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

Form 10-K

ý	
 	
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934	

For the fiscal year ended December 31, 2012	

o	
 	
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934	

For the transition period from                to              
	
Commission file number 000-52049

SYNCHRONOSS TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
 	 	 	
Delaware
(State of incorporation)	 	06-1594540
(IRS Employer Identification No.)	

200 Crossing Boulevard, 8 th  Floor, Bridgewater, New Jersey 08807
(Address of principal executive offices, including ZIP code)	
(866) 620-3940
(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, par value $.0001 par value	 	The NASDAQ Stock Market, LLC	
          Securities registered pursuant to Section 12(g) of the Act:

None

          Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act of 1933. Yes ý    No o

          Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act"). Yes  o     No  ý

          Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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  ý     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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  ý     No  o

          Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K 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.  ý

          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 ý	 	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 ý

          The aggregate market value of the common stock held by non-affiliates of the Registrant as of June 30, 2012, based upon the closing price of the common stock as reported by The NASDAQ Stock Market on such date was approximately $414 million. Shares of common stock held by each executive officer, director and stockholders known by the Registrant to own 10% or more of the outstanding stock based on public filings and other information known to the Registrant have been excluded since such persons may be deemed affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

          As of February 11, 2013, a total of 38,860,686 shares of the Registrant's common stock were outstanding.

          The exhibit index as required by Item 601(a) of Regulation S-K is included in Item 15 of Part IV of this report on Form 10-K.

DOCUMENTS INCORPORATED BY REFERENCE

          Information required by Part III (Items 10, 11, 12, 13 and 14) is incorporated by reference to portions of the Registrant's definitive Proxy Statement for its 2013 Annual Meeting of Stockholders (the "Proxy Statement"), which is to be filed pursuant to Regulation 14A within 120 days after the end of the Registrant's fiscal year ended December 31, 2012. Except as expressly incorporated by reference, the Proxy Statement shall not be deemed to be a part of this report on Form 10-K.

SYNCHRONOSS TECHNOLOGIES, INC.

FORM 10-K
DECEMBER 31, 2012

TABLE OF CONTENTS

Item	 	 
	 	Page No.	 	
PART I	 	
1.	 	Business	 	 	3	 	
1A.	 	Risk Factors	 	 	19	 	
1B.	 	Unresolved Staff Comments	 	 	31	 	
2.	 	Properties	 	 	31	 	
3.	 	Legal Proceedings	 	 	31	 	
4.	 	[Removed and Reserved]	 	 	32	 	
PART II	 	
5.	 	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	 	 	33	 	
6.	 	Selected Financial Data	 	 	34	 	
7.	 	Management's Discussion and Analysis of Financial Condition and Results of Operations	 	 	36	 	
7A.	 	Quantitative and Qualitative Disclosures About Market Risk	 	 	52	 	
8.	 	Financial Statements and Supplementary Data	 	 	54	 	
9.	 	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	 	 	97	 	
9A.	 	Controls and Procedures	 	 	97	 	
9B.	 	Other Information	 	 	100	 	
PART III	 	
10.	 	Directors and Executive Officers and Corporate Governance	 	 	100	 	
11.	 	Executive Compensation	 	 	100	 	
12.	 	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	 	 	100	 	
13.	 	Certain Relationships and Related Transactions	 	 	101	 	
14.	 	Principal Accountant Fees and Services	 	 	101	 	
PART IV	 	
15.	 	Exhibits and Financial Statement Schedules	 	 	102	 	
 	 	Signatures	 	 	106	 	
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PART I

ITEM 1.    BUSINESS

        The words "Synchronoss", "we", "our", "ours", "us" and the "Company" refer to Synchronoss Technologies, Inc. All statements in this Annual Report on Form 10-K that are not historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding Synchronoss' "expectations", "beliefs", "hopes", "intentions", "strategies," "plans," "targets," "estimations" or the like. Such statements are based on management's current expectations and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Synchronoss cautions investors that there can be no assurance that actual results or business conditions will not differ materially from those projected or suggested in such forward-looking statements as a result of various factors, including, but not limited to, the risk factors discussed in this Annual Report on Form 10-K. Synchronoss expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Synchronoss' expectations with regard thereto or any change in events, conditions, or circumstances on which any such statements are based.

General

        We are a mobile innovation company that provides software-based activation and personal cloud solutions for connected devices across the globe. Such transactions include device and service procurement, provisioning, activation, support, intelligent connectivity management and content synchronization, back-up and sharing that enable communications service providers (CSPs), cable operators/multi-services operators (MSOs), original equipment manufacturers (OEMs) with embedded connectivity (e.g. smartphones, laptops, tablets and mobile Internet devices, among others), e-Tailers/retailers and other customers to accelerate and monetize their go-to-market strategies for connected devices. This includes automating subscriber activation, order management, upgrades, service provisioning and connectivity and content management from any channel (e.g., e-commerce, telesales, enterprise, indirect and other retail outlets, etc.) to any communication service (e.g., wireless (3G, (EV-DO and HSPA), 4G, (LTE and WiMAX)), Wi-Fi, high speed access, local access, IPTV, cable, satellite TV, etc.) across any connected device type and content transfer, synchronize and share. Our global solutions touch all aspects of connected devices on the mobile Internet.

        Our Activation Services and Personal Cloud platforms provide end-to-end seamless integration between customer-facing channels/applications, communication services, or devices and "back-office" infrastructure-related systems and processes. Our customers rely on our solutions and technology to automate the process of activation and content management for their customers' devices while delivering additional communication services. Our platforms also support automated customer care processes through use of accurate and effective speech processing technology and enable our customers to offer their subscribers the ability to store in the Cloud their personal content and data which resides on their connected mobile devices, such as personal computers, smartphones and tablets. Our platforms are designed to be carrier-grade, high availability, flexible and scalable to enable multiple converged communication services to be managed across multiple distribution channels, including e-commerce, m-commerce, telesales, customer stores, indirect and other retail outlets, etc., allowing us to meet the rapidly changing and converging services and connected devices offered by our customers. We enable our customers to acquire, retain and service subscribers quickly, reliably and cost-effectively by enabling back-up, synchronization and sharing of subscriber content. Through the use of our platforms, our customers can simplify the processes associated with managing the customer experience for procuring, activating, connecting, synchronizing and social media sharing connected devices and services. The extensibility, scalability and relevance of our platforms enable new revenue streams and retention opportunities for our customers through new subscriber acquisitions, sale of new devices, accessories

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and new value-added service offerings in the Cloud, while optimizing their cost of operations and enhancing customer experience.

        We currently operate in and market our solutions and services directly through our sales organizations in North America, Europe and Asia-Pacific.

        Our industry-leading customers include Tier 1 service providers such as AT&T Inc., Verizon Wireless, Telefonica, Orange and Vodafone, Tier 1 cable operators/MSOs like Cablevision, Comcast, and Time Warner Cable and large OEMs/e-Tailers such as Apple, Microsoft, Dell and Sony. These customers utilize our platforms, technology and services to service both consumer and business customers.

        We were incorporated in Delaware in 2000. Our Web address is www.synchronoss.com. On this Web site, we post the following filings as soon as reasonably practicable after they are electronically filed with or furnished to the U.S. Securities and Exchange Commission (SEC): our annual reports on Form 10-K, quarterly reports on Form 10-Q, our current reports on Form 8-K, our proxy statement on Form 14A related to our annual stockholders' meeting and any amendment to those reports or statements filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended. All such filings are available on the Investor Relations portion of our Web site free of charge. The contents of our Web site are not intended to be incorporated by reference into this Form 10-K or in any other report or document we file.

Synchronoss' Platforms

        Our Activation Services and Personal Cloud platforms provide highly scalable automated on-demand, end-to-end order processing, transaction management, service provisioning, device activation, intelligent connectivity and content transfer, synchronization and social media sharing through multiple channels including e-commerce, m-commerce, telesales, enterprise, indirect, and retail outlets. Our global platforms are designed to be flexible and scalable across a wide range of existing communication services and connected devices, while offering a best-in-class experience for our customers. The extensible nature of our platforms enables our customers to rapidly respond to the ever changing and competitive nature of the telecommunications marketplace.

        Our Activation Services platform orchestrates the complex and different back-end systems of communication service providers to provide a best-in-class ordering system by orchestrating the workflow and consolidated automated customer care services. This allows CSPs using our platform to realize the full benefits of their offerings and analyze customer buying behavior. The platform also supports, among other automated transaction areas, credit card billing, inventory management, and trouble ticketing. In addition to this, the platform supports the physical transactions involved in customer activation and service such as managing access service requests, local service requests, local number portability, and directory listings.

        Our Personal Cloud platform extends features from our core platform into more transaction areas required to enable subscriber management for connected devices including directly on the device itself. In addition, our Personal Cloud platform is specifically designed to support connected devices, such as smartphones, mobile Internet devices (MIDS), laptops, tablets and wirelessly enabled consumer electronics such as cameras, tablets, e-readers, personal navigation devices, and global positioning system (GPS) enabled devices.

        Our Personal Cloud platform is designed to deliver an operator-branded experience for subscribers to backup, restore, synchronize and share their personal content across smartphones, tablets, computers and other connected devices from anywhere at any time. A key element of our Personal Cloud platform is that it extends a carrier's or OEM's visibility and reach into all aspects of a subscriber's use of a connected device. It introduces the notion of Connect-Sync-Activate for all devices. Through our

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Activation Services platform, a device is activated through a variety of different channels; once activated, our solution enables the device to be connected to the best available network by enforcing policies that are managed from the Cloud by a carrier. Once connected, most users of mobile devices avail themselves of content synchronization from the Cloud using policies that are appropriate and applicable to each specific device.

        In addition to handling large volumes of customer transactions quickly and efficiently, our platforms are designed to recognize, isolate and address transactions when there is insufficient information or other erroneous process elements. This knowledge enables us to adapt our solutions to automate a higher percentage of transactions over time, further improving the value of our solutions to our customers. Our platforms also offer a centralized reporting platform that provides intelligent, real-time analytics around the entire workflow related to any transaction. This reporting allows our customers to appropriately identify buying behaviors and trends, define their subscriber segments and pin-point areas where their business is changing or could be improved. These analytics enable our customers to upsell new and additional products and services in a targeted fashion that help increase their consumption of our product offerings. The automation and ease of integration of our platforms are designed to enable our customers to lower the cost of new subscriber acquisitions, enhance the accuracy and reliability of customer transactions thus reducing the inbound service call volumes, and responding rapidly to competitive market conditions to create new revenue streams. Our platforms offer flexible, scalable, extensible and relevant solutions backed by service level agreements (SLAs) and exception handling.

        Our platforms manage transactions relating to a wide range of existing communications and digital content services across our customers. For example, we enable wireless providers to conduct business-to-consumer, or B2C, business-to-business, or B2B, enterprise and indirect channel (i.e.: resellers/dealers) transactions. The capabilities of our platforms are designed to provide our customers with the opportunity to improve operational performance and efficiencies, dynamically identify new revenue opportunities and rapidly deploy new services. They are also designed to provide customers the opportunity to improve performance and efficiencies for activation, content migration and connectivity management for connected devices.

        Our platforms are designed to be:

        Carrier Grade:    We designed our platforms to handle high-volume transactions from carriers (such as launch of the new iPhone 5) rapidly and efficiently, with virtually no down-time. Our platforms are also capable of simultaneously handling millions of device content related transactions on a daily basis to ensure that personal content on all subscriber devices stays fresh and synchronized with the Cloud.

        Highly Automated:    We designed our platforms to eliminate manual processes and to automate otherwise labor-intensive tasks, thus improving operating efficiencies and order accuracy, and reducing costs. By tracking every order and identifying those that are not provisioned properly, our platforms are designed to substantially reduce the need for manual intervention and reduce unnecessary customer service center calls. The technology of our platforms automatically guides a customer's request for service through the entire series of required steps.

        Predictable and Reliable:    We are committed to providing high-quality, dependable services to our customers. To ensure reliability, system uptime and other service offerings, our transaction management is guaranteed through SLAs. Our platforms offer a complete customer management solution, including exception handling, which we believe is one of the main factors that differentiates us from our competitors. In performing exception handling, our platforms recognize and isolate transaction orders that are not configured to specifications, process them in a timely manner and communicate these orders back to our customers, thereby improving efficiency and reducing backlog. If manual intervention is required, our exception handling services are

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performed internally as well as outsourced to centers located in Canada and the United States and, where applicable, to other cost-effective geographies. Additionally, our database is designed to preserve data integrity while ensuring fast, efficient, transaction-oriented data retrieval methods.

        Seamless:    Our platforms integrate information across our customers' entire operation, including subscriber information, order information, delivery status, installation scheduling and content stored on the device to allow for the seamless activation and content transfer during the device purchase flow. Through our platforms, the device is automatically activated and consumer's content is available for use via the Cloud, ensuring continuity of service and reducing subscriber churn propensity. CSPs and e-Tailers/retailers can bundle additional applications during retail phone purchases, and also provide live updates to support new features and new devices. We have built our platforms using an open design with fully-documented software interfaces, commonly referred to as application programming interfaces, or APIs. Our APIs enable our customers, strategic partners and other third parties to integrate our platforms with other software applications and to build best-in-class Cloud-based applications incorporating third-party or customer-designed capabilities. Through our open design and alliance program, we believe we provide our customers with superior solutions that combine our technology with best-of-breed applications with the efficiency and cost-effectiveness of commercial, packaged interfaces.

        Scalable:    Our platforms are designed to process expanding transaction volumes reliably and cost effectively. While our transaction volume has increased rapidly since our inception, we anticipate substantial future growth in transaction volumes, and we believe our platforms are capable of scaling their output commensurately, requiring principally routine computer hardware and software updates. Our synchronization and activation platforms routinely support our customers' transactions at the highest level of demands when needed with our current production deployments. We continue to see the number of transactions for connected devices, such as smartphones, mobile Internet devices (MIDS), laptops, tablets and wirelessly enabled consumer electronics such as cameras, tablets, e-readers, personal navigation devices, global positioning system (GPS) enabled devices, and other connected consumer electronics, to be one of the fastest growing transaction types across all our platforms, products and services. Our Personal Cloud solution is deployed across more than 50 million devices, managing 10 billion entities in the Cloud and performing more than 7 million synchronizations per day across all of our customers.

        Value-add Reporting Tools:    Our platforms' attributes are tightly integrated into the critical workflows of our customers and have analytical reporting capabilities that provide near real-time information for every step of the relevant transaction processes. In addition to improving end-user customer satisfaction, these capabilities are designed to provide our customers with value-added insights into historical and current transaction trends. We also offer mobile reporting capabilities for users to receive critical data about their transactions on connected devices.

        Build Consumer Loyalty:    Our synchronization services help drive consumers to the CSPs, OEM or e-Tailer/Retailer's Web site by presenting them with a branded application and fully-integrated Web portal that provides convenience, security, and continuity for end user customers, which we believe helps our customers by further building the loyalty of their subscribers.

        Efficient:    Our platforms' capabilities provide what we believe to be a more cost-effective, efficient and productive approach to enabling new activations across services and channels. Our solutions allow our customers to reduce overhead costs associated with building and operating their own customer transaction management infrastructure. With automated activation and consolidated fall out customer service, our e-commerce platforms consolidate customer service fall out, which we believe dramatically reduces our customers' subscriber acquisition/retention costs in addition to operating expenses for training and staffing costs. We also provide our customers with the information and tools intended to more efficiently manage marketing and operational aspects

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of their business, as well as business intelligence required to do targeted up-selling of their products and services.

        Quick Concept to Market Delivery:    The automation and ease of integration of our on-demand platform allow our customers to accelerate the deployment of their services and new service offerings by shortening the time between a subscriber's order and the provisioning of service or activation and enabling of a connected device(s).

        Extensible and Relevant:    Our customers operate in dynamic and fast paced industries. Our platforms and solutions are built in a modular fashion, thereby conducive to be extended dynamically and enabling our customers to offer solutions that are relevant to current market situations, with the goal of providing them with the competitive edge required for them to be successful. The platforms are also designed to be highly customizable to each carrier's specific back end systems as well as branding requirements

        Designed to integrate with back-office systems, our platforms allow work to flow electronically across our customers' organizations while providing ready access to performance and resource usage information in providing activation and subscriber management.

        Our platforms are comprised of several distinct modules, each providing solutions to what we believe to be the most common and critical needs of our customers as follows:

PerformancePartner® Portal

        Our PerformancePartner® portal is a graphical user interface that allows entry of transaction data into the gateway. Through the PerformancePartner® portal, customers can set up accounts, renew contracts and update and submit new transactions for transaction management processing.

Gateway Manager

        Our Gateway Manager provides the capability to fulfill multiple types of transactions. These gateways are the engines that support our customers' front-end portals, handling hundreds of thousands of activation transactions on a monthly basis. Our gateways deliver a flexible architecture, supporting seamless entry and rapid time to market. In addition, these gateways contain business rules to interact with the customers' back-office and third-party trading partners.

WorkFlow Manager

        Our WorkFlow Manager provides a seamless interaction with all third-party relationships and enables customers to have a single transaction view, including all relevant data from third-party systems. The WorkFlow Manager is designed to ensure that each customer transaction is fulfilled accurately and offers:

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Flexible configuration to meet individual customer requirements

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Centralized queue management for maximum productivity

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Real-time visibility for transaction revenues management

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Exception handling management

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Order view availability during each stage of the transactional process

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Uniform look and integrated experience.

        By streamlining all procurement processes from pre-order through service activation and billing, our WorkFlow Manager reduces many cost and time impediments that often delay our customers' process of delivering products and services to end-users.

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Visibility Manager

        Our Visibility Manager provides historical trending and mobile reporting to our customers, supports best business practices and processes, and allows our customers to monitor daily metrics to determine whether process objectives are being met or exceeded. The Visibility Manager offers:

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A centralized reporting platform that provides intelligent analytics around the entire workflow

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Transaction management information

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Historical trending

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Mobile reporting for key users to receive critical transaction data on mobile devices.

Content Synchronization Portal

        Our Content Synchronization Portal facilitates seamless content migration across devices from different platforms. Our Content Synchronization Portal (i) protects consumer content in the Cloud that is accessible from a customer branded site, (ii) provides comprehensive integration with customer Web presence including single sign on and CSR administrative access and (iii) provides flexible APIs that provide synchronization of content across a customer's disparate services (e.g. providing a centralized address book solution for the carrier's chosen GPS application, TXT messaging, video conferencing, and other services).

Device Client

        Our Device Client provides smart connectivity for seamless activation, connection management, and content migration and synchronization. The Device Client offers customization for customer brand requirements and availability across major device operating system platforms for feature phones, smartphones, computers, and tablets.

Voice Care and SmartCare

        Our Voice Care and SmartCare on-device and in-cloud solutions are highly accurate and effective, and specialized towards automating customer care needs on carriers' services. These solutions enable a touch-talk or type interface on subscriber devices, capture the voice requests, and fetch the appropriate solutions after performing a semantic matching of the request with the Cloud.

Demand Drivers for Our Business

        Our products and services are capable of managing a wide variety of transactions across multiple customer delivery channels and services, which we believe enables us to benefit from increased growth, complexity and technological change in the communications technology industry. As the communications technology industry evolves, new access networks, connected devices and applications with multiple services and modes are emerging. This proliferation of services and advancement of technologies, combined with their bundling, are accelerating subscriber growth, significantly expanding the types and volume of rich content accessed and stored by consumers, and increasing the number of transactions between our customers and their subscribers. In addition to this dynamic, we believe our core electronic transaction management business is further being driven by the following factors:

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A proliferation of connected devices led by a) new and richer operating systems that challenge the status quo, b) increasing connected devices adoption, c) broadband networks experiencing critical mass and d) enhanced Cloud computing enabling access to rich content

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Wireless ecosystem undergoing a paradigm shift in its buying patterns

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Continued growth of the online channel for the communications marketplace

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Consolidation of e-Tailers/retailers focused in the communications marketplace

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Expansion of communication service bundles to be utilized across multiple devices

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Pressure on operators to improve efficiency while delivering a superior subscriber experience

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Growth of the on-demand delivery model

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Mobile Network Operators' shift in focus from new subscriber additions to new connections added

        We continue to see embedded connectivity technology within a vast array of common electronic devices. According to the GSMA, the number of total wireless connected devices is expected to more than double from 9 billion today to more than 24 billion in 2020. This growth will be paced by strong momentum in mobile connected devices which are expected to increase from 6 billion today to 12 billion by 2020.

        We see the following drivers behind this development:

        New and Richer Operating Systems:    In many ways, new device operating systems like the iOS for the iPhone/iTouch/iPad portfolio, the Android produced by Google, Windows® Phone 7, BlackBerry OS for the BlackBerry portfolio and Sony Playstation phone and next generation PSP for mobile connected gaming have accelerated the adoption and usage of smartphones. Additionally, touchscreen based operating systems have been extended to tablets and many analysts believe there will be a surge in tablets. For example, in the latest forecast update of the Worldwide Quarterly Media Tablet and eReader Tracker , IDC revised upward its 2013 forecast number from 137.4 million units to 142.8 million units and estimated that by 2016 worldwide shipments should reach 222.1 million units.

        Increasing Mobile Adoption in Developed Countries:    Mobile broadband subscriptions are expected to top 2 billion in 2013 and forecasted to reach 5 billion by 2017. In the same timeframe, smartphones are expected to reach 1.2 billion and 3.1 billion, respectively. As operators address this mobile adoption and the subsequent slowing in top line growth, they become receptive to new types of devices that leverage the existing infrastructure (i.e.: connected netbooks, e-readers, etc.) and encourage their customers to have more than one wireless device. In addition, the International Telecommunication Union ("ITU") reported that the level of mobile subscriptions in the developed world has reached its saturation point, with at least one cell phone subscription per person. Thus, ITU expects that greater market growth will be driven by demand in developing countries, led by rapid mobile adoption in China and India, the world's most populous nations.

        Wireless Broadband Networks Experiencing Critical Mass:    The establishment of multiple broadband mobile networks (e.g., Universal Mobile Telecommunications System, High-Speed Packet Access, Evolution-Data Optimized, WiMax, and LTE among others) has provided broader bandwidth to CSPs, while decreasing the cost per bit transmitted, thus enabling the proliferation of mobile devices and equipment with embedded connectivity. As more of these devices enter the market, and many of them with lower average revenue per user (ARPU) than traditional wireless services, they will necessitate an efficient and seamless activation/provisioning system with a best-in-class customer experience to differentiate them.

        4G-LTE Networks:    The emergence of 4G-LTE networks is expected to improve the connected devices customer experience with higher data speeds and reduced latency. In addition, devices such as mobile routers and tablets can generate mobile hotspots. With fixed mobile broadband, mobile carriers and MSOs can also offer bundled services. As well, these networks are also focused on enhancing Machine to Machine (M2M) communications.

        Wireless Ecosystem Undergoing a Paradigm Shift in its Buying Patterns:    Consumers have traditionally been accustomed to purchasing their devices and service plans directly from CSPs. That is,

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if they wanted a particular wireless service, they first had to decide which operator they wanted, and then only after they made this decision, could they select a phone. We are seeing considerable forces altering this typical buy flow and in doing so generating considerable innovation and change in the ecosystem.

        Companies like Amazon with the Kindle and Kindle Fire have in some ways contributed to the change of this buy flow process. Specifically, we are seeing these OEMs invest considerable resources in developing their "direct to consumer" channel and in some cases making it the only channel available. While this recent change in the ecosystem offers some advantages to these OEMs it also presents some challenges for them while at the same time creating a new higher growth channel for communication service providers who ultimately provide the access and connectivity. In many ways analysts have argued that this is a win-win game theory situation and that ultimately the "pie," not "individual slices," is getting larger. Managing the activation, provisioning, connectivity and synchronization of these devices and handling the connectivity with the different service providers is something that is not core to OEMs or e-Tailers/retailers. As this dynamic evolves, we expect that there will be an increasing need for automated connect-sync-activate services as well as other transaction areas such as device integration, certification, credit card billing, inventory management, and trouble ticketing.

        Continued Growth of the Online Channel for the Communications Space:    Cloud-based commerce provides our customers with the opportunity to cost-effectively gain new subscribers, provide service and interact more effectively. Specifically, we estimate that the cost per gross add (CPGA) for a customer obtained via e-commerce can be up to 50% less than those obtained via traditional means. With the dramatic increase in Internet usage and desire to directly connect with end users over the course of the customer lifecycle, service providers are increasingly focusing on e-commerce as a channel for customer acquisition and delivery of ongoing services. According to industry research firm Forrester, online sales will grow from 7% of overall retail sales to close to 9% by 2016 and that they expect consumers will spend $327 billion online annually by 2016. As online channels continue to experience growth, we expect that there will be an increasing need to automate the activation and provisioning process of mobile devices, and provide a best-in-class customer experience over the Internet.

        Consolidation of e-Tailers/retailers focused in the Communications Space:    Phones and connected devices have become sought after consumer items. Retailer channels will take marketing efforts to another level to drive demand. Automated systems that are efficient and easy to use for retail sales representatives will be important to lower training and staffing costs and improve in-store experience. We believe that this channel represents as much as 10% growth for some leading CSPs today. Furthermore, this channel has demonstrated considerable innovation as these e-Tailers/retailers attempt to launch emerging devices (e.g., Amazon's Kindle).

        As these constituents of the wireless ecosystem continue to advance their strategies and grow their presence in the connected devices marketplace, we believe they will require further support to automate the activation/provisioning of their new customers and to assist with the management of their existing customers.

        Expansion of Communication Service Bundles:    With subscribers expecting CSPs to offer all services under one contract, communications companies continue the development of bundled style offerings of their available services. In this environment, more CSPs are utilizing an array of communication delivery technologies to become all-in-one providers of communication services. For example, MSOs are increasingly creating true quad-play's (i.e., voice, video, high speed data and wireless) with the creation, acquisition and/or development of their own wireless networks. As wireless technology proliferates further into the consumer device market, we believe we will see an emergence of service bundling that surpasses the traditional perception of a quad-play, where the wireless component will encompass an added array of wireless enabled devices. As quad-play offerings gain more traction and service bundles begin encompassing emerging devices and technologies, we believe

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that the level of complexity in seamlessly delivering these services will increase significantly and that CSPs will need transaction management systems that can effectively handle those delivery challenges. According to Strategy Analytics, by 2016 13% of U.S. households will take a "Quad Play" service—a bundled offering of fixed voice, broadband, television and mobile devices. Additionally, Strategy Analytics sees high growth opportunities for multiplay bundling in China, Italy, and Austria, each expected to double the percentage of multi-play homes by 2016.

        Smartphone Sales and Diversification:    Smartphone sales are increasing exponentially each year and, according to IDC, are expected to grow from 662 million in 2013 to 977 million in 2016. IDC Forecasts also indicate that by 2015 the smartphone market share will be well diversified with Android leading the market followed by iOS and Windows. With increasingly large amounts of content being created and stored in the smartphones and tablets, the number of Cloud storage subscriptions are forecasted to exceed 1.2 billion by 2017, according to the Yankee Group. In addition, Yankee Group also predicts that by 2015 the number of other connected consumer devices will exceed 5 billion. These smartphones, tablets and other connected devices have a need to store, synchronize and share content across multiple devices which drive the need for personal cloud solutions in the market-place.

        Pressure on Customers to Improve Efficiency while Delivering a Superior Subscriber Experience:    Increased competition, recessionary markets, and the cost of network capacity have placed significant pressure on our customers to reduce costs and increase revenues. At the same time, due to deregulation, the emergence of new network technologies and the proliferation of services, the complexity of back-office operations has increased significantly. Customers with multiple back-end systems are looking for ways to help their systems interoperate for a better customer experience. In addition, customers are moving to automated provisioning systems to enable them to more easily purchase, upgrade or add new features, application and content. As a result, we believe customers are looking for ways to offer new communications services more rapidly and efficiently to existing and new customers. Increased competition and demand for superior subscriber experience have placed significant pressure on our customers to improve customer-centric processes. CSPs are increasingly turning to transaction-based, cost effective, scalable and automated third-party solutions that can offer guaranteed levels of service delivery.

        Growth in On-Demand Delivery Model:    Our on-demand business model enables delivery of our proprietary solutions over the Internet as a service. As such, customers do not have to make large and potentially risky upfront investments in software, additional hardware, extensive implementation services and additional IT staff.

        Services, Networks and Device Complexity:    The wireless industry is changing. CSPs are moving away from unlimited data plans, networks are becoming multi-layered with varying levels of complexity and devices are becoming more feature rich and capable, driving bandwidth consuming traffic over the networks. We believe all of these require CSPs and OEMs to be more creative in the services they offer, requiring an increased need for automation in device integration certification and activation. This will require complex policy based device and network management. Certain functions of our platforms can help address these needs.

Our Growth Strategy

        Our growth strategy is to establish our platforms as the de-facto industry standard for CSPs, MSOs, OEMs, and e-Tailers/retailers while investing in extensions of our product and services portfolio. We will continue to focus our technology and development efforts around improving functionality, helping customers drive higher ARPU and subscriber retention, embracing alternative channels and allowing more capabilities for ordering bundled applications and content offerings across these same complex and advanced networks.

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        Key elements of this strategy are:

        Continue to Expand our Product Portfolio and offer more of them to Communication Service Providers.    Given the explosive growth of connected mobile broadband devices and the increasing need to back-up, restore and share content across those devices, our objective is to play a vital role in monetizing those devices with our connect-sync-activate strategy. Methods of monetization may include licenses per device, maintenance fees, professional service fees, active user fees as well as data storage fees. By acquiring Newbay Software, Limited, we believe we will be able to expand functionalities in our Personal Cloud platform and provide a more robust solution to our customers. Once our Personal Cloud solution deployment reaches critical mass, we believe we will be able to integrate the solution with other potential revenue generating offers from service providers and other customers.

        Continue our Expansion into Original Equipment Manufacturers (OEMs).    As OEMs further expand their footprint into the "direct to consumer" model, they will need to develop robust yet nimble capabilities to support and differentiate their ordering/activation experience. As new types of connected devices are deployed, we expect to work with our customers, such as Microsoft, Dell, and Apple to enable our technology to support a "plug and play" approach to end users wishing to purchase new advanced devices and services being offered by these customers.

        Broaden Customer Base and Expand Offering to Existing Customers.    As our existing customers continue to expand into new distribution channels, such as the rapidly growing e-commerce channels, they will likely need to support new types of transactions that are managed by our platforms. In addition, we believe our customers will require new transaction management solutions as they expand their subscriber customer base, which will provide us with opportunities to drive increasing amounts of volume over our platforms. Many customers purchase multiple services from us, and we believe we are well positioned to cross-sell additional services to customers who do not currently purchase our full services portfolio. The expansion of our relationship with AT&T, Vodafone, Verizon and other customers highlight further penetration of existing customers as well as the development of a major growth initiative in consumer digital convergence.

        Expand Into New Geographic Markets.    Although the majority of our revenue has traditionally been generated in North America, we continue to expand globally. Today, we have several instances of our platforms deployed in Europe and new customer engagements with a variety of carriers in Europe, including Vodafone and Telefonica, to support their customers. In addition, our recent acquisitions of Miyowa SA, SpeechCycle, Inc., Spatial Systems Nominees PTY Limited and Newbay Software Limited have helped expand our operations and customer engagements in Europe and the Asia-Pacific region. We believe that the growth of connected devices will further drive opportunities to penetrate new geographic markets within the coming years. Asia/Pacific and Latin America are of particular interest, as these markets experience similar trends to those that have driven growth in North America.

        Maintain Technology Leadership.    We strive to continue to build upon our technology leadership by continuing to invest in research and development to increase the automation of processes and workflows and develop complementary product modules that leverage our platforms and competitive strengths, thus driving increased interest by making it more economical for customers to use us as a third-party solutions provider. In addition, we believe our close relationships with our Tier 1 customers will continue to provide us with valuable insights into the dynamics that are creating demand for next-generation solutions.

        Expand through Strategic Partnerships or Acquisitions.    We are in the process of integrating our various acquisitions and we will continue to assimilate the synergies and efficiencies that these acquisitions may afford us. As we explore additional new opportunities, we continue to look for

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strategic partnership or acquisition candidates that may enable us to enter new markets or enhance our offerings.

        Leverage and Enforce our Intellectual Property.    We have a significant repository of granted and filed IP, and we expect to use this as a differentiator of our products and services in the marketplace.

Customers

        Our industry-leading customers include Tier 1 service providers such as AT&T Inc., Verizon Wireless, Telefonica, Orange and Vodafone, Tier 1 cable operators/MSOs like Cablevision, Comcast, and Time Warner Cable and large OEMs/e-Tailers such as Apple, Microsoft, Dell and Sony. These customers utilize our platforms, technology and services to service both consumer and business customers.

        We maintain strong and collaborative relationships with our customers, which we believe to be one of our core competencies and critical to our success. We are generally the only provider of the services we offer to our customers. Contracts extend up to 60 months from execution and include minimum transaction or revenue commitments from our customers. All of our significant customers may terminate their contracts for convenience upon written notice and in many cases payment of contractual penalties. Contract penalties received by us were immaterial to our Statements of Income for the years ended December 31, 2012, 2011, and 2010. We have a long-standing relationship with AT&T, dating back to January 2001 when we began providing service to AT&T Wireless, which was subsequently acquired by Cingular Wireless. Through the merger of AT&T with BellSouth, Cingular Wireless was integrated into AT&T. We are the primary provider of e-commerce transaction management solutions to AT&T's e-commerce channels. Our agreement with AT&T was automatically renewed through December 2013 and will automatically renew each year unless either party notifies the other of its intention not to renew at least sixty days prior to the end of the then-current term. This agreement defines the work activities, transaction pricing, forecasting process, service level agreements and remedies associated with certain services performed by us for AT&T's e-commerce organizations. The agreement provides for AT&T to pay us (i) monthly hosting fees, (ii) fees based on the number of transactions processed through our technology platform, (iii) fees based on manual processing services, and (iv) fees for professional services rendered by us. For 2012, we received 46% of our revenues from AT&T, compared to 51% of our revenues in 2011. Verizon Wireless is the only other customer that accounted for more than 10% of our revenues in 2012.

Sales and Marketing

Sales

        We market and sell our services primarily through a direct sales force and through our strategic partners. To date, we have concentrated our sales efforts on a range of CSPs, OEMs, and e-Tailers/retailers both domestically and internationally. Typically our sales process involves an initial consultative process that allows our customers to better assess the operating and capital expenditure benefits associated with an optimal activation, provisioning, and Cloud-based content management architecture. Our sales teams are well trained in our Activation Services and Personal Cloud platforms and on the market trends and conditions that our current and potential customers are facing. This enables them to easily identify and qualify opportunities that are appropriate for our platform deployments to benefit these customers. Following each sale, we assign account managers to provide ongoing support and to identify additional sales opportunities. We generate leads from contacts made through trade-shows, seminars, conferences, events, market research, our Web site, customers, strategic partners and our ongoing public relations program.

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Marketing

        We focus our marketing efforts on supporting new product initiatives, creating awareness of our services and generating new sales opportunities. We base our product management strategy on analysis of market requirements, customer needs, industry direction, competitive offerings and projected customer cost savings and revenue opportunities. Our team is active in numerous technology and industry forums and regularly gets invited to speak at tradeshows such as the Consumer Electronics Show (CES), Cellular Telecommunications Industry Association (CTIA), GSM Association- Mobile World Congress, Wireless Future Forward Series, Wireless Influencers' Forum, and National Cable & Telecommunications Association (NCTA), in which we also demonstrate our solutions. In addition, through our product marketing and marketing communications functions, we also have an active public relations program and maintain relationships with recognized trade media and industry analysts such as International Data Corporation (IDC), Gartner Inc., Forrester Research, Inc., Frost & Sullivan and Yankee Group. We also manage and maintain our Web site, blog, social media profiles on LinkedIn and Twitter, utilize search engine optimization (SEO) and search engine marketing (SEM), publish product related content and educational white papers, and conduct seminars and user group meetings. Finally, we also actively sponsor technology-related conferences and demonstrate our solutions at trade-shows targeted at providers of communications services.

Operations and Technology

        We leverage common proprietary information technology platforms to deliver carrier grade services to our customers across communication and digital convergence market segments. Constructed using a combination of internally developed and licensed technologies, our platforms integrate our order management, gateway, workflow, Cloud-based content management, and reporting into a unified system. The platforms are secure foundations on which to build and offer additional services and maximize performance, scalability and reliability.

Exception Handling Services

        We differentiate our services from both the internal and competitive offerings by handling exceptions through our technology and human touch solutions, a substantial portion of which are provided by third-party vendors. Our business process engineers optimize each workflow; however, there are exceptions and we handle these with the goal of ensuring the highest quality customer experience at the lowest cost. Our exception handling services deal with the customer communication touch points including provisioning orders, inbound calls, automated interactive voice responses (e.g., order status, address changes), Web forums, inbound and outbound email, proactive outbound calls (e.g., out of stock, backorders, exceptions) and self-correct order tools. These services are continuously reviewed for improved workflow and automation. We use third-party vendors in providing exception handling services, each of whom provide services under automatically renewable contracts. We believe our unique exception handling services help reduce the cost of each transaction by driving more automation, over time, into a better and more cost effective way to manage our customers' subscriber experiences.

Locations

        Our locations are distributed across various time zones in the United States, Asia and Europe to help us serve our customers in a timely manner. Through our various acquisitions, in 2012 we added locations in Dublin, Ireland, Melbourne, Australia and Denver, Colorado. We believe these diverse locations afford us access to key talent in all major markets in the U.S. and around the globe.

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Data Center Facilities

        We have data center facilities in Bethlehem, Pennsylvania, Bangalore, India, and Tucson, Arizona. These facilities are currently expected to support our growth objectives. These secure facilities house all customer-facing, production, test and development systems that are the backbone of the services delivered to our customers. The facilities and systems are monitored 7 days a week, 24 hours a day, and are protected via multiple layers of physical and electronic security measures. In addition, a redundant power supply ensures constant, regulated power into the managed data facility and a back-up generator system provides power indefinitely to the facility in the event of a utility power failure. All systems in the managed data facility are monitored for availability and performance using industry standard tools such as, Solar Winds® ,  Nagios®, Keynote®, and Empirix OneSight®. We also entered into a major partnership agreement with Terremark Inc. that enables us to offer geographically diversified hosting and storage for our Personal Cloud solutions.

Network

        We use AT&T, Verizon and Sprint to provide a managed, fully-redundant network solution at our Bethlehem, Pennsylvania facility to deliver enterprise scale services to customers. Specifically, we have two OC-12 and one OC-48 fiber optic rings, delivering highly redundant bandwidth to the Bethlehem, Pennsylvania and Bridgewater, New Jersey facilities. Wide Area Network connectivity between our locations is achieved via redundant Multiprotocol Label Switching (MLPS) circuits and Internet access to selected locations via multiple dedicated circuits. A dedicated Metro Ethernet solution is utilized to provide a data center backbone connection between our primary data center facility in Bethlehem and our disaster recovery site, should the need arise.

Disaster Recovery Facility

        We operate a second data center facility at our corporate headquarters in Bridgewater, New Jersey that is used to provide a hot site for real time data backup and disaster recovery purposes.

Customer Support

        Our Customer Service Center (CSC) acts as an initial point of contact for all customer-related issues and requests. The CSC staff is available 7 days a week via phone, email or pager to facilitate the diagnosis and resolution of application and service-related issues with which they are presented. Issues that require further investigation are immediately escalated to our product and infrastructure support teams on behalf of the customer as part of our continuing effort to provide the greatest speed of problem resolution and highest levels of customer service.

Competition

        Competition in our markets is intense and includes rapidly-changing technologies and customer requirements, as well as evolving industry standards and frequent product introductions. We compete primarily on the basis of the breadth of our domain expertise, our proprietary exception handling, and the breadth of our Personal Cloud content synchronization and sharing capabilities, as well as on the basis of price, time-to-market, functionality, quality and breadth of product and service offerings. We believe the most important factors making us a strong competitor include:

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Breadth and depth of our transaction and content management solutions, including our exception handling technology

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Carrier grade nature and scalability of our solutions

•
Quality and performance of our products

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•
High-quality customer service

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Ability to implement and integrate solutions

•
Overall value of our platforms

•
References of our customers

        We are aware of other software developers and smaller entrepreneurial companies that are focusing significant resources on developing and marketing products and services that will compete with our platforms. We anticipate continued growth in the communications industry and the entrance of new competitors in the order processing and transaction management solutions market and expect that the market for our products and services will remain intensely competitive.

Government Regulation

        We are not currently subject to any federal, state or local government regulation, other than regulations that apply to businesses generally. Many of our customers are subject to regulation by the Federal Communications Commission, or FCC. Changes in FCC regulations that affect our existing or potential customers could lead them to spend less on transaction management solutions, which would reduce our revenues and could have a material adverse effect on our business, financial condition or results of operations. We also comply with industry required regulations, such as PCI compliance and all of our employees have completed the required compliance education.

Intellectual Property

        To establish and protect our intellectual property, we rely on a combination of copyright, trade secret, patent and trademark rights, as well as confidentiality procedures and contractual restrictions. Synchronoss®, the Synchronoss® logo, PerformancePartner®, ConvergenceNow® and ActivationNow® are registered trademarks of Synchronoss. In addition, we regularly file patent applications to protect inventions arising from our research and development, and have obtained a number of patents in the United States and other countries. No single patent is solely responsible for protecting our products or services. In addition to legal protections, we rely on the technical and creative skills of our employees, deep technical integration with our customers networks and back office systems, frequent product enhancements and improved product quality to maintain a technology-leadership position. We maintain a program to protect our investment in technology by attempting to ensure respect for our intellectual property rights. For instance, in 2012 we entered into an agreement with Research in Motion, Ltd. to license certain of our technology. We cannot be certain that others will not develop technologies that are similar or superior to our technology. We enter into confidentiality and invention assignment agreements with our employees and confidentiality agreements with our alliance partners and customers, and we control access to and distribution of our software, documentation and other proprietary information.

Employees

        We believe that our recent growth and success is attributable in large part to our employees and an experienced management team, many members of which have years of industry experience in building, implementing, marketing and selling transaction management solutions critical to business operations. We intend to continue training our employees as well as developing and promoting our culture and believe such efforts provide us with a sustainable competitive advantage. We offer a work environment that enables employees to make meaningful contributions, as well as incentive programs to continue to motivate and reward our employees.

        As of December 31, 2012, we had 1,340 full-time employees. None of our employees are covered by any collective bargaining agreements.

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Executive Officers of the Registrant

        The following sets forth certain information regarding our Executive Officers as of February 15, 2013:
 	 	 	 	 	 	
Name	 	Age	 	Position	
Stephen G. Waldis	 	 	45	 	Chairman of the Board of Directors and Chief Executive Officer	
Robert Garcia	 	 	44	 	President and Chief Operating Officer	
Lawrence R. Irving	 	 	56	 	Executive Vice President, Chief Financial Officer and Treasurer	
Ronald J. Prague	 	 	49	 	Executive Vice President, Chief Legal Officer, General Counsel & Secretary	
Christopher S. Putnam	 	 	44	 	Executive Vice President of Sales	
Mark Mendes	 	 	50	 	Executive Vice President and President of Broadband Solutions	
Patrick J. Doran	 	 	39	 	Executive Vice President of R&D and Chief Technology Officer	
Biju Nair	 	 	47	 	Executive Vice President and Chief Corporate Strategy Officer	
David Berry	 	 	47	 	Executive Vice President and Chief Innovation Officer	
Paula J. Hilbert	 	 	57	 	Executive Vice President of Human Resources	
Karen L. Rosenberger	 	 	47	 	Senior Vice President, Controller and Chief Accounting Officer	
        Stephen G. Waldis has served as Chief Executive Officer of Synchronoss since founding the Company in 2000 and has served as Chairman of the Board of Directors since February of 2001. From 2000 until 2011 Mr. Waldis also served as President of Synchronoss. Before founding Synchronoss, from 1994 to 2000, Mr. Waldis served as Chief Operating Officer at Vertek Corporation, a privately held professional services company serving the telecommunications industry. From 1992 to 1994, Mr. Waldis served as Vice President of Sales and Marketing of Logical Design Solutions, a provider of telecom and interactive solutions. From 1989 to 1992, Mr. Waldis worked in various technical and product management roles at AT&T. Mr. Waldis received a degree in corporate communications from Seton Hall University.

        Robert Garcia has served as President of Synchronoss since December 2011 and Chief Operating Officer since April 2007. Prior to that position, Mr. Garcia served in various positions at Synchronoss, including Executive Vice President of Operations and Service Delivery and General Manager of Synchronoss' western office since joining Synchronoss in August 2000. Before joining Synchronoss, Mr. Garcia was a Senior Business Consultant with Vertek Corporation from January 1999 to August 2000. Mr. Garcia has also held senior management positions with Philips Lighting Company and Johnson & Johnson Company. Mr. Garcia received a degree in logistics and economics from St. John's University in New York.

        Lawrence R. Irving has served as Chief Financial Officer and Treasurer of Synchronoss since July 2001. Before joining Synchronoss, from 1998 to 2001, Mr. Irving served as Chief Financial Officer and Treasurer at CommTech Corporation, a telecommunications software provider that was acquired by ADC Telecommunications. From 1995 to 1998, Mr. Irving served as Chief Financial Officer of Holmes Protection Group, a publicly traded company which was acquired by Tyco International. Mr. Irving is a certified public accountant and a member of the New York State Society of Certified Public Accountants. Mr. Irving received a degree in accounting from Pace University.

        Ronald J. Prague was promoted to Executive Vice President in December 2011. Mr. Prague joined Synchronoss in August 2006 as General Counsel, and has served as Secretary since October 2006. Before joining Synchronoss, Mr. Prague held various senior positions with Intel Corporation from 1998 to 2006, including as Group Counsel for Intel's Communications Infrastructure Group. Prior to joining Intel, Mr. Prague practiced law with the law firms of Haythe & Curley (now Torys LLP) and Richards & O'Neil (now Bingham McCutchen). Mr. Prague is a graduate of Northwestern University School of Law and earned a degree in business administration and marketing from Cornell University.

        Christopher S. Putnam has been with Synchronoss since January 2004 and has served as Executive Vice President of Sales of Synchronoss since April 2005. Prior to joining Synchronoss, from 1999 to

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2004, Mr. Putnam served as Director of Sales for Perot Systems' Telecommunications business unit. Mr. Putnam received a degree in communications from Texas Christian University. Mr. Putnam has informed us that he intends to resign from Synchronoss effective as of March 15, 2013.

        Mark Mendes has served as President of Broadband Solutions since January 2013. Prior to that position, Mr. Mendes was Chief Information Officer from December 2010 until January 2013 and Executive Vice President of InterconnectNow since he joined Synchronoss in September 2008 in connection with Synchronoss' acquisition of Wisor Telecom Corp., where Mr. Mendes was Chief Executive Officer since 2001. Prior to joining Wisor, from 1997 to 2001, Mr. Mendes was Chief Operating Officer and Chief Technology Officer of NET2000 Communications, Inc. Mr. Mendes received an Engineering degree and MBA Finance/MIS from Syracuse University.

        Patrick J. Doran has served as Executive Vice President of Research and Development and Chief Technology Officer since April 2007. Prior to that position, Mr. Doran served in various positions, including Chief Architect and Senior Software Engineer, since joining Synchronoss in 2002. Before joining Synchronoss, Mr. Doran was a Senior Development Engineer at Agility Communications from 2000 to 2002 and a Member of Technical staff at AT&T/Lucent from 1996 to 2000. Mr. Doran received a degree in Computer and Systems engineering from Rensselaer Polytechnic Institute and a Masters Degree in Industrial Engineering from Purdue University.

        Paula J. Hilbert has served as Executive Vice President of Human Resources since January 2013. Prior to that position, Ms. Hilbert served as Executive Vice President of Global Operations and Chief Service Officer since she joined Synchronoss in October, 2010. Before joining Synchronoss, Ms. Hilbert was an independent consultant from 2008 to 2010. Prior to that position, Ms. Hilbert served as a Managing Director/Global Client Service and Offshoring at JP Morgan Chase Treasury and Securities Services from 2003 to 2008. Prior to JP Morgan Chase, Ms. Hilbert held senior positions at AT&T from 1979 to 2003, including Vice President—Customer Relationship Management. Ms. Hilbert holds a Bachelor of Science degree in Business Administration from Clarion University.

        David E. Berry has served as Executive Vice President and Chief Innovation Officer of Synchronoss since January 2012. Mr. Berry previously was Executive Vice President and Chief Technology Officer of Synchronoss from 2000 to August 2006. Between August 2006 and re-joining the Company, Mr. Berry worked as: an independent consultant; a CTO of a healthcare startup; and a CIO of a digital signage company. Mr. Berry received a Master of Arts in Corporate and Public Communication from Seton Hall University and a Bachelor of Science in Mathematics and Computer Science from Fairfield University.

        Biju Nair has served as Executive Vice President of Product Management and Chief Strategy Officer of Synchronoss since the acquisition of Sapience Knowledge Systems, Inc. ("Sapience") in March 2011, where he was Chairman and Chief Executive Officer. Prior to founding Sapience in 2009, Mr. Nair was Senior Vice President & General Manager of the Connectivity and Security Group at Smith Micro Software, Inc. (NASDAQ: SMSI), a position he held since Mobility Solutions Group, a division of PCTEL, Inc., the company where he was Corporate Vice President & General Manager and founder, was acquired by Smith Micro in 2008. Mr. Nair also held senior executive positions at SAFCO Technologies and Agilent Technologies. Mr. Nair holds a Master of Science degree in Electronic and Computer Engineering from Politechnika Warszawska and a Master of Science degree in Computer Science from Illinois Institute of Technology.

        Karen L. Rosenberger has served as Senior Vice President and Chief Accounting Officer of Synchronoss since January 2012 and Controller since she joined the Company in December 2000. Before joining Synchronoss, Ms. Rosenberger held various management positions with Medical Broadcasting Company and CoreTech Consulting Group. Ms. Rosenberger received a degree in accounting from Cedar Crest College and a Master of Business Administration from Saint Joseph's University. Ms. Rosenberger is a certified public accountant and a member of the American Institute of Certified Public Accountants and the New Jersey Society of Certified Public Accountants.

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ITEM 1A.    RISK FACTORS

        An investment in our common stock involves a high degree of risk. The following are certain risk factors that could affect our business, financial results and results of operations. You should carefully consider the following risk factors in connection with evaluating the forward-looking statements contained in this Annual Report on Form 10-K because these factors could cause the actual results and conditions to differ materially from those projected in forward-looking statements. The risks that we have highlighted here are not the only ones that we face. If any of the risks actually occur, our business, financial condition or results of operation could be negatively affected. In that case, the trading price of our stock could decline, and our stockholders may lose part or all of their investment.

Risks Related to Our Business and Industry

We Have Substantial Customer Concentration, with a Single Customer Accounting for a Substantial Portion of our 2012 Revenues.

        We currently derive a significant portion of our revenues from one customer, AT&T, although the actual portion of our revenues from this customer has continued to decrease. Our relationship with AT&T dates back to January 2001 when we began providing service to AT&T Wireless, which was subsequently acquired by Cingular Wireless and is now a division of AT&T. For the year ended December 31, 2012, AT&T accounted for approximately 46% of our revenues, compared to 51% for the year ended December 31, 2011. Our agreement with AT&T was automatically renewed through December 2013 and will automatically renew each year unless either party notifies the other of its intention not to renew at least sixty days prior to the end of the then-current term. This agreement defines the work activities, transaction pricing, forecasting process, service level agreements and remedies associated with certain services performed by us for AT&T's e-commerce organizations. The agreement provides for AT&T to pay us (i) monthly hosting fees, (ii) fees based on the number of transactions processed through our technology platform, (iii) fees based on manual processing services and (iv) fees for professional services rendered by us.

        Our five largest customers, AT&T, Level 3, Time Warner Cable, Verizon Wireless and Vodafone, accounted for approximately 76% and 86% of our revenues for the years ended December 31, 2012 and 2011, respectively. Verizon Wireless is the only other customer that accounted for more than 10% of our revenues in 2012. There are inherent risks whenever a large percentage of total revenues are concentrated with a limited number of customers. It is not possible for us to predict the future level of demand for our services that will be generated by these customers or the future demand for the products and services of these customers in the end-user marketplace. In addition, revenues from these larger customers may fluctuate from time to time based on the commencement and completion of projects, the timing of which may be affected by market conditions or other facts, some of which may be outside of our control. Further, some of our contracts with these larger customers permit them to terminate our services at any time (subject to notice and certain other provisions). If any of these customers experience declining or delayed sales due to market, economic or competitive conditions, we could be pressured to reduce the prices we charge for our services or we could lose a major customer. Any such development could have an adverse effect on our margins and financial position, and would negatively affect our revenues and results of operations and/or trading price of our common stock.

The Communications Industry is Highly Competitive, and if We Do Not Adapt to Rapid Technological Change, We Could Lose Customers or Market Share.

        Our industry is characterized by rapid technological change and frequent new service offerings and is highly competitive with respect to the need for innovation. Significant technological changes could make our technology and services obsolete, less marketable or less competitive. We must adapt to our rapidly changing market by continually improving the features, functionality, reliability and

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responsiveness of our transaction management services, and by developing new features, services and applications to meet changing customer needs. Our ability to take advantage of opportunities in the market may require us to invest in development and incur other expenses well in advance of our ability to generate revenues from these offerings or services. We may not be able to adapt to these challenges or respond successfully or in a cost-effective way. Our failure to do so would adversely affect our ability to compete and retain customers and/or market share. Further, we may experience delays in the development of one or more features of our offerings, which could materially reduce the potential benefits to us providing these services. In addition, our present or future service offerings may not satisfy the evolving needs of the industry in which we operate. If we are unable to anticipate or respond adequately to such needs, due to resource, technological or other constraints, our business and results of operations could be harmed.

The Success of Our Business Depends on the Continued Growth of Consumer and Business Transactions Related to Communications Services on the Internet.

        The future success of our business depends upon the continued growth of consumer and business transactions on the Internet, including attracting consumers who have historically purchased wireless services and devices through traditional retail stores. Specific factors that could deter consumers from purchasing wireless services and devices on the Internet include concerns about buying wireless devices without a face-to-face interaction with sales personnel and the ability to physically handle and examine the devices.

        Our business growth would be impeded if the performance or perception of the Internet was harmed by security problems such as "viruses," "worms" or other malicious programs, reliability issues arising from outages and damage to Internet infrastructure, delays in development or adoption of new standards and protocols to handle increased demands of Internet activity, increased costs, decreased accessibility and quality of service, or increased government regulation and taxation of Internet activity. The Internet has experienced, and is expected to continue to experience, significant user and traffic growth, which has, at times, caused user frustration with slow access and download times. If Internet activity grows faster than Internet infrastructure or if the Internet infrastructure is otherwise unable to support the demands placed on it, or if hosting capacity becomes scarce, the growth of our business may be adversely affected.

The Success of Our Business Depends on the Continued Growth in Demand for Connected Devices.

        The future success of our business depends upon the continued growth in demand for connected devices. While we believe the market for connected devices will continue to grow for the foreseeable future, we cannot accurately predict the extent to which demand for connected devices will increase, if at all. If the demand for connected devices were to stabilize or decline, our business and results of operations may be adversely affected.

The Success of Our Business Depends on our Ability to Achieve or Sustain Market Acceptance of Our Services and Solutions at Desired Pricing Levels.

        Our competitors and customers may cause us to reduce the prices we charge for our services and solutions. Our current or future competitors may offer our customers services at reduced prices or bundling and pricing services in a manner that may make it difficult for us to compete, customers with a significant volume of transactions may attempt to use this leverage in pricing negotiations with us. Also if our prices are too high, current or potential customers may find it economically advantageous to handle certain functions internally instead of using our services. We may not be able to offset the effects of any price reductions by increasing the number of transactions we handle or the number of customers we serve, by generating higher revenue from enhanced services or by reducing our costs. If

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these or other sources of pricing pressure cause us to reduce the pricing of our service or solutions below desired levels, our business and results of operations may be adversely affected.

Our Cloud Strategy, including our Personal Cloud Offering, May Not be Successful.

        Our Cloud strategy, including our Personal Cloud offering, may not be successful. We offer customers the ability to offer their subscribers the ability to backup, restore and share content across multiple devices through a Cloud-based environment in the Cloud. The success of our Personal Cloud offering is dependent upon continued acceptance by and growth in subscribers of Cloud-based services in general and there can be no guarantee of the adoption rate by these subscribers. Our Cloud strategy will continue to evolve and we may not be able to compete effectively, generate significant revenues or maintain profitability. While we believe our expertise, investments in infrastructure, and the breadth of our Cloud-based services provides us with a strong foundation to compete, it is uncertain whether our strategies will attract the users or generate the revenue required to be successful. In addition to software development costs, we are incurring costs to build and maintain infrastructure to support Cloud-based services. Whether we are successful in our Cloud strategy depends on our execution in a number of areas, which may or may not be within our control, including continuing to innovate and bring to market compelling Cloud-based offerings, continued growth and demand for Cloud-based offerings, maintaining the utility, compatibility, and performance of our Cloud-based services on the growing array of devices, including smartphones, handheld computers, netbooks and tablets, and ensuring that our Cloud-based services meet the reliability expectations of our customers and maintain the security of their data.

Our Revenue, Earnings And Profitability Are Affected By The Length Of Our Sales Cycle, And A Longer Sales Cycle Could Adversely Affect Our Results Of Operations And Financial Condition.

        Our business is directly affected by the length of our sales cycle. Our customers' businesses are relatively complex and their purchase of the types of services that we offer generally involve a significant commitment of capital, with attendant delays frequently associated with large capital commitments and procurement procedures within an organization. The purchase of the types of services that we offer typically also requires coordination and agreement across many departments within a potential customer's organization. Delays associated with such timing factors could have a material adverse effect on our results of operations and financial condition. In periods of economic slowdown our typical sales cycle lengthens, which means that the average time between our initial contact with a prospective customer and the signing of a sales contract increases. The lengthening of our sales cycle could reduce growth in our revenue. In addition, the lengthening of our sales cycle contributes to an increased cost of sales, thereby reducing our profitability.

If We Do Not Meet Our Revenue Forecasts, We May Be Unable To Reduce Our Expenses To Avoid Or Minimize Harm To Our Results Of Operations.

        Our revenues are difficult to forecast and are likely to fluctuate significantly from period to period. We base our operating expense and capital investment budgets on expected sales and revenue trends, and many of our expenses, such as office and equipment leases and personnel costs, will be relatively fixed in the short term and will increase over time as we make investments in our business. Our estimates of sales trends may not correlate with actual revenues in a particular quarter or over a longer period of time. Variations in the rate and timing of conversion of our sales prospects into actual revenues could cause us to plan or budget inaccurately and those variations could adversely affect our financial results. In particular, delays, reductions in amount or cancellation of customers' contracts would adversely affect the overall level and timing of our revenues, and our business, results of operations and financial condition could be harmed. Due to the relatively fixed nature of many of our

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expenses, we may be unable to adjust spending quickly enough to offset any unexpected revenue shortfall.

        In the course of our sales to customers, we may encounter difficulty collecting accounts receivable and could be exposed to risks associated with uncollectible accounts receivable. In the event we are unable to collect on our accounts receivable, it could negatively affect our cash flows, operating results and business.

Compromises to Our Privacy Safeguards or Disclosure of Confidential Information Could Impact Our Reputation.

        Names, addresses, telephone numbers, credit card data and other personal identification information, or PII, is collected, processed and stored in our systems. Our treatment of such information is subject to contractual restrictions and federal, state, and foreign data privacy laws and regulations. We have implemented steps designed to protect against unauthorized access to such information, and comply with these laws and regulations. Because of the inherent risks and complexities involved in protecting this information, the steps we have taken to protect PII may not be sufficient to prevent the misappropriation or improper disclosure of such PII. If such misappropriation or disclosure were to occur, our business could be harmed through reputational injury, litigation and possible damages claimed by the affected end customers, including in some cases costs related to customer notification and fraud monitoring, or potential fines from regulatory authorities. We may need to incur significant costs or modify our business practices and/or our services in order to comply with these data privacy and protection laws and regulations in the future. Even the mere perception of a security breach or inadvertent disclosure of PII could adversely affect our business and results of operations. In addition, third party vendors that we engage to perform services for us may unintentionally release PII or otherwise fail to comply with applicable laws and regulations. Our insurance may not cover potential claims of this type or may not be adequate to cover all costs incurred in defense of potential claims or to indemnify us for all liability that may be imposed. Concerns about the security of online transactions and the privacy of PII could deter consumers from transacting business with us on the Internet. The occurrence of any of these events could have an adverse effect on our business, financial position, and results of operations.

Fraudulent Internet Transactions Could Negatively Impact Our Business.

        Our business may be exposed to risks associated with Internet credit card fraud and identity theft that could cause us to incur unexpected expenditures and loss of revenues. Under current credit card practices, a merchant is liable for fraudulent credit card transactions when, as is the case with the transactions we process, that merchant does not obtain a cardholder's signature. Although our customers currently bear the risk for a fraudulent credit card transaction, in the future we may be forced to share some of that risk and the associated costs with our customers. To the extent that technology upgrades or other expenditures are required to prevent credit card fraud and identity theft, we may be required to bear the costs associated with such expenditures. In addition, to the extent that credit card fraud and/or identity theft cause a decline in business transactions over the Internet generally, both the business of our customers and our business could be adversely affected.

If the Wireless Services Industry Experiences a Decline in Subscribers, Our Business May Suffer.

        The wireless services industry has faced an increasing number of challenges, including a slowdown in new subscriber growth. Revenues from services performed for customers in the wireless services industry accounted for 61% of our revenues in 2012 and 60% in 2011. A continued slowdown in subscriber growth in the wireless services industry could adversely affect our business growth.

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The Consolidation in the Communications Industry Can Reduce the Number of Actual and Potential Customers and Adversely Affect Our Business.

        The communications industry continues to experience consolidation and an increased formation of alliances among CSPs and between CSPs and other entities. Should one or more of our significant customers consolidate or enter into an alliance with an entity or decide to either use a different service provider or to manage its transactions internally, this could have a negative material impact on our business. Any such consolidations, alliances or decisions to manage transactions internally may cause us to lose customers or require us to reduce prices as a result of enhanced customer leverage, which would have a material adverse effect on our business. We may not be able to offset the effects of any price reductions. We may not be able to expand our customer base to make up any revenue declines if we lose customers or if our transaction volumes decline.

If We Fail to Compete Successfully With Existing or New Competitors, Our Business Could Be Harmed.

        If we fail to compete successfully with established or new competitors, it could have a material adverse effect on our results of operations and financial condition. The communications industry is highly competitive and fragmented, and we expect competition to increase. We compete with independent providers of information systems and services and with the in-house departments of our OEMs and communications services companies' customers. Rapid technological changes, such as advancements in software integration across multiple and incompatible systems, and economies of scale may make it more economical for CSPs, MSOs or OEMs to develop their own in-house processes and systems, which may render some of our products and services less valuable or eventually obsolete. Our competitors include firms that provide comprehensive information systems and managed services solutions, systems integrators, clearinghouses and service bureaus. Many of our competitors have long operating histories, large customer bases, substantial financial, technical, sales, marketing and other resources, and strong name recognition.

        Current and potential competitors have established, and may establish in the future, cooperative relationships among themselves or with third parties to increase their ability to address the needs of our current or prospective customers. In addition, our competitors have acquired, and may continue to acquire in the future, companies that may enhance their market offerings. Accordingly, new competitors or alliances among competitors may emerge and rapidly acquire significant market share. As a result, our competitors may be able to adapt more quickly than us to new or emerging technologies and changes in customer requirements, and may be able to devote greater resources to the promotion and sale of their products. These relationships and alliances may also result in transaction pricing pressure which could result in large reductions in the selling prices of our products and services. Our competitors or our customers' in-house solutions may also provide services at a lower cost, significantly increasing pricing pressure on us. We may not be able to offset the effects of this potential pricing pressure. Our failure to adapt to changing market conditions and to compete successfully with established or new competitors may have a material adverse effect on our results of operations and financial condition. In particular, a failure to offset competitive pressures brought about by competitors or in-house solutions developed by AT&T could result in a substantial reduction in or the outright termination of our contract with AT&T, which would have a significant, negative and material impact on our business.

Failures or Interruptions of Our Systems and Services Could Materially Harm Our Revenues, Impair Our Ability to Conduct Our Operations and Damage Relationships with Our Customers.

        Our success depends on our ability to provide reliable services to our customers and process a high volume of transactions in a timely and effective manner. Although we have a disaster recovery facility in our Bridgewater, New Jersey corporate headquarters, our network operations are currently located in a single facility in Bethlehem, Pennsylvania that is susceptible to damage or interruption from human

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error, fire, flood, power loss, telecommunications failure, terrorist attacks and similar events. We could also experience failures or interruptions of our systems and services, or other problems in connection with our operations, as a result of, among other things:

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damage to or failure of our computer software or hardware or our connections and outsourced service arrangements with third parties;

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errors in the processing of data by our system;

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computer viruses or software defects;

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physical or electronic break-ins, sabotage, intentional acts of vandalism and similar events;

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fire, cyber attack, terrorist attack or other catastrophic event;

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increased capacity demands or changes in systems requirements of our customers; or

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errors by our employees or third-party service providers.

        We have acquired a number of companies, products, services and technologies over the last several years. While we make significant efforts to address any IT security issues with respect to our acquisitions, we may still inherit certain risks when we integrate these acquisitions. In addition, our business interruption insurance may be insufficient to compensate us for losses or liabilities that may occur. Any interruptions in our systems or services could damage our reputation and substantially harm our business and results of operations.

If We Fail to Meet Our Service Level Obligations Under Our Service Level Agreements, We Would Be Subject to Penalties and Could Lose Customers.

        We have service level agreements with many of our customers under which we guarantee specified levels of service availability. These arrangements involve the risk that we may not have adequately estimated the level of service we will in fact be able to provide. If we fail to meet our service level obligations under these agreements, we would be subject to penalties, which could result in higher than expected costs, decreased revenues and decreased operating margins. We could also lose customers.

Economic, Political and Market Conditions Can Adversely Affect Our Business, Results of Operations and Financial Condition.

        Our business is influenced by a range of factors that are beyond our control and that we have no comparative advantage in forecasting. These include but are not limited to general economic and business conditions, the overall demand for cloud-based products and service, general political developments and currency exchange rate fluctuations. Economic uncertainty may exacerbate negative trends in consumer spending and may negatively impact the businesses of certain of our customers, which may cause a reduction in their use of our platforms or increase their likelihood of defaulting on their payment obligations, and therefore a reduction in our revenues. These conditions and uncertainty about future economic conditions may make it challenging for us to forecast our operating results, make business decisions and identify the risks that may affect our business, financial conditions and results of operations. In addition, it may result in a more competitive environment, resulting in possible pricing pressures.

We are Exposed to Our Customers' Credit Risk.

        We are subject to the credit risk of our customers and customers with liquidity issues may lead to bad debt expense for us. Most of our sales are on an open credit basis, with typical payment terms of 30 days in the United States and, because of local customs or conditions, longer payment terms in some markets outside the United States. We use various methods to screen potential customers and

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establish appropriate credit limits, but these methods cannot eliminate all potential bad credit risks and may not prevent us from approving applications that are fraudulently completed. Moreover, businesses that are good credit risks at the time of application may become bad credit risks over time and we may fail to detect this change. We maintain reserves we believe are adequate to cover exposure for doubtful accounts. If we fail to adequately assess and monitor our credit risks, we could experience longer payment cycles, increased collection costs and higher bad debt expense. A decrease in accounts receivable resulting from an increase in bad debt expense could adversely affect our liquidity. Our exposure to credit risks may increase if our customers are adversely affected by the difficult macroeconomic environment, or if there is a continuation or worsening of the economic environment. Although we have programs in place that are designed to monitor and mitigate the associated risk, including monitoring of particular risks in certain geographic areas, there can be no assurance that such programs will be effective in reducing our credit risks or the incurrence of additional losses. Future and additional losses, if incurred, could harm our business and have a material adverse effect on our business operating results and financial condition. Additionally, to the degree that the current or future credit markets makes it more difficult for some customers to obtain financing, those customers' ability to pay could be adversely impacted, which in turn could have a material adverse impact on our business, operating results, and financial condition.

The Financial and Operating Difficulties in the Telecommunications Sector May Negatively Affect Our Customers and Our Company.

        The telecommunications sector has faced significant challenges resulting from significant changes in technology and consumer behavior, excess capacity, poor operating results and financing difficulties. The sector's financial status has at times been uncertain and access to debt and equity capital has been seriously limited. The impact of these events on us could include slower collection on accounts receivable, higher bad debt expense, uncertainties due to possible customer bankruptcies, lower pricing on new customer contracts, lower revenues due to lower usage by the end customer and possible consolidation among our customers, which will put our customers and operating performance at risk. In addition, because we operate in the communications sector, we may also be negatively impacted by limited access to debt and equity capital.

Our Reliance on Third-Party Providers for Communications Software, Services, Hardware and Infrastructure Exposes Us to a Variety of Risks We Cannot Control.

        Our success depends on software, equipment, network connectivity and infrastructure hosting services supplied by our vendors and customers. In addition, we rely on third-party vendors to perform a substantial portion of our exception handling services. We may not be able to continue to purchase the necessary software, equipment and services from vendors on acceptable terms or at all. If we are unable to maintain current purchasing terms or ensure service availability with these vendors and customers, we may lose customers and experience an increase in costs in seeking alternative supplier services.

        Our business also depends upon the capacity, reliability and security of the infrastructure owned and managed by third parties, including our vendors and customers, that is used by our technology interoperability services, network services, number portability services, call processed services and enterprise solutions. We have no control over the operation, quality or maintenance of a significant portion of that infrastructure and whether those third parties will upgrade or improve their software, equipment and services to meet our and our customers' evolving requirements. We depend on these companies to maintain the operational integrity of our services. If one or more of these companies is unable or unwilling to supply or expand its levels of services to us in the future, our operations could be severely interrupted. In addition, rapid changes in the communications industry have led to industry consolidation. This consolidation may cause the availability, pricing and quality of the services we use to vary and could lengthen the amount of time it takes to deliver the services that we use.

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Our Failure to Protect Confidential Information and Our Network Against Security Breaches Could Damage Our Reputation and Substantially Harm Our Business and Results of Operations.

        Security threats are a particular challenge to companies like us whose business is technology products and services. The encryption and authentication technology licensed from third parties on which we rely to securely transmit confidential information, including credit card numbers, may not adequately protect customer transaction data. A cyberattack or any other security incident that allows unauthorized access to or modification of our customers' data or our own data or our IT systems or if the services we provide to our customers were disrupted, or if our products or services are perceived as having security vulnerabilities, could damage our reputation and expose us to risk of loss or litigation and possible liability or fines which could substantially harm our business and results of operations. In addition, anyone who is able to circumvent our security measures could misappropriate proprietary information or cause interruptions in our operations. Although we carry general liability insurance, our insurance may not cover potential claims of this type or may not be adequate to cover all costs incurred in defense of potential claims or to indemnify us for all liability that may be imposed. As a result, we may need to expend significant resources to protect against security breaches or to address problems caused by breaches.

If We Are Unable to Protect Our Intellectual Property Rights, Our Competitive Position Could Be Harmed or We Could Be Required to Incur Significant Expenses to Enforce Our Rights.

        Our success depends to a significant degree upon the protection of our software and other proprietary technology rights, particularly with respect to our Activation Services and Personal Cloud platforms. We rely on trade secret, copyright and trademark laws and confidentiality agreements with employees and third parties, all of which offer only limited protection. We also regularly file patent applications to protect inventions arising from our research and development, and have obtained a number of patents in the United States and other countries. There can be no assurance that our patent applications will be approved, that any issued patents will adequately protect our intellectual property, or that such patents will not be challenged by third parties. Also, much of our business and many of our solutions rely on key technologies developed or licensed by third or other parties, and we may not be able to obtain or continue to obtain licenses and technologies from these third parties at all or on reasonable terms. The steps we have taken to protect our intellectual property may not prevent misappropriation of our proprietary rights or the reverse engineering of our solutions. Legal standards relating to the validity, enforceability and scope of protection of intellectual property rights in other countries are uncertain and may afford little or no effective protection of our proprietary technology. Consequently, we may be unable to prevent our proprietary technology from being exploited abroad, which could require costly efforts to protect our technology. Policing the unauthorized use of our products, trademarks and other proprietary rights is expensive, difficult and, in some cases, impossible. Litigation may be necessary in the future to enforce or defend our intellectual property rights, to protect our trade secrets or to determine the validity and scope of the proprietary rights of others. Such litigation could result in substantial costs and diversion of management resources, either of which could materially harm our business. Accordingly, despite our efforts, we may not be able to prevent third parties from infringing upon or misappropriating our intellectual property.

Claims By Others That We Infringe Their Proprietary Technology Could Harm Our Business.

        Third parties could claim that our current or future products or technology infringe their proprietary rights. We expect that software developers will increasingly be subject to infringement claims as the number of products and competitors providing software and services to the communications industry increases and overlaps occur. Any claim of infringement by a third party, even those without merit, could cause us to incur substantial costs defending against the claim, and could distract our management from our business. Furthermore, a party making such a claim, if successful,

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could secure a judgment that requires us to pay substantial damages. A judgment could also include an injunction or other court order that could prevent us from offering our products or services. Any of these events could seriously harm our business. Third parties may also assert infringement claims against our customers. These claims may require us to initiate or defend protracted and costly litigation on behalf of our customers, regardless of the merits of these claims. If any of these claims succeed, we may be forced to pay damages on behalf of our customers. We also are generally obligated to indemnify our customers if our services infringe the proprietary rights of third parties.

        If anyone asserts a claim against us relating to proprietary technology or information, while we might seek to license their intellectual property, we might not be able to obtain a license on commercially reasonable terms or on any terms. In addition, any efforts to develop non-infringing technology could be unsuccessful. Our failure to obtain the necessary licenses or other rights or to develop non-infringing technology could prevent us from offering our services and could therefore seriously harm our business.

We May Seek to Acquire Companies or Technologies, Which Could Disrupt Our Ongoing Business, Disrupt Our Management and Employees and Adversely Affect Our Results of Operations.

        We have made, and in the future intend to make, acquisitions of, and investments in, companies, technologies or products in existing, related or new markets for us which we believe may enhance our market position or strategic strengths. However, we cannot be sure that any acquisition or investment will ultimately enhance our products or strengthen our competitive position. Acquisitions involve numerous risks, including but not limited to:

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diversion of management's attention from other operational matters;

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inability to identify acquisition candidates on terms acceptable to us or at all, or inability to complete acquisitions as anticipated or at all;

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inability to realize anticipated benefits;

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failure to commercialize purchased technologies;

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inability to capitalize on characteristics of new markets that may be significantly different from our existing markets;

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exposure to operational risks, rules and regulations to the extent such activities are located in countries where we have not historically done business;

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inability to obtain and protect intellectual property rights in key technologies;

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ineffectiveness of an acquired company's internal controls;

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impairment of acquired intangible assets as a result of technological advancements or worse-than-expected performance of the acquired company or its product offerings;

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unknown, underestimated and/or undisclosed commitments or liabilities;

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excess or underutilized facilities; and

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ineffective integration of operations, technologies, products or employees of the acquired companies.

        In addition, acquisitions may disrupt our ongoing operations and increase our expenses and harm our results of operations or financial condition. Future acquisitions could also result in potentially dilutive issuances of equity securities, the incurrence of debt, which may reduce our cash available for operations and other uses, an increase in contingent liabilities or an increase in amortization expense

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related to identifiable assets acquired, each of which could materially harm our business, financial condition and results of operations.

Our Expansion into International Markets May Be Subject to Uncertainties That Could Increase Our Costs to Comply with Regulatory Requirements in Foreign Jurisdictions, Disrupt Our Operations and Require Increased Focus from Our Management.

        Our growth strategy includes the growth of our operations in foreign jurisdictions. International operations and business expansion plans are subject to numerous additional risks, including economic and political risks in foreign jurisdictions in which we operate or seek to operate, difficulty in enforcing contracts and collecting receivables through some foreign legal systems, unexpected changes in legal and regulatory requirements, differing technology standards and pace of adoption, fluctuations in currency exchange rates, varying regional and geopolitical business conditions and demands, and the difficulties associated with managing a large organization spread throughout various countries and the differences in foreign laws and regulations, including foreign tax, data privacy requirement, anti-competition, intellectual property, labor, contract, trade and other laws. Additionally, compliance with international and U.S. laws and regulations that apply to our international operational may increase our cost of doing business in foreign jurisdictions. Violation of these laws and regulations could result in fines, criminal sanctions against us, our officers or our employees, or prohibitions on the conduct of our business. As we continue to expand our business globally, our success will depend, in large part, on our ability to anticipate and effectively manage these and other risks associated with our international operations. However, any of these factors could adversely affect our international operations and, consequently, our operating results.

Our Expansion into International Markets May Expose Us to Risks Associated with Fluctuations in Foreign Currency Exchange Rates That Could Adversely Affect Our Business.

        We consider the U.S. dollar to be our functional currency. However, as we expand our operations into international markets a portion of our revenues and/or operating costs may be incurred outside the United States in other currencies. In such event, fluctuations in exchange rates between the currencies in which such revenues and/or costs may occur and the U.S. dollar may have a material adverse effect on our results of operations and financial condition. In addition, from time to time following our expansion into international markets we may experience increases in the costs of our operations outside the United States, as expressed in U.S. dollars, which could have a material adverse effect on our results of operations and financial condition. Further, the imposition of restrictions on the conversion of foreign currencies could also have a material adverse effect on our business, results of operations and financial condition.

We Must Recruit and Retain Our Key Management And Other Key Personnel and Our Failure to Recruit and Retain Qualified Employees Could Have a Negative Impact on Our Business.

        We believe that our success depends in part on the continued contributions of our senior management and other key personnel to generate business and execute programs successfully. In addition, the relationships and reputation that these individuals have established and maintain with our customers and within the industry in which we operate contribute to our ability to maintain good relations with our customers and others within the industry. The loss of any members of senior management or other key personnel could materially impair our ability to identify and secure new contracts and otherwise effectively manage our business. Further, in the technology industry, there is substantial and continuous competition for highly skilled business, product development, technical and other personnel. Competition for qualified personnel at times can be intense and as a result we may not be successful in attracting and retaining the personnel we require, which could have a material adverse effect on our ability to meet our commitments and new product delivery objectives.

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We Continue to Incur Significant Costs as a Result of Operating as a Public Company, and Our Management Is Required to Devote Substantial Time to New and Ongoing Compliance Initiatives.

        We operate as a public company, and will continue to incur significant legal, accounting and other expenses as we comply with the Sarbanes-Oxley Act of 2002, as well as new rules subsequently implemented by the Securities and Exchange Commission and the NASDAQ Global Market, including recent changes under the Dodd-Frank Wall Street Reform and Consumer Protection Act. These rules impose various new requirements on public companies, including requiring changes in corporate governance practices. Our management and other personnel will continue to devote a substantial amount of time to these new compliance initiatives. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. For example, we expect these new rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantial costs to maintain the same or similar coverage. These rules and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers.

        Section 404 of the Sarbanes-Oxley Act of 2002 requires that we include in our annual report our assessment of the effectiveness of our internal control over financial reporting and our audited financial statements as of the end of each fiscal year. We successfully completed our assessment of our internal control over financial reporting as of December 31, 2012. Our continued compliance with Section 404 will require that we incur substantial expense and expend significant management time on compliance related issues. We currently do not have an internal audit group and we will evaluate the need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge. In future years, if we fail to timely complete this assessment, there may be a loss of public confidence in our internal control, the market price of our stock could decline and we could be subject to regulatory sanctions or investigations by the NASDAQ Global Market, the Securities and Exchange Commission or other regulatory authorities, which would require additional financial and management resources. In addition, any failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm our operating results or cause us to fail to timely meet our regulatory reporting obligations.

Changes in, or Interpretations of, Accounting Principles Could Result in Unfavorable Accounting Charges.

        We prepare our consolidated financial statements in conformity with U.S. generally accepted accounting principles. These principles are subject to interpretation by the SEC and various bodies formed to interpret and create appropriate accounting principles. A change in these principles, or their interpretation, could have a significant effect on our reported results and may even retroactively affect previously reported results. Our accounting principles that recently have been or may be affected by changes in accounting principles are: (i) accounting for stock-based compensation; (ii) accounting for income taxes; (iii) accounting for business combinations and goodwill; (iv) revenue recognition guidance; and (v) accounting for foreign currency translation.

Changes in, or Interpretations of, Tax Rules and Regulations, Could 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 or by changes in the valuation of our deferred tax assets and liabilities. It is possible that future requirements, including the recently proposed implementation of International Financial Reporting Standards, or IFRS, could change our current application of U.S. GAAP, resulting in a material adverse impact on our financial position or results of operations. In addition, we are subject to the continued examination of our income tax returns by the IRS and other tax authorities. We regularly assess the likelihood of outcomes resulting from these examinations, if any, to determine the adequacy of our

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provision for income taxes. We believe such estimates to be reasonable, but there can be no assurance that the final determination of any of these examinations will not have an adverse effect on our operating results and financial position.

Our Stock Price May Continue to Experience Significant Fluctuations.

        Our stock price, like that of other technology companies, continues to fluctuate greatly. Our stock price can be affected by many factors such as quarterly increases or decreases in our earnings, speculation in the investment community about our financial condition or results of operations and changes in revenue or earnings estimates, announcement of new services, technological developments, alliances, or acquisitions by us. Additionally, the price of our common stock may continue to fluctuate greatly in the future due to factors that are non-company specific, such as the decline in the United States and/or international economies, acts of terror against the United States or other jurisdictions where we conduct business, war or due to a variety of company specific factors, including quarter to quarter variations in our operating results, shortfalls in revenue, gross margin or earnings from levels projected by securities analysts and the other factors discussed in these risk factors.

If Securities or Industry Analysts Do Not Publish Research or Reports or Publish Unfavorable Research About Our Business, Our Stock Price and Trading Volume Could Decline.

        The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business. We currently have research coverage by securities and industry analysts. If one or more of the analysts who covers us downgrades our stock or states a view that our business prospects are reduced, our stock price would likely decline. If one or more of these analysts ceases coverage of our company or fails to regularly publish reports on us, interest in the purchase of our stock could decrease, which could cause our stock price or trading volume to decline.

Delaware Law and Provisions in Our Amended and Restated Certificate of Incorporation and Bylaws Could Make a Merger, Tender Offer or Proxy Contest Difficult, Therefore Depressing the Trading Price of Our Common Stock.

        We are a Delaware corporation and the anti-takeover provisions of the Delaware General Corporation Law may discourage, delay or prevent a change in control by prohibiting us from engaging in a business combination with an interested stockholder for a period of three years after the person becomes an interested stockholder, even if a change of control would be beneficial to our existing stockholders. In addition, our amended and restated certificate of incorporation and bylaws may discourage, delay or prevent a change in our management or control over us that stockholders may consider favorable. Our amended and restated certificate of incorporation and bylaws:

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authorize the issuance of "blank check" preferred stock that could be issued by our board of directors to thwart a takeover attempt;

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prohibit cumulative voting in the election of directors, which would otherwise allow holders of less than a majority of the stock to elect some directors;

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establish a classified board of directors, as a result of which the successors to the directors whose terms have expired will be elected to serve from the time of election and qualification until the third annual meeting following election;

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require that directors only be removed from office for cause;

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provide that vacancies on the board of directors, including newly-created directorships, may be filled only by a majority vote of directors then in office;

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limit who may call special meetings of stockholders;

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prohibit stockholder action by written consent, requiring all actions to be taken at a meeting of the stockholders; and

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establish advance notice requirements for nominating candidates for election to the board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings.

ITEM 1B.    UNRESOLVED STAFF COMMENTS

        None.

ITEM 2.    PROPERTIES

        In 2011, we entered into a ten year lease for approximately 80,000 square feet of office space for our corporate headquarters in Bridgewater, New Jersey, effective January 2012. In addition to our principal office space in Bridgewater, New Jersey, we lease facilities and offices in Bethlehem, Pennsylvania, Chicago, Illinois, Denver, Colorado, Tucson, Arizona, Fairpoint, New York, Bellevue and Seattle, Washington, San Jose, California, Galway and Dublin, Ireland, Marseille, France, Melbourne, Australia, and Bangalore, India. Our lease for our 61,000 square foot facility in Bethlehem, Pennsylvania expires in 2019, our lease for our 47,000 square foot facility in Tucson, Arizona expires in 2021, and our lease for our 47,000 square foot facility in Bangalore, India expires in 2014. Lease terms for our other locations expire in the years between 2013 and 2025. We believe that the facilities we now lease are sufficient to meet our needs through at least the next 12 months. However, we may require additional office space after that time or if our current business plans change, and we are currently evaluating expansion possibilities.

ITEM 3.    LEGAL PROCEEDINGS

        On January 4, 2011, we filed a complaint in the United States District Court for the District of Wisconsin (Civ Act. No. 11-CV-02) against Dashwire, Inc. ("Dashwire"), claiming that Dashwire has infringed, and continues to infringe, several of our patents. We filed an Amended Complaint against Dashwire on April 22, 2011. As a result of these claims, Dashwire filed a complaint against us in the same court asserting that we were infringing two of the Dashwire patents which it recently acquired from Intellectual Venture Partners. On July 29, 2011, we entered into a patent license and settlement agreement with Dashwire whereby Dashwire received a limited license to certain of our specific Cloud management patents. In accordance with the terms of the patent license and settlement agreement, the parties dismissed the above complaints.

        Except for the above claims, we are not currently subject to any legal proceedings that could have a material adverse effect on our operations; however, we may from time to time become a party to various legal proceedings arising in the ordinary course of our business. For instance, on August 26, 2011, we filed a complaint in the United States District Court for the District of New Jersey (Civ Act. No. 11-4947 (FLW/LHG) against Newbay Software, Inc. and Newbay Software, Ltd. (collectively, "Newbay"), claiming that Newbay has infringed, and continues to infringe, several of our patents. On November 28, 2011, Newbay filed an answer to our complaint and asserted certain counterclaims that our patents at issue were invalid. In December 2012, we entered into a patent license and settlement agreement with Newbay and its parent corporation Research in Motion, Ltd. ("RIM") (now called BlackBerry) whereby we granted each of RIM and Newbay a limited license to our patents. As part of the business combination accounting rules we calculated the fair value of the affective settlement using an income approach derived from historical and estimated future cash flow information. As a result of entering into the patent license and settlement agreement, the parties dismissed the above complaints. In addition, on October 4, 2011, we filed a complaint in the United States District Court for the

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District of New Jersey (Civ Act. No. 3:11-cv-05811 FLW-TJB) against Assurion, Inc. ("Assurion"), claiming that Assurion has infringed, and continues to infringe, several of our patents. On February 3, 2012, Assurion filed an answer to our complaint and asserted certain counterclaims that our patents at issue are invalid. In addition, on November 21, 2011, we filed an amended complaint in the United States District Court for the District of New Jersey (Civ Act. No. 3:11-cv-06713) against OnMobile Global Limited, VoxMobili, Inc. and VolMobili, S.A. ("collectively, VoxMobili"), claiming that VoxMobili has infringed, and continues to infringe, several of our patents. On April 2, 2012, VoxMobili filed an answer to our complaint and asserted certain counterclaims that our patents at issue are invalid. Although due to the inherent uncertainties of litigation, we cannot predict the outcome of the actions at this time, we continue to pursue our claims and believe that any counterclaims are without merit, and we intend to defend against all such counterclaims.

ITEM 4.    MINE SAFETY DISCLOSURES

        Not applicable.

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PART II

ITEM 5.    Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

        Our common stock is traded over-the-counter and is listed on the NASDAQ Global Select Market under the symbol "SNCR." We began trading on the NASDAQ National Market on June 19, 2006. The following table sets forth, for each period during the past two years, the high and low sale prices as reported by NASDAQ.

	 	Common Stock	 	
 
	 	2012	 	2011	 	
 
	 	High	 	Low	 	High	 	Low	 	
First Quarter	 	$	38.90	 	$	27.58	 	$	35.43	 	$	26.04	 	
Second Quarter	 	$	33.21	 	$	16.89	 	$	35.79	 	$	26.28	 	
Third Quarter	 	$	25.33	 	$	17.45	 	$	35.90	 	$	23.27	 	
Fourth Quarter	 	$	24.29	 	$	17.08	 	$	34.00	 	$	22.54	 	
        As of February 11, 2013, there were approximately 165 holders of record of our common stock. On February 11, 2013, the last reported sale price of our common stock as reported on the NASDAQ Global Select Market was $28.86 per share.

Dividend Policy

        We have never declared or paid cash dividends on our common or preferred equity. We currently intend to retain all available funds and any future earnings for use in the operation of our business and do not anticipate paying any cash dividends in the foreseeable future. Any future determination to declare cash dividends will be made at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements, general business conditions and other factors that our board of directors may deem relevant.

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Stock Performance Graph

        The graph set forth below compares the cumulative total stockholder return on our common stock between December 31, 2007 and December 31, 2012, with the cumulative total return of (i) the NASDAQ Computer Index and (ii) the NASDAQ Composite Index, over the same period. This graph assumes the investment of $100 on December 31, 2007 in our common stock, the NASDAQ Computer Index and the NASDAQ Composite Index, and assumes the reinvestment of dividends, if any. The graph assumes the value of an investment in our common stock and each index was $100 at December 31, 2007 was the closing sales price of $35.44 per share.

        The comparisons shown in the graph below are based upon historical data. We caution that the stock price performance shown in the graph below is not necessarily indicative of, nor is it intended to forecast, the potential future performance of our common stock. Information used in the graph was obtained from NASDAQ, a source believed to be reliable, but we are not responsible for any errors or omissions in such information.

 
	 	12/31/07	 	12/31/08	 	12/31/09	 	12/31/10	 	12/30/11	 	12/31/12	 	
Synchronoss Technologies, Inc. 	 	 	100	 	 	30	 	 	45	 	 	75	 	 	85	 	 	60	 	
Nasdaq Composite Index	 	 	100	 	 	59	 	 	86	 	 	100	 	 	98	 	 	114	 	
Nasdaq Computer Index	 	 	100	 	 	53	 	 	91	 	 	107	 	 	107	 	 	121	 	
ITEM 6.    SELECTED FINANCIAL DATA

        The following selected financial data should be read in conjunction with our consolidated financial statements and related notes and the "Management's Discussion and Analysis of Financial Condition and Results of Operations" and other financial data included elsewhere in this Form 10-K. The

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selected statements of operations and the selected balance sheet data are derived from our consolidated audited financial statements.

	 	Year Ended December 31,	 	
 
	 	2012	 	2011	 	2010	 	2009	 	2008	 	
 
	 	(In thousands, except per share data)
	 	
Statements of Operations Data:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net revenues	 	$	273,692	 	$	229,084	 	$	165,969	 	$	128,805	 	$	110,982	 	
Costs and expenses:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cost of services*	 	 	115,670	 	 	106,595	 	 	83,217	 	 	64,455	 	 	53,528	 	
Research and development	 	 	52,307	 	 	41,541	 	 	26,008	 	 	13,153	 	 	11,049	 	
Selling, general and administrative	 	 	46,680	 	 	44,886	 	 	33,743	 	 	23,650	 	 	21,718	 	
Net change in contingent consideration obligation	 	 	(6,235	)	 	2,954	 	 	4,295	 	 	—	 	 	—	 	
Depreciation and amortization	 	 	23,812	 	 	14,739	 	 	9,403	 	 	8,499	 	 	6,656	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Total costs and expenses	 	 	232,234	 	 	210,715	 	 	156,666	 	 	109,757	 	 	92,951	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Income from operations	 	 	41,458	 	 	18,369	 	 	9,303	 	 	19,048	 	 	18,031	 	
Interest income	 	 	1,315	 	 	821	 	 	394	 	 	517	 	 	2,425	 	
Interest expense	 	 	(998	)	 	(928	)	 	(917	)	 	(741	)	 	(96	)	
Other income (expense)	 	 	889	 	 	97	 	 	317	 	 	9	 	 	(56	)	
 	 	 	 	 	 	 	 	 	 	 	 	
Income before income tax expense	 	 	42,664	 	 	18,359	 	 	9,097	 	 	18,833	 	 	20,304	 	
Income tax expense	 	 	(15,581	)	 	(3,233	)	 	(5,223	)	 	(6,536	)	 	(8,424	)	
 	 	 	 	 	 	 	 	 	 	 	 	
Net income attributable to common stockholders	 	$	27,083	 	$	15,126	 	$	3,874	 	$	12,297	 	$	11,880	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Net income attributable to common stockholders per common share:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic	 	$	0.71	 	$	0.44	 	$	0.12	 	$	0.40	 	$	0.38	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Diluted	 	$	0.69	 	$	0.43	 	$	0.12	 	$	0.39	 	$	0.37	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Weighted-average common shares outstanding:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic	 	 	38,195	 	 	37,372	 	 	31,971	 	 	30,813	 	 	31,619	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Diluted	 	 	39,126	 	 	38,619	 	 	33,011	 	 	31,145	 	 	32,187	 	

*
Cost of services excludes depreciation and amortization which is shown separately.

	 	As of December 31,	 	
 
	 	2012	 	2011	 	2010	 	2009	 	2008	 	
 
	 	(In thousands)
	 	
Balance Sheet Data:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cash, cash equivalents and marketable securities	 	$	56,869	 	$	152,576	 	$	189,635	 	$	97,684	 	$	78,763	 	
Working capital	 	 	96,256	 	 	152,886	 	 	203,796	 	 	108,336	 	 	91,248	 	
Total assets	 	 	452,439	 	 	398,618	 	 	340,399	 	 	172,559	 	 	145,319	 	
Lease financing obligation—long-term	 	 	9,540	 	 	9,241	 	 	9,205	 	 	9,150	 	 	6,685	 	
Contingent consideration obligation—long-term	 	 	5,100	 	 	8,432	 	 	16,915	 	 	—	 	 	—	 	
Total stockholders' equity	 	 	374,657	 	 	334,563	 	 	288,023	 	 	146,464	 	 	124,338	 	
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Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations.

        This annual report on Form 10-K, particularly Management's Discussion and Analysis of Financial Condition and Results of Operations set forth below, contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties and are based on the beliefs and assumptions of our management as of the date hereof based on information currently available to our management. Use of words such as "believes," "expects," "anticipates," "intends," "plans," "should, "continues," "likely" or similar expressions, indicate a forward-looking statement. Forward-looking statements are not guarantees of future performance and involve risks, uncertainties and assumptions. Actual results may differ materially from the forward-looking statements we make. We discuss factors that we believe could cause or contribute to these differences below and elsewhere in this Annual Report on Form 10-K, including those set forth under "Risk Factors". We caution investors not to place substantial reliance on the forward-looking statements included in this report on Form 10-K. These statements speak only as of the date of this report (unless another date is indicated), and we undertake no obligation to update or revise the statements in light of future developments.

        The following discussion should be read in conjunction with the Consolidated Financial Statements and the related notes that appear elsewhere in this document. All numbers are expressed in thousands unless otherwise stated.

Overview

        We are a mobile innovation company that provides software-based activation and personal cloud solutions for connected devices across the globe. Such transactions include device and service procurement, provisioning, activation, support, intelligent connectivity management and content synchronization, back-up and sharing that enable communications service providers (CSPs), cable operators/multi-services operators (MSOs), original equipment manufacturers (OEMs) with embedded connectivity (e.g. smartphones, laptops, tablets and mobile Internet devices, among others), e-Tailers/retailers and other customers to accelerate and monetize their go-to-market strategies for connected devices. This includes automating subscriber activation, order management, upgrades, service provisioning and connectivity and content management from any channel (e.g., e-commerce, telesales, enterprise, indirect and other retail outlets, etc.) to any communication service (e.g., wireless (3G, (EV-DO and HSPA), 4G, (LTE and WiMAX)), Wi-Fi, high speed access, local access, IPTV, cable, satellite TV, etc.) across any connected device type and content transfer, synchronize and share. Our global solutions touch all aspects of connected devices on the mobile Internet.

        Our Activation Services and Personal Cloud platforms provide end-to-end seamless integration between customer-facing channels/applications, communication services, or devices and "back-office" infrastructure-related systems and processes. Our customers rely on our solutions and technology to automate the process of activation and content management for their customers' devices while delivering additional communication services. Our platforms also support automated customer care processes through use of highly accurate and effective speech processing technology and enable our customers to offer their subscribers the ability to store in the Cloud their personal content and data which resides on their connected mobile devices, such as personal computers, smartphones and tablets. Our platforms are designed to be carrier-grade, high availability, flexible and scalable to enable multiple converged communication services to be managed across multiple distribution channels, including e-commerce, m-commerce, telesales, customer stores, indirect and other retail outlets, etc., allowing us to meet the rapidly changing and converging services and connected devices offered by our customers. We enable our customers to acquire, retain and service subscribers quickly, reliably and cost-effectively by enabling back-up, synchronization and sharing of subscriber content. Through the use of our platforms, our customers can simplify the processes associated with managing the customer experience for procuring, activating, connecting, synchronizing and social media sharing connected

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devices and services. The extensibility, scalability and relevance of our platforms enable new revenue streams and retention opportunities for our customers through new subscriber acquisitions, sale of new devices, accessories and new value-added service offerings in the Cloud, while optimizing their cost of operations and enhancing customer experience.

        We currently operate in and market our solutions and services directly through our sales organizations in North America, Europe and Asia-Pacific.

        Our industry-leading customers include Tier 1 service providers such as AT&T Inc., Verizon Wireless, Telefonica, Orange and Vodafone, Tier 1 cable operators/MSOs like Cablevision, Comcast, and Time Warner Cable and large OEMs/e-Tailers such as Apple, Microsoft, Dell and Sony. These customers utilize our platforms, technology and services to service both consumer and business customers.

Revenues

        We generate a substantial portion of our revenues on a per-transaction basis, most of which is derived from contracts that extend up to 60 months from execution. For the years ended December 31, 2012 and 2011, we derived approximately 67% and 77%, respectively, of our revenues from transactions processed and subscription arrangements. The remainder of our revenues was generated by professional services and licenses. The current mix of revenue represents lower transaction and subscription revenues than we have historically experienced. This is a result of professional services and licenses associated with new arrangements with our customers. Our expectations are that the percentage of our transaction revenues will begin to increase moving forward.

        Historically, our revenues have been directly impacted by the number of transactions processed. In recent years, the fourth quarter has had the highest volume of transactions processed due to increased consumer activation activity during the holiday season. The future success of our business depends on the continued growth of consumer and business transactions and, as such, the volume of transactions that we process could fluctuate on a quarterly basis. See "Current Trends Affecting Our Results of Operations" for certain matters regarding future results of operations.

        Substantially all of our revenues are recorded in US dollars but as we continue to expand our footprint with international carriers and increase the extent of recording our international activities in local currencies we will become subject to currency translation risk that could affect our future net sales.

        We currently derive a significant portion of our revenues from one customer, AT&T. For the year ended December 31, 2012, AT&T accounted for approximately 46% of our revenues, compared to 51% for the year ended December 31, 2011. Our agreement with AT&T was automatically renewed through December 2013 and will automatically renew each year unless either party notifies the other of its intention not to renew at least sixty days prior to the end of the then-current term. This agreement defines the work activities, transaction pricing, forecasting process, service level agreements and remedies associated with certain services performed by us for AT&T's e-commerce organizations. The agreement provides for AT&T to pay us (i) monthly hosting fees, (ii) fees based on the number of transactions processed through our technology platform, (iii) fees based on manual processing services and (iv) fees for professional services rendered by us. Verizon Wireless is the only other customer that accounted for more than 10% of our revenues in 2012.

        Our five largest customers, AT&T, Level 3 Communications, Time Warner Cable, Verizon Wireless and Vodafone, accounted for approximately 76% and 86% of our revenues for the years ended December 31, 2012 and 2011, respectively. See "Risk Factors" for certain matters bearing risks on our future results of operations.

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Costs and Expenses

        Our costs and expenses consist of cost of services, research and development, selling, general and administrative, depreciation and amortization, change in contingent consideration and interest and other expense.

        Cost of services includes all direct materials, direct labor, cost of facilities and those indirect costs related to revenues such as indirect labor, materials and supplies. Our primary cost of services is related to our information technology and systems department, including network costs, data center maintenance, database management and data processing costs, as well as personnel costs associated with service implementation, customer deployment and customer care. Also included in cost of services are costs associated with our exception handling centers and the maintenance of those centers. Currently, we utilize a combination of employees and third-party providers to process transactions through these centers.

        Research and development costs are expensed as incurred unless they meet GAAP criteria for deferral and amortization. Software development costs incurred prior to the establishment of technological feasibility do not meet these criteria, and are expensed as incurred. Research and development expense consists primarily of costs related to personnel, including salaries and other personnel-related expenses, consulting fees and the cost of facilities, computer and support services used in service technology development. We also expense costs relating to developing modifications and minor enhancements of our existing technology and services.

        Selling, general and administrative expense consists of personnel costs including salaries, sales commissions, sales operations and other personnel-related expense, travel and related expense, trade shows, costs of communications equipment and support services, facilities costs, consulting fees and costs of marketing programs, such as internet and print. General and administrative expense consists primarily of salaries and other personnel-related expense for our executive, administrative, legal, finance and human resources functions, facilities, professional services fees, audit, tax and bad debt expense.

        Depreciation and amortization relates to our property and equipment and includes our network infrastructure and facilities. Amortization relates to the trademarks, customer lists and technology acquired.

        Net change in contingent consideration obligation consists of the changes to the fair value estimate of the obligation to the former equity holders which resulted from our acquisitions. The estimate was based on the weighted probability of achieving certain financial targets and milestones. The contingent consideration obligation earn-out periods are no longer than 12 months in duration.

        Interest expense consists primarily of interest on our lease financing obligations.

Current Trends Affecting Our Results of Operations

        Our on-demand business model enables delivery of our proprietary solutions over the Web as a service and has been driven by market trends such as various forms of device activations, order provisioning, local and mobile number portability ("L/MNP"), the implementation of new technologies, subscriber growth, competitive churn, network changes, growth of the emerging device market (i.e., smartphones, tablets, connected consumer electronics devices, etc.), need for Cloud-based content back up, synchronization and sharing, and a universal connectivity platform for all connected devices and consolidations in the industry. In particular, the emergence of order provisioning of e-commerce transactions for smartphone devices, wireless, VoIP, L/MNP, and other communication services surrounding the convergence of bundled services, as well as the recent cooperative activities between cable MSOs and wireless carriers, have increased the need for our services and we believe will continue

38

to be a source of growth for us. New and emerging companies looking to offer wireless services also look towards us as a source of knowledge and technology.

        To support our expected growth driven by the favorable industry trends mentioned above, we continue to look for opportunities to improve our operating efficiencies, such as the utilization of offshore technical and non-technical resources for our exception handling center management as well as routine software maintenance activities. We believe that these opportunities will continue to provide future benefits and position us to support revenue growth. In addition, we anticipate further automation of the transactions generated by our more mature customers and additional transaction types. Our cost of services can fluctuate from period to period based upon the level of automation and the on-boarding of new transaction and service types.

        We continue to advance our plans for the expansion of our platforms' footprint with international carriers to support connected devices and multiple networks through our focus on transaction management and Cloud-based services for back up, synchronization and sharing of content. Our initiatives with AT&T, Verizon Wireless, Vodafone and other CSPs continue to grow along with our account presence with connected device OEM's. We are also exploring additional opportunities through merger and acquisition activities to support our customer, product and geographic diversification strategies.

Critical Accounting Policies and Estimates

        The discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP"). The preparation of these consolidated financial statements in accordance with GAAP requires us to utilize accounting policies and make certain estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingencies as of the date of the financial statements and the reported amounts of revenues and expenses during a fiscal period. The Securities and Exchange Commission ("SEC") considers an accounting policy to be critical if it is important to a company's financial condition and results of operations, and if it requires significant judgment and estimates on the part of management in its application. We have discussed the selection and development of the critical accounting policies with the audit committee of our board of directors, and the audit committee has reviewed our related disclosures in this Form 10-K. Although we believe that our judgments and estimates are appropriate, correct and reasonable under the circumstances, actual results may differ from those estimates. If actual results or events differ materially from those contemplated by us in making these estimates, our reported financial condition and results of operations for future periods could be materially affected. See "Risk Factors" for certain matters bearing risks on our future results of operations.

        We believe the following to be our critical accounting policies because they are important to the portrayal of our financial condition and results of operations and they require critical management judgments and estimates about matters that are uncertain. If actual results or events differ materially from those contemplated by us in making these estimates, our reported financial condition and results of operations for future periods could be materially affected. See "Risk Factors" for certain matters bearing risks on our future results of operations.

Revenue Recognition and Deferred Revenue

        We provide services principally on a transactional or subscription basis or, at times, on a fixed fee basis and recognize the revenues as the services are performed or delivered as discussed below:

        Transactional and Subscription Service Arrangements:    Transaction and subscription revenues represented approximately 67%, 77%, and 79% of our revenues for the years ended December 31, 2012, 2011 and 2010, respectively. Transaction and subscription revenues consist of revenues derived

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from the processing of transactions through our service platforms, providing enterprise portal management services on a subscription basis and maintenance agreements on software licenses. Transaction service arrangements include services such as processing equipment orders, new account set-up and activation, number port requests, credit checks and inventory management. Subscription services include hosting and maintenance support services of software products.

        Transaction revenues are principally based on a contractual price per transaction and are recognized based on the number of transactions processed during each reporting period. Revenues are recorded based on the total number of transactions processed at the applicable price established in the relevant contract. The total amount of revenues recognized is based primarily on the volume of transactions. Subscription revenues are recorded on a straight-line basis over the life of the contract for subscription services and maintenance agreements.

        Many of our contracts guarantee minimum volume transactions from the customer. In these instances, if the customer's total transaction volume for the period is less than the contractual amount, we record revenues at the minimum guaranteed amount. At times, transaction revenues may also include billings to customers that reimburse us based on the number of individuals dedicated to processing transactions. Set-up fees for transactional service arrangements are deferred and recognized on a straight-line basis over the life of the contract since these amounts would not have been paid by the customer without the related transactional service arrangement. Revenues are presented net of discounts, which are volume level driven, or credits, which are performance driven, and are determined in the period in which the volume thresholds are met or the services are provided.

        Professional Service and Software License Arrangements:    Professional service and software license revenues represented approximately 33%, 23% and 21% of our revenues for the years ended December 31, 2012, 2011 and 2010, respectively. Professional services include process and workflow consulting services and development services. Professional services, when sold with non-software transactional or subscription service arrangements, are accounted for separately when these services have value to the customer on a standalone basis. Professional services, when sold with software transactional or subscription service arrangements, are accounted for separately when these services have value to the customer on a standalone basis and there is objective and reliable evidence of fair value of the professional services. When accounted for separately, professional service revenues are recognized on a monthly basis, as services are performed and all other elements of revenue recognition have been satisfied.

        In determining whether professional service revenues can be accounted for separately from transaction or subscription service revenues, we consider the following factors for each professional services agreement: availability of the professional services from other vendors, whether objective and reliable evidence of fair value exists of the undelivered elements, the nature of the professional services, the timing of when the professional services contract was signed in comparison to the transaction or subscription service start date and the contractual independence of the transactional or subscription service from the professional services.

        If a professional service arrangement were not to qualify for separate accounting, we would recognize the professional service revenues ratably over the remaining term of the transaction or subscription agreement.

        Revenue from software license arrangements is recognized when the license is delivered to our customers and all of the software revenue recognition criteria are met. When software arrangements include multiple elements, the arrangement consideration is allocated at the inception to all deliverables using the residual method providing we have vendor specific objective evidence ("VSOE") on all undelivered elements. We determine VSOE for each element based on historical stand-alone sales to third-parties. When sold with non-software transaction or subscription service arrangements, the arrangement consideration is allocated at the inception of an arrangement to all deliverables using

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the relative selling price method. The relative selling price method allocates any discount in the arrangement proportionally to each deliverable on the basis of each deliverable's selling price. The selling price used for each deliverable will be based on VSOE if available, third-party evidence ("TPE") if vendor-specific objective evidence is not available, or estimated selling price ("ESP") if neither vendor-specific objective evidence nor third-party evidence is available. The objective of ESP is to determine the price at which we would transact a sale if the product or service were sold on a stand-alone basis. We determine ESP by considering multiple factors, including, but not limited to, geographies, market conditions, competitive landscape, internal costs, gross margin objectives, and pricing practices. ESP is generally used for offerings that are not typically sold on a stand-alone basis or for new or highly customized offerings.

        While we follow specific and detailed rules and guidelines related to revenue recognition, we make and use management judgments and estimates in connection with the revenue recognized in any reporting period, particularly in the areas described above, as well as collectability. If management made different estimates or judgments, differences in the timing of the recognition of revenue could occur.

        Deferred Revenue:    Deferred revenues primarily represent billings to customers for services in advance of the performance of services, with revenues recognized as the services are rendered, and also include the fair value of deferred revenues recorded as a result of acquisitions.

Service Level Standards

        Pursuant to certain contracts, we are subject to service level standards and to corresponding penalties for failure to meet those standards. All performance-related penalties are reflected as a corresponding reduction of our revenues. These penalties, if applicable, are recorded in the month incurred and were insignificant for the years ended December 31, 2012, 2011 and 2010.

Allowance for Doubtful Accounts

        We maintain an allowance for doubtful accounts for estimated bad debts resulting from the inability of our customers to make required payments. The amount of the allowance account is based on historical experience and our analysis of the accounts receivable balance outstanding. While credit losses have historically been within our expectations and the provisions established, we cannot guarantee that we will continue to experience the same credit losses that we have in the past or that our reserves will be adequate. If the financial condition of one of our customers were to deteriorate, resulting in its inability to make payments, additional allowances may be required which would result in an additional expense in the period that this determination was made.

Income Taxes

        We account for the effects of income taxes that result from our activities during the current and preceding years. Under this method, deferred income tax liabilities and assets are based on the difference between the financial statement carrying amounts and the tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse or be utilized. The realization of deferred tax assets is contingent upon the generation of future taxable income. A valuation allowance is recorded if it is "more likely than not" that a portion or all of a deferred tax asset will not be realized.

        As of December 31, 2012, and 2011 we had total unrecognized tax benefit reserves of $529 thousand and $533 thousand which includes $18 thousand and $31 thousand for accumulated interest related to uncertain positions, respectively. Components of the reserve are classified as either current or long-term in the consolidated balance sheet based on when we expect each of the items to be settled. Accordingly, we recorded a long-term liability for unrecognized tax benefits of $529 thousand

41

on the balance sheet at December 31, 2012, $343 of which would reduce the effective tax rate if recognized. We did not have a short term liability on the balance sheet at December 31, 2012. We record interest and penalties accrued in relation to uncertain income tax positions below the operating income line as a component of interest expense. Tax returns for years 2009 and thereafter are subject to future examination by tax authorities.

        In 2012, the net decrease in the reserve for unrecognized tax benefits was $8 thousand and the net decrease for interest benefit was $13 thousand. We expect that the amount of unrecognized tax benefits will change during 2013; however, we do not expect the change to have a significant impact on our results of operations or financial position.

        While we believe we have identified all reasonably identifiable exposures and that the reserve we have established for identifiable exposures is appropriate under the circumstances, it is possible that additional exposures exist and that exposures may be settled at amounts different than the amounts reserved. It is also possible that changes in facts and circumstances could cause us to either materially increase or reduce the carrying amount of our tax reserves.

Stock-Based Compensation

        As of December 31, 2012, we maintain three stock-based compensation plans. We utilize the Black-Scholes pricing model to determine the fair value of stock options on the dates of grant. Restricted stock awards are measured based on the fair market values of the underlying stock on the dates of grant. We recognize stock-based compensation over the requisite service period with an offsetting credit to additional paid-in capital.

        For our performance restricted stock awards we estimate the number of shares the recipient is to receive by applying a probability of achieving the performance goals. The actual number of shares the recipient receives is determined at the end of the annual performance period based on the results achieved versus goals based on our annual performance targets, such as operating income. Once the number of awards is determined, the compensation cost is fixed and continues to be recognized using the accelerated attribution recognition over the requisite service period for each vesting tranche.

        We classify benefits of tax deductions in excess of the compensation cost recognized (excess tax benefits) as a financing cash inflow with a corresponding operating cash outflow. We included $6.9 million, $3.6 million and $2.4 million of excess tax benefits as a financing cash inflow for the years ended December 31, 2012, 2011 and 2010, respectively.

        We utilize the Black-Scholes option pricing model for determining the estimated fair value for stock-option awards. Use of a valuation model requires management to make certain assumptions with respect to selected model inputs. Expected volatility was calculated based on our historical information of our stock. The average expected life was determined using historical stock option exercise activity. The risk-free interest rate is based on U.S. Treasury zero-coupon issues with a remaining term equal to the expected life assumed at the date of grant. We have never declared or paid cash dividends on our common or preferred equity and do not anticipate paying any cash dividends in the foreseeable future. Forfeitures are estimated based on the historical analysis of actual stock option forfeitures.

        The weighted-average assumptions used in the Black-Scholes option pricing model are as follows:

	 	Year Ended
December 31,	 	
 
	 	2012	 	2011	 	2010	 	
Expected stock price volatility	 	 	68	%	 	69	%	 	62	%	
Risk-free interest rate	 	 	0.80	%	 	1.12	%	 	2.45	%	
Expected life of options (in years)	 	 	4.8	 	 	4.7	 	 	4.9	 	
Expected dividend yield	 	 	0	%	 	0	%	 	0	%	
42

        The weighted-average fair value (as of the date of grant) of the options granted was $13.47, $17.04 and $11.18 per share for the year ended December 31, 2012, 2011 and 2010, respectively. The total stock-based compensation cost related to non-vested equity awards not yet recognized as an expense as of December 31, 2012 was approximately $33.1 million.

Business Combinations

        We account for business combinations in accordance with the acquisition method. The acquisition method of accounting requires that assets acquired and liabilities assumed be recorded at their fair values on the date of a business acquisition. Our consolidated financial statements and results of operations reflect an acquired business from the completion date of an acquisition.

        The judgments that we make in determining the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact net income in periods following a business combination. We generally use either the income, cost or market approach to aid in our conclusions of such fair values and asset lives. The income approach presumes that the value of an asset can be estimated by the net economic benefit to be received over the life of the asset, discounted to present value. The cost approach presumes that an investor would pay no more for an asset than its replacement or reproduction cost. The market approach estimates value based on what other participants in the market have paid for reasonably similar assets. Although each valuation approach is considered in valuing the assets acquired, the approach ultimately selected is based on the characteristics of the asset and the availability of information.

        For acquisitions completed after January 1, 2009, we record contingent consideration resulting from a business combination at its fair value on the acquisition date. Each reporting period thereafter, we revalue these obligations and record increases or decreases in their fair value as an adjustment to net change in contingent consideration obligation within the consolidated statement of income. Changes in the fair value of the contingent consideration obligation can result from updates in the achievement of financial targets and changes to the weighted probability of achieving those future financial targets. Significant judgment is employed in determining the appropriateness of these assumptions as of the acquisition date and for each subsequent period. Accordingly, any change in the assumptions described above, could have a material impact on the amount of the net change in contingent consideration obligation that we record in any given period.

Goodwill

        Goodwill represents the excess of the purchase price over the fair value of assets acquired, including other definite-lived intangible assets. Goodwill is not amortized, but reviewed annually for impairment or upon the occurrence of events or changes in circumstances that would more likely than not reduce the fair value of the reporting unit below its carrying amount. We performed our annual impairment test noting no impairment as of December 31, 2012, and we do not believe we are at risk for significant impairment.

        The change in the carrying amount of goodwill for the year ended December 31, 2012 is as follows:
 	 	 	 	 	
Balance at December 31, 2011	 	$	54,617	 	
Acquired goodwill	 	 	61,105	 	
Reclassifications, adjustments and other	 	 	(205	)	
 	 	 	 	
Balance at December 31, 2012	 	 	115,517	 	
 	 	 	 	
        The reclassifications, adjustment and other of $205 is primarily related to adjustments to our deferred taxes as a result of changes to acquired tax attributes.

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Results of Operations

Year ended December 31, 2012, compared to the Year ended December 31, 2011

        The following table presents an overview of our results of operations for the years ended December 31, 2012 and 2011.

	 	Year Ended December 31,	 	 

 
	 	2012	 	2011	 	 

 
	 	 	 	 	 	2012 vs 2011	 	 	 	 	 	 	 	 	 	

	 	% of Revenue	 	 
	 	% of Revenue	 	 	 	 	 	 	 	 	 	 	 	 	
 
	 	$	 	 	 	$	 	 	 	$ Change	 	% Change	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 
	 	(in thousands)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net revenues	 	$	273,692	 	 	100.0	%	$	229,084	 	 	100.0	%	$	44,608	 	 	19.5	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cost of services*	 	 	115,670	 	 	42.3	%	 	106,595	 	 	46.5	%	 	9,075	 	 	8.5	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Research and development	 	 	52,307	 	 	19.1	%	 	41,541	 	 	18.1	%	 	10,766	 	 	25.9	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Selling, general and administrative	 	 	46,680	 	 	17.1	%	 	44,886	 	 	19.6	%	 	1,794	 	 	4.0	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net change in contingent consideration obligation	 	 	(6,235	)	 	(2.3)	%	 	2,954	 	 	1.3	%	 	(9,189	)	 	(311.1)	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Depreciation and amortization	 	 	23,812	 	 	8.7	%	 	14,739	 	 	6.4	%	 	9,073	 	 	61.6	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	232,234	 	 	84.9	%	 	210,715	 	 	92.0	%	 	21,519	 	 	10.2	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income from operations	 	$	41,458	 	 	15.1	%	$	18,369	 	 	8.0	%	$	23,089	 	 	125.7	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

*
Cost of services excludes depreciation and amortization which is shown separately.

        Net Revenues.    Net revenues increased by $44.6 million to $273.7 million in 2012, compared to 2011. This increase was primarily due to the expansion of professional services provided to our top five customer relationships. Transaction and subscription revenues recognized for the years ended December 31, 2012 and 2011 represented 67% or $183.6 million and 77% or $176.4 million of net revenues, respectively. Net revenues related to AT&T increased $8.1 million to $124.8 million for 2012, compared to 2011. AT&T represented 46% and 51% of our revenues for 2012 and 2011, respectively. Net revenues outside of AT&T increased by $36.5 million to $148.9 million for 2012, compared to 2011. Net revenues outside of AT&T represented 54% and 49% of our revenues in 2012 and 2011, respectively. Professional service and license revenues as a percentage of sales were 33% or $90.1 million for 2012, compared to 23% or $52.7 million in 2011. The increase in professional services and license revenue is primarily due to the expansion of services and license agreements due to new projects primarily relating to Cloud services with existing and new customers.

Expense

        Cost of Services.    Cost of services increased $9.1 million to $115.7 million in 2012, compared to 2011, due primarily to an increase of $7.5 million in telecommunication and facility costs related to the increased call volume and capacity associated with our data facilities. There was an increase of $3.7 million in our personnel related costs due primarily to an increase in headcount as a result of our continued growth in existing and new programs with our current customers. The increases in cost of services were offset by a decrease of $2.5 million in outside consulting expense, due to our increased productivity and cost saving from changes in our third party exception handling vendors. Cost of services as a percentage of revenues decreased to 42.3% for 2012, as compared to 46.5% for 2011 as a result of increases in professional services and highly automated transaction revenues which have higher margins.

        Research and Development.    Research and development expense increased approximately $10.8 million to $52.3 million in 2012, compared to 2011, due to headcount increases. Personnel and

44

related costs increased $11.5 million. The increase in personnel and related costs was due primarily to an increase in headcount through acquisitions and our continued growth as we further expand the capabilities of our offerings, as well as investing in several early-stage customer deployments. In addition, there was an increase of $1.5 million in telecommunications and facility costs related to the increase in headcount and the utilization of our expanded resources. The increases in research and development expense were offset by a decrease of $3.0 million in outside consulting expense, due to our increased headcount resulting in less reliance on third party consultants. As a result of increased revenues, research and development expense as a percentage of revenues increased to 19.1% for 2012, compared to 18.1% in 2011.

        Selling, General and Administrative.    Selling, general and administrative expenses increased $1.8 million to $46.7 million in 2012, compared to 2011. There was an increase of $1.7 million in telecommunications and facility costs in 2012, compared to 2011, due to our new larger corporate headquarters and increased locations as a result of our acquisitions and an increase of $1.4 million in professional services in 2012, compared to 2011, related to accounting and legal costs as a result of our acquisition and patent activity. We had a decrease of $1.6 million of stock compensation expense as a result of targets achieved in certain compensation plans and the decreased price of our common stock. As a result of increased revenues, selling, general and administrative expense as a percentage of revenues decreased to 17.1% for 2012, as compared to 19.6% for 2011.

        Net change in contingent consideration obligation.    The net change in contingent consideration obligation resulted in a $6.2 million reduction of the contingent consideration obligation for the year ended December 31, 2012 driven by changes in the fair value estimates related to the weighted probability of achieving revenue and product milestones for the Miyowa S.A. ("Miyowa"), SpeechCycle, Inc. ("SpeechCycle"), Spatial Systems Nominees PTY Limited ("Spatial"), and Sapience Knowledge Systems, Inc. ("SKS") Earn-outs. The $3.0 million of additional expense for the fair value change in the contingent consideration liability for the year ended December 31, 2011 was due to the change in the estimate of the fair value of the contingent consideration obligation related to the FusionOne, Inc. ("FusionOne") and SKS Earn-outs, primarily due to changes to the forecasted operational efficiencies and the weighted probability of achieving financial milestones.

        Depreciation and amortization.    Depreciation and amortization expense increased $9.1 million to $23.8 million in 2012, compared to 2011, primarily related to the amortization of our newly acquired intangible assets of Miyowa and SpeechCycle. There was also an increase in depreciable fixed assets necessary for the continued expansion of our platforms. Depreciation and amortization expense as a percentage of revenues increased to 8.7% for 2012, as compared to 6.4% for 2011.

        Income from Operations.    Income from operations increased $23.1 million to $41.5 million in 2012, compared to 2011. This was due primarily to increased revenues from professional services and expansion into new programs with our largest customers, improved gross profit margins and the reduction in contingent consideration obligation. Income from operations as a percentage of revenues increased to 15.1% for 2012, as compared to 8.0% for 2011.

        Interest income.    Interest income increased $494 thousand to $1.3 million in 2012, compared to 2011. Interest income increased primarily due to a change in the mix of our cash and investment balances to higher yielding investments.

        Interest expense.    Interest expense increased $70 thousand to $998 thousand in 2012, compared to 2011. Interest expense increased due to the facility lease for our Bridgewater, New Jersey facility.

        Other income.    Other income increased $792 thousand to $889 thousand in 2012, compared to 2011. Other income increased primarily due to research and development tax credits in foreign jurisdictions and changes in foreign currency exchange rate fluctuations.

45

        Income Tax.    During 2012 and 2011, we recognized approximately $15.6 million and $3.2 million in income tax expense, respectively. Our effective tax rate was approximately 36.5% and 17.6% during 2012 and 2011, respectively. In 2012, our effective tax rate was higher than our US federal statutory rate primarily due to state taxes and the tax effect of non-deductible expenses, offset by the favorable impact of income in foreign jurisdictions which have lower tax rates than the U.S. and the favorable tax impact of the fair market value adjustment for the contingent consideration obligations related to the Earn-out payments. In addition, compared to 2011, our effective tax rate was unfavorably impacted by the late extension of the tax credit for research and experimentation expenses. The tax benefit for this credit will be recorded in first quarter 2013 (see Note 14).

        We expect to be exposed to fluctuations in our effective rate during the Earn-out period for our contingent consideration liabilities. Due to the nature of these transactions we may experience significant adjustments to fair value of the contingent consideration obligation depending on the outcome of the target achievements.

        A reconciliation of the beginning and ending amounts of unrecognized tax benefits for the twelve months ended December 31, 2012 is as follows:
 	 	 	 	 	
Unrecognized tax benefit at December 31, 2011	 	$	533	 	
Additions for tax positions of prior periods	 	 	154	 	
Decreases for tax positions of prior periods	 	 	—	 	
Additions for tax positions of current periods	 	 	25	 	
Reductions related to the expiration of statutes of limitations	 	 	(183	)	
 	 	 	 	
Unrecognized tax benefit at December 31, 2012	 	$	529	 	

Year ended December 31, 2011, compared to the Year ended December 31, 2010

        The following table presents an overview of our results of operations for the years ended December 31, 2011 and 2010.

	 	Year Ended December 31,	 	 

 
	 	2011	 	2010	 	 

 
	 	 	 	 	 	2011 vs 2010	 	 	 	 	 	 	 	 	 	

	 	% of Revenue	 	 
	 	% of Revenue	 	 	 	 	 	 	 	 	 	 	 	 	
 
	 	$	 	 	 	$	 	 	 	$ Change	 	% Change	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 
	 	(in thousands)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net revenues	 	$	229,084	 	 	100.0	%	$	165,969	 	 	100.0	%	$	63,115	 	 	38.0	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cost of services*	 	 	106,595	 	 	46.5	%	 	83,217	 	 	50.1	%	 	23,378	 	 	28.1	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Research and development	 	 	41,541	 	 	18.1	%	 	26,008	 	 	15.7	%	 	15,533	 	 	59.7	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Selling, general and administrative	 	 	44,886	 	 	19.6	%	 	33,743	 	 	20.3	%	 	11,143	 	 	33.0	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net change in contingent consideration obligation	 	 	2,954	 	 	1.3	%	 	4,295	 	 	2.6	%	 	(1,341	)	 	(31.2	)%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Depreciation and amortization	 	 	14,739	 	 	6.4	%	 	9,403	 	 	5.7	%	 	5,336	 	 	56.7	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	210,715	 	 	92.0	%	 	156,666	 	 	94.4	%	 	54,049	 	 	34.5	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income from operations	 	$	18,369	 	 	8.0	%	$	9,303	 	 	5.6	%	$	9,066	 	 	97.5	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

*
Cost of services excludes depreciation and amortization which is shown separately.

        Net Revenues.    Net revenues increased by $63.1 million to $229.1 million in 2011, compared to 2010. This increase was primarily due to increased transaction volumes and expansion into new programs from our top five customer relationships. Transaction and subscription revenues recognized for the years ended December 31, 2011 and 2010 represented 77% or $176.4 million and 79% or

46

$130.4 million of net revenues, respectively. Net revenues related to AT&T increased $14.3 million to $116.7 million for 2011, compared to 2010. AT&T represented 51% and 62% of our revenues for 2011 and 2010, respectively. Net revenues outside of AT&T increased by $48.8 million to $112.4 million for 2011, compared to 2010. Net revenues outside of AT&T represented 49% and 38% of our revenues in 2011 and 2010, respectively. Professional service and license revenues as a percentage of sales were 23% or $52.7 million in 2011, compared to 21% or $35.6 million in 2010. The increase in professional services and license revenue is primarily due to the expansion of services due to new projects with existing customers.

Expense

        Cost of Services.    Cost of services increased $23.4 million to $106.6 million in 2011, compared to 2010, due primarily to an increase of $10.6 million for outside consultants related to growth in existing and new programs with our customers. There was an increase of $8.4 million in our personnel and related costs and an increase of $912 thousand in stock-based compensation in 2011, compared to 2010. The increase in personnel and related costs and stock-based compensation was due primarily to an increase in headcount as a result of our continued growth in existing and new programs with our current customers. In addition, there was an increase of $3.4 million in telecommunication and facility costs related to the increased call volume and capacity associated with our existing and new Arizona data facilities. Cost of services as a percentage of net revenues decreased to 46.5% for 2011, as compared to 50.1% for 2010 as a result of increases in technology based revenues which have higher margins.

        Research and Development.    Research and development expense increased approximately $15.5 million to $41.5 million in 2011, compared to 2010, due to headcount increases. Personnel and related costs increased $9.2 million and stock-based compensation increased $2.4 million. The increase in personnel and related costs and stock-based compensation was due primarily to an increase in headcount through acquisitions and our continued expansion as we further expand the capabilities of our offerings, as well as investing in several early-stage customer deployments that we believe have the potential to scale. In addition, there was an increase of $3.8 million in outside consultants expense related to growth in existing and new programs with our customers and an increase of $220 thousand in telecommunication and facility costs related to the increase in headcount and the utilization of our expanded resources. Research and development expense as a percentage of net revenues increased to 18.1% for 2011, compared to 15.7% in 2010.

        Selling, General and Administrative.    Selling, general and administrative expenses increased $11.1 million to $44.9 million in 2011, compared to 2010, primarily due to increased headcount. Personnel and related costs increased by $5.5 million and stock-based compensation expense increased by $5.1 million. The increase in personnel and related costs and stock-based compensation was due primarily to an increase in headcount as a result of our acquisitions and continued growth and the increase in the fair value of our stock awards which was due to the increase of our stock price. Also included in the increase in personnel and related costs and in stock-based compensation costs were costs of $2.4 million related to the vesting of the FusionOne employee Earn-out during 2011. Additionally, we had an increase of $699 thousand in professional fees associated with increased legal activity related to the FusionOne Earn-out settlement and patent related services, and an increase of $168 thousand for outside consultants related to our expanded marketing efforts offset by a decrease of $497 thousand in acquisition related costs. Selling, general and administrative expense as a percentage of net revenues decreased to 19.6% for 2011, as compared to 20.3% for 2010.

        Net change in contingent consideration obligation.    The fair value change in the contingent consideration liability related to the equity-holders' Earn-out resulted in additional expense of $3.0 million for the year ended December 31, 2011. Changes in the contingent consideration obligation

47

are driven by the fair value estimates related to our acquisitions of FusionOne and SKS. The change in the estimate of the fair value of the contingent consideration obligation related to the FusionOne Earn-out is primarily due to the changes in our stock price prior to the amendment and settlement of the FusionOne Earn-out. The change in the estimate of the fair value of the contingent consideration obligation related to the SKS Earn-out is due to changes to the weighted probability of achieving product milestones and operational efficiencies for the SKS Earn-out.

        Depreciation and amortization.    Depreciation and amortization expense increased $5.3 million to $14.7 million in 2011, compared to 2010, primarily related to the amortization of our newly acquired intangible assets of FusionOne and the continued expansion of our platforms. This increase was offset by the completion of the depreciation of certain assets which, for accounting purposes, have reached the end of their respective useful lives. Depreciation and amortization expense as a percentage of net revenues increased to 6.4% for 2011, as compared to 5.7% for 2010.

        Income from Operations.    Income from operations increased $9.1 million to $18.4 million in 2011, compared to 2010. This increase was due primarily to increased revenues that resulted from increased transaction volumes and expansion into new programs with our largest customers. Income from operations as a percentage of net revenues increased to 8.0% for 2011, as compared to 5.6% for 2010.

        Interest income.    Interest income increased $427 thousand to $821 thousand in 2011, compared to 2010. Interest income increased primarily due to a change in the mix of our cash and investment balances to higher yielding investments.

        Interest expense.    Interest expense increased $11 thousand to $928 thousand in 2011, compared to 2010. Interest expense increased related to the Bethlehem, Pennsylvania facility lease and interest related to uncertain tax positions.

        Other income.    Other income decreased $220 thousand to $97 thousand in 2011, compared to 2010. Other expense increased primarily due to changes in foreign currency exchange rate fluctuations.

        Income Tax.    During 2011 and 2010, we recognized approximately $3.2 million and $5.2 million in income tax expense, respectively. Our effective tax rate was approximately 17.6% and 57.4% during 2011 and 2010, respectively. In 2011, our effective tax rate was lower than our US federal statutory rate primarily due to the favorable tax impact of the utilization of our federal NOL's resulting from the additional consideration paid to the FusionOne equity holders during 2011, the favorable impact of research and development tax credits, and the impact of income in foreign jurisdictions, which have lower tax rates than the US offset by the unfavorable tax impact of the fair market value adjustment for the contingent consideration obligations related to the Earn-outs.

        We expect to be exposed to fluctuations in our effective rate during the Earn-out period for our contingent consideration liabilities. Due to the nature of these transactions we may experience significant adjustments to fair value of the contingent consideration obligation depending on the outcome of the target achievements.

        A reconciliation of the beginning and ending amounts of unrecognized tax benefits for the twelve months ended December 31, 2011 is as follows:
 	 	 	 	 	
Unrecognized tax benefit at December 31, 2010	 	$	600	 	
Additions for tax positions of prior periods	 	 	35	 	
Decreases for tax positions of prior periods	 	 	(78	)	
Additions for tax positions of current periods	 	 	187	 	
Reductions related to the expiration of statutes of limitations	 	 	(211	)	
 	 	 	 	
Unrecognized tax benefit at December 31, 2011	 	$	533	 	
 	 	 	 	
48

Unaudited Quarterly Results of Operations

	 	Quarter Ended	 	
 
	 	March 31	 	June 30	 	September 30	 	December 31	 	
 
	 	(In thousands, except per share data)
	 	
2012	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net revenues	 	$	64,560	 	$	66,990	 	$	68,961	 	$	73,181	 	
Gross profit(2)	 	 	35,939	 	 	40,359	 	 	39,825	 	 	41,899	 	
Net income(3)	 	 	5,483	 	 	11,949	 	 	6,202	 	 	3,449	 	
Basic net income per common share(1)	 	 	0.14	 	 	0.31	 	 	0.16	 	 	0.09	 	
Diluted net income per common share(1)	 	 	0.14	 	 	0.31	 	 	0.16	 	 	0.09	 	

 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 
	 	Quarter Ended	 	
 
	 	March 31	 	June 30	 	September 30	 	December 31	 	
 
	 	(In thousands, except per share data)
	 	
2011	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net revenues	 	$	52,878	 	$	54,817	 	$	59,238	 	$	62,151	 	
Gross profit(2)	 	 	28,267	 	 	28,939	 	 	31,457	 	 	33,826	 	
Net income(3)	 	 	139	 	 	3,204	 	 	3,575	 	 	8,208	 	
Basic net income per common share(1)	 	 	0.04	 	 	0.07	 	 	0.10	 	 	0.22	 	
Diluted net income per common share(1)	 	 	0.04	 	 	0.06	 	 	0.09	 	 	0.21	 	

(1)
Per common share amounts for the quarters and full year have been calculated separately. Accordingly, quarterly amounts do not add to the annual amount because of differences in the weighted-average common shares outstanding during each period principally due to the effect of issuing shares of our common stock and options during the year.

(2)
Gross profit is defined as net revenues less cost of services and excludes depreciation and amortization expense.

(3)
Net income for the quarters ended March 31, 2011, June 30, 2011, September 30, 2011, December 31, 2011, March 31, 2012, June 30, 2012, September 30, 2012, and December 31, 2012, included a change in contingent consideration obligation of $2.9 million, ($85) thousand, $480 thousand, ($357) thousand, ($780) thousand, ($4.6) million, ($327) thousand, and ($500) thousand, respectively.

Liquidity and Capital Resources

        In 2012, our principal source of liquidity was cash provided by operations. Our cash, cash equivalents and marketable securities balance was $56.9 million at December 31, 2012, a decrease of $95.7 million as compared to the end of 2011. This decrease was primarily due to cash used for the acquisition of SpeechCycle, Spatial, and Newbay Software, Ltd. and its subsidiaries (collectively, "Newbay"), the settlement of contingent consideration obligations, the repurchase of our Common Stock, and the purchase of fixed assets, offset by cash generated from operations and the exercise of stock options. We anticipate that our principal uses of cash in the future will be to fund the expansion of our business through both organic growth as well as possible acquisition activities and the expansion of our customer base internationally. Uses of cash will also include facility and technology expansion, capital expenditures, and working capital.

        We believe that our existing cash and cash equivalents and our cash flow from operations will be sufficient to fund our operations and our capital expenditures for at least the next 12 months based on our current business plan. Our future capital requirements will depend on many factors, including our rate of revenue growth, the expansion of our sales and marketing activities, the timing and extent of

49

spending to support product development efforts and expansion into new territories, the timing of introductions of new products and enhancements to existing products and the continuing market acceptance of our products and services. We may from time to time enter into agreements, arrangements or letters of intent regarding potential investments in, or acquisitions of, complementary businesses, applications or technologies, which could require us to seek additional equity or debt financing. Additional funds may not be available on terms favorable to us or at all.

Discussion of Cash Flows

Year ended December 31, 2012, compared to the Year ended December 31, 2011

        Cash flows from operations.    Net cash provided by operating activities for the year ended December 31, 2012 was $55.9 million, as compared to $42.6 million for the year ended December 31, 2011. The increase in net cash provided by operating activities for the year ended December 31, 2012, of $13.3 million as compared to 2011 is primarily due to an increase in operating income excluding depreciation and amortization. We also made cash payments related to contingent consideration obligations, taxes and leased facilities.

        Cash flows from investing.    Net cash used in investing activities for the year ended December 31, 2012 was $77.2 million, as compared to $145.1 million for the year ended December 31, 2011. The decrease in net cash used in investing activities for the year ended December 31, 2012, of $67.9 million as compared to 2011 is primarily due to an increase in sales of marketable securities offset by cash used for current acquisitions and purchases of property and equipment related to our continued investments in our global information technology and business systems infrastructure.

        Cash flows from financing.    Net cash used in financing activities for the year ended December 31, 2012 was $12.4 million, as compared to $8.2 million for the year ended December 31, 2011. The increase in net cash used in financing activities for the year ended December 31, 2012, of $4.2 million as compared to 2011 is primarily due to a $9.8 million decrease in proceeds from the exercise of stock options and an increase of $4.6 million in the repurchase of common stock offset by a decrease of $6.3 million in payments for contingent consideration and an increase of $3.3 million in the excess tax benefit from the exercise of stock options.

        We believe that our existing cash and cash equivalents and cash generated from our operations will be sufficient to fund our operations for the next twelve months based on our current business plan.

Year ended December 31, 2011, compared to the Year ended December 31, 2010

        Cash flows from operations.    Net cash provided by operating activities for the year ended December 31, 2011 was $42.6 million, as compared to $21.7 million for the year ended December 31, 2010. Our primary uses of cash from operating activities are for personnel related expenditures and outside consultants. We also make cash payments related to taxes and leased facilities. The increase in net cash provided by operating activities for the year ended December 31, 2011 of $20.8 million as compared to 2010 is primarily due to from an increase in adjusted net income of $25.0 million, offset by increased levels of net working capital of $4.2 million.

        Cash flows from investing.    Net cash used in investing activities for the year ended December 31, 2011 was $145.1 million, as compared to $47.2 million for the year ended December 31, 2010. The primary use of cash was $55.8 million used in the current year acquisitions net of cash acquired. In addition, there was $12.8 million used to purchase property and equipment and $1.9 million to develop technology and patents. The purchases of property and equipment were primarily related to our continued investments in global information technology and business system infrastructure. We also used $82.1 million related to the purchase of our marketable securities available for sale. The increase

50

in marketable securities was primarily to utilize our accumulated cash by increasing our investments in municipal bonds and money markets.

        Cash flows from financing.    Net cash used in financing activities for the year ended December 31, 2011 was $8.2 million, as compared to cash provided by financing activities of $116.1 million for the year ended December 31, 2010. The decrease was primarily due to the $106.6 million of proceeds from secondary public offering in the year ended December 31, 2010 and there were no public offerings in year ended December 31, 2011. In addition, in the year ended December 31, 2011, there was $20.0 million used to repurchase our common stock, $8.5 million in payments related to the Earn-out for the FusionOne equity holders, and $945 thousand in payments on our capital obligation related to our data facility, offset by $17.7 million in proceeds from the exercise of stock options and a $3.6 million tax benefit from the exercise of stock options.

Effect of Inflation

        Although inflation generally affects us by increasing our cost of labor and equipment, we do not believe that inflation has had any material effect on our results of operations during 2012, 2011 and 2010.

Contractual Obligations

        Our contractual commitments consist of obligations under leases for office space, automobiles, computer equipment and furniture and fixtures. The following table summarizes our long-term contractual obligations as of December 31, 2012 (in thousands).

	 	Payments Due by Period	 	
 
	 	Total	 	Less Than 1 Year	 	1 - 3 Years	 	4 - 5 Years	 	More Than 5 Years	 	
Long-term lease obligations(1)	 	$	8,508	 	$	1,382	 	$	2,705	 	$	2,313	 	$	2,108	 	
Contingent consideration obligation(2)	 	 	8,379	 	 	3,279	 	 	5,100	 	 	—	 	 	—	 	
Operating lease obligations	 	 	47,390	 	 	9,240	 	 	13,632	 	 	8,578	 	 	15,940	 	
Captial lease obligations	 	 	1,067	 	 	747	 	 	320	 	 	—	 	 	—	 	
Other long-term liabilities(3)	 	 	529	 	 	—	 	 	529	 	 	—	 	 	—	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Total	 	$	65,873	 	$	14,648	 	$	22,286	 	$	10,891	 	$	18,048	 	

(1)
Amount represents obligation associated with the Pennsylvania facility lease.

(2)
Amount represents the fair value of the contingent consideration obligations of our Miyowa, SpeechCycle, and SpatialInfo acquisitions and is based on actual and estimated achievements of financial targets and milestones as of December 31, 2012. When settled at the end of the applicable Earn-out period the amount is subject to change due to the actual achievements of financial targets and our stock price.

(3)
Amount represents unrecognized tax positions recorded in our balance sheet. Although the timing of the settlement is uncertain, we believe this amount will be settled within 3 years.

Impact of Recently Issued Accounting Standards

        During the year ended December 31, 2012, we adopted amendments to disclosure requirements for common fair value measurement. These amendments result in common definition of fair value and common requirements for measurement of and disclosure requirements between U.S. GAAP and IFRS. Consequently, the amendments change some fair value measurement principles and disclosure requirements. The implementation of this amended accounting guidance has not had a material impact on our consolidated financial statements or disclosures.

51

        During the year ended December 31, 2012, we adopted amendments to disclosure requirements for presentation of comprehensive income. This guidance requires presentation of total comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. For purposes of the interim financial statements, we included total comprehensive income on the face of the income statement.

        During the year ended December 31, 2012, we adopted amendments to simplify how entities test goodwill for impairment. These amendments permit an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. The implementation of this amended accounting guidance has not had a material impact on our consolidated financial statements or disclosures.

Off-Balance Sheet Arrangements

        We had no off-balance sheet arrangements as of December 31, 2012 and December 31, 2011.

ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk

        The following discussion about market risk disclosures involves forward-looking statements. Actual results could differ materially from those projected in the forward-looking statements. We deposit our excess cash in what we believe are high-quality financial instruments, primarily money market funds and certificates of deposit and, we may be exposed to market risks related to changes in interest rates. We do not actively manage the risk of interest rate fluctuations on our marketable securities; however, such risk is mitigated by the relatively short-term nature of these investments. We do not expect the current rate of inflation to have a material impact on our business. These investments are denominated in United States dollars.

        The primary objective of our investment activities is to preserve our capital for the purpose of funding operations, while at the same time maximizing the income we receive from our investments without significantly increasing risk. To achieve these objectives, our investment policy allows us to maintain a portfolio of cash equivalents and short- and long-term investments in a variety of securities, which could include commercial paper, money market funds and corporate and government debt securities. Our cash, cash equivalents and marketable securities at December 31, 2012 and 2011 were invested in liquid money market accounts, certificates of deposit and government securities. All market-risk sensitive instruments were entered into for non-trading purposes.

Foreign Currency Exchange Risk

        We conduct business outside the U.S. in several currencies including the British Pound Sterling, Euro, Australian Dollar, and Indian Rupee. The financial statements of our foreign subsidiaries are translated into U.S. dollars using period-end rates of exchange for assets and liabilities and average rates for the period for revenues and expenses.

        We do not hold any derivative instruments and do not engage in any hedging activities. Although our reporting currency is the U.S. dollar, we may conduct business and incur costs in the local currencies of other countries in which we may operate, make sales and buy materials. As a result, we are subject to currency translation risk. Further, changes in exchange rates between foreign currencies and the U.S. dollar could affect our future net sales and cost of sales and could result in exchange losses.

52

        We cannot accurately predict future exchange rates or the overall impact of future exchange rate fluctuations on our business, results of operations and financial condition. To the extent that our international activities recorded in local currencies increase in the future, our exposure to fluctuations in currency exchange rates will correspondingly increase and hedging activities may be considered if appropriate.

53

ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm	 	 	55	 	
Consolidated Balance Sheets as of December 31, 2012 and 2011	 	 	56	 	
Consolidated Statements of Income for the years ended December 31, 2012, 2011 and 2010	 	 	57	 	
Consolidated Statements of Comprehensive Income for the years ended December 31, 2012, 2011 and 2010	 	 	58	 	
Consolidated Statements of Stockholders' Equity for the years ended December 31, 2012, 2011 and 2010	 	 	59	 	
Consolidated Statements of Cash Flows for the years ended December 31, 2012, 2011 and 2010	 	 	60	 	
Notes to Consolidated Financial Statements	 	 	61	 	
54

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of
Synchronoss Technologies, Inc.

        We have audited the accompanying consolidated balance sheets of Synchronoss Technologies, Inc. as of December 31, 2012 and 2011, and the related consolidated statements of income and comprehensive income, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2012. Our audits also included the financial statement schedule listed in the Index at Item 15(a)(2). These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our 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 audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

        In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Synchronoss Technologies, Inc. at December 31, 2012 and 2011, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2012, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

        We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Synchronoss Technologies, Inc.'s internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 21, 2013 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP
MetroPark, New Jersey
February 21, 2013

55

SYNCHRONOSS TECHNOLOGIES, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

 
	 	December 31,	 	
 
	 	2012	 	2011	 	
ASSETS	 	
Current assets:	 	 	 	 	 	 	 	
Cash and cash equivalents	 	$	36,028	 	$	69,430	 	
Marketable securities	 	 	20,188	 	 	51,504	 	
Accounts receivable, net of allowance for doubtful accounts of $258 and $356 at December 31, 2012 and 2011, respectively	 	 	77,565	 	 	57,387	 	
Prepaid expenses and other assets	 	 	19,009	 	 	16,061	 	
Deferred tax assets	 	 	4,114	 	 	3,938	 	
 	 	 	 	 	 	
Total current assets	 	 	156,904	 	 	198,320	 	
Marketable securities	 	 	653	 	 	31,642	 	
Property and equipment, net	 	 	58,162	 	 	34,969	 	
Goodwill	 	 	115,517	 	 	54,617	 	
Intangible assets, net	 	 	110,760	 	 	63,969	 	
Deferred tax assets	 	 	6,961	 	 	12,606	 	
Other assets	 	 	3,482	 	 	2,495	 	
 	 	 	 	 	 	
Total assets	 	$	452,439	 	$	398,618	 	
 	 	 	 	 	 	
LIABILITIES AND STOCKHOLDERS' EQUITY	 	
Current liabilities:	 	 	 	 	 	 	 	
Accounts payable	 	$	8,980	 	$	7,712	 	
Accrued expenses	 	 	37,069	 	 	24,153	 	
Deferred revenues	 	 	11,320	 	 	8,834	 	
Contingent consideration obligation	 	 	3,279	 	 	4,735	 	
 	 	 	 	 	 	
Total current liabilities	 	 	60,648	 	 	45,434	 	
Lease financing obligation—long term	 	 	9,540	 	 	9,241	 	
Contingent consideration obligation—long-term	 	 	5,100	 	 	8,432	 	
Other liabilities	 	 	2,494	 	 	948	 	
Stockholders' equity:	 	 	 	 	 	 	 	
Preferred stock, $0.0001 par value; 10,000 shares authorized, 0 shares issued and outstanding at December 31, 2012 and 2011	 	 	—	 	 	—	 	
Common stock, $0.0001 par value; 100,000 shares authorized, 42,533 and 41,063 shares issued; 38,674 and 38,394 outstanding at December 31, 2012 and 2011, respectively	 	 	4	 	 	4	 	
Treasury stock, at cost (3,859 and 2,669 shares at December 31, 2012 and 2011, respectively	 	 	(67,918	)	 	(43,712	)	
Additional paid-in capital	 	 	344,469	 	 	307,586	 	
Accumulated other comprehensive loss	 	 	(365	)	 	(699	)	
Retained earnings	 	 	98,467	 	 	71,384	 	
 	 	 	 	 	 	
Total stockholders' equity	 	 	374,657	 	 	334,563	 	
 	 	 	 	 	 	
Total liabilities and stockholders' equity	 	$	452,439	 	$	398,618	 	

See accompanying notes to consolidated financial statements.

56

SYNCHRONOSS TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

 
	 	Year Ended December 31,	 	
 
	 	2012	 	2011	 	2010	 	
Net revenues	 	$	273,692	 	$	229,084	 	$	165,969	 	
Costs and expenses:	 	 	 	 	 	 	 	 	 	 	
Cost of services*	 	 	115,670	 	 	106,595	 	 	83,217	 	
Research and development	 	 	52,307	 	 	41,541	 	 	26,008	 	
Selling, general and administrative	 	 	46,680	 	 	44,886	 	 	33,743	 	
Net change in contingent consideration obligation	 	 	(6,235	)	 	2,954	 	 	4,295	 	
Depreciation and amortization	 	 	23,812	 	 	14,739	 	 	9,403	 	
 	 	 	 	 	 	 	 	
Total costs and expenses	 	 	232,234	 	 	210,715	 	 	156,666	 	
 	 	 	 	 	 	 	 	
Income from operations	 	 	41,458	 	 	18,369	 	 	9,303	 	
Interest income	 	 	1,315	 	 	821	 	 	394	 	
Interest expense	 	 	(998	)	 	(928	)	 	(917	)	
Other income	 	 	889	 	 	97	 	 	317	 	
 	 	 	 	 	 	 	 	
Income before income tax expense	 	 	42,664	 	 	18,359	 	 	9,097	 	
Income tax expense	 	 	(15,581	)	 	(3,233	)	 	(5,223	)	
 	 	 	 	 	 	 	 	
Net income	 	$	27,083	 	$	15,126	 	$	3,874	 	
 	 	 	 	 	 	 	 	
Net income per common share:	 	 	 	 	 	 	 	 	 	 	
Basic†	 	$	0.71	 	$	0.44	 	$	0.12	 	
 	 	 	 	 	 	 	 	
Diluted†	 	$	0.69	 	$	0.43	 	$	0.12	 	
 	 	 	 	 	 	 	 	
Weighted-average common shares outstanding:	 	 	 	 	 	 	 	 	 	 	
Basic†	 	 	38,195	 	 	37,372	 	 	31,971	 	
 	 	 	 	 	 	 	 	
Diluted†	 	 	39,126	 	 	38,619	 	 	33,011	 	

*
Cost of services excludes depreciation and amortization which is shown separately.

†
See notes to financial statement footnote 2.

See accompanying notes to consolidated financial statements.

57

SYNCHRONOSS TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

 
	 	Year Ended December 31,	 	
 
	 	2012	 	2011	 	2010	 	
Net Income	 	$	27,083	 	$	15,126	 	$	3,874	 	
Other comprehensive income (loss), net of tax:	 	 	 	 	 	 	 	 	 	 	
Foreign currency translation adjustments	 	 	211	 	 	(310	)	 	(192	)	
Unrealized gain (loss) on securities, (net of tax)	 	 	123	 	 	(207	)	 	17	 	
 	 	 	 	 	 	 	 	
Total other comprehensive income (loss)	 	 	334	 	 	(517	)	 	(175	)	
 	 	 	 	 	 	 	 	
Total Comprehensive Income	 	$	27,417	 	$	14,609	 	$	3,699	 	

See accompanying notes to consolidated financial statements.

58

SYNCHRONOSS TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(In thousands)

 
	 	Common Stock	 	Treasury Stock	 	 
	 	Accumulated
Other
Comprehensive
Income (Loss)	 	 

 
	 	 	 	 	 	Additional
Paid-In
Capital	 	 	 	Retained
Earnings	 	Total
Stockholders'
Equity	 	 	 	 	 	 	 	 	 	 	 	 	
 
	 	Shares	 	Amount	 	Shares	 	Amount	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance at December 31, 2009	 	 	33,104	 	$	3	 	 	(2,000	)	$	(23,713	)	$	117,797	 	$	(7	)	$	52,384	 	$	146,464	 	 	 	 	 	 	 	 	 	 	 	 	
Stock based compensation	 	 	—	 	 	—	 	 	—	 	 	—	 	 	11,167	 	 	—	 	 	—	 	 	11,167	 	 	 	 	 	 	 	 	 	 	 	 	
Issuance of restricted stock	 	 	132	 	 	—	 	 	—	 	 	—	 	 	1,804	 	 	—	 	 	—	 	 	1,804	 	 	 	 	 	 	 	 	 	 	 	 	
Issuance of common stock on exercise of options	 	 	731	 	 	—	 	 	—	 	 	—	 	 	8,090	 	 	—	 	 	—	 	 	8,090	 	 	 	 	 	 	 	 	 	 	 	 	
Issuance of common stock related to acquisition	 	 	398	 	 	—	 	 	—	 	 	—	 	 	7,136	 	 	—	 	 	—	 	 	7,136	 	 	 	 	 	 	 	 	 	 	 	 	
Issuance of common stock from secondary offering	 	 	4,414	 	 	1	 	 	—	 	 	—	 	 	106,637	 	 	—	 	 	—	 	 	106,638	 	 	 	 	 	 	 	 	 	 	 	 	
Earn-out shares issuable	 	 	84	 	 	—	 	 	—	 	 	—	 	 	664	 	 	—	 	 	—	 	 	664	 	 	 	 	 	 	 	 	 	 	 	 	
Comprehensive income:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	3,874	 	 	3,874	 	 	 	 	 	 	 	 	 	 	 	 	
Foreign currency translation	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	(192	)	 	—	 	 	(192	)	 	 	 	 	 	 	 	 	 	 	 	
Unrealized gain on investments in marketable securities, net of taxes of $41	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	17	 	 	—	 	 	17	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total comprehensive income	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	3,699	 	 	 	 	 	 	 	 	 	 	 	 	
Tax benefit from stock option exercise	 	 	—	 	 	—	 	 	—	 	 	—	 	 	2,361	 	 	—	 	 	—	 	 	2,361	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance at December 31, 2010	 	 	38,863	 	$	4	 	 	(2,000	)	$	(23,713	)	$	255,656	 	$	(182	)	$	56,258	 	$	288,023	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Stock based compensation	 	 	—	 	 	—	 	 	—	 	 	—	 	 	10,637	 	 	—	 	 	—	 	 	10,637	 	 	 	 	 	 	 	 	 	 	 	 	
Issuance of restricted stock	 	 	510	 	 	—	 	 	—	 	 	—	 	 	10,090	 	 	—	 	 	—	 	 	10,090	 	 	 	 	 	 	 	 	 	 	 	 	
Issuance of common stock on exercise of options	 	 	1,444	 	 	—	 	 	—	 	 	—	 	 	17,707	 	 	—	 	 	—	 	 	17,707	 	 	 	 	 	 	 	 	 	 	 	 	
Earn-Out shares issuable	 	 	(84	)	 	—	 	 	—	 	 	—	 	 	(664	)	 	—	 	 	—	 	 	(664	)	 	 	 	 	 	 	 	 	 	 	 	
Issuance of Earn-Out shares	 	 	330	 	 	—	 	 	—	 	 	—	 	 	10,585	 	 	—	 	 	—	 	 	10,585	 	 	 	 	 	 	 	 	 	 	 	 	
Repurchase of treasury stock	 	 	—	 	 	—	 	 	(669	)	 	(19,999	)	 	—	 	 	—	 	 	—	 	 	(19,999	)	 	 	 	 	 	 	 	 	 	 	 	
Comprehensive income:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	15,126	 	 	15,126	 	 	 	 	 	 	 	 	 	 	 	 	
Foreign currency translation	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	(310	)	 	—	 	 	(310	)	 	 	 	 	 	 	 	 	 	 	 	
Unrealized loss on investments in marketable securities, net of tax benefits of $93	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	(207	)	 	—	 	 	(207	)	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total comprehensive income	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	14,609	 	 	 	 	 	 	 	 	 	 	 	 	
Tax benefit from stock option exercise	 	 	—	 	 	—	 	 	—	 	 	—	 	 	3,575	 	 	—	 	 	—	 	 	3,575	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance at December 31, 2011	 	 	41,063	 	$	4	 	 	(2,669	)	$	(43,712	)	$	307,586	 	$	(699	)	$	71,384	 	$	334,563	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Stock based compensation	 	 	—	 	 	—	 	 	—	 	 	—	 	 	10,186	 	 	—	 	 	—	 	 	10,186	 	 	 	 	 	 	 	 	 	 	 	 	
Issuance of restricted stock	 	 	760	 	 	—	 	 	—	 	 	—	 	 	9,782	 	 	—	 	 	—	 	 	9,782	 	 	 	 	 	 	 	 	 	 	 	 	
Issuance of common stock on exercise of options	 	 	634	 	 	—	 	 	—	 	 	—	 	 	7,949	 	 	—	 	 	—	 	 	7,949	 	 	 	 	 	 	 	 	 	 	 	 	
Issuance of common stock related to acquisition	 	 	76	 	 	—	 	 	—	 	 	—	 	 	1,386	 	 	—	 	 	—	 	 	1,386	 	 	 	 	 	 	 	 	 	 	 	 	
ESPP compensation	 	 	—	 	 	—	 	 	—	 	 	—	 	 	457	 	 	—	 	 	—	 	 	457	 	 	 	 	 	 	 	 	 	 	 	 	
Repurchase of treasury stock	 	 	—	 	 	—	 	 	(1,223	)	 	(24,615	)	 	—	 	 	—	 	 	—	 	 	(24,615	)	 	 	 	 	 	 	 	 	 	 	 	
Sale of Treasury Stock in connection with an employee stock purchase plan	 	 	—	 	 	—	 	 	33	 	 	409	 	 	203	 	 	—	 	 	—	 	 	612	 	 	 	 	 	 	 	 	 	 	 	 	
Comprehensive income:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	27,083	 	 	27,083	 	 	 	 	 	 	 	 	 	 	 	 	
Foreign currency translation	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	211	 	 	—	 	 	211	 	 	 	 	 	 	 	 	 	 	 	 	
Unrealized loss on investments in marketable securities, net of tax benefits of $82	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	123	 	 	—	 	 	123	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total comprehensive income	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	—	 	 	27,417	 	 	 	 	 	 	 	 	 	 	 	 	
Tax benefit from stock option exercise	 	 	—	 	 	—	 	 	—	 	 	—	 	 	6,920	 	 	—	 	 	—	 	 	6,920	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance at December 31, 2012	 	 	42,533	 	$	4	 	 	(3,859	)	$	(67,918	)	$	344,469	 	$	(365	)	$	98,467	 	$	374,657	 	 	 	 	 	 	 	 	 	 	 	 	

See accompanying notes to consolidated financial statements.

59

SYNCHRONOSS TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, except per share data)

 
	 	Year Ended December 31,	 	
 
	 	2012	 	2011	 	2010	 	
Operating activities:	 	 	 	 	 	 	 	 	 	 	
Net income	 	$	27,083	 	$	15,126	 	$	3,874	 	
Adjustments to reconcile net income to net cash provided by operating activities:	 	 	 	 	 	 	 	 	 	 	
Depreciation and amortization expense	 	 	23,812	 	 	14,739	 	 	9,403	 	
Loss on disposal of asset	 	 	230	 	 	—	 	 	94	 	
Amortization of bond premium	 	 	1,216	 	 	622	 	 	—	 	
Proceeds from insurance claim	 	 	—	 	 	(199	)	 	(418	)	
Deferred income taxes	 	 	1,475	 	 	(642	)	 	69	 	
Non-cash interest on leased facility	 	 	921	 	 	918	 	 	913	 	
Stock-based compensation	 	 	20,425	 	 	22,051	 	 	13,637	 	
Changes in operating assets and liabilities:	 	 	 	 	 	 	 	 	 	 	
Accounts receivable, net of allowance for doubtful accounts	 	 	(11,611	)	 	(19,409	)	 	(8,740	)	
Prepaid expenses and other current assets	 	 	8,129	 	 	597	 	 	(1,927	)	
Other assets	 	 	(496	)	 	(349	)	 	(1,695	)	
Accrued payable and accrued expenses	 	 	(631	)	 	7,695	 	 	5,678	 	
Contingent consideration obligation	 	 	(8,211	)	 	2,188	 	 	4,795	 	
Excess tax benefit from the exercise of stock options	 	 	(6,920	)	 	(3,575	)	 	(2,361	)	
Other liabilities	 	 	(497	)	 	(183	)	 	(228	)	
Deferred revenues	 	 	949	 	 	3,006	 	 	(1,352	)	
 	 	 	 	 	 	 	 	
Net cash provided by operating activities	 	 	55,874	 	 	42,585	 	 	21,742	 	
Investing activities:	 	 	 	 	 	 	 	 	 	 	
Purchases of fixed assets	 	 	(33,234	)	 	(14,732	)	 	(15,423	)	
Proceeds from sale of fixed assets	 	 	—	 	 	—	 	 	55	 	
Proceeds from insurance claim	 	 	—	 	 	199	 	 	418	 	
Purchases of marketable securities available-for-sale	 	 	(13,146	)	 	(82,098	)	 	(4,723	)	
Sales and maturities of marketable securities available-for-sale	 	 	74,334	 	 	7,259	 	 	3,230	 	
Business acquired, net of cash	 	 	(105,177	)	 	(55,752	)	 	(30,779	)	
 	 	 	 	 	 	 	 	
Net cash used in investing activities	 	 	(77,223	)	 	(145,124	)	 	(47,222	)	
Financing activities:	 	 	 	 	 	 	 	 	 	 	
Proceeds from the exercise of stock options	 	 	7,949	 	 	17,707	 	 	8,090	 	
Payments on contingent consideration obligation	 	 	(2,268	)	 	(8,533	)	 	—	 	
Proceeds from secondary public offering, net of offering costs	 	 	—	 	 	—	 	 	106,637	 	
Excess tax benefit from the exercise of stock option	 	 	6,920	 	 	3,576	 	 	2,361	 	
Repurchase of common stock	 	 	(24,615	)	 	(19,999	)	 	—	 	
Proceeds from the sale of Treasury Stock in connection with an employee stock purchase plan	 	 	612	 	 	—	 	 	—	 	
Repayments of capital obligations	 	 	(1,015	)	 	(945	)	 	(949	)	
 	 	 	 	 	 	 	 	
Net (cash used) provided by in financing activities	 	 	(12,417	)	 	(8,194	)	 	116,139	 	
Effect of exchange rate changes on cash	 	 	364	 	 	(204	)	 	(216	)	
 	 	 	 	 	 	 	 	
Net (decrease) increase in cash and cash equivalents	 	 	(33,402	)	 	(110,937	)	 	90,443	 	
Cash and cash equivalents at beginning of year	 	 	69,430	 	 	180,367	 	 	89,924	 	
 	 	 	 	 	 	 	 	
Cash and cash equivalents at end of period	 	$	36,028	 	$	69,430	 	$	180,367	 	
 	 	 	 	 	 	 	 	
Supplemental disclosures of cash flow information:	 	 	 	 	 	 	 	 	 	 	
Cash paid for interest	 	$	77	 	$	—	 	$	2	 	
 	 	 	 	 	 	 	 	
Cash paid for income taxes	 	 	3,396	 	 	3,600	 	 	6,225	 	
 	 	 	 	 	 	 	 	
Supplemental disclosures of non-cash investing and financing activities:	 	 	 	 	 	 	 	 	 	 	
Issuance of common stock in connection with the acquisition	 	$	1,386	 	$	—	 	$	7,136	 	
 	 	 	 	 	 	 	 	
Issuance of common stock in connection with settlement of contingent consideration	 	 	—	 	 	8,597	 	 	—	 	

See accompanying notes to consolidated financial statements.

60

SYNCHRONOSS TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share data)

1. Description of Business

        Synchronoss Technologies, Inc. (the "Company" or "Synchronoss") is a mobile innovation company that provides software-based activation and personal cloud solutions for connected devices across the globe. Such transactions include device and service procurement, provisioning, activation, support, intelligent connectivity management and content synchronization, back-up and sharing that enable communications service providers (CSPs), cable operators/multi-services operators (MSOs), original equipment manufacturers (OEMs) with embedded connectivity (e.g. smartphones, laptops, tablets and mobile Internet devices, among others), e-Tailers/retailers and other customers to accelerate and monetize their go-to-market strategies for connected devices. This includes automating subscriber activation, order management, upgrades, service provisioning and connectivity and content management from any channel (e.g., e-commerce, telesales, enterprise, indirect and other retail outlets, etc.) to any communication service (e.g., wireless (3G, (EV-DO and HSPA), 4G, (LTE and WiMAX)), Wi-Fi, high speed access, local access, IPTV, cable, satellite TV, etc.) across any connected device type and content transfer, synchronize and share. The Company's solutions touch all aspects of connected devices on the mobile Internet.

        The Company's Activation Services and Personal Cloud platforms provide end-to-end seamless integration between customer-facing channels/applications, communication services, or devices and "back-office" infrastructure-related systems and processes. The Company's customers rely on its solutions and technology to automate the process of activation and content management for their customers' devices while delivering additional communication services. The Company's platforms also support automated customer care processes through use of highly accurate and effective speech processing technology and enable the Company's customers to offer their subscribers the ability to store in the Cloud their personal content and data which resides on their connected mobile devices, such as personal computers, smartphones and tablets. The Company's platforms are designed to be carrier-grade, high availability, flexible and scalable to enable multiple converged communication services to be managed across multiple distribution channels, including e-commerce, m-commerce, telesales, customer stores, indirect and other retail outlets, etc., allowing it to meet the rapidly changing and converging services and connected devices offered by its customers. The Company enables its customers to acquire, retain and service subscribers quickly, reliably and cost-effectively by enabling back-up, synchronization and sharing of subscriber content. Through the use of the Company's platforms, its customers can simplify the processes associated with managing the customer experience for procuring, activating, connecting, synchronizing and social media sharing connected devices and services. The extensibility, scalability and relevance of the Company's platforms enable new revenue streams and retention opportunities for its customers through new subscriber acquisitions, sale of new devices, accessories and new value-added service offerings in the Cloud, while optimizing their cost of operations and enhancing customer experience.

        The Company currently operates in and markets its solutions and services directly through its sales organizations in North America, Europe and Asia-Pacific.

        The Company's industry-leading customers include Tier 1 service providers such as AT&T Inc., Verizon Wireless, Telefonica, Orange and Vodafone, Tier 1 cable operators/MSOs like Cablevision, Comcast, and Time Warner Cable and large OEMs/e-Tailers such as Apple, Microsoft, Dell and Sony. These customers utilize the Company's platforms, technology and services to service both consumer and business customers.

61

SYNCHRONOSS TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except per share data)

2. Summary of Significant Accounting Policies

Basis of Presentation and Consolidation

        The consolidated financial statements include the accounts of the Company and its subsidiaries. All material intercompany transactions and accounts have been eliminated in consolidation.

Use of Estimates

        The preparation of financial statements in conformity with U.S. generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

Revenue Recognition and Deferred Revenue

        The Company provides services principally on a transactional or subscription basis or, at times, on a fixed fee basis and recognizes the revenues as the services are performed or delivered as described below:

        Transactional and Subscription Service Arrangements:    Transaction and subscription revenues represented approximately 67%, 77%, and 79% of revenues for the years ended December 31, 2012, 2011 and 2010, respectively. Transaction and subscription revenues consist of revenues derived from the processing of transactions through the Company's service platforms, providing enterprise portal management services on a subscription basis and maintenance agreements on software licenses. Transaction service arrangements include services such as processing equipment orders, new account set-up and activation, number port requests, credit checks and inventory management. Subscription services include hosting and maintenance support services of software products.

        Transaction revenues are principally based on a contractual price per transaction and are recognized based on the number of transactions processed during each reporting period. Revenues are recorded based on the total number of transactions processed at the applicable price established in the relevant contract. The total amount of revenues recognized is based primarily on the volume of transactions. Subscription revenues are recorded on a straight-line basis over the life of the contract for subscription services and maintenance agreements.

        Many of the Company's contracts guarantee minimum volume transactions from the customer. In these instances, if the customer's total transaction volume for the period is less than the contractual amount, the Company records revenues at the minimum guaranteed amount. At times, transaction revenues may also include billings to customers that reimburse the Company based on the number of individuals dedicated to processing transactions. Set-up fees for transactional service arrangements are deferred and recognized on a straight-line basis over the life of the contract since these amounts would not have been paid by the customer without the related transactional service arrangement. Revenues are presented net of discounts, which are volume level driven, or credits, which are performance driven, and are determined in the period in which the volume thresholds are met or the services are provided.

        Professional Service and Software License Arrangements:    Professional service and software license revenues represented approximately 33%, 23% and 21% of revenues for the years ended December 31,

62

SYNCHRONOSS TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except per share data)

2. Summary of Significant Accounting Policies (Continued)

2012, 2011 and 2010, respectively. Professional services include process and workflow consulting services and development services. Professional services, when sold with non-software transactional or subscription service arrangements, are accounted for separately when the professional services have value to the customer on a standalone basis. Professional services, when sold with software transactional or subscription service arrangements are accounted for separately when the professional services have value to the customer on a standalone basis and there is objective and reliable evidence of fair value of the professional services. When accounted for separately, professional service revenues are recognized on a monthly basis, as services are performed and all other elements of revenue recognition have been satisfied.

        In determining whether professional service revenues can be accounted for separately from transaction or subscription service revenues, the Company considers the following factors for each professional services agreement: availability of the professional services from other vendors, whether objective and reliable evidence of fair value exists of the undelivered elements, the nature of the professional services, the timing of when the professional services contract was signed in comparison to the transaction or subscription service start date and the contractual independence of the transactional or subscription service from the professional services.

        If a professional service arrangement were not to qualify for separate accounting, the Company would recognize the professional service revenues ratably over the remaining term of the transaction or subscription agreement.

        Revenue from software license arrangements is recognized when the license is delivered to its customers and all of the software revenue recognition criteria are met. When software arrangements include multiple elements, the arrangement consideration is allocated at the inception to all deliverables using the residual method providing the Company has vendor specific objective evidence ("VSOE") on all undelivered elements. The Company determines VSOE for each element based on historical stand-alone sales to third parties. When sold with non-software transaction or subscription service arrangements, the arrangement consideration is allocated at the inception of an arrangement to all deliverables using the relative selling price method. The relative selling price method allocates any discount in the arrangement proportionally to each deliverable on the basis of each deliverable's selling price. The selling price used for each deliverable will be based on VSOE if available, third-party evidence ("TPE") if vendor-specific objective evidence is not available, or estimated selling price ("ESP") if neither vendor-specific objective evidence nor third-party evidence is available. The objective of ESP is to determine the price at which the Company would transact a sale if the product or service were sold on a stand-alone basis. The Company determines ESP by considering multiple factors, including, but not limited to, geographies, market conditions, competitive landscape, internal costs, gross margin objectives, and pricing practices. ESP is generally used for offerings that are not typically sold on a stand-alone basis or for new or highly customized offerings.

        While the Company follows specific and detailed rules and guidelines related to revenue recognition, it makes and uses management judgments and estimates in connection with the revenue recognized in any reporting period, particularly in the areas described above, as well as collectability. If management made different estimates or judgments, differences in the timing of the recognition of revenue could occur.

63

SYNCHRONOSS TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except per share data)

2. Summary of Significant Accounting Policies (Continued)

        Deferred Revenue:    Deferred revenues primarily represent billings to customers for services in advance of the performance of services, with revenues recognized as the services are rendered, and also includes the fair value of deferred revenues recorded as a result of acquisitions.

Service Level Standards

        Pursuant to certain contracts, the Company is subject to service level standards and to corresponding penalties for failure to meet those standards. All performance-related penalties are reflected as a corresponding reduction of the Company's revenues. These penalties, if applicable, are recorded in the month incurred and were insignificant for the years ended December 31, 2012, 2011 and 2010, respectively.

Concentration of Credit Risk

        The Company's financial instruments that are exposed to concentration of credit risk consist primarily of cash and cash equivalents, marketable securities and accounts receivable. The Company maintains its cash and cash equivalents at several institutions. The Federal Deposit Insurance Corporation fully insures non-interest bearing bank accounts and interest bearing accounts up to $250 thousand. Although the Company's interest bearing balances exceed $250 thousand, the Company has not experienced any realized losses in such accounts and believes it is not exposed to any significant credit risk related to cash, cash equivalents and securities. The Company's cash equivalents and short-term marketable securities consist primarily of money market funds, certificates of deposit, and municipal and corporate bonds. Concentration of credit risk with respect to accounts receivable is limited because of the creditworthiness of the Company's major customers.

        The Company's top five customers accounted for 76%, 86% and 83% of net revenues for 2012, 2011 and 2010, respectively. The Company's top five customers accounted for 67% and 80% of accounts receivable at December 31, 2012 and 2011, respectively. The Company is the primary provider of e-commerce transaction management solutions to the e-commerce channels of AT&T Inc. ("AT&T"), the Company's largest customer, under an agreement which was amended in 2012 to provide that it automatically renews each calendar year unless either party notifies the other party of its intention not to renew at least sixty days prior to the end of the then-current term. For the year ended December 31, 2012, AT&T accounted for approximately 46% of the Company's revenues, compared to 51% for the year ended December 31, 2011. The loss of AT&T as a customer would have a material negative impact on the Company. The Company believes that if AT&T terminated its relationship with Synchronoss, AT&T would encounter substantial costs in replacing Synchronoss' transaction management solutions. Verizon Wireless is the only other customer that accounted for more than 10% of the Company's revenues in 2012.

Fair Value of Financial Instruments and Liabilities

        The Company includes disclosures of fair value information about financial instruments and liabilities, whether or not recognized in the balance sheet, for which it is practicable to estimate that value. Due to their short-term nature, the carrying amounts reported in the financial statements approximate the fair value for cash and cash equivalents, marketable securities, accounts receivable and accounts payable.

64

SYNCHRONOSS TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except per share data)

2. Summary of Significant Accounting Policies (Continued)

Cash and Cash Equivalents

        The Company considers all highly liquid investments purchased with a maturity of three months or less at the date of acquisition to be cash equivalents.

Marketable Securities

        Marketable securities consist of fixed income investments with a maturity of greater than three months and enhanced money market funds. These investments are classified as available-for-sale and are reported at fair value on the Company's balance sheet. The Company classifies its securities with maturity dates of 12 months or more as long term. Unrealized holding gains and losses are reported within accumulated other comprehensive loss as a separate component of stockholders' equity. If a decline in the fair value of a marketable security below the Company's cost basis is determined to be other than temporary, such marketable security is written down to its estimated fair value as a new cost basis and the amount of the write-down is included in earnings as an impairment charge. The Company has recorded temporary changes in fair value of the marketable securities but has not recorded other-than-temporary charges for the periods presented herein.

Accounts Receivable and Allowance for Doubtful Accounts

        Accounts receivable consist of amounts due to the Company from normal business activities. The Company maintains an allowance for estimated losses resulting from the inability of its customers to make required payments. The Company estimates uncollectible amounts based upon historical bad debts, current customer receivable balances, the age of customer receivable balances, the customer's financial condition and current economic trends.

Property and Equipment

        Property and equipment and leasehold improvements are stated at cost, net of accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which range from 3 to 5 years, or the lesser of the related initial term of the lease or useful life for leasehold improvements. Amortization of property and equipment recorded under a capital lease is included with depreciation expense. Expenditures for routine maintenance and repairs are charged against operations. Major replacements, improvements and additions are capitalized.

Business Combinations

        The Company accounts for business combinations in accordance with the acquisition method. The acquisition method of accounting requires that assets acquired and liabilities assumed be recorded at their fair values on the date of a business acquisition. The Company's consolidated financial statements and results of operations reflect an acquired business from the completion date of an acquisition.

        The judgments that the Company makes in determining the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact net income in periods following a business combination. The Company generally uses either the income, cost or market approach to aid in its conclusions of such fair values and asset lives. The income approach presumes that the value of an asset can be estimated by the net economic benefit to be received over

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except per share data)

2. Summary of Significant Accounting Policies (Continued)

the life of the asset, discounted to present value. The cost approach presumes that an investor would pay no more for an asset than its replacement or reproduction cost. The market approach estimates value based on what other participants in the market have paid for reasonably similar assets. Although each valuation approach is considered in valuing the assets acquired, the approach ultimately selected is based on the characteristics of the asset and the availability of information.

        For acquisitions completed after January 1, 2009, the Company records contingent consideration resulting from a business combination at its fair value on the acquisition date. Each reporting period thereafter, the Company revalues these obligations and records increases or decreases in their fair value as an adjustment to net change in contingent consideration obligation within the consolidated statement of income. Changes in the fair value of the contingent consideration obligation can result from updates in the achievement of financial targets and changes to the weighted probability of achieving those future financial targets. Significant judgment is employed in determining the appropriateness of these assumptions as of the acquisition date and for each subsequent period. Accordingly, any change in the assumptions described above, could have a material impact on the amount of the net change in contingent consideration obligation that the Company records in any given period.

Goodwill

        Goodwill represents the excess of the purchase price over the fair value of assets acquired, including other definite-lived intangible assets. Goodwill is not amortized, but reviewed annually for impairment or upon the occurrence of events or changes in circumstances that would more likely than not reduce the fair value of the reporting unit below its carrying amount. There were no impairment charges recognized during the years ended December 31, 2012, 2011 and 2010.

Impairment of Long-Lived Assets

        A review of long-lived assets for impairment is performed when events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. If an indication of impairment is present, the Company compares the estimated undiscounted future cash flows to be generated by the asset to the asset's carrying amount. If the undiscounted future cash flows are less than the carrying amount of the asset, the Company records an impairment loss equal to the amount by which the asset's carrying amount exceeds its fair value. The fair value is determined based on valuation techniques such as a comparison to fair values of similar assets or using a discounted cash flow analysis. There were no impairment charges recognized during the years ended December 31, 2012, 2011 and 2010.

Cost of Services

        Cost of services includes all direct materials, direct labor and those indirect costs related to revenues such as indirect labor, materials and supplies and facilities cost, exclusive of depreciation expense.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except per share data)

2. Summary of Significant Accounting Policies (Continued)

Research and Development

        Research and development costs are expensed as incurred, unless they meet GAAP criteria for deferral and amortization. Software development costs incurred prior to the establishment of technological feasibility do not meet these criteria, and are expensed as incurred. Amortization of software development costs is computed using the straight-line method over the estimated useful lives of the assets, 3 and 5 years. As of December 31, 2012, the Company had $2.0 million of unamortized software development costs and $1.3 million of amortization expense which was recognized during 2012. As of December 31, 2011, the Company had $3.1 million of unamortized software development costs and $567 of amortization expense which was recognized during 2011. Research and development expense consists primarily of costs related to personnel, including salaries and other personnel-related expenses, consulting fees and the cost of facilities, computer and support services used in service technology development. The Company also expenses costs relating to developing modifications and minor enhancements of its existing technology and services.

Income Taxes

        The Company accounts for the effects of income taxes that result from its activities during the current and preceding years. Under this method, deferred income tax liabilities and assets are based on the difference between the financial statement carrying amounts and the tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse or be utilized. The realization of deferred tax assets is contingent upon the generation of future taxable income. A valuation allowance is recorded if it is "more likely than not" that a portion or all of a deferred tax asset will not be realized.

        As of December 31, 2012, and 2011 the Company had total unrecognized tax benefit reserves of $529 and $533 which includes $18 and $31 for accumulated interest related to uncertain positions, respectively. Components of the reserve are classified as either current or long-term in the consolidated balance sheet based on when the Company expects each of the items to be settled. Accordingly, the Company recorded a long-term liability for unrecognized tax benefits of $529 on the balance sheet at December 31, 2012, $343 of which would reduce the effective tax rate if recognized. The Company did not have a short term liability on the balance sheet at December 31, 2012. The Company records interest and penalties accrued in relation to uncertain income tax positions below the operating income line as a component of interest expense. Tax returns for years 2009 and thereafter are subject to future examination by tax authorities.

        In 2012, the net decrease in the reserve for unrecognized tax benefits was $8 and the net decrease for interest benefit was $13. The Company expects that the amount of unrecognized tax benefits will change during 2013; however, the Company does not expect the change to have a significant impact on its results of operations or financial position.

        While the Company believes it has identified all reasonably identifiable exposures and that the reserves it has established for identifiable exposures are appropriate under the circumstances, it is possible that additional exposures exist and that exposures may be settled at amounts different than the amounts reserved. It is also possible that changes in facts and circumstances could cause the Company to either materially increase or reduce the carrying amount of its tax reserves.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except per share data)

2. Summary of Significant Accounting Policies (Continued)

Foreign Currency

        Assets and liabilities of consolidated foreign subsidiaries, whose functional currency is the local currency, are translated to U.S. dollars at year end exchange rates. Income statement items are translated to U.S. dollars at the average rates of exchange prevailing during the fiscal year. The adjustment resulting from translating the financial statements of such foreign subsidiaries to U.S. dollars is reflected as a cumulative translation adjustment and reported as a component of other comprehensive income.

        Transactions denominated in currencies other than the functional currency are recorded based on exchange rates at the time such transactions arise. Subsequent changes in exchange rates result in transaction gains or losses, which are reflected within other income in the consolidated statement of income and were not significant for all years presented.

Comprehensive Income

        Reporting on comprehensive income requires components of other comprehensive income, including unrealized gains or losses on available-for-sale securities, to be included as part of total comprehensive income. Comprehensive income is comprised of net income, translation adjustments and unrealized gains and losses on available-for-sale securities. The components of comprehensive income are included in the statements of comprehensive income.

Basic and Diluted Net Income Attributable to Common Stockholders per Common Share

        The Company calculates basic and diluted per share amounts based on net earnings adjusted for the effects to earnings that would result if contingently issuable shares related to contingent consideration to be settled in the Company's stock were reported as equity for the periods presented. To calculate basic earnings per share, the Company uses the weighted average number of common shares outstanding during the period adjusted for the weighted average number of contingently issuable shares. The weighted average numbers of shares contingently issuable are calculated as if they were outstanding as of the last day of the period. The diluted earnings per share calculation is based on the weighted average number of shares of common stock outstanding adjusted for the number of additional shares that would have been outstanding had all potentially dilutive common shares been issued. Potentially dilutive shares of common stock include stock options, non-vested share awards and contingently issuable shares related to contingent consideration to be settled in stock. The dilutive effects of stock options and restricted stock awards are based on the treasury stock method. The dilutive effects of the contingent consideration to be settled in stock are calculated as if the contingently issuable shares were outstanding as of the beginning of the period. The following table provides a reconciliation of the numerator and denominator used in computing basic and diluted net income attributable to common stockholders per common share. Stock options that are anti-dilutive

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except per share data)

2. Summary of Significant Accounting Policies (Continued)

and excluded from the following table totaled 1,840, 947, and 1,918 for the years ended December 31, 2012, 2011 and 2010, respectively.

	 	Year Ended December 31,	 	
 
	 	2012	 	2011	 	2010	 	
Numerator:	 	 	 	 	 	 	 	 	 	 	
Net income attributable to common stockholders	 	$	27,083	 	$	15,126	 	$	3,874	 	
Income effect for equity mark-to-market on contingent consideration obligation, net of tax	 	 	—	 	 	1,466	 	 	(10	)	
 	 	 	 	 	 	 	 	
Net income applicable to shares of common stock for earnings per share	 	$	27,083	 	$	16,592	 	$	3,864	 	
 	 	 	 	 	 	 	 	
Denominator:	 	 	 	 	 	 	 	 	 	 	
Weighted average common shares outstanding—basic	 	 	38,195	 	 	37,372	 	 	31,971	 	
Dilutive effect of:	 	 	 	 	 	 	 	 	 	 	
Net issuable common share equivalents	 	 	—	 	 	—	 	 	42	 	
Options and unvested restricted shares	 	 	931	 	 	1,247	 	 	998	 	
 	 	 	 	 	 	 	 	
Weighted average common shares outstanding—diluted	 	 	39,126	 	 	38,619	 	 	33,011	 	

Stock-Based Compensation

        As of December 31, 2012, the Company maintains three stock-based compensation plans. The Company utilizes the Black-Scholes pricing model to determine the fair value of stock options on the dates of grant. Restricted stock awards are measured based on the fair market values of the underlying stock on the dates of grant. The Company recognizes stock-based compensation over the requisite service period with an offsetting credit to additional paid-in capital.

        For the Company's performance restricted stock awards the Company estimates the number of shares the recipient is to receive by applying a probability of achieving the performance goals. The actual number of shares the recipient receives is determined at the end of the annual performance period based on the results achieved versus goals based on its annual performance targets, such as operating income. Once the number of awards is determined, the compensation cost is fixed and continues to be recognized using the accelerated attribution recognition over the requisite service period for each vesting tranche.

        The Company classifies benefits of tax deductions in excess of the compensation cost recognized (excess tax benefits) as a financing cash inflow with a corresponding operating cash outflow. The Company included $6.9 million, $3.6 million and $2.4 million of excess tax benefits as a financing cash inflow for the years ended December 31, 2012, 2011 and 2010, respectively.

Impact of Recently Issued Accounting Standards

        During the year ended December 31, 2012, the Company adopted amendments to disclosure requirements for common fair value measurement. These amendments result in common definition of fair value and common requirements for measurement of and disclosure requirements between U.S. GAAP and IFRS. Consequently, the amendments change some fair value measurement principles

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except per share data)

2. Summary of Significant Accounting Policies (Continued)

and disclosure requirements. The implementation of this amended accounting guidance has not had a material impact on the Company's consolidated financial statements or disclosures.

        During the year ended December 31, 2012, the Company adopted amendments to disclosure requirements for presentation of comprehensive income. This guidance requires presentation of total comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. For purposes of the interim financial statements, the Company included total comprehensive income on the face of the income statement.

        During the year ended December 31, 2012, the Company adopted amendments to simplify how entities test goodwill for impairment. These amendments permit an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. The implementation of this amended accounting guidance has not had a material impact on the Company's consolidated financial statements or disclosures.

Segment and Geographic Information

        The Company currently operates in one business segment providing critical technology services to providers of communication devices and associated subscriber services. The Company is not organized by market and is managed and operated as one business. A single management team reports to the chief operating decision maker who comprehensively manages the entire business. The Company does not operate any separate lines of business or separate business entities with respect to its services. Accordingly, the Company does not accumulate a complete set of discrete financial information with respect to separate service lines and does not have separately reportable segments. Although, the Company operates in North America, Europe and Asia-Pacific a majority of the Company's revenue and long lived assets are in the US.

        Revenues by geography are based on the billing addresses of the Company's customers. The following tables set forth revenues and property and equipment, net by geographic area:

	 	Year Ended December 31,	 	
 
	 	2012	 	2011	 	2010	 	
Revenues	 	 	 	 	 	 	 	 	 	 	
Domestic	 	$	252,292	 	$	220,406	 	$	164,524	 	
Foreign	 	 	21,400	 	 	8,678	 	 	1,445	 	
 	 	 	 	 	 	 	 	
Total	 	$	273,692	 	$	229,084	 	$	165,969	 	
 	 	 	 	 	 	 	 	
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except per share data)

2. Summary of Significant Accounting Policies (Continued)

 
	 	December 31,	 	
 
	 	2012	 	2011	 	
Property and equipment, net:	 	 	 	 	 	 	 	
Domestic	 	$	52,852	 	$	34,075	 	
Foreign	 	 	5,310	 	 	894	 	
 	 	 	 	 	 	
Total	 	$	58,162	 	$	34,969	 	
 	 	 	 	 	 	
3. Acquisition

Newbay Software Limited ("Newbay")

        On December 24, 2012 the Company acquired 100% of the capital stock of Newbay, an Ireland company, and its subsidiaries, for cash consideration of $55.5 million. Newbay has operations in Europe and the U.S.

        The Company accounted for this business combination by applying the acquisition method, and accordingly, the purchase price was allocated to the tangible assets acquired and liabilities assumed based upon their fair values at the acquisition date. The excess of the purchase price over the net tangible assets and liabilities, approximately $23.8 million was recorded as goodwill, which is not tax deductible. The Company is in the process of finalizing the purchase allocation, thus the provisional measures of deferred revenue, deferred income taxes, intangibles and goodwill are subject to change. The Company expects the purchase price allocation will be finalized in 2013.

        In December 2012, the Company entered into a patent license and settlement agreement with Newbay and its parent corporation Research in Motion, Ltd. ("RIM") (now called BlackBerry) whereby the Company granted each of RIM and Newbay a limited license to the Company's patents. As part of the business combination accounting rules, the Company calculated the fair value of the effective settlement using an income approach derived from historical and estimated future cash flow information.

        The Company believes that the acquisition of Newbay has the potential to accelerate and expand the Company's Cloud offerings. In addition the Company believes it will increase the Company's penetration of its domestic customer base and other high growth markets through cross channel marketing into Newbay's customer accounts.

        Total purchase price is summarized as follows:

	 	December 24,
2012	 	
Total consideration	 	$	55,500	 	
Closing Adjustment	 	 	(2,947	)	
 	 	 	 	
Total purchase price	 	$	52,553	 	
 	 	 	 	
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except per share data)

3. Acquisition (Continued)

Allocation of Consideration Transferred

        The following table summarizes the preliminary estimated fair values of the Newbay assets and liabilities assumed at the acquisition date:

	 	December 24,
2012	 	
Cash and cash equivalents	 	$	2,444	 	
Accounts receivable	 	 	5,748	 	
Prepaid expenses and other assets	 	 	3,838	 	
Intangible assets	 	 	27,989	 	
Property and equipment	 	 	4,543	 	
Other assets, non-current	 	 	1,089	 	
 	 	 	 	
Total identifiable assets acquired	 	 	45,651	 	
Accounts payable and accrued liabilities	 	 	
(13,575	
)	
Deferred revenue	 	 	(563	)	
Deferred tax liability	 	 	(362	)	
Captial lease	 	 	(2,348	)	
 	 	 	 	
Total liabilities assumed	 	 	(16,848	)	
Net identifiable assets acquired	 	 	
28,803	 	
Goodwill	 	 	
23,750	 	
 	 	 	 	
Net assets acquired	 	$	52,553	 	
 	 	 	 	
        The Company recorded $28.0 million in intangible assets as of the acquisition date with a weighted-average amortization period of 8 years and is amortizing the value of the trade name, technology, and customer relationships over an estimated useful life of 2, 7, and 10 years, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except per share data)

3. Acquisition (Continued)

        Intangible assets related to the Newbay acquisition as of December 31, 2012 consist of the following:
 	 	 	 	 	
Intangible assets:	 	 	 	 	
Trade name	 	$	238	 	
Accumulated amortization	 	 	—	 	
 	 	 	 	
Trade name, net	 	 	238	 	
 	 	 	 	
Technology	 	 	21,012	 	
Accumulated amortization	 	 	—	 	
 	 	 	 	
Technology, net	 	 	21,012	 	
 	 	 	 	
Customer relationships	 	 	6,739	 	
Accumulated amortization	 	 	—	 	
 	 	 	 	
Customer relationships, net	 	 	6,739	 	
 	 	 	 	
Intangibles assets, net	 	$	27,989	 	

Deferred Revenues

        In connection with the purchase price allocation, the Company estimated the fair value of the service obligations assumed from Newbay as a consequence of the acquisition. The estimated fair value of the service obligations was determined using a cost build-up approach. The cost build-up approach determines fair value by estimating the costs relating to fulfilling the obligations plus a normal profit margin of a market participant. The estimated costs to fulfill the service obligations were based on the historical direct costs and indirect costs related to Newbay's service agreements with its customers. The Company recorded $563 of deferred revenue to reflect the estimate of the fair value of Newbay's service obligations assumed.

Pro Forma

        The following unaudited pro forma financial information reflects the consolidated results of operations of Synchronoss as if the acquisition of Newbay had taken place on January 1, 2012 and 2011. The pro forma information includes adjustments for the amortization of intangible assets. The pro forma financial information is not necessarily indicative of the results of operations as they would have been had the transaction been effected on the assumed date.

	 	Year Ended
December 31,	 	
 
	 	2012	 	2011	 	
Net Sales	 	$	310,725	 	$	261,867	 	
Net earnings	 	 	23,655	 	 	5,372	 	
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except per share data)

3. Acquisition (Continued)

Spatial Systems Nominees PTY LTD ("Spatial")

        On November 30, 2012 the Company acquired 100% of the capital stock of Spatial, an Australian company with operations in the US as well, for total cash consideration of $31.0 million and issued approximately 240 shares of the Company's Common Stock. The total cash consideration was comprised of $30.0 million for the purchase of all of the shares of Spatial and $1.0 million for the estimated surplus working capital on the date of purchase. Of the 240 shares of the Company's Common Stock issued, only a portion valued at approximately $1.4 million based on the Company's November 30, 2012 closing stock price per shares were considered purchase price. The remaining value of the shares will be recognized as compensation expense and amortized over the service period of three years. In addition, the Company potentially may make payments totaling up to approximately $5.0 million in cash and may issue up to 260 shares of stock based on the ability to achieve a range of business objectives for the period from December 1, 2012 through November 30, 2013.

        The Company accounted for this business combination by applying the acquisition method, and accordingly, the purchase price was allocated to the tangible assets acquired and liabilities assumed based upon their fair values at the acquisition date. The excess of the purchase price over the net tangible assets and liabilities, approximately $24.4 million was recorded as goodwill, which is not tax deductible. The Company is in the process of finalizing the purchase allocation, thus the provisional measures of deferred revenue, deferred income taxes, intangibles and goodwill are subject to change. The Company expects the purchase price allocation will be finalized in 2013. The results of Spatial's operations have been included in the consolidated financial statements since the acquisition date. Pro forma results of operations for the acquisition have not been presented because the effects of the acquisition were not material to the Company's prior financial statements.

        The Company believes that Spatial will help to augment the Company's activation services offerings with more powerful broadband bundled offerings and expand into new and emerging markets. In addition, the acquisition of Spatial will help to increase the Company's penetration of its domestic customer base and expand the Company's engagements in the Asia-Pacific markets.

Allocation of Consideration Transferred

        Total purchase price is summarized as follows:

	 	November 30,
2012	 	
Cash consideration	 	$	30,000	 	
Working Capital Surplus	 	 	996	 	
Value of Synchronoss common stock issued	 	 	1,386	 	
Estimated fair value of the Earn-out payments	 	 	4,600	 	
 	 	 	 	
Total purchase price	 	$	36,982	 	
 	 	 	 	
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except per share data)

3. Acquisition (Continued)

        The following table summarizes the preliminary estimated fair values of the assets and liabilities assumed at the acquisition date:

	 	November 30,
2012	 	
Cash and cash equivalents	 	$	2,395	 	
Accounts receivable	 	 	6,994	 	
Prepaid expenses and other assets	 	 	229	 	
Property and equipment	 	 	584	 	
Intangible assets	 	 	11,197	 	
Other assets, non-current	 	 	70	 	
 	 	 	 	
Total identifiable assets acquired	 	 	21,469	 	
Accounts payable and accrued liabilities	 	 	
(4,900	
)	
Deferred revenue	 	 	(1,477	)	
Deferred tax liability	 	 	(2,071	)	
Other liabilities, non-current	 	 	(389	)	
 	 	 	 	
Total liabilities assumed	 	 	(8,837	)	
Net identifiable assets acquired	 	 	
12,632	 	
Goodwill	 	 	
24,350	 	
 	 	 	 	
Net assets acquired	 	$	36,982	 	
 	 	 	 	
        The Company recorded $11.2 million in intangible assets as of the acquisition date with a weighted-average amortization period of 7 years and is amortizing the value of the trade name, technology, and customer relationships over an estimated useful life of 2, 6, and 8 years, respectively. Amortization expense related to the acquired intangible assets resulting from the Spatial acquisition, which is included in depreciation and amortization expense, was approximately $139 for the year ended December 31, 2012.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except per share data)

3. Acquisition (Continued)

        Intangible assets related to the Spatial Systems acquisition as of December 31, 2012 consist of the following:
 	 	 	 	 	
Intangible assets:	 	 	 	 	
Trade name	 	$	568	 	
Accumulated amortization	 	 	(24	)	
 	 	 	 	
Trade name, net	 	 	544	 	
 	 	 	 	
Technology	 	 	4,409	 	
Accumulated amortization	 	 	(44	)	
 	 	 	 	
Technology, net	 	 	4,365	 	
 	 	 	 	
Customer relationships	 	 	6,220	 	
Accumulated amortization	 	 	(71	)	
 	 	 	 	
Customer relationships, net	 	 	6,149	 	
 	 	 	 	
Intangibles assets, net	 	$	11,058	 	

SpeechCycle Inc. ("SpeechCycle")

        On May 7, 2012, the Company acquired 100% of the capital stock of SpeechCycle, a Delaware corporation, for the total cash consideration of $27.0 million with the potential for additional earn-out consideration of up to $12.0 million based on the ability to achieve a range of business objectives. The total cash consideration was comprised of $26.0 million for the purchase of all of the shares and warrants of SpeechCycle and $1.0 million for the estimated surplus working capital on the date of purchase. The maximum earn-out that could be paid to existing employees of SpeechCycle is $9.1 million and actual amounts will be recorded as compensation expense over the service period.

        The Company accounted for this business combination by applying the acquisition method, and accordingly, the purchase price was allocated to the assets and liabilities assumed based upon their fair values at the acquisition date. The excess of the purchase price over the net assets and liabilities, approximately $12.7 million, was recorded as goodwill, which is not tax deductible. The Company is in the process of finalizing the purchase allocation, thus the provisional measures of deferred income taxes, intangibles and goodwill are subject to change. The Company expects the purchase price allocation will be finalized in 2013. The results of SpeechCycle's operations have been included in the consolidated financial statements since the acquisition date. Pro forma results of operations for the acquisition have not been presented because the effects of the acquisition were not material to the Company's prior financial statements.

        The Company believes that SpeechCycle will help to augment and expand the Company's self-service customer care solutions. In addition, the acquisition of SpeechCycle is expected to help increase the Company's penetration of its existing domestic customer base and other high growth markets through cross channel marketing into SpeechCycle's customer accounts.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except per share data)

3. Acquisition (Continued)

Allocation of Consideration Transferred

        Total purchase price is summarized as follows:

	 	May 7, 2012	 	
Cash consideration	 	$	26,000	 	
Working Capital Surplus	 	 	1,000	 	
Estimated fair value of the Earn-out payments	 	 	1,090	 	
 	 	 	 	
Total purchase price	 	$	28,090	 	
 	 	 	 	
        The following table summarizes the preliminary estimated fair values of the assets and liabilities assumed at the acquisition date:

	 	May 7, 2012	 	
Cash and cash equivalents	 	$	548	 	
Accounts receivable	 	 	1,865	 	
Prepaid expenses and other assets	 	 	91	 	
Intangible assets	 	 	15,790	 	
Other assets, non-current	 	 	7	 	
 	 	 	 	
Total identifiable assets acquired	 	 	18,301	 	
Accounts payable and accrued liabilities	 	 	
(1,896	
)	
Deferred tax liability	 	 	(1,044	)	
 	 	 	 	
Total liabilities assumed	 	 	(2,940	)	
Net identifiable assets acquired	 	 	
15,361	 	
Goodwill	 	 	
12,729	 	
 	 	 	 	
Net assets acquired	 	$	28,090	 	
 	 	 	 	
        The Company recorded $15.8 million in intangible assets as of the acquisition date with a weighted-average amortization period of 8 years and is amortizing the value of the trade name, technology, and customer relationships over an estimated useful life of 2, 7, and 10 years, respectively. Amortization expense related to the acquired intangible assets resulting from the SpeechCycle acquisition, which is included in depreciation and amortization expense, was approximately $1.3 million for the year ended December 31, 2012.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except per share data)

3. Acquisition (Continued)

        Intangible assets related to the SpeechCycle acquisition as of December 31, 2012 consist of the following:
 	 	 	 	 	
Intangible assets:	 	 	 	 	
Trade name	 	$	90	 	
Accumulated amortization	 	 	(30	)	
 	 	 	 	
Trade name, net	 	 	60	 	
 	 	 	 	
Technology	 	 	9,000	 	
Accumulated amortization	 	 	(846	)	
 	 	 	 	
Technology, net	 	 	8,154	 	
 	 	 	 	
Customer relationships	 	 	6,700	 	
Accumulated amortization	 	 	(447	)	
 	 	 	 	
Customer relationships, net	 	 	6,253	 	
 	 	 	 	
Intangibles assets, net	 	$	14,467	 	

Miyowa S.A. ("Miyowa")

        On December 30, 2011 the Company acquired 100% of the capital stock of Miyowa, a French company, for cash consideration of $50.1 million with the potential for additional earn-out consideration of up approximately $13.4 million based on the achievement of certain financial targets and contract milestones for the year ending December 31, 2012. The maximum that could be paid to existing employees of Miyowa is $2.9 million and actual amounts will be recorded as compensation expense over the service period.

        The Company accounted for this business combination by applying the acquisition method, and accordingly, the purchase price was allocated to the tangible assets acquired and liabilities assumed based upon their fair values at the acquisition date. The excess of the purchase price over the net tangible assets and liabilities, approximately $26.7 million, was recorded as goodwill, which is not tax deductible.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except per share data)

3. Acquisition (Continued)

        The following table summarizes the estimated fair values of the assets and liabilities assumed at the acquisition date:

	 	December 31, 2011	 	
Cash and cash equivalents	 	$	2,221	 	
Accounts receivable	 	 	2,781	 	
Prepaid expenses and other assets	 	 	4,477	 	
Property and equipment	 	 	194	 	
Deferred tax assets, net	 	 	8	 	
Intangible assets	 	 	32,414	 	
Other assets, non-current	 	 	113	 	
 	 	 	 	
Total identifiable assets acquired	 	 	42,208	 	
Accounts payable and accrued liabilities	 	 	
(3,964	
)	
Deferred tax liability	 	 	(6,160	)	
Deferred revenue	 	 	(182	)	
Other liabilities, non-current	 	 	(29	)	
 	 	 	 	
Total liabilities assumed	 	 	(10,335	)	
Net identifiable assets acquired	 	 	
31,873	 	
Goodwill	 	 	
26,651	 	
 	 	 	 	
Net assets acquired	 	$	58,524	 	

Acquisition-related Costs

        Acquisition-related costs recognized during the year ended December 31, 2012, including transaction costs such as employee retention, legal, accounting, valuation and other professional services, were $2.9 million.

4. Fair Value Measurements of Assets and Liabilities

        The Company classifies marketable securities as available-for-sale. The fair value hierarchy established in the guidance adopted by the Company prioritizes the inputs used in valuation techniques into three levels as follows:

•
Level 1—Observable inputs—quoted prices in active markets for identical assets and liabilities;

•
Level 2—Observable inputs other than the quoted prices in active markets for identical assets and liabilities—includes quoted prices for similar instruments, quoted prices for identical or similar instruments in inactive markets, and amounts derived from valuation models where all significant inputs are observable in active markets; and

•
Level 3—Unobservable inputs—includes amounts derived from valuation models where one or more significant inputs are unobservable and require the Company to develop relevant assumptions.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except per share data)

4. Fair Value Measurements of Assets and Liabilities (Continued)

        The following is a summary of assets and liabilities held by the Company and their related classifications under the fair value hierarchy at December 31, 2012 and 2011:

	 	December 31,	 	
 
	 	2012	 	2011	 	
Level 1(A)	 	$	41,395	 	$	99,315	 	
Level 2(B)	 	 	15,474	 	 	53,261	 	
Level 3(C)	 	 	(8,379	)	 	(13,167	)	
 	 	 	 	 	 	
Total	 	$	48,490	 	$	139,409	 	

(A)
Level 1 assets include money market funds and enhanced income money market funds which are classified as cash equivalents and marketable securities, respectively.

(B)
Level 2 assets include certificates of deposit, municipal bonds and corporate bonds which are classified as marketable securities.

(C)
Level 3 liabilities include the contingent consideration obligation.

        The Company utilizes the market approach to measure fair value for its financial assets. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets. The Company's marketable securities investments classified as Level 2 primarily utilize broker quotes in a non-active market for valuation of these securities. No transfers of assets between Level 1 and Level 2 of the fair value measurement hierarchy occurred during the year ended December 31, 2012.

        The aggregate fair value of available for sale securities and aggregate amount of unrealized gains and losses for available for sale securities at December 31, 2012 were as follows:

	 	 
	 	Aggregate
Amount of
Unrealized	 	 	
 
	 	Aggregate
Fair Value	 	 	 	 	 	
 
	 	 	 	Gains	 	Losses	 	 	 	 	 	
Due in one year or less	 	$	20,188	 	$	18	 	$	(41	)	 	 	 	 	
Due after one year, less than five years	 	 	653	 	 	1	 	 	(1	)	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
 	 	$	20,841	 	$	19	 	$	(42	)	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except per share data)

4. Fair Value Measurements of Assets and Liabilities (Continued)

        The aggregate fair value of available for sale securities and aggregate amount of unrealized gains and losses for available for sale securities at December 31, 2011 were as follows:

	 	 
	 	Aggregate
Amount of
Unrealized	 	 	
 
	 	Aggregate
Fair Value	 	 	 	 	 	
 
	 	 	 	Gains	 	Losses	 	 	 	 	 	
Due in one year or less	 	$	51,504	 	$	59	 	$	(315	)	 	 	 	 	
Due after one year, less than five years	 	 	31,642	 	 	76	 	 	(48	)	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
 	 	$	83,146	 	$	135	 	$	(363	)	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
        Unrealized gains and losses are reported as a component of accumulated other comprehensive loss in stockholders' equity. The net unrealized (loss) gain net of tax was $123 and $(207) as of December 31, 2012 and 2011, respectively. During the year ended December 31, 2012, the Company received $52.8 million in proceeds from the sale of its marketable securities and recognized $264 of net losses. The cost of securities sold is based on specific identification method. The Company evaluates investments with unrealized losses to determine if the losses are other than temporary. The Company has determined that the gross unrealized losses at December 31, 2012 and 2011 are temporary. In making this determination, the Company considered the financial condition, credit ratings and near-term prospects of the issuers, the underlying collateral of the investments, and the magnitude of the losses as compared to the cost and the length of time the investments have been in an unrealized loss position. Additionally, while the Company classifies the securities as available for sale, the Company does not currently intend to sell such investments and it is more likely than not to recover the carrying value prior to being required to sell such investments.

        The Company determined the fair value of the contingent consideration obligation based on a probability-weighted income approach derived from quarterly revenue estimates and a probability assessment with respect to the likelihood of achieving the various performance criteria. The fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement. The significant unobservable inputs used in the fair value measurement of the Company's contingent consideration obligation are the probabilities of achieving certain financial targets and contractual milestones. Significant increases (decreases) in any of those probabilities in isolation may result in a higher (lower) fair value measurement. No changes in valuation techniques occurred during the year ended December 31, 2012. During the year ended December 31, 2012, the Company paid approximately $2.3 million to the former FusionOne employees at the completion of the service period for the FusionOne contingent consideration obligation and $3.5 million to the former stock-holders of Sapience Knowledge Systems, Inc. ("SKS") and employees at the completion of the SKS Earn-out milestones.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except per share data)

4. Fair Value Measurements of Assets and Liabilities (Continued)

        The changes in fair value of the Company's Level 3 contingent consideration obligation during the year ended December 31, 2012 were as follows:

	 	Level 3	 	
Balance at December 31, 2011	 	$	13,167	 	
Fair value adjustment to contingent consideration obligation included in net income	 	 	(6,235	)	
FusionOne Earn-out payment	 	 	(2,334	)	
SKS Earn-out payment	 	 	(3,466	)	
Earn-out compensation due to Miyowa employees	 	 	203	 	
Fx impact of change in contingent consideration obligation	 	 	(20	)	
Addition of SpeechCycle Earn-out	 	 	1,090	 	
Earn-out compensation due to SpeechCycle employees	 	 	1,374	 	
Addition of SpatialInfo Earn-out	 	 	4,600	 	
 	 	 	 	
Balance at December 31, 2012	 	$	8,379	 	
 	 	 	 	
5. Property and Equipment

        Property and equipment consist of the following:

	 	December 31,	 	
 
	 	2012	 	2011	 	
Computer hardware	 	$	33,381	 	$	37,012	 	
Computer software	 	 	18,313	 	 	19,846	 	
Construction in-progress	 	 	8,755	 	 	483	 	
Furniture and fixtures	 	 	3,568	 	 	1,614	 	
Building	 	 	8,808	 	 	8,808	 	
Leasehold improvements	 	 	9,931	 	 	7,940	 	
 	 	 	 	 	 	
 	 	 	82,756	 	 	75,703	 	
Less: Accumulated depreciation	 	 	(24,594	)	 	(40,734	)	
 	 	 	 	 	 	
 	 	$	58,162	 	$	34,969	 	
 	 	 	 	 	 	
        Depreciation expense was approximately $14.5 million, $10.5 million, and $7.0 million for 2012, 2011, and 2010, respectively. Amortization of property and equipment recorded under a capital lease is included with depreciation expense.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except per share data)

6. Accrued Expenses

        Accrued expenses consist of the following:

	 	December 31,	 	
 
	 	2012	 	2011	 	
Accrued compensation and benefits	 	$	15,687	 	$	13,520	 	
Accrued third party processing fees	 	 	4,139	 	 	1,369	 	
Accrued accounting fees	 	 	928	 	 	692	 	
Accrued consulting fees	 	 	2,136	 	 	1,160	 	
Accrued acquistion costs	 	 	5,303	 	 	1,500	 	
Accrued other	 	 	6,954	 	 	5,012	 	
Accrued income tax payable	 	 	1,922	 	 	900	 	
 	 	 	 	 	 	
 	 	$	37,069	 	$	24,153	 	
 	 	 	 	 	 	
7. Capital Structure

        As of December 31, 2012, the Company's authorized capital stock was 110,000 shares of stock with a par value of $0.0001, of which 100,000 shares were designated common stock and 10,000 shares were designated preferred stock.

Common Stock

        Each holder of common stock is entitled to vote on all matters and is entitled to one vote for each share held. Dividends on common stock will be paid when, as and if declared by the Company's board of directors. No dividends have ever been declared or paid by the Company. As of December 31, 2012, there were 38,674 shares of common stock issued, 5,097 shares of common stock reserved for issuance under the Company's 2000 Stock Plan (the "2000 Plan"), 10,000 shares of common stock reserved for issuance under the Company's 2006 Equity Incentive Plan (the "2006 Plan"), and 0 shares of common stock reserved for issuance under the Company's 2010 New Hire Equity Incentive Plan (the "2010 Plan").

Preferred Stock

        There are no shares of preferred stock outstanding as of December 31, 2012 or 2011. The board of directors is authorized to issue preferred shares and has the discretion to determine the rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences of preferred stock.

Registration Rights

        Holders of shares of common stock which were issued upon conversion of the Company's Series A preferred stock are entitled to have their shares registered under the Securities Act of 1933, as amended (the "Securities Act"). Under the terms of an agreement between the Company and the holders of these securities which include registration rights, if the Company proposes to register any of its securities under the Securities Act, either for its own account or for the account of others, these

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except per share data)

7. Capital Structure (Continued)

stockholders are entitled to notice of such registration and are entitled to include their shares in such registration.

8. Stock Plans

        As of December 31, 2012, the Company maintains three stock incentive plans, the 2000 Plan, the 2006 Plan and the 2010 Plan. The Company's board of directors administers the 2000 Plan, the 2006 Plan, and the 2010 Plan and is responsible for determining the individuals to be granted options or shares, the number of options or shares each individual will receive, the price per share and the exercise period of each option.

        Under the 2000 Plan, the Company has the ability to provide employees, outside directors and consultants an opportunity to acquire a proprietary interest in the success of the Company or to increase such interest by receiving options or purchasing shares of the Company's stock at a price not less than the fair market value at the date of grant for incentive stock options and a price not less than 30% of the fair market value at the date of grant for non-qualified options. Under the 2006 Plan and 2010 Plan, the Company may grant to its employees, outside directors and consultants awards in the form of incentive stock options, non-qualified stock options, shares of restricted stock and stock units or stock appreciation rights. During the year ended December 31, 2012, options to purchase 363 shares of common stock were granted under the 2006 Plan. Under the Company's Plans, options may be exercised in whole or in part for 100% of the shares subject to vesting at any time after the date of grant. Options under the Company's 2000 and 2006 Plans generally vest 25% on the first year anniversary of the date of grant plus an additional 1/48 th  for each month of continuous service thereafter. Options under the Company's 2010 Plan generally vest the first 50% on the second year anniversary from July 19, 2010 and an additional 1/48 th  for each month of continuous service thereafter.

        During 2012, the Company issued approximately 269 shares of restricted stock and reduced the amount reserved to grant 420 shares of stock related to the 2010 performance share grant. As of December 31, 2012, the Company had a remaining 461 shares of restricted stock reserved for the 2011 performance share grant. The actual number of shares to be issued, which could range from 0 to 461, is dependent upon the Company's revenue and operating income against target. The additional shares, if any, will be issued in early 2013. As of December 31, 2012, there were 2,220 shares available for grant or award under the Company's Plans.

        The Company utilizes the Black-Scholes option pricing model for determining the estimated fair value for stock option awards. Use of a valuation model requires management to make certain assumptions with respect to selected model inputs. Expected volatility was calculated based on a weighted-average of the Company's historical stock information. The average expected life was determined using the Company's historical data. The risk-free interest rate is based on U.S. Treasury zero-coupon issues with a remaining term equal to the expected life assumed at the date of grant. The Company has never declared or paid cash dividends on its common or preferred equity and does not anticipate paying any cash dividends in the foreseeable future. Forfeitures are estimated based on

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except per share data)

8. Stock Plans (Continued)

voluntary termination behavior, as well as a historical analysis of actual option forfeitures. The weighted-average assumptions used in the Black-Scholes option pricing model are as follows:

	 	Year Ended December 31,	 	
 
	 	2012	 	2011	 	2010	 	
Expected stock price volatility	 	 	68	%	 	69	%	 	62	%	
Risk-free interest rate	 	 	0.80	%	 	1.12	%	 	2.45	%	
Expected life of options (in years)	 	 	4.8	 	 	4.7	 	 	4.9	 	
Expected dividend yield	 	 	0	%	 	0	%	 	0	%	
        The weighted-average fair value (as of the date of grant) of the options granted during the year ended December 31, 2012, 2011 and 2010 was $13.47, $17.04 and $11.18, respectively. During the years ended December 31, 2012, 2011 and 2010, the Company recorded total pre-tax stock-based compensation expense of $20.4 million ($12.9 million after tax or $0.33 per diluted share), $22.1 million ($14.1 million after tax or $0.37 per diluted share), and $13.6 million ($6.9 million after tax or $0.21 per diluted share), respectively, which includes the fair value for equity awards issued after January 1, 2006. The total stock-based compensation cost related to non-vested equity awards not yet recognized as an expense as of December 31, 2012 was approximately $33.1 million. That cost is expected to be recognized over a weighted-average period of approximately 2.50 years.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except per share data)

8. Stock Plans (Continued)

Stock Options

        The following table summarizes information about shares available for grant and stock options outstanding.
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Options	 	Number of
Options	 	Weighted-
Average
Exercise Price	 	Weighted-
Average
Remaining
Contractual
Term (Years)	 	Aggregate
Intrinsic
Value	 	
Outstanding at December 31, 2009	 	 	4,623	 	$	13.44	 	 	 	 	 	 	 	
Options Granted	 	 	1,852	 	 	21.69	 	 	 	 	 	 	 	
Options Exercised	 	 	(731	)	 	11.07	 	 	 	 	 	 	 	
Options Cancelled	 	 	(183	)	 	17.52	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Outstanding at December 31, 2010	 	 	5,561	 	 	16.36	 	 	 	 	 	 	 	
Options Granted	 	 	630	 	 	30.17	 	 	 	 	 	 	 	
Options Exercised	 	 	(1,444	)	 	12.26	 	 	 	 	 	 	 	
Options Cancelled	 	 	(449	)	 	20.21	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Outstanding at December 31, 2011	 	 	4,298	 	 	19.36	 	 	 	 	 	 	 	
Options Granted	 	 	363	 	 	24.19	 	 	 	 	 	 	 	
Options Exercised	 	 	(634	)	 	12.55	 	 	 	 	 	 	 	
Options Cancelled	 	 	(51	)	 	20.35	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	
Outstanding at December 31, 2012	 	 	3,976	 	$	20.88	 	 	4.87	 	$	15,388	 	
 	 	 	 	 	 	 	 	 	 	
Vested or expected to vest at December 31, 2012	 	 	3,824	 	$	20.70	 	 	4.83	 	$	15,275	 	
 	 	 	 	 	 	 	 	 	 	
Exercisable at December 31, 2012	 	 	2,461	 	$	18.83	 	 	4.28	 	$	13,372	 	
 	 	 	 	 	 	 	 	 	 	
        As of December 31, 2012 and 2011, the weighted-average remaining contractual life of outstanding options was approximately 4.9 and 5.0 years, respectively. As of December 31, 2012 and 2011, the weighted-average remaining contractual life of exercisable options was approximately 4.3 and 4.4 years, respectively. Options vested as of December 31, 2012 have an aggregate intrinsic value of approximately $13.4 million. Options outstanding as of December 31, 2012 have an aggregate intrinsic value of approximately $15.4 million. The total intrinsic value (the excess of the market price over the exercise price) for stock options exercised in 2012, 2011, and 2010 was approximately $9.5 million, $28.4 million, and $9.2 million, respectively. The amount of cash received from the exercise of stock options was approximately $7.9 million in 2012. For the years ended December 31, 2012 and 2011, the total fair value of vested options was approximately $13.6 million and $11.1 million, respectively. As of December 31, 2012 and 2011 the weighted-average fair value (as of the date of grant) of the non-vested options was $11.45 and $11.52, respectively. During the year ended December 31, 2012 the weighted-average fair value (as of the date of grant) of options granted, vested and forfeited was $13.47, $9.79 and $10.03, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except per share data)

8. Stock Plans (Continued)

        The following table summarizes stock options outstanding and exercisable at December 31, 2012:

	 	Outstanding	 	Exercisable	 	
Range of Exercise Price	 	Number of
Options	 	Weighted-Average
Exercise Price	 	Weighted-Average
Remaining
Contractual
Life (in years)	 	Number of
Options	 	Weighted Average
Exercise Price	 	
$0.29 - $9.93	 	 	540	 	$	8.72	 	 	3.16	 	 	539	 	$	8.72	 	
$10.04 - $14.00	 	 	951	 	$	12.81	 	 	5.86	 	 	755	 	$	12.70	 	
$15.89 - $20.71	 	 	495	 	$	19.52	 	 	5.27	 	 	153	 	$	18.92	 	
$20.91 - $24.46	 	 	485	 	$	21.61	 	 	4.43	 	 	301	 	$	21.92	 	
$26.83 - $27.92	 	 	511	 	$	27.53	 	 	4.65	 	 	270	 	$	27.58	 	
$28.46 - $30.41	 	 	229	 	$	30.16	 	 	6.24	 	 	45	 	$	30.05	 	
$30.50 - $30.50	 	 	479	 	$	30.50	 	 	5.93	 	 	120	 	$	30.50	 	
$31.71 - $38.62	 	 	286	 	$	36.28	 	 	2.46	 	 	278	 	$	36.39	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	3,976	 	 	 	 	 	 	 	 	2,461	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
        A summary of the Company's non-vested restricted stock activity and the balance at December 31, 2012, is presented below:
 	 	 	 	 	 	 	 	
Non-Vested Restricted Stock	 	Number of
Awards	 	Weighted-Average
Grant Date
Fair Value	 	
Non-vested at December 31, 2009	 	 	114	 	$	12.62	 	
Granted	 	 	132	 	$	23.86	 	
Vested	 	 	(59	)	$	14.38	 	
Forfeited	 	 	—	 	$	—	 	
 	 	 	 	 	 	 	
Non-vested at December 31, 2010	 	 	187	 	$	20.01	 	
Granted	 	 	530	 	$	27.48	 	
Vested	 	 	(186	)	$	20.66	 	
Forfeited	 	 	(20	)	$	28.50	 	
 	 	 	 	 	 	 	
Non-vested at December 31, 2011	 	 	511	 	$	27.72	 	
Granted	 	 	809	 	$	23.94	 	
Vested	 	 	(410	)	$	27.09	 	
Forfeited	 	 	(44	)	$	28.97	 	
 	 	 	 	 	 	 	
Non-vested at December 31, 2012	 	 	866	 	$	24.43	 	

Employee Stock Purchase Plan

        On February 1, 2012, the Company established a ten year Employee Stock Purchase Plan ("ESPP" or "the Plan") for certain eligible employees. The Plan is to be administered by the Company's Board of Directors. The total number of shares available for purchase under the Plan is 500 shares of the Company's Common Stock. Employees participate over a six month period through payroll withholdings and may purchase, at the end of the six month period, the Company's Common Stock at

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except per share data)

8. Stock Plans (Continued)

the lower of 85% of the fair market value on the first day of the offering period or the fair market value on the purchase date. No participant will be granted a right to purchase Common Stock under the Plan if such participant would own more than 5% of the total combined voting power of the Company. In addition, no participant may purchase more than one share of Common Stock within any purchase period.

        The expected life of ESPP shares is the average of the remaining purchase period under each offering period. The weighted-average assumptions used to value employee stock purchase rights during December 31, 2012 were as follows:

	 	Year Ended
December 31,

	 	2012	 	
Expected stock price volatility	 	 	68	%	
Risk-free interest rate	 	 	0.92	%	
Expected life of ESPP shares (in years)	 	 	0.5	 	
Expected dividend yield	 	 	0	%	
        During the year ended December 31, 2012, the Company recorded $457 of compensation expense related to the ESPP. During the year ended December 31, 2012, the Company sold a total of 33 shares of its Treasury Stock pursuant to purchases under its ESPP Plan. Cash received from purchases through the ESPP Plan during the year ended December 31, 2012, was approximately $612 and is included within the financing activities section of the consolidated statements of cash flows. There were no shares purchased during the year ended December 31, 2011. The total unrecognized compensation expense related to the ESPP was approximately $62 which is expected to be recognized over the remainder of the offering period.

Treasury Stock

        On May 8, 2012, the Company's Board of Directors authorized a stock repurchase program to purchase up to $25 million of the Company's outstanding Common Stock. The duration of the repurchase program is twelve months. Under the program, the Company may purchase shares of its Common Stock in the open market, through block trades or otherwise at prices deemed appropriate by the Company. The timing and amount of repurchase transactions under the program will depend on available working capital. As of December 31, 2012, a total of 1.2 million shares have been purchased under the program for an aggregate purchase price of $24.6 million. The Company classifies Common Stock repurchased as Treasury Stock on its balance sheet.

        On May 2, 2011, the Company's board of directors authorized a stock repurchase program to purchase up to $20 million of the Company's outstanding common stock. The duration of the repurchase program is twelve months. Under the program, the Company may purchase shares of its common stock in the open market, through block trades or otherwise at prices deemed appropriate by the Company. The timing and amount of repurchase transactions under the program will depend on market conditions and corporate and regulatory considerations. The purchases will be funded from available working capital. As of December 31, 2011, the Company completed the stock repurchase

88

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except per share data)

8. Stock Plans (Continued)

program and a total of 669 shares were repurchased for an aggregate purchase price of $20.0 million. The Company classifies common stock repurchased as treasury stock on its balance sheet.

9. 401(k) Plan

        The Company has a 401(k) plan (the "Plan") covering all eligible employees. The Plan allows for a discretionary employer match. The Company incurred and expensed $1.3 million, $1.1 million, and $782 for the years ended December 31, 2012, 2011 and 2010, respectively, in Plan match contributions.

10. Income Taxes

        The components of income before income taxes are as follows:

	 	Year Ended December 31,	 	
 
	 	2012	 	2011	 	2010	 	
Domestic	 	$	40,680	 	$	11,584	 	$	7,198	 	
Foreign	 	 	1,984	 	 	6,775	 	 	1,899	 	
 	 	 	 	 	 	 	 	
Total	 	$	42,664	 	$	18,359	 	$	9,097	 	
 	 	 	 	 	 	 	 	
        The components of income tax (expense) benefit are as follows:

	 	Year Ended December 31,	 	
 
	 	2012	 	2011	 	2010	 	
Current:	 	 	 	 	 	 	 	 	 	 	
Federal	 	$	(10,544	)	$	(2,328	)	$	(2,672	)	
State	 	 	(2,409	)	 	(718	)	 	(1,733	)	
Foreign	 	 	(1,076	)	 	(829	)	 	(742	)	
Deferred:	 	 	 	 	 	 	 	 	 	 	
Federal	 	 	(1,809	)	 	29	 	 	(713	)	
State	 	 	(227	)	 	562	 	 	510	 	
Foreign	 	 	484	 	 	51	 	 	127	 	
 	 	 	 	 	 	 	 	
Income tax expense	 	$	(15,581	)	$	(3,233	)	$	(5,223	)	
 	 	 	 	 	 	 	 	
89

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except per share data)

10. Income Taxes (Continued)

        A reconciliation of the statutory tax rates and the effective tax rates for the years ended December 31, 2012, 2011 and 2010 are as follows:

	 	Year Ended
December 31,	 	
 
	 	2012	 	2011	 	2010	 	
Statutory rate	 	 	35	%	 	34	%	 	35	%	
State taxes, net of federal benefit	 	 	4	%	 	—	 	 	7	%	
Effect of Rates Different than Statutory	 	 	(1	)%	 	(6	)%	 	(2	)%	
Non-deductible stock based compensation	 	 	1	%	 	(1	)%	 	6	%	
Other permanent adjustments	 	 	1	%	 	1	%	 	1	%	
Fair market value adjustment on Earn-out	 	 	(5	)%	 	5	%	 	18	%	
Research and development credit	 	 	(1	)%	 	(8	)%	 	(5	)%	
Federal net operating losses	 	 	—	 	 	(9	)%	 	—	 	
Other	 	 	3	%	 	2	%	 	(3	)%	
 	 	 	 	 	 	 	 	
Net	 	 	37	%	 	18	%	 	57	%	
 	 	 	 	 	 	 	 	
        Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax assets and liabilities are as follows:

	 	December 31,	 	
 
	 	2012	 	2011	 	
Deferred tax assets:	 	 	 	 	 	 	 	
Accrued liabilities	 	$	108	 	$	507	 	
Deferred revenue	 	 	532	 	 	303	 	
Bad debts reserve	 	 	40	 	 	142	 	
Deferred compensation	 	 	12,671	 	 	11,196	 	
Federal net operating loss carry forwards	 	 	24,658	 	 	23,404	 	
State net operating loss carry forwards	 	 	2,970	 	 	3,585	 	
Foreign net operating loss carry forwards	 	 	7,423	 	 	4,908	 	
Deferred rent	 	 	477	 	 	127	 	
Capital loss carryforward	 	 	119	 	 	—	 	
Other	 	 	1,060	 	 	211	 	
 	 	 	 	 	 	
Total deferred tax assets	 	$	50,058	 	$	44,383	 	
Deferred tax liabilities:	 	 	 	 	 	 	 	
Intangible assets	 	$	(31,611	)	$	(21,395	)	
Fixed assets	 	 	(7,372	)	 	(6,191	)	
 	 	 	 	 	 	
Total deferred tax liabilities	 	 	(38,983	)	 	(27,586	)	
Less: valuation allowance	 	 	—	 	 	(253	)	
 	 	 	 	 	 	
Net Deferred Income Tax Assets	 	$	11,075	 	$	16,544	 	
 	 	 	 	 	 	
90

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except per share data)

10. Income Taxes (Continued)

        The following table indicates where net deferred income taxes have been classified in the Balance Sheet:

	 	December 31,	 	
 
	 	2012	 	2011	 	
Current deferred tax assets	 	$	4,114	 	$	3,959	 	
Less: Valuation allowance	 	 	—	 	 	(21	)	
 	 	 	 	 	 	
Net current deferred tax assets	 	 	4,114	 	 	3,938	 	
Non-current deferred tax assets	 	 	6,961	 	 	12,837	 	
Less: Valuation allowance	 	 	—	 	 	(231	)	
 	 	 	 	 	 	
Net non-current deferred tax assets	 	 	6,961	 	 	12,606	 	
 	 	 	 	 	 	
Net Deferred Tax Assets	 	$	11,075	 	$	16,544	 	
 	 	 	 	 	 	
        At December 31, 2012, the Company had approximately $70.5 million of federal net operating losses, approximately $60.6 million of state net operating losses, and approximately $36.9 million of foreign net operating losses. These federal and state net operating loss carryforwards begin to expire in 2013 and are subject to certain limitations under Internal Revenue Code Section 382 due to the changes in ownership of the acquired companies. The foreign net operating losses generally do not expire.

        During 2012, the Company settled the examination of its 2009 federal tax return with the Internal Revenue Service, resulting in a small refund.

        In January 2013, the Income Tax Department of India closed the 2009 income tax examination of the Company's wholly-owned subsidiary, Synchronoss Technologies India, without changes. Examinations of 2010 and 2011 are in progress. The Company believes the result of these audits will not have a material effect on its financial position or results of operations.

91

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except per share data)

10. Income Taxes (Continued)

        The Company has not provided taxes for undistributed earnings of its foreign subsidiaries except to the extent that the Company does not plan to reinvest such earnings indefinitely outside the United States. If the cumulative foreign earnings exceed the amount the Company intends to reinvest in foreign countries in the future, the Company would provide for taxes on such excess amount. The undistributed earnings of the foreign subsidiaries which the Company plans to reinvest indefinitely outside the United States is approximately $13.1 million.

        A reconciliation of the amounts of unrecognized tax benefits excluding interest is as follows:
 	 	 	 	 	
Unrecognized tax benefit at December 31, 2009	 	 	875	 	
Increases for tax positions taken during prior year	 	 	22	 	
Decreases for tax positions taken during prior year	 	 	(44	)	
Reduction due to lapse of applicable statue of limitations	 	 	(460	)	
Increases for tax positions of current period	 	 	153	 	
 	 	 	 	
Unrecognized tax benefit at December 31, 2010	 	 	546	 	
Increases for tax positions taken during prior year	 	 	17	 	
Decreases for tax positions taken during prior year	 	 	(78	)	
Reduction due to lapse of applicable statue of limitations	 	 	(169	)	
Increases for tax positions of current period	 	 	187	 	
 	 	 	 	
Unrecognized tax benefit at December 31, 2011	 	 	503	 	
Increases for tax positions taken during prior year	 	 	141	 	
Decreases for tax positions taken during prior year	 	 	—	 	
Reduction due to lapse of applicable statue of limitations	 	 	(158	)	
Increases for tax positions of current period	 	 	25	 	
 	 	 	 	
Unrecognized tax benefit at December 31, 2012	 	 	511	 	
 	 	 	 	
        The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in interest expense. The liability for unrecognized tax benefits includes accrued interest of $18 and $31 at December 31, 2012 and 2011, respectively.

92

SYNCHRONOSS TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except per share data)

11. Commitments and Contingencies

Leases

        The Company leases office space, automobiles and office equipment under non-cancellable lease agreements, which expire through December 2025. Aggregate annual future minimum lease payments under these non-cancellable leases are as follows:
 	 	 	 	 	
Year Ending December 31:	 	 	 	 	
2013	 	$	11,369	 	
2014	 	 	9,316	 	
2015	 	 	7,342	 	
2016	 	 	5,681	 	
2017 and thereafter	 	 	23,257	 	
 	 	 	 	
 	 	$	56,965	 	
 	 	 	 	
        Rent expense for the years ended December 31, 2012, 2011 and 2010 was $5.7 million, $2.9 million, and $2.2 million, respectively.

12. Goodwill and Intangibles

Goodwill

        The following table shows the adjustment to goodwill during 2012 and 2011:
 	 	 	 	 	
Balance at December 31, 2010	 	$	19,063	 	
Acquisitions	 	 	37,191	 	
Reclassifications, adjustments and other	 	 	(1,637	)	
 	 	 	 	
Balance at December 31, 2011	 	$	54,617	 	
Acquisitions	 	 	61,105	 	
Reclassifications, adjustments and other	 	 	(205	)	
 	 	 	 	
Balance at December 31, 2012	 	$	115,517	 	
 	 	 	 	
        The reclassifications, adjustment and other of $205 for the year 2012 is primarily related to adjustments to deferred taxes as a result of changes to acquired tax attributes. The reclassifications, adjustment and other of $1.6 million for the year 2011 is primarily related to the Company's deferred taxes as a result of changes to the apportionment used related to its state effective tax rate.

        The Company performs an impairment study of the Company's goodwill annually. There were no impairment charges recognized during the years ended December 31, 2012 and 2011.

Other Intangible Assets

        The Company's intangible assets with definite lives consist primarily of trade names, technology, and customer lists and relationships. These intangible assets are being amortized on the straight-line method over the estimated useful lives of the assets ranging from 2-25 years. Amortization expense

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except per share data)

12. Goodwill and Intangibles (Continued)

related to currently existing intangible assets for the years ended December 31, 2012, 2011 and 2010 was $8.7 million, $3.6 million, and $2.2 million, respectively.

        The Company's intangible assets consist of the following:

	 	December 31, 2012	 	
Intangible assets:	 	 	 	 	
Trade name	 	$	1,487	 	
Accumulated amortization	 	 	(237	)	
 	 	 	 	
Trade name, net	 	 	1,250	 	
 	 	 	 	
Technology	 	 	65,280	 	
Accumulated amortization	 	 	(7,515	)	
 	 	 	 	
Technology, net	 	 	57,765	 	
 	 	 	 	
Customer lists and relationships	 	 	57,373	 	
Accumulated amortization	 	 	(7,480	)	
 	 	 	 	
Customer lists and relationships, net	 	 	49,893	 	
 	 	 	 	
Capitalized software and patents	 	 	2,460	 	
Accumulated amortization	 	 	(608	)	
 	 	 	 	
Capitalized software and patents, net	 	 	1,852	 	
 	 	 	 	
Intangibles assets, net	 	$	110,760	 	

 	 	 	 	 	
 
	 	December 31, 2011	 	
Intangible assets:	 	 	 	 	
Trade name	 	$	591	 	
Accumulated amortization	 	 	(90	)	
 	 	 	 	
Trade name, net	 	 	501	 	
 	 	 	 	
Technology	 	 	30,858	 	
Accumulated amortization	 	 	(2,835	)	
 	 	 	 	
Technology, net	 	 	28,023	 	
 	 	 	 	
Customer lists and relationships	 	 	37,714	 	
Accumulated amortization	 	 	(4,243	)	
 	 	 	 	
Customer lists and relationships, net	 	 	33,471	 	
 	 	 	 	
Capitalized software and patents	 	 	1,974	 	
Accumulated amortization	 	 	—	 	
 	 	 	 	
Capitalized software and patents, net	 	 	1,974	 	
 	 	 	 	
Intangibles assets, net	 	$	63,969	 	
 	 	 	 	
94

SYNCHRONOSS TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except per share data)

12. Goodwill and Intangibles (Continued)

        Estimated annual amortization expense of its intangible assets for the next five years is as follows:
 	 	 	 	 	
Period ended December 31:	 	 	 	 	
2013	 	$	14,276	 	
2014	 	 	14,150	 	
2015	 	 	13,726	 	
2016	 	 	13,726	 	
2017	 	 	13,726	 	
13. Legal Matters

        On January 4, 2011, the Company filed a complaint in the United States District Court for the District of Wisconsin (Civ Act. No. 11-CV-02) against Dashwire, Inc. ("Dashwire"), claiming that Dashwire has infringed, and continues to infringe, several of the Company's patents. The Company filed an Amended Complaint against Dashwire on April 22, 2011. As a result of these claims, Dashwire filed a complaint against the Company in the same court asserting that the Company was infringing two of the Dashwire patents which it recently acquired from Intellectual Venture Partners. On July 29, 2011, the Company entered into a patent license and settlement agreement with Dashwire whereby Dashwire received a limited license to certain of the Company's specific Cloud management patents. In accordance with the terms of the patent license and settlement agreement, the parties dismissed the above complaints.

        Except for the above claims, the Company is not currently subject to any legal proceedings that could have a material adverse effect on its operations; however, the Company may from time to time become a party to various legal proceedings arising in the ordinary course of its business. For instance, on August 26, 2011, the Company filed a complaint in the United States District Court for the District of New Jersey (Civ Act. No. 11-4947 (FLW/LHG) against Newbay Software, Inc. and Newbay Software, Ltd. (collectively, "Newbay"), claiming that Newbay has infringed, and continues to infringe, several of its patents. On November 28, 2011, Newbay filed an answer to its complaint and asserted certain counterclaims that its patents at issue were invalid. On December 28, 2012, the Company entered into a patent license and settlement agreement with Newbay and its parent corporation Research in Motion, Ltd. ("RIM") whereby the Company granted each of RIM and Newbay a limited license to its patents. As part of the business combination accounting rules the Company calculated the fair value of the affective settlement using an income approach derived from historical and estimated future cash flow information. As a result of entering into the patent license and settlement agreement, the parties dismissed the above complaints. In addition, on October 4, 2011, the Company filed a complaint in the United States District Court for the District of New Jersey (Civ Act. No. 3:11-cv-05811 FLW-TJB) against Assurion, Inc. ("Assurion"), claiming that Assurion has infringed, and continues to infringe, several of the Company's patents. On February 3, 2012, Assurion filed an answer to the Company's complaint and asserted certain counterclaims that the Company's patents at issue are invalid. In addition, on November 21, 2011, the Company filed an amended complaint in the United States District Court for the District of New Jersey (Civ Act. No. 3:11-cv-06713) against OnMobile Global Limited, VoxMobili, Inc. and VolMobili, S.A. ("collectively, VoxMobili"), claiming that VoxMobili has infringed, and continues to infringe, several of its patents. On April 2, 2012, VoxMobili filed an answer to the Company's complaint and asserted certain counterclaims that the

95

SYNCHRONOSS TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(In thousands, except per share data)

13. Legal Matters (Continued)

Company's patents at issue are invalid. Although due to the inherent uncertainties of litigation, the Company cannot predict the outcome of the actions at this time, the Company continues to pursue its claims and believe that any counterclaims are without merit, and the Company intends to defend all of such counterclaims.

14. Subsequent Events Review

        During January 2013, subsequent to the Company's acquisitions, the Company implemented personnel reductions and other cost cutting measures to streamline operations and merge functions. As a result, the Company will reduce its aggregate workforce by approximately 10% and consolidate some of its locations. The expected separation costs of approximately $5 to $7 million are related to the staffing reductions that were implemented in the first quarter of 2013 across all departments and expected office closures to address the redundancies resulting from the Company's acquisitions.

        On January 2, 2013, President Obama signed into law the American Taxpayer Relief Act of 2012. This Act retroactively extended many Code provisions (known as the "tax extenders") that expired at the end of 2011 or 2012, including the tax credit for research and experimentation expenses, which was extended for amounts paid or incurred on or before December 31, 2013. The Company estimates that the 2012 tax credit for research and experimentation expenses will reduce the 2013 annual effective tax rate by 1% to 3%. It will be recorded as a discrete benefit in the first quarter of 2013 in accordance with the date of enactment.

96

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

        Not applicable.

ITEM 9A.    CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

        Under the supervision and with the participation of the Company's management, including its Chief Executive Officer and Chief Financial Officer, the Company evaluated the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of December 31, 2012. Based upon that evaluation, the Company's Chief Executive Officer and Chief Financial Officer concluded that its disclosure controls and procedures were effective as of December 31, 2012, to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, are recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and that such information is accumulated and communicated to the Company's management, including its Chief Executive Officer, as appropriate to allow timely decisions regarding required disclosures.

Management's Annual Report on Internal Control over Financial Reporting

        The Company's management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the Company's principal executive and principal financial officers and effected by the Company's board of directors, management and other personnel, 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 and includes those policies and procedures that:

•
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;

•
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

•
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.

        To assist management, the Company has established procedures to verify and monitor its internal controls. Because of its inherent limitations, however, internal control over financial reporting may not prevent or detect misstatements. 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.

        The Company's management assessed the effectiveness of its internal control over financial reporting as of December 31, 2012. In making this assessment, the Company's management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework .

97

        Based on the Company's assessment, management concluded that, as of December 31, 2012, its internal control over financial reporting was effective.

        The effectiveness of the Company's internal control over financial reporting as of December 31, 2012 has been audited by Ernst & Young LLP, its independent registered public accounting firm, as stated in their report which is included in Item 9 of this Annual Report on Form 10-K.

Changes in Internal Control over Financial Reporting

        There were no changes in the Company's internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rule 13a-15 that was conducted during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

        The Company's management, including its Chief Executive Officer and Chief Financial Officer, does not expect that its disclosure controls or its internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company's operations have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

98

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of
Synchronoss Technologies, Inc.

        We have audited Synchronoss Technologies, Inc.'s internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Synchronoss Technologies, Inc.'s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the company's internal control over financial reporting based on our audit.

        We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

        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 (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) 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 (3) 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.

        In our opinion, Synchronoss Technologies, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2012, based on the COSO criteria.

        We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Synchronoss Technologies, Inc. as of December 31, 2012 and 2011 and the related consolidated statements of income and comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended December 31, 2012 of Synchronoss Technologies, Inc. and our report dated February 21, 2013 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP
Metropark, New Jersey
February 21, 2013

99

ITEM 9B.    OTHER INFORMATION

        None.
PART III

ITEM 10.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

        (a)   Identification of Directors. Information concerning the directors of Synchronoss is set forth under the heading "Election of Directors" in the Synchronoss Proxy Statement for the 2012 Annual Meeting of Stockholders and is incorporated herein by reference.

        (b)   Audit Committee Financial Expert. Information concerning Synchronoss' audit committee financial expert is set forth under the heading "Audit Committee" in the Synchronoss Proxy Statement for the 2013 Annual Meeting of Stockholders and is incorporated herein by reference.

        (c)   Identification of the Audit Committee. Information concerning the audit committee of Synchronoss is set forth under the heading "Audit Committee" in the Synchronoss Proxy Statement for the 2013 Annual Meeting of Stockholders and is incorporated herein by reference.

        (d)   Section 16(a) Beneficial Ownership Reporting Compliance. Information concerning compliance with beneficial ownership reporting requirements is set forth under the caption "Section 16(a) Beneficial Ownership Reporting Compliance" in the Synchronoss Proxy Statement for the 2013 Annual Meeting of Stockholders and is incorporated herein by reference.

        (e)   Code of Ethics. Information concerning the Synchronoss Code of Business Conduct is set forth under the caption "Code of Business Conduct" in the Synchronoss Proxy Statement for the 2013 Annual Meeting of Stockholders and is incorporated herein by reference. The Code of Business Conduct can also be found on our website, www.synchronoss.com.

ITEM 11.    EXECUTIVE COMPENSATION

        Information concerning executive compensation is set forth under the headings "Compensation of Executive Officers" in the Synchronoss Proxy Statement for the 2013 Annual Meeting of Stockholders and is incorporated herein by reference.

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

        Information concerning shares of Synchronoss equity securities beneficially owned by certain beneficial owners and by management is set forth under the heading "Equity Security Ownership of Certain Beneficial Owners and Management" in the Synchronoss Proxy Statement for the 2013 Annual Meeting of Stockholders and is incorporated herein by reference.

Securities Authorized for Issuance Under Equity Compensation Plan

        The following table provides information as of December 31, 2012 with respect to the shares of our common stock that may be issuable under our existing equity compensation plans.

100

        The following information is as of December 31, 2012:

	 	(a)	 	(b)	 	(c)	 	
Plan Category	 	Number of Securities
to be Issued Upon
Exercise of
Outstanding Options
and Rights	 	Weighted-Average
Exercise Price of
Outstanding
Options and Rights	 	Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans
(Excluding Securities
Reflected in Column (a))	 	
Equity compensation plans approved by security holders	 	 	3,910,626	 	$	20.90	 	 	2,220,188	 	
Equity compensation plans not approved by security holders	 	 	65,153	 	$	19.32	 	 	—	 	
 	 	 	 	 	 	 	 	 	
Totals	 	 	3,975,779	 	$	20.88	 	 	2,220,188	 	
 	 	 	 	 	 	 	 	 	
ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

        Information concerning certain relationships and related transactions is set forth under the heading "Certain Related Party Transactions" in the Synchronoss Proxy Statement for the 2013 Annual Meeting of Stockholders and is incorporated herein by reference.

ITEM 14.    PRINCIPAL ACCOUNTANT FEES AND SERVICES

        Information concerning fees and services of the Company's principal accountants is set forth under the heading "Report of the Audit Committee" and "Independent Registered Public Accounting Firm's Fees" in the Synchronoss Proxy Statement for the 2013 Annual Meeting of Stockholders and is incorporated herein by reference.

101

PART IV

ITEM 15.    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

        (a)(1)  Financial Statements:
 	 	 	
Report of Independent Registered Public Accounting Firm	 	55	
Balance Sheets	 	56	
Statements of Income	 	57	
Statements of Comprehensive Income	 	58	
Statements of Stockholders' Equity	 	59	
Statements of Cash Flows	 	60	
Notes to Financial Statements	 	61	
        (a)(2)  Schedule for the years ended December 31, 2012, 2011, 2010:

        II—Valuation and Qualifying Accounts

        All other Schedules have been omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.

        (a)(3)  Exhibits:
 	 	 	 	
Exhibit No.	 	Description	
 	3.1	 	Restated Certificate of Incorporation of the Registrant, incorporated by reference to Registrant's Registration Statement on Form S-1 (Commission File No. 333-132080).	
 	  	 	 	
 	3.2	 	Amended and Restated Bylaws of the Registrant, incorporated by reference to Registrant's Registration Statement on Form S-1 (Commission File No. 333-132080).	
 	  	 	 	
 	4.1	 	Reference is made to Exhibits 3.1 and 3.2.	
 	  	 	 	
 	4.2	 	Amended and Restated Investors Rights Agreement, dated December 22, 2000, by and among the Registrant, certain stockholders and the investors listed on the signature pages thereto, incorporated by reference to Registrant's Registration Statement on Form S-1 (Commission File No. 333-132080).	
 	  	 	 	
 	4.3	 	Amendment No. 1 to Synchronoss Technologies, Inc. Amended and Restated Investors Rights Agreement, dated April 27, 2001, by and among the Registrant, certain stockholders and the investors listed on the signature pages thereto, incorporated by reference to Registrant's Registration Statement on Form S-1 (Commission File No. 333-132080).	
 	  	 	 	
 	4.4	 	Registration Rights Agreement, dated November 13, 2000, by and among the Registrant and the investors listed on the signature pages thereto, incorporated by reference to Registrant's Registration Statement on Form S-1 (Commission File No. 333-132080).	
 	  	 	 	
 	4.5	 	Amendment No. 1 to Synchronoss Technologies, Inc. Registration Rights Agreement, dated May 21, 2001, by and among the Registrant, certain stockholders listed on the signature pages thereto and Silicon Valley Bank, incorporated by reference to Registrant's Registration Statement on Form S-1 (Commission File No. 333-132080).	
 	  	 	 	
 	10.1	 	Form of Indemnification Agreement between the Registrant and each of its directors and executive officers, incorporated by reference to Registrant's Registration Statement on Form S-1 (Commission File No. 333-132080).	

102

 	 	 	 	
Exhibit No.	 	Description	
 	10.2	 	Synchronoss Technologies, Inc. 2000 Stock Plan and forms of agreements thereunder, incorporated by reference to Registrant's Registration Statement on Form S-1 (Commission File No. 333-132080).	
 	10.3	 	Amendment No. 1 to Synchronoss Technologies, Inc. 2000 Stock Plan, incorporated by reference to Registrant's Registration Statement on Form S-1 (Commission File No. 333-132080).	
 	  	 	 	
 	10.4	 	2006 Equity Incentive Plan, as amended and restated, incorporated by reference to Registrant's Schedule 14A dated April 8, 2010.	
 	  	 	 	
 	10.4.1	 	2010 New Hire Equity Incentive Plan, incorporated by reference to Registrant's Registration Statement on Form S-8 (Commission File No. 333-168745).	
 	  	 	 	
 	10.5	 	Employee Stock Purchase Plan, incorporated by reference to Registrant's Annual Report on Form 10-K for the year ended December 31, 2011.	
 	  	 	 	
 	10.6	 	Lease Agreement between the Registrant and Triple Net Investments XXV, L.P. for the premises located at Lehigh Valley Industrial Park VII, Bethlehem, Pennsylvania, dated as of May 16, 2008, as amended, incorporated by reference to Registrant's Annual Report on Form 10-K for the year ended December 31, 2008.	
 	  	 	 	
 	10.7	 	Lease Agreement between the Registrant and Wells Reit—Bridgewater NJ, LLC for the premises located at 200 Crossing Boulevard, Bridgewater, New Jersey, dated as of October 27, 2011, incorporated by reference to Registrant's Annual Report on Form 10-K for the year ended December 31, 2011.	
 	  	 	 	
 	10.8	 	Loan & Security Agreement between the Registrant and Silicon Valley Bank, dated as of May 21, 2001, incorporated by reference to Registrant's Registration Statement on Form S-1 (Commission File No. 333-132080).	
 	  	 	 	
 	10.9	‡	Cingular Master Services Agreement, effective September 1, 2005 by and between the Registrant and Cingular Wireless LLC, incorporated by reference to Registrant's Annual Report on Form 10-K for the year ended December 31, 2008.	
 	  	 	 	
 	10.10	†	Employment Agreement dated as of December 31, 2011 between the Registrant and Stephen G. Waldis, incorporated by reference to Registrant's Annual report on form 10-K for the year ended December 31, 2011.	
 	  	 	 	
 	10.11	†	Employment Agreement dated as of December 31, 2011 between the Registrant and Lawrence R. Irving, incorporated by reference to Registrant's Annual report on form 10-K for the year ended December 31, 2011.	
 	  	 	 	
 	10.12	†	Employment Agreement dated as of December 31, 2011 between the Registrant and Robert Garcia, incorporated by reference to Registrant's Annual report on form 10-K for the year ended December 31, 2011.	
 	  	 	 	
 	10.13	†	Employment Agreement dated as of December 31, 2011 between the Registrant and Chris Putnam, incorporated by reference to Registrant's Annual report on form 10-K for the year ended December 31, 2011.	
 	  	 	 	
 	10.14	†	Employment Agreement dated as of December 31, 2011 between the Registrant and Biju Nair, incorporated by reference to Registrant's Annual report on form 10-K for the year ended December 31, 2011.	
 	  	 	 	
 	10.15	†	Employment Agreement dated as of January 1, 2012 between the Registrant and David Berry.	

103

 	 	 	 	
Exhibit No.	 	Description	
 	10.16	 	Share Purchase Agreement dated as of December 24, 2012 by and between Synchronoss Technologies Ireland Ltd. and Research In Motion Ltd.	
 	  	 	 	
 	21.1	 	List of subsidiaries.	
 	  	 	 	
 	23.1	 	Consent of Ernst & Young, LLP, Independent Registered Public Accounting Firm.	
 	  	 	 	
 	24	 	Power of Attorney (see signature page to this Annual Report on Form 10-K)	
 	  	 	 	
 	31.1	 	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Exchange Act, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002	
 	  	 	 	
 	31.2	 	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002	
 	  	 	 	
 	32.1	 	Certification of Chief Executive Officer pursuant to Rule 13a-14(b) of the Exchange Act and section 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002	
 	  	 	 	
 	32.2	 	Certification of Chief Financial Officer pursuant to Rule 13a-14(b) of the Exchange Act and section 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002	
 	  	 	 	
 	101.INS	 	XBRL Instance Document	
 	  	 	 	
 	101.SCH	 	XBRL Schema Document	
 	  	 	 	
 	101.CAL	 	XBRL Calculation Linkbase Document	
 	  	 	 	
 	101.DEF	 	XBRL Taxonomy Extension Definition Linkbase	
 	  	 	 	
 	101.LAB	 	XBRL Labels Linkbase Document	
 	  	 	 	
 	101.PRE	 	XBRL Presentation Linkbase Document	

†
Compensation Arrangement.

‡
Confidential treatment has been requested for portions of this document. The omitted portions of this document have been filed with the Securities and Exchange Commission.

        (b)   Exhibits.

        See (a)(3) above.

        (c)   Financial Statement Schedule.

104

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS
December 31, 2012, 2011, and 2010

 
	 	Beginning
Balance	 	Additions	 	Reductions	 	Ending
Balance	 	
 
	 	(In thousands)
	 	
Allowance for doubtful receivables	 	 	 	 	 	 	 	 	 	 	 	 	 	
2012	 	$	356	 	$	230	 	$	(328	)	$	258	 	
2011	 	$	558	 	$	(202	)	$	—	 	$	356	 	
2010	 	$	830	 	$	324	 	$	(596	)	$	558	 	
105

SIGNATURES

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

 	
By	
 	
/s/ STEPHEN G. WALDIS

Stephen G. Waldis
Chairman of the Board and Chief
Executive Officer	
February 21, 2013
POWER OF ATTORNEY

        KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Ronald J. Prague or Lawrence R. Irving, or either of them, each with the power of substitution, their attorney-in-fact, to sign any amendments to this Form 10-K (including post-effective amendments), and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or their substitute or substitutes, may do or cause to be done by virtue hereof.

        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	 	Title	 	Date	

 	

 	
/s/ STEPHEN G. WALDIS

Stephen G. Waldis	 	Chief Executive Officer and Director
(Principal Executive Officer)	 	February 21, 2013	

/s/ LAWRENCE R. IRVING

Lawrence R. Irving	
 	
Chief Financial Officer
(Principal Financial Officer)	
 	
February 21, 2013	

/s/ KAREN ROSENBERGER

Karen L. Rosenberger	
 	
Chief Accounting Officer
(Principal Accounting Officer)	
 	
February 21, 2013	

/s/ WILLIAM J. CADOGAN

William J. Cadogan	
 	
Director	
 	
February 21, 2013	
106

 	 	 	 	 	
Signature	 	Title	 	Date	

 	

 	
/s/ CHARLES E. HOFFMAN

Charles E. Hoffman	 	Director	 	February 21, 2013	

/s/ THOMAS J. HOPKINS

Thomas J. Hopkins	
 	
Director	
 	
February 21, 2013	

/s/ JAMES M. MCCORMICK

James M. McCormick	
 	
Director	
 	
February 21, 2013	

/s/ DONNIE M. MOORE

Donnie M. Moore	
 	
Director	
 	
February 21, 2013	
107

QuickLinks
SYNCHRONOSS TECHNOLOGIES, INC.
FORM 10-K DECEMBER 31, 2012
TABLE OF CONTENTS
PART I
ITEM 1. BUSINESS
Executive Officers of the Registrant
ITEM 1A. RISK FACTORS
ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 2. PROPERTIES
ITEM 3. LEGAL PROCEEDINGS
ITEM 4. MINE SAFETY DISCLOSURES
PART II
ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
ITEM 6. SELECTED FINANCIAL DATA
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm
SYNCHRONOSS TECHNOLOGIES, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except per share data)
SYNCHRONOSS TECHNOLOGIES, INC. CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data)
SYNCHRONOSS TECHNOLOGIES, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands)
SYNCHRONOSS TECHNOLOGIES, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (In thousands)
SYNCHRONOSS TECHNOLOGIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands, except per share data)
SYNCHRONOSS TECHNOLOGIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except per share data)
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
ITEM 9A. CONTROLS AND PROCEDURES
Report of Independent Registered Public Accounting Firm
ITEM 9B. OTHER INFORMATION
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
ITEM 11. EXECUTIVE COMPENSATION
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS December 31, 2012, 2011, and 2010
SIGNATURES
POWER OF ATTORNEY

Exhibit 10.15
 
EMPLOYMENT AGREEMENT
 
THIS AGREEMENT is entered into as of January 1, 2012, by and between David Berry (the “Executive”) and Synchronoss Technologies, Inc., a Delaware corporation (the “Company”).  Except as otherwise provided herein, defined terms are set forth in Section 10 below.
 
1.             Duties and Scope of Employment.
 
(a)           Position.  For the term of his employment under this Agreement (the “Employment”), the Company agrees to continue to employ the Executive in the position of Executive Vice President and Chief Innovation Officer.  The Executive shall report to the Company’s President or Chief Executive Officer or his or her designee.
 
(b)           Obligations to the Company.  During his Employment, the Executive (i) shall devote his full business efforts and time to the Company, (ii) shall not engage in any other employment, consulting or other business activity that would create a conflict of interest with the Company, (iii) shall not assist any person or entity in competing with the Company or in preparing to compete with the Company, and (iv) shall comply with the Company’s policies and rules, as they may be in effect from time to time.
 
(c)           No Conflicting Obligations.  The Executive represents and warrants to the Company that he is under no obligations or commitments, whether contractual or otherwise, that are inconsistent with his obligations under this Agreement.  The Executive represents and warrants that he will not use or disclose, in connection with his Employment, any trade secrets or other proprietary information or intellectual property in which the Executive or any other person has any right, title or interest and that his Employment will not infringe or violate the rights of any other person.  The Executive represents and warrants to the Company that he has returned all property and confidential information belonging to any prior employer.
 
(d)           Commencement Date.  The Executive has previously commenced full-time Employment.  This Agreement shall govern the terms of Executive’s Employment effective as of January 1, 2012 (the “Commencement Date”) through the Term (as defined in Section 5(a) below).
 
2.             Compensation
 
(a)           Salary.  The Company shall pay the Executive as compensation for his services a base salary at a gross annual rate of not less than $300,000.  Such salary shall be payable in accordance with the Company’s standard payroll procedures.  (The annual compensation specified in this Subsection (a), together with any increases in such compensation that the Company may grant from time to time, is referred to in this Agreement as “Base Salary.”).
 
(b)           Incentive Bonuses.  The Executive shall be eligible for an annual incentive bonus with a target amount equal to 60% of his Base Salary (the “Target Bonus”).  The Executive’s bonus (if any) shall be awarded based on criteria established by the Company’s Board of Directors (the “Board”) or its Compensation Committee.  The Executive shall not be entitled to an incentive

 
bonus if he is not employed by the Company on the last day of the fiscal year for which such bonus is payable.  Any bonus for a fiscal year shall be paid within 2½ months after the close of that fiscal year.  The determinations of the Board or its Compensation Committee with respect to such bonus shall be final and binding.
 
3.             Vacation and Employee Benefits.  During his Employment, the Executive shall be eligible for paid vacations in accordance with the Company’s vacation policy, as it may be amended from time to time, with a minimum of 20 vacation days per year.  During his Employment, the Executive shall be eligible to participate in the employee benefit plans maintained by the Company, subject in each case to the generally applicable terms and conditions of the plan in question and to the determinations of any person or committee administering such plan.
 
4.             Business Expenses.  During his Employment, the Executive shall be authorized to incur necessary and reasonable travel, entertainment and other business expenses in connection with his duties hereunder.  The Company shall reimburse the Executive for such expenses upon presentation of an itemized account and appropriate supporting documentation, all in accordance with the Company’s generally applicable policies.  Notwithstanding anything to the contrary herein, except to the extent any expense or reimbursement provided pursuant to this Agreement does not constitute a “deferral of compensation” within the meaning of Section 409A of the Code, (a) the amount of expenses eligible for reimbursement provided to the Executive during any calendar year will not affect the amount of expenses eligible for reimbursement or in-kind benefits provided to the Executive in any other calendar year, (b) the reimbursements for expenses for which the Executive is entitled to be reimbursed shall be made on or before the last day of the calendar year following the calendar year in which the applicable expense is incurred, and (c) the right to payment or reimbursement hereunder may not be liquidated or exchanged for any other benefit.
 
5.             Term of Employment.
 
(a)           Employment Term.  The Company hereby employs Executive to render services to the Company in the position and with the duties and responsibilities described in Section 1 for the period commencing on the Commencement Date and ending upon the earlier of (i) three (3) years from such date, and (ii) the date Executive’s Employment is terminated in accordance with Section 5(b) (the “Term”).  After the initial three-year term of this Agreement Executive’s Employment shall be “at will” and either Executive or the Company shall be entitled to terminate Executive’s Employment at any time and for any reason, with or without cause.  However, this Agreement will not govern the terms of Executive’s employment after the Term.
 
(b)           Termination of Employment.  The Company may terminate the Executive’s Employment at any time and for any reason (or no reason), and with or without Cause, by giving the Executive 30 days’ advance notice in writing.  The Executive may terminate his Employment by giving the Company 30 days’ advance notice in writing.  The Executive’s Employment shall terminate automatically in the event of his death.  The termination of the Executive’s Employment shall not limit or otherwise affect his obligations under Section 7.
 
2

 
(c)           Rights Upon Termination.  Upon Executive’s termination of Employment for any reason, Executive shall be entitled to the compensation, benefits and reimbursements described in Sections 1, 2, 3, and 4 for the period preceding the effective date of such termination.  Upon the termination of Executive’s Employment under certain circumstances, Executive may be entitled to additional severance pay benefits described in Section 6.  The payments under this Agreement shall fully discharge all responsibilities of the Company to the Executive.  This Agreement shall terminate when all obligations of the parties hereunder have been satisfied.
 
(d)           Rights Upon Death.  If Executive’s Employment ends due to death, Executive’s estate shall be entitled to receive an amount equal to his target bonus for the fiscal year in which his death occurred, prorated based on the number of days he was employed by the Company during that fiscal year.  All amounts under this Section 5(d) shall be paid on the first regularly scheduled payroll date that occurs on or after 60 days after the Executive’s date of death.
 
(e)           Rights Upon Permanent Disability.  If Executive’s Employment ends due to Permanent Disability and a Separation occurs, Executive shall be entitled to receive (i) an amount equal to his Target Bonus for the fiscal year in which his Employment ended, prorated based on the number of days he was employed by the Company during that fiscal year, and (ii) a lump sum amount equal to the product of (A) 24 and (B) the monthly amount the Company was paying on behalf of the Executive and his eligible dependents with respect to the Company’s health insurance plans in which the Executive and his eligible dependents were participants as of the date of Separation.  The amounts payable under this Section 5(e) shall be paid on the first regularly scheduled payroll date that occurs on or after 60 days after the Executive’s Separation.
 
6.             Termination Benefits.
 
(a)           Preconditions.  Any other provision of this Agreement notwithstanding, Subsections (b) and (c) below shall not apply unless the Executive:
 
(i)            Has executed a general release of all claims the Executive may have against the Company or persons affiliated with the Company (substantially in the form attached hereto as Exhibit A) (the “Release”);
 
(ii)           Has returned all property of the Company in the Executive’s possession; and
 
(iii)          If requested by the Board, has resigned as a member of the Board and as a member of the boards of directors of all subsidiaries of the Company, to the extent applicable.
 
The Executive must execute and return the Release within the period of time set forth in the Release (the “Release Deadline”).  The Release Deadline will in no event be later than 50 days after the Executive’s Separation.  If the Executive fails to return the Release on or before the Release Deadline or if the Executive revokes the Release, then the Executive will not be entitled to the benefits described in this Section 6.
 
(b)           Severance Pay in the Absence of a Change in Control.  If, during the term of this Agreement and prior to the occurrence of a Change in Control or more than 12 months following a Change in Control, the Company terminates the Executive’s Employment with the Company for a reason other than Cause or Permanent Disability and a Separation occurs, then the
 
3

 
Company shall pay the Executive a lump sum severance payment equal to (i) one times his Base Salary in effect at the time of the termination of Employment, (ii) his average annual bonus based on the actual amounts received in the immediately preceding two years and (iii) the product of (A) 12 and (B) the monthly amount the Company was paying on behalf of the Executive and his eligible dependents with respect to the Company’s health insurance plans in which the Executive and his eligible dependents were participants as of the date of Separation.  If, during the term of this Agreement and prior to the occurrence of a Change in Control or more than 12 months following a Change in Control, Executive resigns his Employment for Good Reason and a Separation occurs, then the Company shall pay the Executive a lump sum severance payment equal to (i) one times his Base Salary in effect at the time of the termination of Employment (ii) his average annual bonus based on the actual amounts received in the immediately preceding two years and a lump sum amount equal to the product of (A) 24 and (B) the monthly amount the Company was paying on behalf of the Executive and his eligible dependents with respect to the Company’s health insurance plans in which the Executive and his eligible dependents were participants as of the date of Separation.  Notwithstanding anything herein to the contrary, in the event that the Executive Employment is terminated for a reason other than Cause or Permanent Disability or the Executive resigns his Employment for Good Reason under this Subsection (b) within two years after commencement of employment with the Company, then in lieu of using the average bonus received in the immediately preceding two years for the above calculation, such calculation shall use his Target Bonus in the year of termination if such termination under this Subsection (b) occurs in the first year of employment with the Company and the actual bonus the Executive received during the first year of employment with the Company if such termination under this Subsection (b) occurs in the second year of employment with the Company.  However, the amount of the severance payment under this Subsection (b) shall be reduced by the amount of any severance pay or pay in lieu of notice that the Executive receives from the Company under a federal or state statute (including, without limitation, the Worker Adjustment and Retraining Notification Act).
 
(c)           Severance Pay in Connection with a Change in Control.  If, during the term of this Agreement and within 12 months following a Change in Control, the Executive is subject to an Involuntary Termination, then (i) the Company shall pay the Executive a lump sum severance payment equal to (x) one-and one-half times his Base Salary in effect at the time of the termination of Employment plus one and one-half times the Executive’s average bonus received in the immediately preceding two years and (y) a lump sum amount equal to the product of (A) 18 and (B) the monthly amount the Company was paying on behalf of the Executive and his eligible dependents with respect to the Company’s health insurance plans in which the Executive and his eligible dependents were participants as of the date of Separation, (ii) the vesting of all stock options and shares of restricted stock granted by the Company and held by the Executive shall be accelerated in full as of the date of the Involuntary Termination.  Notwithstanding anything herein to the contrary, in the event that the Executive is subject to an Involuntary Termination under this Subsection (c) within two years after commencement of employment with the Company, then in lieu of using the average bonus received in the immediately preceding two years for the above calculation, such calculation shall use his Target Bonus in the year of the Involuntary Termination if such termination under this Subsection (c) occurs in the first year of employment with the Company and the actual bonus the Executive received during the first year of employment with the Company if such termination under this Subsection (c) occurs in the second year of employment with the Company.  However, the amount of the severance payment
 
4

 
under this Subsection (c) shall be reduced by the amount of any severance pay or pay in lieu of notice that the Executive receives from the Company under a federal or state statute (including, without limitation, the Worker Adjustment and Retraining Notification Act).
 
(d)           Commencement of Severance Payments.  Payment of the severance pay provided for under this Agreement will be made on the first regularly scheduled payroll date that occurs on or after 60 days after the Executive’s Separation, but only if the Executive has complied with the release and other preconditions set forth in Subsection (a) (to the extent applicable).
 
7.             Non-Solicitation and Non-Disclosure.
 
(a)           Non-Solicitation.  During the period commencing on the date of this Agreement and continuing until the second anniversary of the date the Executive’s Employment terminated for any reason, the Executive shall not directly or indirectly, personally or through others, solicit or attempt to solicit (on the Executive’s own behalf or on behalf of any other person or entity) either (i) the employment of any employee or consultant of the Company or any of the Company’s affiliates or (ii) the business of any customer of the Company or any of the Company’s affiliates in a manner that could constitute engaging in sale of goods or services in or for a Restricted Business or otherwise interferes with Company’s relationship with such customer.
 
(b)           Non-Competition.  As one of the Company’s executive and management personnel and officer, Executive has obtained extensive and valuable knowledge and confidential information concerning the business of the Company, including certain trade secrets the Company wishes to protect.  Executive further acknowledges that during his Employment he will have access to and knowledge of Proprietary Information.  To protect the Company’s Proprietary Information, Executives agrees that during his Employment with the Company, whether full-time or half-time and for a period of 24 months after his last day of Employment with the Company, he will not directly or indirectly engage in (whether as an employee, consultant, proprietor, partner, director or otherwise), or have any ownership interest in, or participate in the financing, operation, management or control of, any person, firm, corporation or business that engages in a Restricted Business in a Restricted Territory.  It is agreed that ownership of (i) no more than one percent (1%) of the outstanding voting stock of a publicly traded corporation, or (ii) any stock he presently owns shall not constitute a violation of this provision.
 
(c)           Reasonable.  Executive agrees and acknowledges that the time limitation on the restrictions in this Section 7, combined with the geographic scope, is reasonable.  Executive also acknowledges and agrees that this provision is reasonably necessary for the protection of Proprietary Information, that through his Employment he shall receive adequate consideration for any loss of opportunity associated with the provisions herein, and that these provisions provide a reasonable way of protecting the Company’s business value which will be imparted to him.  If any restriction set forth in this Section 7 is found by any court of competent jurisdiction to be unenforceable because it extends for too long a period of time or over too great a range of activities or in too broad a geographic area, it shall be interpreted to extend only over the maximum period of time, range of activities or geographic area as to which it may be enforceable.
 
5

 
(d)           Non-Disclosure.  The Executive has entered into a Proprietary Information and Inventions Agreement with the Company, which is incorporated herein by this reference.
 
8.             Successors.
 
(a)           Company’s Successors.  This Agreement shall be binding upon any successor (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company’s business and/or assets.  For all purposes under this Agreement, the term “Company” shall include any successor to the Company’s business and/or assets which becomes bound by this Agreement.
 
(b)           Employee’s Successors.  This Agreement and all rights of the Executive hereunder shall inure to the benefit of, and be enforceable by, the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.
 
9.             Taxes.
 
(a)           Withholding Taxes.  All payments made under this Agreement shall be subject to reduction to reflect applicable withholding and payroll taxes or other deductions required to be withheld by law.
 
(b)           Tax Advice.  The Executive is encouraged to obtain his own tax advice regarding his compensation from the Company.  The Executive agrees that the Company does not have a duty to design its compensation policies in a manner that minimizes the Executive’s tax liabilities, and the Executive shall not make any claim against the Company or the Board related to tax liabilities arising from the Executive’s compensation.
 
(c)           Parachute Taxes.  Notwithstanding anything in this Agreement to the contrary, if it shall be determined that any payment or distribution by the Company to or for the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (“Total Payments”) to be made to Executive would otherwise exceed the amount (the “Safe Harbor Amount”) that could be received by Executive without the imposition of an excise tax under Section 4999 of Code, then the Total Payments shall be reduced to the extent, and only to the extent, necessary to assure that their aggregate present value, as determined in accordance the applicable provisions of Section 280G of the Code and the regulations thereunder, does not exceed the greater of the following dollar amounts (the “Benefit Limit”): (i) the Safe Harbor Amount, or (ii) the greatest after-tax amount payable to Executive after taking into account any excise tax imposed under section 4999 of the Code on the Total Payments.  All determinations to be made under this subparagraph (c) shall be made by an independent public accounting firm selected by the Company before the date of the Change of Control (the “Accounting Firm”).  In determining whether such Benefit Limit is exceeded, the Accounting Firm shall make a reasonable determination of the value to be assigned to the restrictive covenants in effect for Executive pursuant to Section 7 of this Agreement, and the amount of his potential parachute payment under Section 280G of the Code shall reduced by the value of those restrictive covenants to the extent consistent with Section 280G of the Code and the regulations thereunder. To the extent a reduction to the Total Payments is required to be made in accordance with this subparagraph (c), such reduction and/or cancellation of
 
6

 
acceleration of equity awards shall occur in the order that provides the maximum economic benefit to Executive.  In the event that acceleration of equity awards is to be reduced, such acceleration of vesting also shall be canceled in the order that provides the maximum economic benefit to Executive.  Notwithstanding the foregoing, any reduction shall be made in a manner consistent with the requirements of section 409A of the Code and where two economically equivalent amounts are subject to reduction but payable at different times, such amounts shall be reduced on a pro rata basis but not below zero.  All of the fees and expenses of the Accounting Firm in performing the determinations referred to in this subparagraph (c) shall be borne solely by the Company.  The Company agrees to indemnify and hold harmless the Accounting Firm from any and all claims, damages and expenses resulting from or relating to its determinations pursuant to this subparagraph (c), except for claims, damages or expenses resulting from the gross negligence or willful misconduct of the Accounting Firm.
 
(d)           Section 409A.  Each payment made under this Agreement shall be treated as a separate payment and the right to a series of installment payments under this Agreement is to be treated as a right to a series of separate payments.  If the Company determines that the Executive is a “specified employee” under Section 409A(a)(2)(B)(i) of the Code at the time of his Separation, then (i) the severance payments under Section 6, to the extent that they are subject to Section 409A of the Code, shall commence on the first business day following (A) expiration of the six-month period measured from the Executive’s Separation, or (B) the date of the Executive’s death, and (ii) the installments that otherwise would have been paid prior to such date will be paid in a lump sum when such payments commence.
 
10.          Definitions.
 
(a)           Cause.  For all purposes under this Agreement, “Cause” shall mean:
 
(i)            An unauthorized use or disclosure by the Executive of the Company’s confidential information or trade secrets, which use or disclosure causes material harm to the Company;
 
(ii)           A material breach by the Executive of any material agreement between the Executive and the Company;
 
(iii)          A material failure by the Executive to comply with the Company’s written policies or rules;
 
(iv)          The Executive’s conviction of, or plea of “guilty” or “no contest” to, a felony under the laws of the United States or any State thereof;
 
(v)           The Executive’s gross negligence or willful misconduct which causes material harm to the Company;
 
(vi)          A continued failure by the Executive to perform reasonably assigned duties after receiving written notification of such failure from the Board; or
 
(vii)         A failure by the Executive to cooperate in good faith with a governmental or internal investigation of the Company or its directors, officers or employees, if the Company has requested the Executive’s cooperation.
 
7

 
(b)           Change of Control.  For all purposes under this Agreement, “Change of Control” shall mean the occurrence of:
 
(i)            The acquisition, by a person or persons acting as a group, of the Company’s stock that, together with other stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the Company;
 
(ii)           The acquisition, during a 12-month period ending on the date of the most recent acquisition, by a person or persons acting as a group, of 30% or more of the total voting power of the Company;
 
(iii)          The replacement of a majority of the members of the Board, during any 12-month period, by directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of such appointment or election; or
 
(iv)          The acquisition, during a 12-month period ending on the date of the most recent acquisition, by a person or persons acting as a group, of the Company’s assets having a total gross fair market value (determined without regard to any liabilities associated with such assets) of 80% or more of the total gross fair market value of all of the assets of the Company (determined without regard to any liabilities associated with such assets) immediately prior to such acquisition or acquisitions.
 
Notwithstanding the foregoing, a Change of Control shall not be deemed to occur unless such transaction also qualifies as an event under Treas. Reg. §1.409A-3(i)(5)(v) (change in the ownership of a corporation), Treas. Reg. §1.409A-3(i)(5)(vi) (change in the effective control of a corporation), or Treas. Reg. §1.409A-3(i)(5)(vii) (change in the ownership of a substantial portion of a corporation’s assets).
 
(c)           Code.  For all purposes under this Agreement, “Code” shall mean the Internal Revenue Code of 1986, as amended.
 
(d)           Good Reason.  For all purposes under this Agreement, “Good Reason” shall mean:
 
(i)            a change in the Executive’s position with the Company that materially reduces his level of authority or responsibility;
 
(ii)           a reduction in the Executive’s base salary by more than 10% unless pursuant to a Company-wide salary reduction affecting all Executives proportionately;
 
(iii)          relocation of the Executive’s principal workplace by more than 50 miles;
 
(iv)          a substantial reduction, without good business reasons, of the facilities and perquisites (including office space and location) available to the Executive immediately prior to such reduction; or
 
(v)           a material reduction in the kind or level of employee benefits to which the Executive is entitled immediately prior to such reduction with the result that the Executive’s overall benefits package is significantly reduced, unless such reduction is made in connection with a reduction in
 
8

 
the kind or level of employee benefits of employees of the Company generally.
 
A condition shall not be considered “Good Reason” unless the Executive gives the Company written notice of such condition within 90 days after such condition comes into existence and the Company fails to remedy such condition within 30 days after receiving the Executive’s written notice.  In addition, the Executive’s resignation must occur within 12 months after the condition comes into existence.
 
(e)           Involuntary Termination.  For all purposes under this Agreement, “Involuntary Termination” shall mean either (i) the Company terminates the Executive’s Employment with the Company for a reason other than Cause or Permanent Disability and a Separation occurs, or (ii) the Executive resigns his Employment for Good Reason and a Separation occurs.
 
(f)            Permanent Disability.  For all purposes under this Agreement, “Permanent Disability” shall mean the Executive’s inability to perform the essential functions of the Executive’s position, with or without reasonable accommodation, for a period of at least 120 consecutive days because of a physical or mental impairment.
 
(g)           Proprietary Information.  For all purposes under this Agreement, “Proprietary Information” shall mean any and all confidential and/or proprietary knowledge, data or information of the Company.  By way of illustration but not limitation, Proprietary Information includes (i) trade secrets, inventions, mask works, ideas, processes, formulas, source and object codes, data, programs, other works of authorship, know-how, improvements, discoveries, developments, designs and techniques; and (ii) information regarding plans for research, development, new products, marketing and selling, business plans, budgets and unpublished financial statements, licenses, prices and costs, suppliers and customers; and (iii) information regarding the skills and compensation of other employees of the Company.
 
(h)           Restricted Business.  For all purposes under this Agreement, “Restricted Business” shall mean the design, development, marketing or sales of software, or any other process, system, product, or service marketed, sold or under development by the Company at the time Executive’s Employment with the Company ends.
 
(i)            Restricted Territory.  For all purposes under this Agreement, “Restricted Territory” shall mean any state, county, or locality in the United States in which the Company conducts business.
 
(j)            Separation.  For all purposes under this Employment Agreement, “Separation” means a “separation from service,” as defined in the regulations under Section 409A of the Code.
 
11.          Miscellaneous Provisions.
 
(a)           Notice.  Notices and all other communications contemplated by this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered, when delivered by FedEx with delivery charges prepaid, or when mailed by U.S. registered or certified mail, return receipt requested and postage prepaid.  In the case of the Executive, mailed notices shall be addressed to him at the home address that he most recently communicated to the
 
9

 
Company in writing.  In the case of the Company, mailed notices shall be addressed to its corporate headquarters, and all notices shall be directed to the attention of its Secretary.
 
(b)           Modifications and Waivers.  No provision of this Agreement shall be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by the Executive and by an authorized officer of the Company (other than the Executive).  No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time.
 
(c)           Whole Agreement.  This Agreement and the Proprietary Information and Inventions Agreement supersede and replace any prior agreements, representations or understandings (whether oral or written and whether express or implied) between the Executive and the Company and constitute the complete agreement between the Executive and the Company regarding the subject matter set forth herein.
 
(d)           Choice of Law and Severability.  This Agreement shall be interpreted in accordance with the laws of the State of New Jersey (except their provisions governing the choice of law).  If any provision of this Agreement becomes or is deemed invalid, illegal or unenforceable in any applicable jurisdiction by reason of the scope, extent or duration of its coverage, then such provision shall be deemed amended to the minimum extent necessary to conform to applicable law so as to be valid and enforceable or, if such provision cannot be so amended without materially altering the intention of the parties, then such provision shall be stricken and the remainder of this Agreement shall continue in full force and effect.  If any provision of this Agreement is rendered illegal by any present or future statute, law, ordinance or regulation (collectively the “Law”), then such provision shall be curtailed or limited only to the minimum extent necessary to bring such provision into compliance with the Law.  All the other terms and provisions of this Agreement shall continue in full force and effect without impairment or limitation.
 
(e)           No Assignment.  This Agreement and all rights and obligations of the Executive hereunder are personal to the Executive and may not be transferred or assigned by the Executive at any time.  The Company may assign its rights under this Agreement to any entity that assumes the Company’s obligations hereunder in connection with any sale or transfer of all or a substantial portion of the Company’s assets to such entity.
 
(f)            Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
 
10

 
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year first above written.

 	/s/ David Berry	
 	David Berry	

 	SYNCHRONOSS TECHNOLOGIES, INC.	

 	By	 /s/ Stephen G. Waldis	
 	 	Stephen G. Waldis	
 	 	President and Chief Executive Officer	

11

Exhibit 10.16
 
EXECUTION

SHARE PURCHASE AGREEMENT
 
dated as of
 
December 24, 2012
 
by and
 
among
 
SYNCHRONOSS TECHNOLOGIES IRELAND, LTD
 
as Buyer
 
and
 
RESEARCH IN MOTION LIMITED
 
as Seller

 
TABLE OF CONTENTS
 
 	 	Page	
 	 	 	
ARTICLE I	GENERAL	1	
 	 	
Section 1.01	Defined Terms	1	
 	 	
ARTICLE II	PURCHASE AND SALE	7	
 	 	
Section 2.01	Purchase and Sale of the Shares	7	
 	 	 	
Section 2.02	Closing	7	
 	 	 	
Section 2.03	Purchase Price	8	
 	 	 	
Section 2.04	Closing Adjustment	8	
 	 	 	
Section 2.05	Closing Deliveries by the Seller	8	
 	 	 	
Section 2.06	Closing Deliveries by the Buyer	9	
 	 	 	
Section 2.07	Post-Closing Statements	9	
 	 	 	
Section 2.08	Reconciliation of Post-Closing Statements	9	
 	 	 	
Section 2.09	Post-Closing Adjustment	11	
 	 	 	
Section 2.10	Payments and Computations	11	
 	 	 	
Section 2.11	Withholding Rights	11	
 	 	
ARTICLE III	REPRESENTATIONS AND WARRANTIES OF THE SELLER	11	
 	 	
Section 3.01	Incorporation, Qualification and Authority of the Seller	12	
 	 	 	
Section 3.02	Incorporation, Qualification and Authority of the Business Subsidiaries	12	
 	 	 	
Section 3.03	Capital Structure of the Business Subsidiaries	12	
 	 	 	
Section 3.04	No Conflict	13	
 	 	 	
Section 3.05	Consents and Approvals	13	
 	 	 	
Section 3.06	Financial Information; Absence of Undisclosed Liabilities	14	
 	 	 	
Section 3.07	Absence of Certain Changes or Events	14	
 	 	 	
Section 3.08	Absence of Litigation	14	
 	 	 	
Section 3.09	Compliance	14	
 	 	 	
Section 3.10	Governmental Licenses and Permits	15	
 	 	 	
Section 3.11	Intellectual Property	15	
 	 	 	
Section 3.12	Environmental Matters	18	
 	 	 	
Section 3.13	Material Contracts	18	
 	 	 	
Section 3.14	Employment and Employee Benefits Matters	20	
 	 	 	
Section 3.15	Assets; Absence of Liens and Encumbrances; Real Property	22	
 	 	 	
Section 3.16	Insurance	23	
 	 	 	
Section 3.17	Taxes	23	
 	 	 	
Section 3.18	Brokers	27	
 	 	 	
Section 3.19	Foreign Corrupt Practices Act	27	
 	 	
ARTICLE IV	REPRESENTATIONS AND WARRANTIES OF THE BUYER	28	
 	 	
Section 4.01	Incorporation and Authority of the Buyer	28	
 	 	 	
Section 4.02	Qualification and Authority of the Buyer	28	
 	 	 	
Section 4.03	No Conflict	28	
 	 	 	
Section 4.04	Consents and Approvals	28	
 	 	 	
Section 4.05	Absence of Restraints; Compliance with Laws	29	

i

 
TABLE OF CONTENTS
(continued)
 
 	 	Page	
 	 	 	
Section 4.06	Investment Intent	29	
 	 	 	
Section 4.07	Financial Ability	29	
 	 	 	
Section 4.08	Brokers	29	
 	 	
ARTICLE V	ADDITIONAL AGREEMENTS	29	
 	 	
Section 5.01	Confidentiality	29	
 	 	 	
Section 5.02	Regulatory and Other Authorizations; Consents	30	
 	 	 	
Section 5.03	Insurance	30	
 	 	 	
Section 5.04	Termination of Rights to the Seller Name and the Seller Marks	31	
 	 	 	
Section 5.05	Resignation of Officers and Directors	31	
 	 	 	
Section 5.06	Minutes Books	31	
 	 	 	
Section 5.07	Further Action	32	
 	 	 	
Section 5.08	Non-Solicitation	32	
 	 	 	
Section 5.09	Special Payment	33	
 	 	
ARTICLE VI	EMPLOYEE MATTERS	33	
 	 	
Section 6.01	Assumption of Subsidiary Plans	33	
 	 	 	
Section 6.02	Credit For Service	33	
 	 	 	
Section 6.03	Welfare Benefits	33	
 	 	 	
Section 6.04	Qualified Plans and Defined Contribution Plans	34	
 	 	 	
Section 6.05	Exceptions	34	
 	 	
ARTICLE VII	TAX MATTERS	34	
 	 	
Section 7.01	Liability for Taxes	34	
 	 	 	
Section 7.02	Preparation and Filing Responsibilities of Tax Returns	35	
 	 	 	
Section 7.03	Cooperation and Exchange of Information	36	
 	 	 	
Section 7.04	Contests	36	
 	 	 	
Section 7.05	Tax Sharing Agreements	37	
 	 	 	
Section 7.06	Due Date for Payment	37	
 	 	 	
Section 7.07	Tax Benefit	37	
 	 	 	
Section 7.08	Transfer Taxes and Irish Stamp Duty	37	
 	 	 	
Section 7.09	Taxes Governed by Article VII	37	
 	 	 	
Section 7.10	Survival	37	
 	 	 	
Section 7.11	Post-Closing Dispositions	38	
 	 	 	
Section 7.12	Tax Treatment of Payments	38	
 	 	 	
Section 7.13	Section 338 Election	38	
 	 	 	
Section 7.14	Definitions	38	
 	 	
ARTICLE VIII	CONDITIONS TO CLOSING	39	
 	 	
Section 8.01	Conditions to Obligations of the Seller	39	
 	 	 	
Section 8.02	Conditions to Obligations of the Buyer	39	
 	 	
ARTICLE IX	INDEMNIFICATION	40	
 	 	
Section 9.01	Indemnification by the Seller	40	

ii

 
TABLE OF CONTENTS
(continued)
 
 	 	Page	
 	 	 	
Section 9.02	Indemnification by the Buyer	41	
 	 	 	
Section 9.03	Notification of Claims	42	
 	 	 	
Section 9.04	Additional Indemnification Provisions	43	
 	 	 	
Section 9.05	Mitigation	43	
 	 	 	
Section 9.06	Materiality Qualifiers	43	
 	 	 	
Section 9.07	Exclusive Remedies	44	
 	 	
ARTICLE X	GENERAL PROVISIONS	44	
 	 	
Section 10.01	Survival	44	
 	 	 	
Section 10.02	Expenses	44	
 	 	 	
Section 10.03	Notices	44	
 	 	 	
Section 10.04	Public Announcements	46	
 	 	 	
Section 10.05	Severability	46	
 	 	 	
Section 10.06	Entire Agreement	46	
 	 	 	
Section 10.07	Assignment	47	
 	 	 	
Section 10.08	No Third-Party Beneficiaries	47	
 	 	 	
Section 10.09	Amendment	47	
 	 	 	
Section 10.10	Dispute Resolution	47	
 	 	 	
Section 10.11	Arbitration	47	
 	 	 	
Section 10.12	Governing Law; Submission to Jurisdiction	48	
 	 	 	
Section 10.13	Specific Performance	49	
 	 	 	
Section 10.14	Rules of Construction	49	
 	 	 	
Section 10.15	Counterparts	49	
 	 	 	
Section 10.16	Waiver of Jury Trial	50	
 	 	 	
Section 10.17	Waiver	50	

iii

 
SHARE PURCHASE AGREEMENT
 
SHARE PURCHASE AGREEMENT, dated as of December 24, 2012 (including the Disclosure Schedule, this “ Agreement ”), by and among Research In Motion Limited, an Ontario corporation (the “ Seller ”) and Synchronoss Technologies Ireland, Ltd., an Irish limited company (the “ Buyer ”).
 
WHEREAS, the Seller holds all of the issued and outstanding shares of, or ownership interests in, Newbay Software Limited, an Ireland limited company (the “ Transferred Subsidiary ” and, together with its direct or indirect Subsidiaries, the “Business Subsidiaries”).
 
WHEREAS, the Business Subsidiaries are engaged in the business of providing digital content services to operators, device makers and end users, including, without limitation, the white label software platform known as “Life Cache” (collectively, the “ Business ”).
 
WHEREAS, the Seller wishes to sell to the Buyer, and the Buyer wishes to purchase from the Seller, all of the issued and outstanding shares of, and ownership interests in, the Transferred Subsidiary held by the Seller (the “ Shares ”).
 
NOW, THEREFORE, in consideration for the premises and mutual covenants, representations, warranties and agreements hereinafter set forth, the parties to this Agreement agree as follows:
 
ARTICLE I
 
GENERAL
 
Section 1.01         Defined Terms.  Capitalized terms used in this Agreement shall have the meanings specified below, or as defined elsewhere in this Agreement.
 
(a)          “Action” means any litigation, claim, action, suit, arbitration, investigation or proceeding by or before any Governmental Authority.
 
(b)          “Affiliate” means, with respect to any Person, any other Person that, at the time of determination, directly or indirectly through one or more intermediaries, Controls, is Controlled by or is under common Control with such specified Person;  provided ,  however , that for the purposes of this Agreement, the Seller shall not be deemed Affiliates of the Buyer nor, after the Closing, of the Business Subsidiaries.
 
(c)          “Business Day” means any day that is not a Saturday, a Sunday or other day on which commercial banks in the City of New York, New York and the City of Toronto, Ontario are required or authorized by Law to be closed.
 
(d)          “Cash Equivalents” means short-term, highly liquid investments with original maturities of three (3) months or less that are both (i) readily convertible to known amounts of cash and (ii) so near maturity that they present insignificant risk of changes in value due to changes in interest rates.

 
(e)          “Code” means the United States Internal Revenue Code of 1986, as amended.
 
(f)           “Companies Acts” means the Companies Acts 1963 to 2012, including all Acts of the Oireachtas and statutory instruments which are to be read as one with, or construed or read together as one with, the Companies Acts, and every statutory modification or re-enactment thereof for the time being in force (or, where the context so admits or requires, any one or more of such Acts).
 
(g)          “Contract” means any loan, credit agreement, bond, debenture, note, mortgage, indenture, guarantee, lease, agreement, license or other contract or similar instrument (including all amendments, schedules and exhibits thereto).
 
(h)          “Control” means, as to any Person, the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.  The terms “Controlled by,” “under common Control with” and “Controlling” shall have correlative meanings.
 
(i)           “Debt” means, with respect to any Person, all obligations or other liabilities of such Person (i) for borrowed money or notes payable (including all principal, interest, premiums, penalties, termination, cancelation and breakage fees whether accrued or otherwise) from third party lending sources, other than trade accounts payable, (ii) in respect of letters of credit, bankers’ acceptances or other similar instruments or reimbursement obligations with respect thereto, (iii) to pay the deferred purchase price of any asset, property or right or in respect of conditional sale obligations and all obligations under title retention agreements, (iv) under capitalized leases, (v) of the types described in clauses (i) through (iv) above guaranteed directly or indirectly by the Business Subsidiaries and (vi) under any mortgage, deed of trust, indenture, security agreement or other agreement securing any of the foregoing obligations.
 
(j)           “Disclosure Schedule” means the schedule dated as of the date hereof delivered by the Seller to the Buyer and which forms a part of this Agreement.
 
(k)          “Environmental Law” means any Law applicable to (i) the pollution or protection, preservation or restoration of the environment or natural resources or (ii) the exposure to, or the use, storage, recycling, treatment, generation, transportation, processing, handling, labeling, production, release or disposal of Hazardous Materials, in each case as in effect at the date hereof.
 
(l)           “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder.
 
(m)          “Fiscal Year End Financial Statements Date” means February 29, 2012.
 
(n)          “Governmental Authority” means any United States federal, state or local or any supra-national or non-United States government, political subdivision, governmental, regulatory or administrative authority, instrumentality, agency, body or commission, self-regulatory organization or any court, tribunal, judicial or arbitral body or quasi-governmental body exercising any regulatory, taxing, importing or other governmental authority.
 
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(o)          “Governmental Order” means any order, writ, judgment, injunction, determination, award or decree, issued by or with any Governmental Authority.
 
(p)           “Grant Agreements” means, collectively, each of the following agreements between Enterprise Ireland and the Transferred Subsidiary:  (i) Agreement made by letter of offer dated 9th June 2008, and accepted by the Company on 11th June 2008; (ii) Agreement made by letter of offer dated 13th March 2008, and accepted by the Company on 26th March 2008; (iii) Agreement made by letter of offer dated 27th March 2007, and accepted by the Company on 12th April 2007; (iv) Agreement made by letter of offer dated 15th November 2005, and accepted by the Company on 17th November 2005; and (v) Agreement made by letter of offer dated 13th March 2008 and accepted by the Company on the 26th March 2008.
 
(q)          “Hazardous Materials” means any substance presently listed, defined, designated or classified as hazardous, toxic or radioactive under any applicable Environmental Law, including any toxic waste, hazardous substance, toxic substance, hazardous waste, asbestos or asbestos containing material, urea formaldehyde, insulation or polychlorinated biphenyls.
 
(r)           “Intellectual Property” means all intellectual property rights worldwide arising under statutory or common law, including, without limitation: (i) patents (utility and design) and patent rights; (ii) rights associated with works of authorship including copyrights and rights associated with mask works, designs and databases; (iii) rights in designs (whether registered or unregistered), trade mark, trade name, trade dress and service mark rights; (iv) rights relating to the protection of trade secrets, inventions and confidential information; and (v) any applications, registrations, divisions, continuations, renewals, reissues, extensions, substitutes, conversions, reexaminations and other equivalents of or for any of the foregoing.
 
(s)           “Irish GAAP” means generally accepted accounting principles, practices, procedures and standards in Ireland (including such accounting principles, practices, procedures and standards as may be prescribed by the Companies Acts or by an accounting standards-setting body recognised in Ireland as having application to the Transferred Subsidiary).
 
(t)           “knowledge” means the knowledge of the officers of the Transferred Subsidiary (in the case of the Seller) or the Buyer, as applicable.
 
(u)          “Law” means any federal, state, local or any supra-national or foreign statute, law, ordinance, regulation, rule, code, order or other requirement or rule of law (including common law).
 
(v)          “Liabilities” means liabilities, claims, demands, expenses, commitments or obligations of every kind and description.
 
(w)         “Lien” means any mortgage, deed of trust, hypothecation, security interest, encumbrance or lien of any kind (whether known or unknown, accrued or fixed, absolute or contingent, matured or unmatured, determined or determinable, or as a guarantor or otherwise).
 
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(x)          “Losses” means any and all losses, damages of any kind, claims, costs, expenses, Liabilities, fines, fees, deficiencies, interest, awards, judgments and penalties (including, without limitation, attorneys’, consultants’ and experts’ fees and expenses and other costs of defending, investigating or settling claims) suffered, incurred, accrued (in accordance with Irish GAAP) or paid (including, without limitation, in connection with any action brought or otherwise initiated ).
 
(y)          “Material Adverse Effect” means any result, occurrence, fact, violation, circumstance, change or event (regardless of whether or not such events, changes, violations, circumstances or effects are inconsistent with the representations or warranties made by the Seller in this Agreement) that has had, or could reasonably be expected to have, individually or in the aggregate, a material adverse effect on the operations, business, properties, assets (tangible or intangible), Liabilities, condition (financial or otherwise) or results of operations of the Business Subsidiaries, taken as a whole, but excluding any result, occurrence, fact, change or event resulting from or attributable to: (i) general political or economic conditions, general financial and capital market conditions (including interest rates) or general conditions in any of the industries in which the Business Subsidiaries primarily operate, to the extent they do not disproportionately affect the Business Subsidiaries, taken as a whole, in relation to the other companies in such industries; (ii) an outbreak or escalation of hostilities or the occurrence of any other calamity or crisis (including any act of terrorism) involving any country, or the declaration by any country of a national emergency or war to the extent they do not disproportionately affect the Business Subsidiaries, taken as a whole, in relation to the other companies in such industries, (iii) any effect resulting from or relating to any changes in Law, Irish GAAP, or any authoritative interpretations thereof, to the extent such changes do not disproportionately affect the Business Subsidiaries, taken as a whole, in relation to the other companies in such industries, (iv) any action taken or failed to be taken by the Seller or any of its Affiliates that is required by this Agreement or (v) any failure to meet the Seller’s internal forecasts for the Business ( provided  that this clause (v) shall not be construed as providing that the circumstances or events giving rise to such failure do not constitute or contribute to a Material Adverse Effect and  provided further  that this clause (v) shall not be construed as implying that the Seller is making any representation or warranty hereunder with regard to any internal forecasts for the Business).
 
(z)          “Material Customer” means any of the ten (10) largest customers (including any Affiliates of such customers) of the Business Subsidiaries, taken as a whole, measured in terms of annual revenue to the Business Subsidiaries (i) for the fiscal year ended February 29, 2012 and (ii) to date for the fiscal year ending February 29, 2013.
 
(aa)        “Material Supplier” means any of the ten (10) largest suppliers (including any Affiliates of such suppliers) of the Business Subsidiaries, taken as a whole, measured in terms of annual expenditures by the Business Subsidiaries (i) for the fiscal year ended February 29, 2012 and (ii) to date for the fiscal year ending February 29, 2013.
 
(bb)        “Organizational Documents” of a Person means such Person’s (i) certificate or articles of incorporation, association, organization, limited partnership or limited liability company, and any limited liability company, operating or partnership agreement and other similar documents adopted or filed in connection with its creation, formation or
 
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organization and (ii) by-laws, regulations, and similar Contracts relating to its organization or governance.
 
(cc)        “Permitted Liens” means the following Liens:  (a) Liens for Taxes, assessments or other governmental charges or levies that are not yet due or payable or that are being contested in good faith by appropriate proceedings or that may thereafter be paid without penalty; (b) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, materialmen, workmen, repairmen and other Liens imposed by Law and in the ordinary course of business consistent with past practice; (c) Liens incurred or deposits made in the ordinary course of business consistent with past practice in connection with workers’ compensation, unemployment insurance or other types of social security; (d) defects or imperfections of title, easements, covenants, rights of way, restrictions and other similar charges or encumbrances that do not individually or in the aggregate materially impair the ordinary conduct of the Business; (e) Liens not created by the Seller or any of its Subsidiaries that affect the underlying fee interest of any Leased Real Property,  provided  such Liens do not, individually or in the aggregate, materially impair the ordinary conduct of the Business or the use of such Leased Real Property; and (f) licenses or other rights granted to Intellectual Property in the ordinary course of business consistent with past practice which have previously been disclosed to Buyer.
 
(dd)        “Person” means any natural person, general or limited partnership, corporation, limited liability company, limited liability partnership, firm, association or organization or other legal entity.
 
(ee)        “Post-Closing Period” means any taxable period beginning after the Closing Date and, in the case of any Straddle Period, the portion of such period ending on and including the Closing Date.
 
(ff)         “Pre-Closing Period” means any taxable period that ends on or before the Closing Date and, in the case of any Straddle Period, the portion of such period ending on and including the Closing Date.
 
(gg)        “Representative” of a Person means the directors, officers, employees, advisors, agents, consultants, attorneys, accountants, investment bankers, equity partners or other representatives of such Person.
 
(hh)        “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
 
(ii)          “Seller Name” and “Seller Marks” means the names or marks of the Seller or any of its Affiliates, including “Research In Motion” and “RIM”, either alone or in combination with other words and all marks, trade dress, logos, domain names and other source identifiers confusingly similar to or embodying any of the foregoing either alone or in combination with other words.
 
(jj)          “Straddle Period” means any taxable period beginning on or prior to and ending after the Closing Date.
 
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(kk)        “Subsidiary” of any Person means any corporation, general or limited partnership, joint venture, limited liability company, limited liability partnership or other Person that is a legal entity, trust or estate of which (or in which) (i) the issued and outstanding capital stock having ordinary voting power to elect a majority of the board of directors (or other body performing similar functions) of such corporation or other Person (irrespective of whether at the time capital stock of any other class or classes of such corporation or other Person shall or might have voting power upon the occurrence of any contingency), (ii) more than 50% of the interest in the capital or profits of such partnership, joint venture or limited liability company or (iii) more than 50% of the beneficial interest in such trust or estate, is at the time of determination directly or indirectly owned or Controlled by such Person.
 
(ll)          “Tax” or “Taxes”means any federal, provincial, territorial, state, local, or foreign income, corporate, gross receipts, license, payroll, employment, excise, severance, duties (other than Irish stamp duty), occupation, premium, windfall profits, environmental, customs and other import and export duties, excise, wealth, capital stock, franchise, profits, withholding, social security, unemployment, disability, real property, personal property, sales, goods and services, use, transfer, gift, inheritance, capital acquisition, capital gain, advance corporation, deposit interest retention, probate, relevant contractors, dividend withholding, registration, value added, alternative or add-on minimum, estimated, unclaimed property, escheat or other tax, customs duty, fee, levy, impost and assessment or similar charge in the nature of a tax of any kind whatsoever imposed by any Governmental Authority (including pension plan contributions, employment insurance and unemployment insurance payments and workers’ compensation premiums) and any interest, fine, penalty, or addition thereto, whether disputed or not and any obligations to any Person to indemnify or otherwise assume or succeed to the Tax liability of any other Person
 
(mm)      “Tax Authority” means any Governmental Authority (including, without limitation, the Revenue Commissioners of Ireland) having jurisdiction with respect to any Tax.
 
(nn)         “Tax Relief” means any relief, allowance, exemption, set-off, deduction or credit of whatsoever nature in computing any profits for Tax purposes or any credit, relief or allowance in respect of Tax.
 
(oo)        “Tax Return” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and any amendment thereof.
 
(pp)        “Technology” means, collectively, all designs, formulae, algorithms, techniques, know-how, documentation, software, research and development, technical data, specifications, processes, methods, interfaces, tools, models, prototypes, lay outs, mask works, discoveries, inventions (whether patentable or un-patentable and whether or not reduced to practice), apparatuses, creations, improvements, and other materials, technologies, work products, and results, in all cases, used in the Business or otherwise directly relating to the Business (including all precursors, works in process, versions, modifications, enhancements and derivatives of any of the foregoing).
 
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(qq)        “Transaction Expenses” shall mean all fees and expenses incurred by any of the Business Subsidiaries on or prior to the Closing Date in connection with this Agreement, the Sale and the transactions contemplated hereby, including (i) all legal, accounting, brokerage, finder’s, commission, financial advisory, consulting and all other fees and expenses of third parties incurred in connection with the negotiation or effectuation of the terms and conditions of this Agreement, (ii) any payments made or anticipated to be made by any of the Business Subsidiaries as a brokerage or finders’ fee, agents’ commission or any similar charge, in connection therewith, and (iii) any transaction bonuses or other compensatory payments required to be made to employees or directors of the Business Subsidiaries, in each case in connection with the transactions contemplated by this Agreement, and including any employment or payroll Taxes arising from such bonuses or other compensatory payments except to the extent such amounts are included as a Current Liability for purposes of determining Working Capital.
 
(rr)           “VAT” means Value Added Tax.
 
(ss)          “VATCA” means the Value Added Tax Consolidation Act 2010 of Ireland, as amended.
 
(tt)          “Working Capital” means, for the Business Subsidiaries on a consolidated basis as of the close of business on the reference date, “Current Assets” minus “Current Liabilities”, in each case calculated in accordance with Irish GAAP consistently applied,  provided ,  however , that the following shall not be included in Working Capital: (a) cash and Cash Equivalents, (b) the current portion of any long-term indebtedness and (c) any deferred tax asset or liability of or relating to the Business Subsidiaries and any employment or payroll Taxes included as a Transaction Expense.
 
ARTICLE II
 
PURCHASE AND SALE
 
Section 2.01         Purchase and Sale of the Shares.  On the terms and subject to the conditions set forth in this Agreement, at the Closing, the Seller shall sell, convey, assign, transfer and deliver to the Buyer, free and clear of all Liens, and the Buyer shall purchase, acquire and accept from the Seller, all of the Seller’s right, title and interest in and to the Shares, immediately upon receipt of and in return for the Purchase Price, which shall be paid as set forth in Section 2.03 (the “ Sale ”).
 
Section 2.02         Closing.  Upon the terms and subject to the conditions set forth in this Agreement, the closing of the Sale (the “ Closing ”) shall take place at 10:00 a.m., Eastern Standard Time, on December 24, 2012 after the satisfaction or (to the extent permitted by applicable Law) waiver of the conditions set forth in Article VIII (other than those conditions to be satisfied or waived by action taken at the Closing), at the offices of Morgan, Lewis & Bockius LLP, 101 Park Avenue, New York, NY 10178, or at such other time, date or place agreed to in writing by the Seller and Buyer.  The date on which the Closing occurs is referred to in this Agreement as the “ Closing Date .”
 
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Section 2.03         Purchase Price.
 
(a)           At the Closing, the Buyer agrees to pay to the Seller the sum of (i) $55,500,000 (the “Total Consideration ”), less (ii) the aggregate amount of the Closing Transaction Expenses (as set forth in Section 2.03(b) below), less (iii) the Closing Debt (as set forth in Section 2.03(c) below), (iv) plus or minus the Closing Adjustment (as defined below) (such amount, (i), less (ii), less (iii), plus or minus (iv), being referred to herein as the “ Purchase Price ”). If the Closing Adjustment is a positive amount, then the Purchase Price shall be increased by the Closing Adjustment.  If the Closing Adjustment is a negative amount, then the Purchase Price shall be decreased by the Closing Adjustment.  The Purchase Price shall be payable in cash by wire transfer of immediately available funds to the Seller, in accordance with the written instructions of the Seller given to Buyer in the Closing Notice.  The Purchase Price shall be subject to Post-Closing Adjustment as set forth in Section 2.09.
 
(b)           Any and all Transaction Expenses incurred or accrued by the Business Subsidiaries in connection with the Sale shall be set forth in the Closing Notice (the “ Closing Transaction Expenses ”) and paid by Buyer to the applicable party pursuant to instructions contained in the Closing Notice at the Closing as a reduction to the Total Consideration in accordance with Section 2.03(a)(ii).
 
(c)           The Debt of the Business Subsidiaries (other than Debt for capitalized leases and Debt between the Business Subsidiaries) outstanding as of the Closing Date shall be set forth in the Closing Notice (the “ Closing Debt ”) and paid by the Buyer to the applicable party at the Closing pursuant to instructions contained in the Closing Notice as a reduction to the Total Consideration in accordance with Section 2.03(a)(iii).
 
Section 2.04          Closing Adjustment.
 
(a)           The Closing Notice shall specify an amount (the “Closing Adjustment”) that shall be equal to the sum of Working Capital set forth in the Statement of Estimated Closing Working Capital.
 
(b)           On or prior to the anticipated Closing Date, the Seller shall provide the Buyer with a preliminary estimated statement of Working Capital as of the Closing Date (the “ Statement of Estimated Closing Working Capital ”), which shall be accompanied by a notice (the “ Closing Notice ”) that sets forth (i) the Seller’s determination of the Closing Adjustment and the Purchase Price after giving effect to the Closing Adjustment and (ii) the account or accounts to which the Buyer shall transfer the Purchase Price pursuant to Sections 2.03 and 2.06.
 
(c)           The Statement of Estimated Closing Working Capital shall be prepared in accordance with Irish GAAP, applied consistently with their application in connection with the preparation of the Fiscal Year End Financial Statements.
 
Section 2.05          Closing Deliveries by the Seller.  At the Closing, the Seller shall deliver or cause to be delivered to the Buyer:
 
(a)           duly executed transfers of the Shares (in the prescribed form) to the Buyer together with share certificates for the Shares;
 
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(b)           a copy of the minutes of a meeting of the board of directors of the Transferred Subsidiary at which, inter alia, the transfer of the Shares is approved and such persons as the Buyer may nominate are appointed as directors and secretary of the Transferred Subsidiary; and
 
(c)           details of the Seller’s Irish tax reference number (including customary email from Irish Revenue Commission or evidence reasonably satisfactory to the Buyer allowing it to verify the accuracy of the number provided) which the Buyer requires for the purposes of making the relevant filing in connection with the discharge of the liability to stamp duty arising on the transfer of the Shares.
 
Section 2.06         Closing Deliveries by the Buyer.  At the Closing, the Buyer shall deliver to the Seller:
 
(a)           the Purchase Price, as specified in the Closing Notice, by wire transfer in immediately available funds, to an account or accounts as directed by the Seller and as set forth in the Closing Notice;
 
(b)           a receipt for the Shares; and
 
(c)           the certificate required to be delivered pursuant to Section 8.01(a).
 
Section 2.07          Post-Closing Statements.
 
(a)           Within sixty (60) days after the Closing Date, the Buyer shall prepare and deliver to the Seller a statement of Working Capital as of the Closing Date (the “ Initial Working Capital Statement ”).  The Initial Working Capital Statement shall be prepared in accordance with Irish GAAP applied consistently with their application in connection with the preparation of the Financial Statements.
 
(b)           During the thirty (30) day period immediately following the Seller’s receipt of the Initial Working Capital Statement (the “ Review Period ”), the Seller and its Representatives will be permitted to review the Buyer’s work papers relating to the Initial Working Capital Statement.
 
Section 2.08          Reconciliation of Post-Closing Statements.
 
(a)           The Seller shall notify the Buyer in writing, setting forth a reasonably specific and detailed description of the basis for such dispute (the “ Notice of Disagreement ”) prior to the expiration of the Review Period, if the Seller disagrees with the Initial Working Capital Statement.  The Seller may dispute items reflected on the Initial Working Capital Statement only on the basis that such amounts were not determined in conformity with the provisions of this Agreement or contain arithmetic errors.  If no Notice of Disagreement is received by the Buyer prior to the expiration of the Review Period, then the Initial Working Capital Statement shall be deemed to have been accepted by the Seller and shall become final and binding upon the parties in accordance with Section 2.08(c).
 
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(b)           During the fifteen (15) Business Days immediately following the delivery of a Notice of Disagreement (the “ Consultation Period ”), the Buyer and the Seller shall seek in good faith to resolve any differences that they may have with respect to the matters specified in the Notice of Disagreement.
 
(c)           If at the end of the Consultation Period the Buyer and the Seller have been unable to resolve any differences that they may have with respect to the matters specified in the Notice of Disagreement, the Buyer and the Seller shall submit all matters that remain in dispute (such disputed matter being an “ Item of Working Capital Dispute ”) with respect to the Notice of Disagreement (along with a copy of the Initial Working Capital Statement marked to indicate those line items that are not in dispute) to (i) an independent chartered accounting firm in Ireland mutually acceptable to the Buyer and the Seller (the “ Independent Accounting Firm ”) or (ii) if the Buyer and the Seller are unable to agree upon such a firm within ten (10) Business Days after the end of the Consultation Period, then within an additional ten (10) Business Days, the Buyer and the Seller shall each select one such firm and those two firms shall select a third such firm, in which event “Independent Accounting Firm” shall mean such third firm.  The scope of the work assignment for the Independent Accounting Firm shall be limited to the resolution of any Item of Working Capital Dispute and be based solely on whether each such unresolved Item of Working Capital Dispute was prepared in accordance with the terms of this Agreement or whether each such Item of Working Capital Dispute contains arithmetic errors.  Within thirty (30) Business Days after such firm’s selection, the Independent Accounting Firm shall make a final determination, binding on the parties to this Agreement, of the appropriate amount of each Item of Working Capital Dispute.  With respect to each Item of Working Capital Dispute, such determination, if not in accordance with the position of either the Buyer or the Seller, shall not be in excess of the higher, nor less than the lower, of the amounts advocated by the Seller in the Notice of Disagreement or by the Buyer in the Initial Working Capital Statement with respect to such disputed line item.  During such determination period, the Independent Accounting Firm also shall (A) prepare a statement of Working Capital as of the Closing Date based upon all of the line items not disputed by the parties and the line items determined by the Independent Accounting Firm and (B) determine the amount of Working Capital reflected on such statement.  The statement of Working Capital that is final and binding on the parties, as determined either through agreement of the parties pursuant to Section 2.07(a), Section 2.08(a) or Section 2.08(b) or through the action of the Independent Accounting Firm pursuant to this Section 2.08(c), is referred to as the “ Final Working Capital Statement .”
 
(d)           The cost of the Independent Accounting Firm’s review and determination shall be shared equally by the Buyer on the one hand and the Seller on the other hand.  During the review by the Independent Accounting Firm, the Seller and the Buyer and their accountants will each make available to the Independent Accounting Firm interviews with such individuals, and such information, books and records and work papers, as may be reasonably required by the Independent Accounting Firm to fulfill its obligations under Section 2.08(c);  provided ,  however , that the accountants of the Buyer or the Seller shall not be obliged to make any work papers available to the Independent Accounting Firm except in accordance with such accountants’ normal disclosure procedures and then only after such firm has signed a customary agreement relating to such access to work papers in form and substance reasonably acceptable to such accountants.  In acting under this Agreement, the Independent Accounting Firm will be entitled to the privileges and immunities of an arbitrator.
 
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Section 2.09          Post-Closing Adjustment.  The “Post-Closing Adjustment” shall be equal to the amount of the Post-Closing Working Capital Adjustment.  If the Post-Closing Adjustment is a positive amount, then the Buyer shall pay in cash to the Seller the amount of the Post-Closing Adjustment.  If the Post-Closing Adjustment is a negative amount, then the Seller shall pay in cash to the Buyer the amount of the Post-Closing Adjustment.  Any such payment by the Buyer or the Seller, as the case may be, shall be made within five (5) Business Days after the Final Working Capital Statement becomes such, payable in cash in accordance with Section 2.10 from the Closing Date until the date of payment.  For purposes of this Agreement, “ Post-Closing Working Capital Adjustment ” means the amount of Working Capital set forth in the Final Working Capital Statement less the amount of Working Capital set forth in the Statement of Estimated Closing Working Capital.
 
Section 2.10         Payments and Computations.  Except for the payment of the Purchase Price (which shall be paid at the Closing) pursuant to Section 2.03 and the instructions in the Closing Notice, each party shall make each payment due to another party to this Agreement not later than 11:00 a.m., Eastern Standard Time, on the day when due.  All payments shall be paid by wire transfer in immediately available funds to the account or accounts designated by the party receiving such payment and shall be free and clear of any withholding for Taxes.  All computations of interest shall be made on the basis of a year of 365 days, in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest is payable.  Whenever any payment under this Agreement shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall be included in the computation of, and payment of, interest.
 
Section 2.11          Withholding Rights.  The Buyer shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement such amounts as it is required to deduct and withhold with respect to the making of such payment under the Code, or any provision of state, local or foreign Tax Law, provided that there shall be no withholding for U.S. Taxes on account of any payment to the Seller provided that the Seller shall have provided to Buyer an IRS Form W-8BEN on or before the Closing Date.  To the extent that amounts are so withheld by the Buyer, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the person to whom such amounts would otherwise have been paid.
 
ARTICLE III
 
REPRESENTATIONS AND WARRANTIES OF THE SELLER
 
The Seller hereby represents and warrants, as of the date hereof, to the Buyer that the statements contained in this Article II are true and correct as of the date of this Agreement and as of the Closing (except for any such representation and warranty that expressly is made as of a specific date, which such representation and warranty shall be true and correct as of such date), subject to such qualifications as set forth in the Disclosure Schedule  The Disclosure Schedule shall be arranged according to specific sections in this Article II and shall provide exceptions to, or otherwise qualify in reasonable detail, only the corresponding section in this Article II and any other section hereof where it is clear and readily apparent upon a reading of such disclosure.
 
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Section 3.01         Incorporation, Qualification and Authority of the Seller.  The Seller is a corporation duly incorporated or organized, validly existing and, to the extent legally applicable, in good standing under the Laws of its jurisdiction of incorporation or organization and has all necessary corporate or other entity power to enter into, consummate the transactions contemplated by, and carry out its obligations under, this Agreement.  The execution and delivery by the Seller of this Agreement and the consummation by the Seller of the transactions contemplated by, and the performance by the Seller of its obligations under, this Agreement have been duly authorized by all requisite corporate or other entity action on the part of the Seller.  This Agreement has been duly executed and delivered by the Seller, and (assuming due authorization, execution and delivery by the Buyer) this Agreement constitutes legal, valid and binding obligations of the Seller, enforceable against the Seller in accordance with its terms, subject to the effect of any applicable Laws relating to bankruptcy, reorganization, insolvency, moratorium, fraudulent conveyance or preferential transfers, or similar Laws relating to or affecting creditors’ rights generally and subject, as to enforceability, to the effect of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).
 
Section 3.02          Incorporation, Qualification and Authority of the Business Subsidiaries.
 
(a)           Each of the Business Subsidiaries is a corporation or other organization duly incorporated or organized, validly existing and, to the extent legally applicable, in good standing under the Laws of its jurisdiction of incorporation or organization and has the corporate or other entity power and authority to own, lease and otherwise hold and operate its properties and assets and to operate its business as now conducted.  Each of the Business Subsidiaries is duly qualified as a foreign corporation or other organization to do business and, to the extent legally applicable, is in good standing in each jurisdiction where the character of its owned, operated or leased properties or the nature of its activities makes such qualification necessary, except for jurisdictions where the failure to be so qualified or in good standing has not had a Material Adverse Effect.  Section 3.02 of the Disclosure Schedule sets forth in respect of each of the Business Subsidiaries:  (i) the name of such Subsidiary; (ii) the number and type of authorized and outstanding equity securities of such Subsidiary; (iii) the jurisdiction of organization of such Subsidiary; (iv) the name of the officers and directors of each Subsidiary and (v) the jurisdictions in which each Subsidiary is qualified or holds licenses to do business as a foreign corporation.
 
(b)           Seller has heretofore made available to Buyer (i) a complete and correct copy of each of the Business Subsidiaries’ Organizational Documents, (ii) complete and correct copies of the minutes of all consents, actions and meeting of the stockholders of the Business Subsidiaries, and the Board of Directors (or similar body) of the Business Subsidiaries and each committee thereof, and (ii) complete and correct copies of the stock transfer books of the Business Subsidiaries setting forth all issuances or transfers of any capital stock of the Business Subsidiaries.  Such Organizational Documents are in full force and effect.  No Business Subsidiary is in material violation of any of the provisions of its Organizational Documents.  There are no outstanding powers of attorney executed on behalf of the Business Subsidiaries.
 
Section 3.03         Capital Structure of the Business Subsidiaries.  All of the issued and outstanding shares of each of the Business Subsidiaries have been duly authorized and validly
 
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issued, are fully paid or credited as fully paid, nonassessable and were not issued in violation of any preemptive rights.  There are no options, warrants or rights of conversion or other rights, agreements, arrangements or commitments obligating any of the Business Subsidiaries to issue or sell any of its shares or securities convertible into or exchangeable for its shares or any shares of its Subsidiaries.  There are no outstanding stock appreciation, phantom stock or similar rights with respect to any Business Subsidiary.  The Seller owns both the legal and beneficial interest in the Shares, free and clear of all Liens, and the Seller has the corporate or other applicable organizational power and authority to sell, transfer, assign and deliver the Shares as provided in this Agreement.  All shares of each Business Subsidiary are held of record or owned beneficially by another Business Subsidiary (other than the shares of the Transferred Subsidiary which are owned by Seller) and are held or owned free and clear of all Liens.  There are no voting trusts, stockholder agreements, proxies or other agreements in effect with respect to the voting or transfer of the shares of any of the Business Subsidiaries.  Other than as set forth in Section 3.03 of the Disclosure Schedule, the Business Subsidiaries do not control, directly or indirectly, or have any direct or indirect equity participation or similar interest in any corporation, partnership, limited liability company, joint venture, trust or other business association.  There are no contractual obligations of the Business Subsidiaries to provide funds to, or make any investment in (whether in the form of a loan, capital contribution or otherwise), any other person.
 
Section 3.04         No Conflict.  Provided that all consents, approvals, authorizations and other actions described in Section 3.05 have been obtained or taken the execution, delivery and performance by the Seller of this Agreement and the consummation by the Seller and the Business Subsidiaries (as applicable) of the transactions contemplated by this Agreement do not and will not (a) materially violate or conflict with the Organizational Documents of any of the Seller or the Business Subsidiaries, (b) materially conflict with or violate any Law or Governmental Order applicable to the Seller or the Business Subsidiaries or (c) conflict with, result in any breach of, or constitute a default (or event which with the giving of notice or lapse of time, or both, would become a default) under, or give to any Person any rights of termination, amendment, acceleration or cancellation of, or result in the creation of any Lien on any of the assets or properties of the Business Subsidiaries pursuant to, any material Contract to which any of the Business Subsidiaries is a party or by which any of such Business Subsidiaries’ material assets or properties is bound or affected.
 
Section 3.05         Consents and Approvals.  The execution and delivery by the Seller of this Agreement does not, and the performance by the Seller and the Business Subsidiaries (as applicable) of, and the consummation by the Seller and the Business Subsidiaries (as applicable) of the transactions contemplated by, this Agreement will not, require any material consent, approval or authorization, or any material filing with or notification to, any Governmental Authority, except where the failure to obtain such consent, approval or authorization, or to make such filing or notification, would not prevent or materially delay the consummation by the Seller and the Business Subsidiaries (as applicable) of the transactions contemplated by, or the performance by the Seller and the Business Subsidiaries (as applicable) of any of their material obligations under, this Agreement.
 
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Section 3.06          Financial Information; Absence of Undisclosed Liabilities.
 
(a)           Section 3.06(a) of the Disclosure Schedule sets forth complete and correct copies of (i) the audited consolidated balance sheet of the Business at February 29, 2012 and the related statement of profits and losses for the Business for the fiscal year ended December 31, 2010 and the notes thereto (together, the “ Fiscal Year End Financial Statements ”) and (ii) the unaudited consolidated balance sheet of the Business at November 30, 2012 (the “ Reference Balance Sheet ”) and the related unaudited statement of profits and losses for the Business for the nine (9) months ended November 30, 2012 ((i) and (ii), collectively, the “ Financial Statements ”).  The Financial Statements (i) were prepared in all material respects in accordance with Irish GAAP consistently applied, (ii) were prepared from and are consistent with the books and records of the Business and (iii) present a true and fair view of the assets, liabilities and the financial condition and the results of operations of the Business at their respective dates and for the periods covered by such statements (subject, in the case of the Reference Balance Sheet, to normal year-end adjustments and other adjustments described therein, which were not, are not and are not reasonably expected to be, individually or in the aggregate, material, including the notes thereto, and the absence of complete footnotes).
 
(b)           There are no Liabilities of the Business (whether known or unknown, accrued or fixed, absolute or contingent, matured or unmatured, determined or determinable, or as a guarantor or otherwise) required under Irish GAAP to be reflected in the Reference Balance Sheet that are not reflected therein, except Liabilities, incurred in the ordinary course of business consistent with past practice other than resulting from breaches, defaults, torts or allegations thereof and that are not material in amount or significance, either individually or in the aggregate since the date of the Reference Balance Sheet.
 
Section 3.07         Absence of Certain Changes or Events.  Except as contemplated by this Agreement, since the date of the Reference Balance Sheet, (a) the Business Subsidiaries have conducted the Business in the ordinary course consistent with past practice and (b) there has not occurred any event that has had a Material Adverse Effect or that would materially impair or delay the ability of the Seller and the Business Subsidiaries (as applicable) to consummate the transactions contemplated by, or to perform their obligations under, this Agreement.
 
Section 3.08         Absence of Litigation.  There is no Action pending or, to the knowledge of the Seller, threatened against the Business Subsidiaries (or against any officer, director or employee of the Business Subsidiaries in their capacity as such or relating to their employment or services with the Business Subsidiaries), or any property or asset owned or used by the Business Subsidiaries or any person whose liability the Business Subsidiaries has or may have assumed, either contractually or by operation of Law, before any arbitrator or Governmental Authority. None of the Business Subsidiaries, the officers or directors thereof in their capacity as such, or any property or asset of the Business Subsidiaries is subject to any continuing Governmental Order.  This Section 3.08 shall not apply to matters relating to Taxes, which shall be governed by Section 3.17.
 
Section 3.09         Compliance.  None of the Business Subsidiaries is, or since December 31, 2009, has been, a violation of any Law applicable to the Business Subsidiaries, conduct of the Business by the Business Subsidiaries or by which any property or asset of the Business Subsidiaries is bound or affected.
 
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Section 3.10         Governmental Licenses and Permits.  The Business Subsidiaries hold all material licenses (including export licenses, exceptions and classifications), permits, franchises, grants, approvals or authorizations related to the Business issued by a Governmental Authority (collectively, “ Material Permits ”).  All Material Permits are in full force and effect and will remain so as a result of the transactions contemplated by this Agreement and no suspension or cancellation of any Material Permit is pending or, to the Seller’s knowledge, threatened.  None of the Business Subsidiaries are in material conflict with, or in default in respect of, any Material Permit.
 
Section 3.11          Intellectual Property.
 
(a)           Section 3.11(a) of the Disclosure Schedule sets forth an accurate, complete and correct list (including name, number, jurisdiction and owner) of all patents, registered trademarks, registered trade names, registered service marks, registered designs, registered mask works and registered copyrights, and any pending applications therefor, and registrations for domain names, in each case, owned or filed by any Business Subsidiary (collectively, “ Registered IP ”).  Section 3.11(a) of the Disclosure Schedule also sets forth an accurate, complete and correct list of all of the foregoing that are exclusively licensed to any Business Subsidiary.
 
(b)           Except as set forth on Section 3.11(b) of the Disclosure Schedule:
 
(i)            All Intellectual Property in the Technology is owned by or licensed by the Business Subsidiaries that use the Technology.  The Intellectual Property owned by or licensed to each Business Subsidiary for use in the Technology included or includes (as applicable) all of the material Intellectual Property required by such Business Subsidiaries to conduct their business substantially in the manner in which such business has been conducted since December 31, 2009 and is being conducted on the date hereof.  Notwithstanding anything to the contrary in this Agreement, the Seller’s sole representations with respect to non-infringement of Intellectual Property are set forth in Section 3.11(b)(iii) herein.
 
(ii)           Except with respect to licenses of “off-the-shelf” software available on reasonable terms through commercial distributors or in consumer retail stores (including, for the avoidance of doubt, Open Source Materials), Section 3.11(b) of the Disclosure Schedule sets forth an accurate, complete and correct list of all material licenses, sublicenses or other agreements pursuant to which any of the Business Subsidiaries has been authorized to use or granted other rights in or to any third party Intellectual Property (“ Licensed Intellectual Property ”).  Section 3.11(b) of the Disclosure Schedule also sets forth an accurate, complete and correct list of all licenses, sublicenses and other agreements pursuant to which (A) any Person has been authorized to use, granted any lien or encumbrance regarding, or given access or any rights to any Intellectual Property in the Technology or other Intellectual Property owned or exclusively licensed by any of the Business Subsidiaries and (B) any Business Subsidiary has deposited or is required to deposit with an escrowholder or any other Person all or part of the source code of any Technology (“ Source Materials ”).  The licenses and other agreements listed in Section 3.11(b) of the Disclosure Schedule are in full force and effect, the Sale will not give rise to a right of termination, any amendment to, or the application of any different terms and conditions, under any of such licenses (including, without limitation, a right of termination) or
 
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the release, disclosure or delivery to any third Person of any part of the Source Materials, no Business Subsidiary is in default under any of such licenses, and to the knowledge of the Seller no party to any of such licenses or other agreements has exercised any termination rights with respect thereto..
 
(iii)          No Business Subsidiary is the subject of any pending or, to the knowledge of the Seller, threatened Action and no Business Subsidiary has received any written notice in the past three (3) years, in each case described in this clause (A), which involves a claim of infringement, unauthorized use, or violation of any Intellectual Property or other rights or property of any Person (“ Infringement ”), against any Business Subsidiary or challenges the ownership or use by a Business Subsidiary of, or the validity or enforceability of, any Intellectual Property owned or licensed or otherwise used by any Business Subsidiary in its Technology; (B) all of each Business Subsidiary’s rights in and to all Registered IP are subsisting and , to the knowledge of Seller, valid and enforceable; (C) the conduct of the Business and the Business Subsidiaries’ use of the Owned Intellectual Property do not violate, conflict with or infringe or misappropriate any Intellectual Property of any other Person; (D) to the knowledge of the Seller, there is no unauthorized use, infringement or misappropriation of any Intellectual Property owned or exclusively licensed by any Business Subsidiary.  Other than in Material Contracts otherwise disclosed, none of the Business Subsidiaries has entered into any agreement to indemnify, hold harmless or defend any other Person with respect to any assertion of Infringement.
 
(iv)          In the last three (3) years, no Business Subsidiary has made any written claim or is involved in any pending or, to the knowledge of the Seller, threatened Action alleging that any Person has infringed, violated, misused or misappropriated any Intellectual Property or Technology owned by any Business Subsidiary.
 
(c)           Except in cases in which the Seller has decided not to maintain its Intellectual Property exercising its reasonable business judgment in the ordinary course of business, all maintenance, registration and renewal fees and any other sums payable in respect of Registered IP are fully paid, no such fees or sums are due within the ninety (90) day period after Closing and, to the knowledge of the Seller, no cancellation termination, expiration or abandonment of Intellectual Property is anticipated.
 
(d)           Section 3.11(d) of the Disclosure Schedule lists all Open Source Materials used by any Business Subsidiary in any way in connection with its products or services, and describes the manner in which such Open Source Materials are used.  No Open Source Materials are or have been incorporated or otherwise integrated into, aggregated, compiled or distributed with the Business Subsidiaries’ proprietary software in a manner that would (i) render such proprietary software subject to the terms of any “open source” license that would require such proprietary software to be disclosed or made available in source code form or that would result in a license to the Business Subsidiaries’ proprietary software to any other Person, (ii) impose any restriction on the consideration to be charged by the Business Subsidiaries for distribution, (iv) create, or purport to create, obligations for any Business Subsidiary with respect to Owned Intellectual Property (as defined below) or grant, or purport to grant, to any third party, any rights or immunities under any Owned Intellectual Property or (v) impose any other material limitation, restriction, or condition on the right of any Business Subsidiary with respect to its use
 
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or distribution of any Technology or Intellectual Property therein.  “Open Source Materials” shall mean any software or other material that is distributed as “free software”, “open source software” or under a similar licensing or distribution terms (including but not limited to the GNU General Public License (GPL), GNU Lesser General Public License (LGPL), Mozilla Public License (MPL), BSD licenses, the Artistic License, the Netscape Public License, the Sun Community Source License (SCSL), the Sun Industry Standards License (SISL) and the Apache License).
 
(e)           The information technology infrastructure used by the Business Subsidiaries includes all such infrastructure required by such Business Subsidiaries to conduct their business substantially in the manner in which such business is being conducted on the date hereof. Each Business Subsidiary has commercially reasonable disaster recovery and business continuity procedures and policies in place.
 
(f)            The Business Subsidiaries have taken reasonable steps to protect and preserve trade secrets included within and the confidentiality of all Technology with respect to which they wish to maintain confidentiality and that is not otherwise disclosed in published patents or patent applications or registered copyrights.
 
(g)           Each current and former employee and contractor of any Business Subsidiary who is or was involved in, or who has contributed to, the creation or development of any Technology has executed and delivered (and to the knowledge of the Seller, is in compliance with) a written agreement, includes reasonable protections for the Business Subsidiaries’ proprietary and confidential information and which provides written assignments to the Business Subsidiary of all rights, title and interests in and to the Technology (and Intellectual Property embodied therein) conceived or developed thereunder but not already owned by the Business Subsidiary by operation of law;  provided, however , that with respect to matters relating to former employees on or before October 25, 2011, the Seller makes such representations based on its knowledge.
 
(h)           The Business Subsidiaries take commercially reasonable efforts to protect Business Software from viruses, worms, trojan horses and other known infections or intentionally harmful routines.  “ Business Software ” means software that is (i) used in the operation of the business of any Business Subsidiary, including, but not limited to, that operated by any Business Subsidiary on its web sites or used by any Business Subsidiary in connection with processing customer orders, storing customer information, or storing or archiving data, or (ii) manufactured, distributed, sold, licensed or marketed by any Business Subsidiary.
 
(i)            To the knowledge of the Seller, there are no defects or errors in any Business Software or other Technology, which defects or errors would reasonably be expected to have a Material Adverse Effect on the business of the Business Subsidiaries.
 
(j)            The Business Subsidiaries have complied with their respective privacy policies relating to the use, collection, storage, disclosure and transfer of any personally identifiable information collected or obtained by them or by third parties having authorized access to the records of the any Business Subsidiary.  No Business Subsidiary has received a complaint regarding the use, collection, storage, disclosure or transfer of personally identifiable
 
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information.  With respect to all personally identifiable information collected or obtained by the Business Subsidiaries, they have taken steps reasonably necessary (including implementing and monitoring compliance with adequate measures with respect to technical and physical security) in an effort to ensure that the personally identifiable information is protected against loss and against unauthorized access, use, modification, disclosure or other misuse.  To the knowledge of the Seller, there has been no unauthorized access to or other misuse of such personally identifiable information.
 
(k)           All Owned Intellectual Property is fully transferable, alienable and licensable by the Business Subsidiaries without restriction and without payment of any kind to any third party and each item of Owned Intellectual Property is solely and exclusively owned, free and clear of any Liens other than Permitted Liens, by one of the Business Subsidiaries.  “ Owned Intellectual Property ” means any and all Intellectual Property in the Technology that is owned, purported to be owned, filed by, held in the name of any of the Business Subsidiaries.
 
(l)            The Owned Intellectual Property and Licensed Intellectual Property owned or used by the Business Subsidiaries immediately prior to Closing will be owned or available for use (as applicable) by the Business Subsidiaries on identical terms and conditions immediately after Closing.  Seller agrees that any license, sublicense or other agreement required to be listed in Section 3.11(b) of the Disclosure Schedule shall be deemed to be a Material Contract for the purposes of the representations and warranties set forth in Section 3.13(b) of this Agreement.
 
Section 3.12         Environmental Matters.  Except for any matters disclosed in Section 3.12 of the Disclosure Schedule:  (a) to the knowledge of the Seller, the Business Subsidiaries are in material compliance with all applicable Environmental Laws; (b) in the past year, and to the knowledge of the Seller for any period of time prior to that, the Business Subsidiaries have not placed any Hazardous Material on any of the Leased Real Properties in violation of any Environmental Laws; (c) no Hazardous Material has been disposed of or released in violation of any applicable Environmental Law by any Business Subsidiary from any Leased Real Property during the period during which such Business Subsidiary owned or operated such real property since December 31, 2009; (d) the Business Subsidiaries have not received, in writing, any notice, demand letter or request for information from any Governmental Authority indicating that such Business Subsidiary may be in violation of any applicable Environmental Law in connection with the ownership or operation of the Business; and (e) the Business Subsidiaries have received no written notice of any civil, criminal or administrative Actions against any Business Subsidiary relating to any violation, or alleged violation, of any Environmental Law.
 
Section 3.13          Material Contracts.
 
Section 3.13(a) of the Disclosure Schedule sets forth a list of each Contract of any of the Business Subsidiaries (each such Contract required to be listed, whether or not actually listed, being a “ Material Contract ”):
 
(i)            Between any of the Business Subsidiaries and either a Material Supplier or a Material Customer (excluding, for the avoidance of doubt, purchase orders and invoices corresponding to such Contracts);
 
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(ii)           all Contracts with any Governmental Authority to which the Business Subsidiaries are a party;
 
(iii)          all Contracts that (A) restrict or purport to limit the ability of the Business Subsidiaries or the Seller to engage in any line of business or compete with any person in any line of business or to compete with any party or in any geographic area or during any period of time, (B) grant any exclusive rights to make, sell or distribute the products of the Business Subsidiaries (or would grant exclusive rights to make, sell or distribute products of Buyer or any of its Affiliates following Closing), (C) grant to a third party any exclusive right to any Intellectual Property of the Business Subsidiaries or the Seller, (D) otherwise specifically prohibit or limit the right of the Business Subsidiaries or the Seller to sell or distribute any products or services anywhere, or (E) provide for most favored customer pricing provisions, rights of first refusal, rights of first negotiation or similar rights;
 
(iv)          all Contracts of the Business Subsidiaries providing for indemnification of any officer, director, employee or agent of the Business Subsidiaries;
 
(v)           any Contract for Debt not being repaid at or prior to the Closing;
 
(vi)          any joint venture or partnership contract, arrangement or commitment, or any other Contract which has involved, or is reasonably expected to involve, a sharing of revenues, profits, cash flows, expenses or losses by the Business Subsidiaries with any other party;
 
(vii)         any Contract pursuant to which (1) the Business Subsidiaries have outstanding obligations to make contingent payments in respect of the business, entity or assets acquired, (2) the business, entity or assets acquired (or the former stockholders or other owners thereof) have ongoing indemnification obligations to the Business Subsidiaries and (3) the Business Subsidiaries have ongoing indemnification obligations to the business, entity or assets acquired (or the former officers, directors or stockholders or other owners thereof); and
 
(viii)        any settlement entered into within three (3) years prior to the date of this Agreement other than releases immaterial in nature or amount entered into by the Business Subsidiaries in the ordinary course of business.
 
(b)           Each Material Contract is a legal, valid and binding obligation of one of the Business Subsidiaries, and, to the knowledge of the Seller, each other party to such Material Contract, and is enforceable against the applicable Business Subsidiary, and, to the knowledge of the Seller, each such other party in accordance with its terms subject, in each case, to the effect of any applicable Laws relating to bankruptcy, reorganization, insolvency, moratorium, fraudulent conveyance or preferential transfers, or similar Laws relating to or affecting creditors’ rights generally and subject, as to enforceability, to the effect of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). To the Seller’s knowledge (which knowledge qualifier shall apply only in the case of breaches, violations or defaults by parties other than the Business Subsidiaries and in the case of rights by the Business Subsidiaries to declare, accelerate, cancel, terminate or modify), within three (3) years prior to the date of this Agreement, no event has occurred, and no circumstance or
 
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condition exists, that (with or without notice or lapse of time or both) will, or would reasonably be expected to, (i) result in a breach or violation of, or default under, any Material Contract, (ii) give any Person the right to declare a default, seek damages or exercise any other remedy under any Material Contract, (iii) give any Person the right to accelerate the maturity or performance of any Material Contract, (iv) give any Person the right to cancel, terminate or modify any Material Contract or (v) give any Person the right to a chargeback, refund, credit, penalty or change in delivery schedule under any Material Contract.  The Seller has delivered or made available to Buyer (or its designated advisors) accurate and complete copies of all Material Contracts.  Section 3.13(a) of the Disclosure Schedule provides an accurate description of the terms of each Material Contract that is not in written form.
 
Section 3.14          Employment and Employee Benefits Matters.
 
(a)           Section 3.14(a) of the Disclosure Schedule sets forth a list of (i) all material employee benefit plans including, in relation to employees of the Business employed in the United States within the meaning of Section 3(3) of ERISA); (ii) all material retirement, welfare benefit bonus, stock option, stock purchase, restricted stock, incentive, supplemental retirement, deferred compensation, retiree health, life insurance, severance, vacation or other employee benefit plans, programs, policies or arrangements and (iii) all individual employment, retention, termination, separation, severance or other similar contracts, in each case, pursuant to which any of the Seller or any of the Business Subsidiaries or their respective Affiliates currently has any obligation with respect to any employee of the Business, other than governmental plans or arrangements (the plans, programs, policies, arrangements and contracts described in clauses (i), (ii) and (iii) above are hereinafter referred to as the “ Employee Plans ”);  provided ,  however , that individual employment agreements for employees of the Business employed outside the United States (“ Non-U.S. Employment Agreements ”) shall not be separately identified in Section 3.14(a) of the Disclosure Schedule solely to the extent such disclosure is prohibited by applicable Law;  provided ,  further , Seller shall have previously provided such non-disclosed information in writing.  The Employee Plans that are sponsored by the Seller or any of its Affiliates (other than the Business Subsidiaries) are referred to as the “ Seller Plans ,” and the Employee Plans that are sponsored by the Business Subsidiaries are referred to as the “ Subsidiary Plans .”  Except as set forth in Section 3.14(a) of the Disclosure Schedule, the Seller has previously made available to Buyer a complete and correct copy of each Employee Plan.
 
(b)           Each Employee Plan that is intended to be qualified under Section 401(a) of the Code has received a favorable determination letter from the IRS that it is so qualified, and each related trust that is intended to be exempt from United States federal income Tax pursuant to Section 501(a) of the Code has received a determination letter from the IRS that it is so exempt, and, to the knowledge of the Seller, no fact or event has occurred since the date of such determination letter that could reasonably be expected to materially adversely affect such qualification or exemption, as the case may be.
 
(c)           Neither the Seller nor any of the Business Subsidiaries has incurred any material liability under or arising out of Title IV of ERISA that has not been satisfied in full (other than any liability for premiums to the Pension Benefit Guaranty Corporation arising in the ordinary course), and to the knowledge of the Seller, no fact or event exists that could reasonably
 
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be expected to result in such a material liability to the Business Subsidiaries following the Closing Date.
 
(d)           Each Subsidiary Plan has been operated in all material respects in accordance with the requirements of all applicable Laws, including, in the case of United States plans, ERISA and the Code.
 
(e)           As of the date hereof, there are no formal organizational campaigns, petitions or, to the knowledge of the Seller, any other material activities seeking recognition of a trade union in the Business, nor have the Seller or Business Subsidiaries taken any action or inaction which may reasonably be construed as recognition of such trade union, and there are no material trade disputes or other union representation questions or complaints before any labor board or Governmental Authority that, in either case, has had, or could reasonably be expected to have, a Material Adverse Effect.  There are no material strikes, slowdowns or work stoppages pending or, to the knowledge of the Seller, threatened, and no such material strike, slowdown or work stoppage has occurred within the three years preceding the date hereof.
 
(f)            None of the Seller, the Business Subsidiaries or their respective Affiliates is, to the knowledge of the Seller, subject to any pending investigation from any labor inspection or similar Governmental Authority which could reasonably be expected to result in any material liability to the Business Subsidiaries, nor to the Seller’s knowledge, are there any circumstances existing which might lead to such an investigation.
 
(g)           Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby, either alone or together with another event, will (i) result in any payment (including, without limitation, severance, unemployment compensation, golden parachute, forgiveness of indebtedness or otherwise) becoming due under any Employee Plan, whether or not such payment is contingent, (ii) increase any benefits otherwise payable under any Employee Plan or other arrangement, or (iii) result in the acceleration of the time of payment, vesting or funding of any benefits.  No Employee Plan provides, or reflects or represents any liability to provide, health, disability, or life insurance benefits or coverage after an employee’s or former employee’s retirement or other termination of employment, except to the extent required by Law.
 
(h)           Except as required by applicable Law, no past employee has a right to return to work or has or may have a right to be reinstated or re-engaged by any of the Business Subsidiaries.
 
(i)            Except as required by applicable Law or as provided under an Employee Plan, the Business Subsidiaries are not liable to make any redundancy payments to any person.
 
(j)            Save to the extent (if any) to which provision or allowance has been made in the Financial Statements: (i) no material liability has been incurred by the Business Subsidiaries for breach of any contract of service or for services, for redundancy payments, protective awards or for compensation for wrongful dismissal, unfair dismissal or a discriminatory dismissal or for failure to comply with any order for the reinstatement or re-engagement of any employee or for any other liability accruing from the termination of any
 
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contract of employment or for services; and (ii) within the past three years, no claims have been made against the Business Subsidiaries for equal pay, discrimination, sexual or other harassment.
 
(k)           The Business Subsidiaries have in relation to each of their employees (and, so far as relevant, to each of its former employees) materially complied with all obligations imposed on it by Laws relevant to the relations between it and its employees or the conditions of service of its employees.
 
Section 3.15          Assets; Absence of Liens and Encumbrances; Real Property.
 
(a)           Except as set forth in Section 3.15 of the Disclosure Schedule, the Business Subsidiaries own, lease or have the legal right to use all of the assets, properties and rights of every kind, nature, character and description, including, without limitation, real property and personal property (other than Intellectual Property, which is covered by Section 3.11 hereof), used in the conduct of the Business or otherwise owned or leased by the Business Subsidiaries and (all such properties and assets being the “ Assets ”).  Such Assets constitute all of the assets that are reasonably necessary for the continued operation of the Business.  Section 3.15 of the Disclosure Schedule sets forth a complete and accurate list of (i) all personal property owned or leased by Company or any Subsidiary with an individual value of $50,000 or greater per item and (ii) all personal property of the Business Subsidiaries subject to capitalized equipment leases. The Business Subsidiaries have good and marketable title to, or, in the case of leased or subleased Assets, valid and subsisting leasehold interests in, all the Assets, free and clear of all Liens, except for Permitted Liens.  The equipment of the Business Subsidiaries used in the operations of the Business is, taken as a whole, in good operating condition and repair, ordinary wear and tear excepted.
 
(b)           The Business Subsidiaries do not own any real property.  Section 3.15(b) of the Disclosure Schedule sets forth a list of all real property currently leased, subleased or licensed by or from the Business Subsidiaries or otherwise used or occupied by the Business Subsidiaries (to the extent required to be listed, whether or not actually listed, the “ Leased Real Property ”).  The Leased Real Property is free and clear of all Liens, except for Permitted Liens and:
 
(i)            Liens that secure Debt that is reflected on the Reference Balance Sheet;
 
(ii)           Liens listed in Section 3.15(b) of the Disclosure Schedule and any other easements, covenants, rights of way and other similar restrictions that are reflected on the public records for the jurisdictions where such Leased Real Property is located;
 
(iii)          zoning, building and other generally applicable land use restrictions; and
 
(iv)          Liens that have been placed by a third party on the fee title of real property constituting Leased Real Property or property over which any of the Business Subsidiaries has easement rights, and subordination or similar agreements relating thereto.
 
(c)           To the knowledge of the Seller, all leases and subleases for the Leased Real Property under which any of the Business Subsidiaries is a lessee or sublessee are in full
 
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force and effect and are enforceable in accordance with their respective terms, subject to the effect of any applicable Laws relating to bankruptcy, reorganization, insolvency, moratorium, fraudulent conveyance or preferential transfers, or similar Laws relating to or affecting creditors’ rights generally and subject, as to enforceability, to the effect of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).  Since December 31, 2009, no written notices of default under any such lease or sublease for any Leased Real Property have been sent or received by any Business Subsidiary.
 
Section 3.16         Insurance.  Except as set forth in Section 3.16 of the Disclosure Schedule, the insurance policies for the Business Subsidiaries are maintained by the Seller. True and correct copies of the standalone insurance policies listed on Section 3.16 of the Disclosure Schedule have been made available to Buyer and are in full force and effect.  To the knowledge of the Seller, no notice has been received by the Seller or any Business Subsidiary from any insurance carrier purporting to cancel or refuse renewal, reduce or dispute coverage under any such stand-alone policy.  Section 3.16 of the Disclosure Schedule includes a complete and correct list of all claims (including a reasonably detailed summary thereof and a statement regarding the current status of the applicable claim) made from December 31, 2009 to the date hereof or which currently remain open or unresolved with respect to the Business Subsidiaries under the stand-alone policies or under any of the Seller policies.  Premiums or other payments due under all such stand-alone policies have been paid in full.
 
Section 3.17         Taxes.
 
(a)          All income and other material Tax Returns or claim or calculation of material Tax Relief required to be filed by or with respect to any Business Subsidiary have been duly and timely filed (or, if due between the date hereof and the Closing Date, will be duly and timely filed), and each such Tax Return correctly and completely reflects Liabilities for Taxes and all other information required to be reported thereon in all material respects.  All material Taxes owed by any Business Subsidiary have been timely paid (or, if due between the date hereof and the Closing Date, will be duly and timely paid).  The Business Subsidiaries have adequately provided for, in their Financial Statements and their books of account and related records, Liabilities for all unpaid Taxes (that are current Taxes not yet due and payable).  No Business Subsidiary is the beneficiary of any extension of time within which to file any Tax Return, nor have any of the Business Subsidiaries made (or had made on their behalf) any requests for such extensions.
 
(b)           Neither entering into this Agreement nor Closing will result in the denial or withdrawal of any Tax Relief sought or granted on or before Closing or result in any material income, profit or gain arising or accruing which will affect the Tax position of the Transferred Subsidiary.
 
(c)           Since the Fiscal Year End Financial Statements Date:
 
(i)            no accounting period of the Transferred Subsidiary has ended or could be treated as having ended;
 
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(ii)           the Transferred Subsidiary has not been involved in any transaction for which any statutory tax clearance or other tax clearance commonly obtained by companies carrying on businesses similar to those carried on by the Transferred Subsidiary has been sought or obtained or ought to have been sought or obtained;
 
(iii)          there has been no:
 
(A)          disposal of any asset (including trading stock) by the Transferred Subsidiary; or
 
(B)          supply of any service or business facility of any kind (including a loan of money or the letting, hiring or licensing of any property whether tangible or intangible) by the Transferred Subsidiary,
 
in a non-arm’s length transaction with an Affiliate of the Transferred Subsidiary where the consideration actually received or receivable for such disposal or supply was less than the consideration which could be deemed to have been received for Tax purposes; and
 
(iv)          no event has occurred which will (or may) give rise to a material Liability to Tax of the Transferred Subsidiary where such liability would be computed by reference to deemed income, profits or gains;
 
(d)           The Transferred Subsidiary has not undergone a major change in the nature and conduct of a trade within the meaning of section 401 of the Taxes Consolidation Act 1997 of Ireland as amended within the last three (3) years.
 
(e)           There is no dispute or disagreement outstanding with any Tax Authority with respect to a Business Subsidiary for which notice has been provided, or which is asserted or threatened in writing, or which is otherwise known to any Stockholder or any Acquired Company. The amount of any liability to Tax of the Transferred Subsidiary has not, to any material extent, depended on any arrangement or concession (in either case whether formal or informal) with any Tax Authority.
 
The Transferred Subsidiary is not and has not been part of a VAT group for Irish VAT purposes .The Transferred Subsidiary is registered for VAT in Ireland and is not registered for VAT in any jurisdiction other than Ireland .The Transferred Subsidiary has not been required by any Tax Authority to give security (or further security) as a condition of supplying goods or for purposes of a taxable supply.  The Transferred Subsidiary has not applied to waive its right to exemption from VAT in relation to any immovable goods nor does any Business Subsidiary engage of (nor has engaged in) the letting of immovable goods.
 
The Transferred Subsidiaryis nota capital goods owner as defined in section 63(1) VATCA.
 
(f)           Each Business Subsidiaryhas duly and properly accounted to the appropriate Tax Authority for all employment related taxes and social security contributions and similar levies and charges (including PAYE, PRSI and universal social charge) by making such
 
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deductions as are required by law from all payments made (or deemed to be or treated as made) by it (or on its behalf or for which it is otherwise required to account).
 
(g)           The Transferred Subsidiary has not repaid any share capital.
 
The Transferred Subsidiary has not issued any share capital or security as paid-up otherwise than by the receipt of new consideration.
 
(h)           All documents to whichthe Transferred Subsidiaryis a party and under whichthe Transferred Subsidiary has any rights or in respect of which any Business Subsidiary is an accountable person have been duly stamped with the correct amount of stamp duty, paid within the applicable time limits, except to the extent that an exemption or relief from stamp duty has been granted.
 
(i)           The Transferred Subsidiary has not made a claim to or filing with a Tax Authority for a relief from stamp duty.
 
The Transferred Subsidiary has notacquired or disposed of any asset or entered into any a non-arm’s length transaction with an Affiliate of the Transferred Subsidiary.
 
(j)            The TransferredSubsidiaryhas not been involved in any transaction falling within the provisions of section 621 TCA ( Depreciatory Transactions in a Group ) or section 622 TCA ( Dividend Stripping ) or Part 21 TCA ( Mergers, Divisions and Transfers of Assets ) or any other similar provisions as applicable.
 
(k)           The Transferred Subsidiary has not made a mandatory disclosure to a Tax Authority in respect of a transaction or a proposed transaction which enables any person to obtain a tax advantage and no circumstances exist which mean that a Business Subsidiary should have made such a disclosure but failed to do so.
 
(l)            The Transferred Subsidiary has not been involved in any transaction which may be designated as a “tax avoidance transaction” within the meaning of Section 811 of the Taxes Consolidation Act of 1997 of Ireland, as amended.
 
(m)          Each Business Subsidiary has withheld and timely paid all material Taxes required to have been withheld or paid with respect to payments by it.
 
(n)           There is no pending dispute or claim concerning any Liabilities for any material Taxes with respect to any Business Subsidiary, for which notice has been provided to any Business Subsidiary.  No Business Subsidiary has waived (or is subject to a waiver of) any statute of limitations in respect of Taxes or has agreed to (or is subject to) any extension of time with respect to a Tax assessment or deficiency, which waiver or extension is outstanding as of the date hereof.  No claim has ever been made by a Governmental Authority in a jurisdiction where a Business Subsidiary does not file Tax Returns that Company or any Business Subsidiary is or may be subject to taxation by that jurisdiction.
 
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(o)           No Business Subsidiary is a party to, a beneficiary of or is subject to, any Tax allocation or sharing agreement which will require a payment following the Closing to a Person other than an Business Subsidiary.  No Business Subsidiary has any Liabilities for the Taxes of any Person (i) as a transferee or successor, (ii) by Contract, (iii) under Section 1.1502-6 of the Treasury Regulations (or any similar provision of state, local or foreign Law), or (iv) otherwise.
 
(p)           No Business Subsidiary has ever been a party (either as a distributing corporation, a distributed corporation or otherwise) to any transaction intended to qualify under Section 355 or Section 361 of the Code or any corresponding provision of state Law.  Each Business Subsidiary that is a U.S. corporation is in full compliance with all the reporting requirements of Section 6038A of the Code.  No Business Subsidiary has participated in (and will not participate in) an international boycott within the meaning of Section 999 of the Code.
 
(q)           None of the assets of any Business Subsidiary that is a U.S. corporation is property required to be treated as being owned by any other person pursuant to the so-called “safe harbor lease” provisions of former Section 168(f)(8) of the Code.  None of the assets of any Business Subsidiary that is a U.S. corporation directly or indirectly secures any debt the interest on which is tax-exempt under Section 103(a) of the Code.  None of any Business Subsidiary that is a U.S. corporation is “tax-exempt use property” within the meaning of Section 168(h) of the Code.  No Business Subsidiary that is a U.S. corporation has ever elected to be treated as an S-corporation under Section 1362 of the Code or any corresponding provision of Federal or state Law.
 
(r)            Each Business Entity is in full compliance with the terms and conditions of any Tax exemption or Tax incentive, and the consummation of the Sale will not have any adverse effect on the continued validity or effectiveness of any such Tax exemption or Tax incentive.
 
(s)            No Business Subsidiary is, nor has been, a United States real property holding corporation (as defined in Section 897(c)(2) of the Code) during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
 
(t)            .  No Business Subsidiary that is a U.S. corporation has consummated or participated in, and is not currently participating in any transaction which was or is a “Tax shelter” transaction as defined in Section 6662, 6011, 6111 or 6112 of the Code, the Regulations or other published guidance from the Internal Revenue Service.
 
(u)           No Business Subsidiary that is a U.S. corporation will be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any: (i) change in method of accounting, other than by reason of the transactions contemplated herein, for Tax purposes for a taxable period ending on or prior to the Closing Date (including, without limitation, by reason of Section 481 or 263A of the Code); (ii) “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or foreign income Tax Law) executed on or prior to the Closing Date; (iii) intercompany transaction or excess loss account described in Section 1502 of the Code and the Treasury Regulations
 
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promulgated thereunder (or any corresponding or similar provision of state, local or foreign income Tax Law); (iv) installment sale or open transaction disposition made on or prior to the Closing Date; or (v) prepaid amount received on or prior to the Closing Date.
 
(v)           There is no Contract to which any Business Subsidiary is a party, including the provisions of this Agreement, that could, individually or collectively, result in the payment of any amount by a Business Subsidiary that would not be deductible by reason of Sections 280G, 162 or 404 of the Code.  There is no contract, agreement, plan, or arrangement to which any Business Subsidiary is a party or by which it is bound to compensate any employee for excise taxes paid pursuant to Section 4999 of the Code.  No Business Subsidiary has granted any compensation, equity or award under an Employee Plan that could be deemed deferred compensation subject to the additional 20% tax under Section 409A of the Code.
 
(w)          No Business Subsidiary is, nor at any time has been, a passive foreign investment company within the meaning of Section 1297 of the Code; no Business Subsidiary that is not a United States person (I) is, or at any time has been, engaged in the conduct of a trade or business within the United States or treated as or considered to be so engaged or (II) has, or at any time has had, an investment in ‘United States property’ within the meaning of Section 956(c) of the Code; No Business Subsidiary is, or at any time has been, subject to (I) the dual consolidated loss provisions of the Section 1503(d) of the Code, (II) the overall foreign loss provisions of Section 904(f) of the Code or (III) the re-characterization provisions of Section 952(c)(2) of the Code.
 
(x)           Each Business Subsidiary’s records includes all agreements, rulings, settlements or other Tax documents relating to Tax incentives between a Business Subsidiary and any Governmental Authority.
 
(y)           The Transferred Subsidiary has used commercially reasonable efforts to obtain, keep and give complete and correct records, invoices and other documents appropriate or required for Tax purposes, including any claims or elections made to determine the Tax liability or Tax Relief to calculate the Tax liability that would arise on any disposal or on the realization of any material asset owned by the Transferred Subsidiary at Closing.
 
Section 3.18          Brokers.  Except for Canaccord Genuity Corp., no broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission from the Seller in connection with the origination, negotiation or execution of this Agreement or the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Seller or any of the Business Subsidiaries.
 
Section 3.19          Foreign Corrupt Practices Act.  The Business Subsidiaries and, to the Seller’s knowledge, each employee, officer, director, affiliate and agent thereof, have complied with and are in compliance with, and none of them has taken any action that has violated the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder, the OECD Convention on Combating Bribery of Foreign Public Officials in International Transactions, dated November 21, 1977, any other Laws that prohibit commercial bribery or money laundering, and the standards established by the Financial Action Task Force on Money Laundering.
 
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ARTICLE IV
 
REPRESENTATIONS AND WARRANTIES OF THE BUYER
 
The Buyer hereby represents and warrants to the Seller that:
 
Section 4.01         Incorporation and Authority of the Buyer.  The Buyer is a corporation or other organization duly incorporated or organized, validly existing and in good standing under the Laws of the jurisdiction of its incorporation or organization and has all necessary corporate or other entity power to enter into this Agreement and to consummate the transactions contemplated by, and to carry out its obligations under, this Agreement.  The execution and delivery of this Agreement by the Buyer, the consummation by the Buyer of the transactions contemplated by, and the performance by the Buyer of its obligations under, this Agreement have been duly authorized by all requisite corporate or other entity action on the part of the Buyer.  This Agreement has been duly executed and delivered by the Buyer, and (assuming due authorization, execution and delivery by the Seller) this Agreement constitute legal, valid and binding obligations of the Buyer enforceable against the Buyer in accordance with its terms, subject to the effect of any applicable Laws relating to bankruptcy, reorganization, insolvency, moratorium, fraudulent conveyance or preferential transfers, or similar Laws relating to or affecting creditors’ rights generally and subject, as to enforceability, to the effect of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).
 
Section 4.02         Qualification and Authority of the Buyer.  The Buyer has the corporate or other entity power and authority to operate its business as now conducted.  The Buyer is duly qualified to do business and, to the extent legally applicable, is in good standing in each jurisdiction where the character of its owned, operated or leased properties or the nature of its activities makes such qualification necessary, except for jurisdictions where the failure to be so qualified or in good standing would not materially impair or delay the ability of the Buyer to consummate the transactions contemplated by, or perform its obligations under, this Agreement.
 
Section 4.03         No Conflict.  Provided that all consents, approvals, authorizations and other actions described in Section 4.04  have been obtained or taken, except as otherwise provided in this Article IV, the execution, delivery and performance by the Buyer of this Agreement and the consummation by the Buyer of the transactions contemplated by this Agreement do not and will not (a) materially violate or conflict with the Organizational Documents of the Buyer, (b) materially conflict with or violate any Law or Governmental Order applicable to the Buyer or (c) conflict with, result in any breach of, or constitute a default (or event which with the giving of notice or lapse of time, or both, would become a default) under, any material Contract to which the Buyer is a party.
 
Section 4.04         Consents and Approvals.  The execution and delivery by the Buyer of this Agreement does not, and the performance by the Buyer of, and the consummation by the Buyer of the transactions contemplated by, this Agreement will not, require any material consent, approval or authorization, or any material filing with or notification to, any Governmental Authority, except where the failure to obtain such consent, approval or authorization or to make such filing or notification, would not prevent or materially delay the Buyer from consummating
 
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the transactions contemplated by, or performing any of its material obligations under this Agreement.
 
Section 4.05          Absence of Restraints; Compliance with Laws.
 
(a)           To the knowledge of the Buyer, there exist no facts or circumstances that could reasonably be expected to materially impair or delay the ability of the Buyer to consummate the transactions contemplated by, or to perform its obligations under, this Agreement.
 
(b)           The Buyer and its Affiliates are not in violation of any Laws or Governmental Orders applicable to it or them or by which any of its or their assets is bound or affected, except for violations the existence of which would not reasonably be expected to materially impair or delay the ability of the Buyer to consummate the transactions contemplated by, or to perform its obligations under, this Agreement.
 
Section 4.06         Investment Intent.  Buyer is acquiring the Shares pursuant to this Agreement solely for its own account and with no intention of distributing or reselling such shares or any part thereof, or interest therein, in any transaction that would be in violation of the Securities Act, or any other securities Laws of the United States of America or any state thereof, it being agreed that the representation herein shall in no way be deemed to apply to any transfer of Shares among wholly-owned direct or indirect subsidiaries of Buyer.
 
Section 4.07         Financial Ability.  Buyer and its Affiliates, collectively, have sufficient cash on hand or other sources of immediately available funds to enable it to make payment of the Purchase Price and consummate the transactions contemplated by this Agreement.
 
Section 4.08         Brokers.  Except for Blackstone Advisory Partners LP, no broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission from the Buyer or its Affiliates in connection with the origination, negotiation or execution of this Agreement or the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Buyer or any of its Affiliates, and any such fee or commission will be paid for solely by the Buyer.
 
ARTICLE V
 
ADDITIONAL AGREEMENTS
 
Section 5.01         Confidentiality.  The terms of the non-disclosure agreement dated December 12, 2012 (the “ Confidentiality Agreement ”) between the Buyer and the Transferred Subsidiary are incorporated into this Agreement by reference and shall continue in full force and effect until the Closing, at which time the confidentiality obligations under the Confidentiality Agreement shall terminate;  provided ,  however , that (i) the Buyer’s confidentiality obligations shall terminate only in respect of that portion of the Confidential Information (as defined in the Confidentiality Agreement) exclusively relating to the Business and (ii) the Buyer’s non-solicitation obligations shall terminate with respect to the Business.  If, for any reason, the sale of the Shares is not consummated, the Confidentiality Agreement shall continue in full force and effect in accordance with its terms.
 
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Section 5.02          Regulatory and Other Authorizations; Consents.
 
(a)           The Buyer and Seller shall each use its respective commercially reasonable efforts to (i) promptly obtain all authorizations, consents, orders and approvals of all Governmental Authorities that may be, or become, necessary for its execution and delivery of, performance of its obligations pursuant to, and consummation of the transactions contemplated by, this Agreement, (ii) take all such actions as may be requested by any such Governmental Authority to obtain such authorizations, consents, orders and approvals and (iii) avoid the entry of, or to effect the dissolution of, any decree, order, judgment, injunction, temporary restraining order or other order in any suit or proceeding, that would otherwise have the effect of preventing or materially delaying the consummation of the transactions contemplated by this Agreement.  The Seller will cooperate with the reasonable requests of the Buyer in seeking promptly to obtain all such authorizations, consents, orders and approvals.  Neither the Seller nor the Buyer shall take any action that they should be reasonably aware would have the effect of materially delaying, impairing or impeding the receipt of any required approvals.
 
(b)           Each party to this Agreement shall promptly notify the other parties of any oral or written communication it receives from any Governmental Authority relating to the transactions that are the subject matter of this Agreement, permit the other parties to review in advance any communication proposed to be made by such party to any Governmental Authority and provide the other parties with copies of all correspondence, filings or other communications between them or any of their Representatives, on the one hand, and any Governmental Authority or members of its staff, on the other hand.  No party to this Agreement shall agree to participate in any meeting with any Governmental Authority in respect of any such filings, investigation or other inquiry unless it consults with the other parties in advance and, to the extent permitted by such Governmental Authority, gives the other parties the opportunity to attend and participate at such meeting.  Subject to the Confidentiality Agreement, the parties to this Agreement will coordinate and cooperate fully with each other in exchanging such information and providing such assistance as the other parties may reasonably request in connection with the foregoing.
 
(c)           Each party to this Agreement agrees to cooperate in obtaining any other consents and approvals that may be required in connection with the transactions contemplated by this Agreement.
 
Section 5.03         Insurance.
 
(a)           From and after the Closing, the Business Subsidiaries shall cease to be insured by the Seller’s or its Affiliates’ insurance policies or by any of their self-insured programs, other than by any insurance policies acquired directly by and in the name of one or more Business Subsidiaries or self-insurance programs of the Business Subsidiaries directly while an Affiliate or Subsidiary of the Seller.
 
(b)           Notwithstanding Section 5.03(a), with respects to acts, omissions, events or circumstances relating to the Business Subsidiaries that occurred or existed prior to the Closing Date that are covered by the Seller’s or its Affiliates’ occurrence-based third party liability insurance policies, the Business Subsidiaries may make claims under such policies and programs subject to the terms and conditions of such policies, programs and this Agreement, to
 
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the extent such coverage and limits are available, provided, however, that the Business Subsidiaries shall notify the Seller of all such covered claims.  For the avoidance of doubt, neither the Buyer nor the Business Subsidiaries shall have any right after the Closing to make claims or seek coverage under any of the Seller’s or its Affiliates’ claims-made or occurrence-reported liability policies, or property insurance policies (which include property, terrorism, transit, and construction-all-risk) arising from the operations of the Business after the Closing.
 
(c)           Notwithstanding Section 5.03(b), as of the second anniversary of this Agreement, the Business Subsidiaries shall no longer be permitted and shall have no right to make any such claims or seek any benefits under occurrence-based third party general liability and products liability insurance policies of the Seller or its Affiliates (other than those of the Business Subsidiaries).
 
(d)           The Seller shall retain exclusive right to control its insurance policies and programs, including the right to exhaust, settle, release, commute, buy-back or otherwise resolve disputes with respect to any of its insurance policies and programs and to amend, modify or waive any rights under any such insurance policies and programs, notwithstanding whether any such policies or programs apply to any Liabilities or claims the Business Subsidiaries have made or could make in the future, and the Business Subsidiaries shall not, without the written consent of the Seller (not to unreasonably be withheld, delayed or conditioned), erode, exhaust, settle, release, commute, buy-back or otherwise resolve disputes with respect to any of the Seller’s or its Affiliates’ insurance policies and programs, or amend, modify or waive any rights under any such insurance policies and programs.  The Business Subsidiaries shall at Seller’s expense cooperate with the Seller and share such information as is reasonably necessary in order to permit the Seller to manage and conduct its insurance matters as it deems appropriate.
 
(e)           At Closing, the Business Subsidiaries will be required to have in effect all insurance programs necessary to comply with all the Business Subsidiaries’ contractual obligations.
 
Section 5.04         Termination of Rights to the Seller Name and the Seller Marks.  As soon as practicable after the Closing Date (and in any event within thirty (30) days thereafter), the Buyer shall and shall cause each of its Affiliates (which shall include the Business Subsidiaries) to (i) cease and discontinue all uses of the Seller Name and the Seller Marks and (ii) complete the removal of the Seller Name and the Seller Marks from all products, signage, vehicles, properties, technical information, promotional materials and other property.
 
Section 5.05         Resignation of Officers and Directors.  The Seller will (i) remove each of the officers of the Transferred Subsidiary effective immediately prior to the Closing and (ii) cause each director of the Transferred Subsidiary to deliver a letter of resignation with respect to such director’s position with the Transferred Subsidiary within five (5) Business Days following the Closing; and the Seller shall indemnify the Buyer for any actions taken by any officers or directors of the Business Subsidiaries who have not resigned as of the Closing.
 
Section 5.06          Minutes Books.  Within ten (10) Business Days following the Closing, the Seller shall deliver or cause to be delivered to the Buyer the Organizational Documents, the seal, statutory books, registers and minute books of each of the Business Subsidiaries.
 
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Section 5.07         Further Action.
 
(a)           Each of the Seller and the Buyer (i) shall execute and deliver, or shall cause to be executed and delivered, such documents and other papers and shall take, or shall cause to be taken, such further actions as may be reasonably required to carry out the provisions of this Agreement and give effect to the transactions contemplated by this Agreement, (ii) shall refrain from taking any actions that could reasonably be expected to impair, delay or impede the Closing and (iii) without limiting the foregoing, shall use its reasonable efforts to cause all of the conditions to the obligations of the other party to consummate the transactions contemplated by this Agreement to be met on or prior to the Termination Date.
 
(b)           If, after the Closing, the Seller or its Affiliates receive any funds that are the property of the Buyer or its Affiliates (including the Business Subsidiaries), the Seller shall, or shall cause one of its Affiliates to, remit any such funds promptly to Buyer or such Affiliate.  If, after the Closing, the Buyer or its Affiliates (including the Business Subsidiaries) receive any funds that are the property of the Seller or its Affiliates, the Buyer shall, or shall cause one of its Affiliates to, remit any such funds promptly to such Seller or such Affiliate.
 
(c)           Each party shall give prompt written notice to the other party of any failure to comply with or satisfy in any material respect any of the covenants, conditions or agreements to be complied with or satisfied by it hereunder.
 
Section 5.08         Non-Solicitation.
 
(a)           For a period of one (1) year from the Closing Date, none of the Seller, its Subsidiaries or any of their respective officers, directors or employees shall, directly or indirectly, solicit for employment or hire any individual who is an employee of a Business Subsidiary immediately prior to Closing;  provided  that the Seller, its Subsidiaries and their officers, directors and employees shall not be precluded from soliciting or hiring any such person who (i) has been terminated by a Business Subsidiary prior to commencement of employment discussions between the Seller, its Subsidiaries or any of their officers, directors or employees and such person, (ii) responds to general or public solicitation not targeted at such persons (including by a bona fide search firm) or (iii) initiates discussions regarding such employment without any direct or indirect solicitation by the Seller, its Subsidiaries or any of their officers, directors or employees.
 
(b)           For a period of one (1) year from the Closing Date, none of the Buyer, its Affiliates (including the Business Subsidiaries) or any of their respective officers, directors or employees shall, directly or indirectly, solicit for employment or hire any individual who was an employee of the Seller or its Affiliates with whom the Buyer, its Affiliates or any of their officers, directors or employees has had contact or who (or whose performance) became known to the Buyer, its Affiliates or any of their officers, directors or employees in connection with the sale of the Business;  provided  that the Buyer, its Affiliates and their officers, directors and employees shall not be precluded from soliciting or hiring any such person who (i) has been terminated by the Seller or its Affiliates prior to commencement of employment discussions between the Buyer, its Affiliates or any of their officers, directors or employees and such person, (ii) responds to general or public solicitation not targeted at such persons (including by a bona
 
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fide search firm) or (iii) initiates discussions regarding such employment without any direct or indirect solicitation by the Buyer, its Affiliates or any of their officers, directors or employees.
 
(c)           Each of the Seller and the Buyer acknowledges that the time, scope and other provisions of this Section 5.08 have been specifically negotiated by sophisticated commercial Persons, and specifically hereby agree that such time, scope and other provisions are reasonable under the circumstances.  It is further agreed that other remedies cannot fully compensate the Seller or the Buyer, as the case may be, for a violation by the Buyer or the Seller, as the case may be, of the terms of this Section 5.08, and that the Buyer or the Seller, as the case may be, shall be entitled to injunctive relief to prevent any such violation or continuing violation by the other party or its Affiliates.  It is the intent and understanding of each party hereto that, if, in any Action, any term, restriction, covenant or promise herein is found to be unreasonable and for that reason unenforceable, then such term, restriction, covenant or promise shall be deemed modified to the extent necessary to make it enforceable.
 
Section 5.09         Special Payment.  Seller shall make a payment to Buyer of $800,000 on or before March 1, 2013 to assist Buyer with respect to certain post-Closing retention bonuses.  Except for such payments, Seller shall have no other obligation or liability with respect to any such retention payments.
 
ARTICLE VI
 
EMPLOYEE MATTERS
 
Section 6.01         Assumption of Subsidiary Plans.  The Buyer shall assume, and shall cause the Business Subsidiaries to assume or retain, as applicable, all obligations and liabilities in respect of Subsidiary Plans.
 
Section 6.02         Credit For Service.  The Buyer agrees that service of Employees with the Seller and its Affiliates (including the Business Subsidiaries) before the Closing Date (including any credited predecessor service) shall be credited for all purposes under the employee benefit plans, programs and arrangements (to the extent permitted under the applicable Employee Plan) of the Buyer and its Affiliates (including the Business Subsidiaries) following the Closing Date, to the same extent such service was counted under the applicable corresponding Employee Plan, except to the extent that such credit would result in duplication of benefits.
 
Section 6.03         Welfare Benefits.  The Buyer shall provide, or shall cause the Business Subsidiaries to provide, welfare benefits of the type described in Section 3(1) of ERISA (“ Welfare Benefits ”) so as to ensure uninterrupted coverage of Employees in the United States (“ U.S. Employees ”). Such plans shall grant credit for amounts paid by the U.S. Employees during the applicable plan year preceding the Closing Date (including applicable deductibles and annual out-of-pocket limits) and shall, with respect to each U.S. Employee, waive any pre-existing condition exclusions, evidence of insurability provisions, waiting period requirements or any similar provision (except to the extent that such exclusion, provision, or requirement was applicable to such U.S. Employee under the applicable Employee Plan in effect immediately prior to the Closing Date).
 
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Section 6.04         Qualified Plans and Defined Contribution Plans.Effective as of the Closing Date, each U.S. Employee shall cease participation and benefit accrual under, and each Business Subsidiary shall cease to be a contributing sponsor of, any Employee Plans that are intended to qualify under Section 401 of the Code (“ Qualified Plans ”), each of which is set forth on Schedule 6.04 of the Disclosure Schedule, and the Seller and its Affiliates shall (subject to the Buyer’s obligations set forth in this Section 6.04 to accept certain rollovers) retain all responsibility and liability for benefits accrued by U.S. Employees in Employee Plans that are Qualified Plans. Effective as of the Closing Date, the Buyer shall cover, or cause the Business Subsidiaries to cover, the U.S. Employees under one or more defined contribution plans and trusts intended to qualify under Section 401(a) and Section 501(a) of the Code (the “ Buyer DC Plans ”).  The terms of the Buyer DC Plans, or of each such Buyer DC Plan, shall provide that such U.S. Employees shall have the right to make direct rollovers to the applicable Buyer DC Plan of their accounts in the applicable defined contribution Qualified Plan of the Seller and its Affiliates, including a direct rollover of any notes evidencing loans made to such U.S. Employees.
 
Section 6.05         Exceptions.  Nothing contained in this Section 6.05 shall by itself be construed as requiring the Buyer and its Affiliates to continue any specific Plan or as preventing the Buyer and its Affiliates from terminating (or modifying the terms of) the employment of any specific Employee.  Nothing contained in this Section 6.05 shall constitute an amendment to any Employee Plan or other employee benefit plan, create any third party beneficiary rights or be enforceable by any employee of Seller or Buyer or their respective Affiliates.
 
ARTICLE VII
 
TAX MATTERS
 
Section 7.01          Liability for Taxes.
 
(a)           the Seller shall be responsible for, pay or cause to be paid, and shall indemnify the Buyer and each of its Subsidiaries and Affiliates (including the Business Subsidiaries after the Closing Date) (each a “ Buyer Tax Indemnitee ”) and hold each Buyer Tax Indemnitee harmless from and against (i) any and all Taxes of the Business Subsidiaries for any Pre-Closing Period, (ii) all Taxes of any member of an affiliated, consolidated, combined or unitary group of which any Business Subsidiary (or any predecessor thereof) is or was a member on or prior to the Closing Date, including pursuant to Treasury Regulation Section 1.1502-6 or any analogous or similar state, local, or foreign law or regulation, and (iii) any and all Taxes of any person imposed on a Business Subsidiary as a transferee or successor, by contract or pursuant to any law, rule, or regulation, which Taxes relate to an event or transaction occurring on or before the Closing Date (other than (w) all Transfer Taxes for which the Buyer is responsible pursuant to Section 7.08, (y) any such Taxes reflected in the Initial Working Capital Statement or Final Working Capital Statement and (z) any such Taxes arising from or in connection with any breach by the Buyer or any of its Affiliates of any covenant contained in this Agreement (such Taxes described in (y) and (z), herein are referred to as “ Excluded Taxes ”).
 
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(b)           The Buyer shall, except to the extent that such Taxes are the responsibility of the Seller under Section 7.01(a), be responsible for, pay or cause to be paid, and shall indemnify the Seller and its Subsidiaries and Affiliates (other than the Business Subsidiaries) (each a “ Seller Tax Indemnitee ”) and hold each Seller Tax Indemnitee harmless from and against all Transfer Taxes for which the Buyer is responsible pursuant to Section 7.08.
 
(c)           For all purposes of this Agreement, in determining the Taxes attributable to the Pre-Closing Period included in any Straddle Period and in determining Taxes in the Initial Working Capital Statement and the Final Working Capital Statement, (i) Property Taxes shall be equal to the amount of such Property Taxes for the entire Straddle Period multiplied by a fraction, the numerator of which is the number of calendar days during the Straddle Period that are in the Pre-Closing Period and the denominator of which is the number of calendar days in the entire Straddle Period, (ii) Taxes (other than Property Taxes) shall be computed as if such taxable period ended as of the end of the day on the Closing Date using a closing of the books method and (iii) notwithstanding Sections 7.01(c)(i) and (ii), any Taxes attributable to any election made by Buyer pursuant to Section 7.15 of this Agreement or any action taken by Buyer out of the ordinary course of business on the Closing Date after the Closing shall be allocated to the Post-Closing Period and are not contemplated by this Agreement.
 
Section 7.02          Preparation and Filing Responsibilities of Tax Returns.
 
(a)           Preparation and Filing of Tax Returns by Seller.  The Seller shall prepare and file, or cause to be prepared and filed, when due: (i) all Tax Returns for any affiliated group of which the Seller is the common parent, (ii) any Tax Return which includes the Seller or any other member of the Seller Group and (iii) any consolidated, combined or unitary Tax Return which includes the Seller or any of its Subsidiaries.  The positions reflected on such Tax Returns shall, to the extent permitted by applicable Law, be consistent with past practice of the Business Subsidiaries.
 
(b)           Preparation and Filing of Tax Returns by Buyer.
 
(i)            Tax Periods Ending on or Before the Closing Date.  The Buyer shall prepare, or cause to be prepared, and provide to the Seller for review, not less than 30 days before the due date for such Tax Returns, drafts of all Tax Returns of the Business Subsidiaries for all periods ending on or prior to the Closing Date which are filed after the Closing Date not described in Section 7.02(a) or solely in respect of Excluded Taxes.  The positions reflected on such Tax Returns shall, to the extent permitted by applicable Law, be consistent with past practice of the Business Subsidiaries.  The Seller shall provide any comments on such draft Tax Returns within 15 days of receipt and the Buyer shall, unless otherwise required by applicable Law, revise the draft Tax Returns to reflect the Seller’s reasonable comments prior to filing or causing the filing of such Tax Returns.  The Seller shall pay to the Buyer the amount of any unpaid Taxes with respect to such Tax Returns within five (5) days following any demand by the Buyer for such payment, except to the extent that such Taxes are Excluded Taxes or are allocable under  Section 6.10(c)  hereof to a Post-Closing Period.
 
(ii)           Tax Periods Beginning Before and Ending After the Closing Date.  The Buyer shall prepare, or cause to be prepared, and provide to the Seller for review, not less
 
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than 30 days before the due date for such Tax Returns, drafts of all Tax Returns of the Business Subsidiaries for all Straddle Periods other than Tax Returns or solely in respect of Excluded Taxes.  The positions reflected on such Tax Returns shall, to the extent permitted by applicable Law, be consistent with past practice of the Business Subsidiaries.  The Seller shall provide any comments on such draft Tax Returns within 10 days of receipt and the Buyer shall, unless otherwise required by applicable Law, revise the draft Tax Returns to reflect the Seller’s reasonable comments, to the extent Buyer believes they are reasonable, prior to filing or causing the filing of such Tax Returns.  The Seller shall pay to the Buyer, within five (5) days following any demand by the Buyer, with respect to such Tax Returns, an amount equal to the portion of any unpaid Taxes allocable to the Pre-Closing Period, except to the extent that such Taxes are Excluded Taxes.
 
(c)           Nothing done by the Buyer pursuant to this Section 7.02 shall in any respect restrict or reduce any rights the Buyer may have to make a claim against the Seller under in respect of any such Tax Liability as is mentioned in Section 7.01(a), except to the extent that Buyer has already been reimbursed for such Taxes.
 
Section 7.03         Cooperation and Exchange of Information.  From and after the Closing Date, each party hereto shall, and shall cause its Affiliates to, provide the other party hereto with such cooperation, documentation and information as either of them reasonably may request in connection with (a) filing any Tax Return or claim for refund, (b) determining a liability for Taxes, an indemnity or payment obligation under this Article VII or a right to a refund of Taxes, (c) conducting any Tax Proceeding (which shall include granting any powers of attorney reasonably requested by the party entitled to control a Tax Proceeding pursuant to Section 7.04) or (d) determining an allocation of Taxes between a Pre-Closing Period and a Post-Closing Period.  Such cooperation and information shall include providing copies of all relevant portions of relevant Tax Returns, together with all relevant accompanying schedules and work papers (or portions thereof) and other supporting documentation.
 
Section 7.04         Contests.
 
(a)           If any Tax Authority asserts a Tax Claim in respect of any Business Subsidiary, then the party hereto first receiving notice of such Tax Claim promptly shall provide written notice thereof to the other party or parties hereto within 15 Business Days of becoming aware of such Tax Claim.  Such notice shall specify in reasonable detail the basis for such Tax Claim and shall include a copy of the relevant portion of any correspondence received from the Tax Authority.
 
(b)           The Buyer shall have exclusive right to control in all respects, including as to settlement, any Tax Proceeding in respect of any Business Subsidiary for any taxable period, and the Seller shall have the right to participate in such contest at its own expense in the event any such Tax Claim could result in an indemnification obligation, and the Buyer shall keep Seller fully informed of such contest.  The Buyer shall not settle or compromise any such contest without the consent of Sellers, which consent shall not be unreasonably withheld, denied or delayed.
 
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Section 7.05         Tax Sharing Agreements.  All liabilities and obligations between the Seller or any member of the Seller Group (defined below), on the one hand, and the Business Subsidiaries, on the other hand, under any Tax allocation or Tax sharing agreement in effect prior to the Closing Date (other than this Agreement) shall cease and terminate as of the Closing Date.
 
Section 7.06         Due Date for Payment.  Where the Seller becomes liable to make any payment under this Article VII, the due date for payment shall be as follows where the Liability is a Liability of a Business Subsidiary to make an actual payment of Tax, the date falling 3 Business Days before the latest date on which that Tax is payable to the relevant Tax Authority in order to avoid incurring any liability to interest, fines, charges, surcharges or penalties.
 
Section 7.07         Tax Benefit.  The Buyer shall be entitled to any refund of (or credit of or against) or any other Tax Benefit in respect of any Taxes of the Business Subsidiaries for all Pre-Closing Periods and any Tax Benefit arising from the utilization or realization in a Post-Closing Period of any item of loss, deduction or credit arising in a Pre-Closing Period.
 
Section 7.08          Transfer Taxes and Irish Stamp Duty.
 
(a)           The Buyer shall be responsible for and shall pay all documentary, sales, use, registration, value added, transfer, stamp (including Irish stamp duty and costs, “Transfer Taxes”) incurred in connection with the transactions contemplated by this Agreement.
 
(b)           The Seller hereby warrants and represents that all documents to which the Transferred Subsidiary is a party and under which any Business Subsidiary has any rights or in respect of which the Transferred Subsidiary is an accountable person have been duly stamped with the correct amount of Irish stamp duty, paid within the applicable time limits, except to the extent that an exemption or relief from stamp duty has been granted.
 
(c)           The Seller hereby warrant and represent that no relief from Irish stamp duty previously granted will or may be withdrawn on or in connection with the sale of the Transferred Subsidiary pursuant to this Agreement.
 
(d)           The warranty given pursuant to section (a) is separate and distinct from the covenants provided under clause Section 7.01(a) and, in the event of any breach of such warranty, the Buyer shall be entitled to procure that the relevant document is stamped, or the stamp duty paid, together with any interest, penalty, fine or similar charge in respect thereof, and the Buyer shall be entitled to claim the stamp duty paid together with any interest, penalty, fine or similar charge from the Seller by way of liquidated damages for breach of the warranty.  The Buyer shall give the Seller no less than 15 Business Days’ notice of any proposed payment to be made pursuant to this subsection (c)
 
Section 7.09         Taxes Governed byArticle VII.  Claims for indemnification with respect to Taxes shall be governed by this Article VII and Section 9.01(b) but not by any other provision of Article IX.
 
Section 7.10         Survival.  All rights and obligations under this Article VII shall survive the Closing Date and continue until the first anniversary of the Closing Date.
 
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Section 7.11         Post-Closing Dispositions.  For the avoidance of doubt, the covenants of the Buyer and the Business Subsidiaries set forth in this Article VII shall apply to the Buyer and the Business Subsidiaries regardless of any post-Closing disposition of the Business Subsidiaries by the Buyer or any of its Subsidiaries.
 
Section 7.12          Tax Treatment of Payments.  The Seller, the Buyer, the Business Subsidiaries and their respective Affiliates shall treat any and all payments under this Article VII or Section 2.04 or Article IX as an adjustment to the Purchase Price for Tax purposes unless they are required to treat such payments otherwise by applicable Tax Laws .
 
Section 7.13         Section 338 Election.  At the option of the Buyer, the Buyer may make an election with respect to any of the Business Subsidiaries under Section 338(g) of the Code and under any comparable provision of state, local or foreign law for which a separate election is permissible.  The Buyer shall be fully responsible and shall indemnify the Seller for any Taxes incurred by the Seller resulting from the making of such election.
 
Section 7.14         Definitions.  For purposes of this Agreement, the following terms shall have the meanings ascribed to them below:
 
(a)           “Property Taxes” means real, personal, and intangible ad valorem property Taxes.
 
(b)           “Seller Group” means the Seller and each of its Subsidiaries, other than the Business Subsidiaries.
 
(c)           “Tax Benefit” means the Tax effect of any item of loss, deduction or credit or any other item which decreases Taxes paid or payable or increases tax basis, including any interest with respect thereto or interest that would have been payable but for such item.  For purposes of determining the amount and timing of any Tax Benefit, the Person that is or would be the recipient of the Tax Benefit shall be deemed to pay Tax at the highest marginal rate in effect in the taxable period such Tax Benefit is realized or utilized and shall be deemed to realize or utilize any Tax Benefit in the first taxable period that such Tax Benefit may be realized or utilized under the Law.
 
(d)           “Tax Claim” means any claim with respect to Taxes made by any Governmental Authority.
 
(e)           “Tax Item” means any item of income, gain, loss, deduction, credit, recapture of credit or any other item which increases or decreases Taxes paid or payable, including an adjustment under Section 481 of the Code resulting from a change in accounting method.
 
(f)            “Tax Proceeding” means any Tax audit, contest, litigation, defense or other proceeding with or against any Governmental Authority.
 
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ARTICLE VIII
 
CONDITIONS TO CLOSING
 
Section 8.01         Conditions to Obligations of the Seller.  The obligation of the Seller to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment or waiver by the Seller in its sole discretion, at or prior to the Closing, of each of the following conditions:
 
(a)           Representations and Warranties; Covenants.  (i) Each of the representations and warranties of the Buyer contained in this Agreement shall be true and correct in all material respects as of the Closing as if made on the Closing Date, other than representations and warranties made as of another date, which representations and warranties shall have been true and correct in all material respects as of such date; (ii) the covenants contained in this Agreement required to be complied with by the Buyer on or before the Closing shall have been complied with in all material respects; and (iii) the Seller shall have received a certificate of the Buyer to such effect signed by its duly authorized executive officer.
 
(b)           No Governmental Order.  There shall be no Governmental Order in existence that prohibits or materially restrains the sale of the Shares or the other material transactions contemplated by this Agreement.
 
(c)           Proceedings.  No Action initiated by an arm’s-length third party shall be pending or threatened before any court or other Governmental Authority (i) seeking to prevent consummation of any of the transactions contemplated by this Agreement or (ii) seeking to restrain or prohibit the Buyer’s ownership or operation of all or any material portion of the business or assets of the Business Subsidiaries or compel the Buyer to dispose of or hold separate all or any material portion of the business or assets of the Business Subsidiaries.
 
Section 8.02         Conditions to Obligations of the Buyer.  The obligations of the Buyer to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment or waiver by the Buyer in its sole discretion, at or prior to the Closing, of each of the following conditions:
 
(a)           Representations and Warranties; Covenants.  (i) The representations and warranties of the Seller contained in this Agreement shall be true and correct in all respects, as of the Closing as if made on the Closing Date (other than representations and warranties that are made as of a specific date, which representations shall have been true and correct as of such date); (ii) the covenants contained in this Agreement required to be complied with by the Seller on or before the Closing shall have been complied with in all material respects; and (iii) the Buyer shall have received a certificate of the Seller to such effect signed by its duly authorized representative.
 
(b)           No Governmental Order.  There shall be no Governmental Order in existence that prohibits or materially restrains the sale of the Shares or the other transactions contemplated by this Agreement.
 
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(c)           Proceedings.  No Action initiated by an arm’s-length third party shall be pending or threatened before any court or Governmental Authority (i) seeking to prevent consummation of any of the transactions contemplated by this Agreement or (ii) seeking to restrain or prohibit the Buyer’s ownership or operation of all or any material portion of the business or assets of the Business Subsidiaries or compel the Buyer to dispose of or hold separate all or any material portion of the business or assets of the Business Subsidiaries.
 
ARTICLE IX
 
INDEMNIFICATION
 
Section 9.01          Indemnification by the Seller.
 
(a)          Subject Section 9.01(b), Section 9.03, Section 9.07 and Section 10.01, if the Closing shall occur, the Seller shall indemnify, defend and hold harmless the Buyer and its Affiliates (collectively, the “ Buyer Indemnified Parties ”) against, and reimburse any Buyer Indemnified Party for, all Losses that such Buyer Indemnified Party may suffer or incur, or become subject to, without adjustment for any Tax Benefit relating thereto, arising out of or resulting from:
 
(i)            any inaccuracy or breach of any representation or warranty made by the Seller in this Agreement, including defending any third-party claim alleging the occurrence of facts or circumstances that, if true, would entitled a Buyer Indemnified Party to indemnification with respect to any inaccuracy or breach of such representation and warranty;
 
(ii)           the breach or failure by the Seller to perform, or cause to be performed, any of its covenants or obligations contained in this Agreement;
 
(iii)          any Transaction Expenses which were unpaid as of immediately prior to the Closing and not listed treated as a Closing Transaction Expense;
 
(iv)          any Debt (other than Debt for capitalized leases and Debt between the Business Subsidiaries) which was outstanding as of immediately prior to the Closing; or
 
(v)           any claims for indemnification or expense reimbursement by or in respect of any current or former officer, director or agent of the Business Subsidiaries with respect to any matter which, if brought against the Business Subsidiaries, would have been a Loss for which an indemnified party would have been entitled to indemnification pursuant to this Section 9.01;
 
(vi)          any claims by Enterprise Ireland requiring any repayment of the Grant Agreements as a result of the transactions contemplated by this Agreement.
 
(vii)         any claims for the Seller’s breach of Section 5.09;
 
(b)           Notwithstanding anything to the contrary contained in this Agreement, except with respect to (1) claims based on fraud or willful misconduct, (2) Losses arising from or related to Section 9.01(a)(iii)-(vii) and (3) with respect to Losses resulting from breaches of
 
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Fundamental Representations (as defined below) (collectively, the “Special Losses”), no indemnification payment by the Seller with respect to any indemnifiable Losses otherwise payable under Section 9.01(a) and arising out of or resulting from the causes enumerated in Section 9.01(a) shall be payable until such time as all such indemnifiable Losses shall aggregate to more than $500,000 (the “ Basket Amount ”), after which time the Seller shall be liable in full for all indemnifiable Losses in excess of $250,000 (the “ Threshold ”). Nothing contained in this Article IX shall be deemed to limit or restrict in any manner any rights or remedies which the Buyer Indemnified Parties have, or might have, at Law, in equity or otherwise, based on fraud or willful misconduct.  The aggregate maximum liability of Seller for any and all Losses for which indemnification may be sought pursuant to Section 9.01(a) (other than with respect to the Fundamental Representations and Section 9.01(a)(vii), Section 9.01(a)(vii) and Article VII) shall be limited to $5,500,000 (excluding any Losses with respect to the Fundamental Representations, Section 9.01(a)(vi) and Section 9.01(a)(vii)).  The aggregate maximum liability of Seller for any and all Losses, including Losses for any inaccuracy or breach of the Fundamental Representations and Special Losses (other than those based on fraud or willful misconduct), shall be limited to the Purchase Price.  The term “ Fundamental Representations ” shall mean the representations and warranties of the Seller contained in Sections 3.01, 3.02, and 3.03.
 
(c)           As used herein, “Losses” are not limited to matters asserted by third parties, but include Losses incurred or sustained by any of the Buyer Indemnified Parties in the absence of claims by third parties.
 
Section 9.02          Indemnification by the Buyer.
 
(a)           Subject to Sections 9.03, 9.04 and 10.01, if the Closing shall occur the Buyer shall indemnify, defend and hold harmless the Seller and its Affiliates (collectively, the “ Seller Indemnified Parties ”) against, and reimburse any the Seller Indemnified Party for, all Losses that such the Seller Indemnified Party may suffer or incur, or become subject to, as a result of:
 
(i)            the breach of any representations or warranties made by the Buyer in this Agreement as of the Closing Date (or with respect to representations and warranties that are made as of a specific date, as of such date); or
 
(ii)           the breach or failure by the Buyer to perform, or cause to be performed, any of its covenants or obligations contained in this Agreement.
 
(b)           Notwithstanding anything to the contrary contained in this Agreement, except with respect to (1) claims for equitable remedies or (2) claims based on fraud or intentional misconduct, no indemnification payment by the Buyer with respect to any indemnifiable Losses otherwise payable under Section 9.02(a) and arising out of or resulting from the causes enumerated in Section 9.02(a) shall be payable until such time as all such indemnifiable Losses shall aggregate to more than the Basket Amount, after which time the Buyer shall be liable in full for all indemnifiable Losses in excess of the Threshold. Nothing contained in this Article X shall be deemed to limit or restrict in any manner any rights or remedies which the Seller Indemnified Parties have, or might have, at Law, in equity or otherwise, based on fraud or willful misconduct.  The aggregate maximum liability of Buyer for
 
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any and all Losses for which indemnification may be sought pursuant to Section 9.02(a) shall be limited to the Purchase Price.
 
Section 9.03          Notification of Claims.
 
(a)           A Person that may be entitled to be indemnified under this Agreement (the “Indemnified Party ”), shall promptly notify the party or parties liable for such indemnification (the “ Indemnifying Party ”) in writing of any pending or threatened claim or demand that the Indemnified Party has determined has given or could reasonably be expected to give rise to a right of indemnification under this Agreement (including a pending or threatened claim or demand asserted by a third party against the Indemnified Party, such claim being a “ Third Party Claim ”), describing in reasonable detail the facts and circumstances with respect to the subject matter of such claim or demand;  provided , however , that the failure to provide such notice shall not release the Indemnifying Party from any of its obligations under this Article IX except to the extent the Indemnifying Party is prejudiced by such failure, it being understood that notices for claims in respect of a breach of a representation, warranty, covenant or agreement must be delivered prior to the expiration of any applicable survival period specified in Section 10.01 for such representation, warranty, covenant or agreement.
 
(b)           Upon receipt of a notice of a claim for indemnity from an Indemnified Party pursuant to Section 9.03(a), the Indemnifying Party may assume the defense and control of any Third Party Claim, but shall allow the Indemnified Party a reasonable opportunity to participate in the defense of such Third Party Claim with its own counsel at its own expense;  provided , however , that the Indemnifying Party shall not have the right to assume the defense of any Third Party Claim if (i) any such claim seeks, as a primary component of such claim (and for the avoidance of doubt, not pursuant to any general prayer for relief), an injunction or other equitable remedies in respect of the Indemnified Party or (ii) there is a conflict of interest that would make it inappropriate (based on a written opinion of counsel) for the same counsel to represent both the Indemnified Party and the Indemnifying Party.  The Indemnifying Party shall select counsel, contractors and consultants of recognized standing and competence after consultation with the Indemnified Party and shall take all steps reasonably necessary in the defense or settlement of such Third Party Claim.  The Seller or the Buyer, as the case may be, shall, and shall cause each of its Affiliates and Representatives to, cooperate fully with the Indemnifying Party in the defense of any Third Party Claim, including, for the avoidance of doubt with respect to Third Party Claims pursuant to Section 3.11(b)(iii), the Buyer shall permit the counsel to the Seller to assert any of the patents of the Business Subsidiaries solely in defending such Third Party Claim.  The Indemnifying Party shall be authorized to consent to a settlement of, or the entry of any judgment arising from, any Third Party Claim, without the consent of any Indemnified Party so long as (A) there is no finding or admission of any violation of Law by the Indemnified Party or (B) the amount available for indemnification hereunder is not exceeded;  provided  that the Indemnifying Party shall (x) pay or cause to be paid all amounts in such settlement or judgment, (y) not encumber any of the material assets of any Indemnified Party or agree to any restriction or condition that would apply to or materially adversely affect any Indemnified Party or the conduct of any Indemnified Party’s business and (z) obtain, as a condition of any settlement or other resolution, a complete release of any Indemnified Party potentially affected by such Third Party Claim.
 
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(c)           In the event that the Indemnifying Party fails or elects not to assume the defense of an Indemnified Party against such Third Party Claim which the Indemnifying Party had the right to assume pursuant to Section 9.03(b), the Indemnified Party shall have the right, at the expense of the Indemnifying Party, to defend or prosecute such claim in any manner as it may reasonably deem appropriate and may settle such claim after giving written notice thereof to the Indemnifying Party, on such terms as such Indemnified Party may deem appropriate, and the Indemnified Party may seek prompt reimbursement from the Indemnifying Party for any Losses incurred in connection with such settlement.  If no settlement of such Third Party Claim is made, the Indemnified Party may seek prompt reimbursement from the Indemnifying Party for any Losses arising out of any judgment rendered with respect to such claim.  Any Losses for which an Indemnified Party is entitled to indemnification hereunder shall be promptly paid as suffered, incurred or accrued (in accordance with Irish GAAP).  If the Indemnifying Party does not elect to assume the defense of a Third Party Claim which it has the right to assume hereunder, the Indemnified Party shall have no obligation to do so.
 
(d)           With respect to the defense of a Third Party Claim pursuant to Section 9.03(c), the Indemnified Party shall conduct the defense of the Third Party Claim actively and diligently, and the Indemnifying Party shall cooperate with the Indemnified Party in such defense and make available to the Indemnified Party, at the Indemnifying Party’s expense, all such witnesses, records, materials and information in the Indemnifying Party’s possession or under the Indemnifying Party’s control relating thereto as is reasonably requested by the Indemnified Party.  If no settlement of such Third Party Claim is made, the Indemnified Party may seek prompt reimbursement from the Indemnifying Party for any expenses and Losses arising out of any judgment rendered with respect to such claim.  Any Losses for which an Indemnified Party is entitled to indemnification hereunder shall be promptly paid as suffered, incurred or accrued (in accordance with Irish GAAP).
 
Section 9.04          Additional Indemnification Provisions.  With respect to each indemnification obligation contained in this Agreement or any other document executed in connection herewith, (a) all Losses shall be net of any third party insurance proceeds that have been recovered by the Indemnified party in connection with the facts giving rise to the right of indemnification, and (b) in no event shall the Indemnifying Party have liability to the Indemnified party for an consequential, special, incidental, indirect or punitive damages (other than punitive damages with respect to third party claims), lost profits, diminution in value or similar items.
 
Section 9.05          Mitigation.  Each of the parties agrees to take all commercially reasonable steps to mitigate their respective Losses upon and after becoming aware of any event or condition that would reasonably be expected to give rise to any Losses that are indemnifiable hereunder.
 
Section 9.06          Materiality Qualifiers.  For purposes of Sections 9.01(a)(i) and 9.02(a)(i), in the event that it is determined that there is any inaccuracy or breach of any representation or warranty made by the Seller or the Buyer, as applicable, the Losses, if any, with respect to such matter shall be determined without regard to any “material”, “in all material respects”, “Material Adverse Effect” or similar qualification contained therein.
 
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Section 9.07         Exclusive Remedies.  Except with respect (1) claims for equitable remedies, (2) claims based on fraud or intentional misconduct, and (3) the matters covered by Sections 2.07 through 2.09, Section 5.05 and with respect to any matter relating to Taxes (which shall be governed by Article VII), the Seller and the Buyer acknowledge and agree that, following the Closing, the indemnification provisions of Sections 9.01 and 9.02 shall be the sole and exclusive remedies of the Seller and the Buyer, respectively, for any Losses (including any Losses from claims for breach of contract, warranty, tortious conduct (including negligence) or otherwise and whether predicated on common law, statute, strict liability, or otherwise) that each party may at any time suffer or incur, or become subject to, as a result of, or in connection with, any breach of any representation or warranty in this Agreement by the other party or any failure by the other party to perform or comply with any covenant or agreement that, by its terms, was to have been performed, or complied with, by such other party prior to the Closing.  Without limiting the generality of the foregoing, the parties hereto hereby irrevocably waive any right of rescission they may otherwise have or to which they may become entitled.
 
ARTICLE X
 
GENERAL PROVISIONS
 
Section 10.01      Survival.  The representations, warranties, covenants and agreements of the Seller and the Buyer contained in or made pursuant to this Agreement or in any certificate furnished pursuant to this Agreement shall survive in full force and effect until the date that is the latter of (i) twelve (12) months after the Closing Date and (ii) the final resolution of claims or demands as to which a written notice of such claim or demand is delivered on or prior to the relevant date described in clause (i), at which time they shall terminate (and no new claims shall be made for indemnification under Section 9.01, Section 9.02 or Article VII thereafter);  provided ,  however , that the Fundamental Representations and the representations and warranties made in Sections 4.06 and 4.08 shall survive the Closing indefinitely; and  provided ,  further , that the covenants and agreements that by their terms apply or are to be performed in whole or in part after the Closing, shall survive for the period provided in such covenants and agreements, if any, or until fully performed.  It is the express intent of the parties that, if the applicable survival period for an item as contemplated by this Section 10.01 is shorter than the statute of limitations that would otherwise have been applicable to such item, then, by contract, the applicable statute of limitations with respect to such item shall be reduced to the shortened survival period contemplated hereby.  The parties further acknowledge that the time periods set forth in this Section 10.01 for the assertion of claims under this Agreement are the result of arms’-length negotiation among the parties and that they intend for the time periods to be enforced as agreed by the parties.
 
Section 10.02      Expenses.  Except as may be otherwise specified in this Agreement or as set forth below, all costs and expenses, including fees and disbursements of counsel, financial advisers and accountants, incurred in connection with this Agreement and the transactions contemplated by this Agreement shall be paid by the party incurring such costs and expenses, whether or not the Closing shall have occurred.
 
Section 10.03      Notices.  All notices, requests, claims, demands and other communications under this Agreement shall be, unless otherwise specified in any Transaction Agreement, in
 
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writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by overnight courier service, by facsimile with receipt confirmed (followed by delivery of an original via overnight courier service) or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 10.03):
 
if to the Seller:	
 	
Research In Motion Limited	
295 Phillip Street	
Waterloo, Ontario, Canada	
N2L 3W8	
Attention President	
Facsimile: (519) 888-7835	
 	
with a copy (excluding invoices) to:	
 	
RIM B	
2200 University Avenue	
Waterloo, Ontario, Canada	
N2K 0A2	
Attention: Legal Department	
Facsimile: (519) 888-7349	
 	
and	
 	
Morgan, Lewis & Bockius	
101 Park Avenue	
New York, New York 10178	
Attention: David W. Pollak	
Facsimile: (212) 309-6001	
 	
if to the Buyer:	
 	
Synchronoss Technologies, Limited	
1st Floor	
Level One, Unit 8	
Galway Technology Park	
Parkmore, Galway, Ireland	
Attention: President	
Facsimile No.: (908) 231-0762	
 
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with a copy (which shall not constitute notice) to	
 	
Synchronoss Technologies, Inc.	
200 Crossing Boulevard	
Bridgewater, NJ  08807	
Facsimile No.: (908) 231-0762	
Attention: Ronald Prague	
 	
with a copy (which shall not constitute notice) to:	
 	
Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP	
850 Winter Street	
Waltham, Massachusetts 02451	
Facsimile No.: (781) 622-1622	
Attention: Marc Dupré	
 
Section 10.04      Public Announcements.  No party to this Agreement or any Affiliate or Representative of such party shall issue or cause the publication of any press release or public announcement or otherwise communicate with any news media in respect of this Agreement or the transactions contemplated by this Agreement without the prior written consent of the other party (which consent shall not be unreasonably withheld or delayed), except as may be required by Law or stock exchange rules, in which case the party required to publish such press release or public announcement shall allow the other party a reasonable opportunity to comment on such press release or public announcement in advance of such publication.
 
Section 10.05      Severability.  If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced under any Law or as a matter of public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated by this Agreement is not affected in any manner materially adverse to any party.  Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties to this Agreement shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated by this Agreement be consummated as originally contemplated to the greatest extent possible.
 
Section 10.06      Entire Agreement.  Except as otherwise expressly provided in the this Agreement, this Agreement constitutes the entire agreement of the Seller or its Affiliates, on the one hand, and the Buyer or its Affiliates, on the other hand, with respect to the subject matter of this Agreement and supersede all prior agreements, undertakings and understandings, both written and oral, other than the Confidentiality Agreement to the extent not in conflict with this Agreement, between or on behalf of the Seller or its Affiliates, on the one hand, and the Buyer or its Affiliates, on the other hand, with respect to the subject matter of this Agreement.
 
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Section 10.07      Assignment.  This Agreement shall not be assigned by operation of Law or otherwise without the prior written consent of the Seller and the Buyer, except that the Seller may assign any or all of its rights and obligations under this Agreement to any controlled Affiliate(s) of the Seller;  provided  that no such assignment shall release the Seller from any liability or obligation under this Agreement.  Any attempted assignment in violation of this Section 10.07 shall be void  ab initio .  This Agreement shall be binding upon, shall inure to the benefit of, and shall be enforceable by the parties hereto and their permitted successors and assigns.
 
Section 10.08      No Third-Party Beneficiaries.  Except as provided in Article IX with respect to the Seller Indemnified Parties and Buyer Indemnified Parties, this Agreement is for the sole benefit of the parties to this Agreement and their permitted successors and assigns and nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy.
 
Section 10.09      Amendment.  No provision of this Agreement, including any Exhibits or Schedules thereto, may be amended, supplemented or modified except by a written instrument making specific reference hereto or thereto signed by all the parties to such agreement.  No consent from any Indemnified Party under Article IX (other than the parties to this Agreement) shall be required in order to amend this Agreement.
 
Section 10.10      Dispute Resolution.  Except as set forth in Sections 2.04 and 2.09 and except with respect to any request for equitable relief (including interim relief) by a Seller(s) on or prior to the Closing Date, any dispute, controversy or claim arising out of or relating to the transactions contemplated by the this Agreement, or the validity, interpretation, breach or termination of any such agreement, including claims seeking redress or asserting rights under any Law (a “ Dispute ”), shall be resolved in accordance with the procedures set forth in this Section 10.10 and Section 10.11.  Until completion of such procedures, no party may take any action to force a resolution of a Dispute by any judicial or similar process, except to the limited extent necessary to (i) avoid expiration of a claim that might eventually be permitted by this Agreement or (ii) obtain interim relief, including injunctive relief, to preserve the status quo or prevent irreparable harm.
 
Section 10.11      Arbitration.  Any dispute between the parties concerning whether there has been a breach of representations and warranties giving rise to an indemnification claim shall be resolved through arbitration in accordance with the Commercial Arbitration Rules (the “ AAA Rules ”) of the American Arbitration Association (the “ AAA ”) based upon the following:
 
(a)           the arbitration tribunal shall consist of one (1) arbitrator appointed by mutual agreement of the parties, or in the event of failure to agree on an arbitrator within seven (7) Business Days of the date on which a dispute is determined to be resolved through arbitration, then parties shall request the AAA to appoint an arbitrator, in accordance with the AAA Rules;
 
(b)           the arbitration shall take place in New York, New York;
 
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(c)           the arbitration award shall be given in writing and shall be final and binding on the parties and shall deal with the question of costs of arbitration and all matters related thereto; and
 
(d)           judgment upon the award rendered may be entered in any court having jurisdiction, or, application may be made to such court for a judicial recognition of the award or an order of enforcement thereof, as the case may be.
 
(e)           Notwithstanding the foregoing, the parties agree that either of them may seek interim measures including injunctive relief in relation to the provisions of this Agreement or the parties’ performance of it from any New York Court (as defined below).
 
Section 10.12       Governing Law; Submission to Jurisdiction.
 
(a)           This Agreement (and any claims or disputes arising out of or related hereto or thereto or to the transactions contemplated hereby or to the inducement of any party to enter herein, whether for breach of contract, tortious conduct or otherwise and whether predicated on common law, statute or otherwise) shall in all respects be governed by, and construed in accordance with, the Laws of the State of New York, including all matters of construction, validity and performance, in each case without reference to any conflict of Law rules that might lead to the application of the Laws of any other jurisdiction.
 
(b)           Each of the Seller and the Buyer agrees that if any Dispute is not resolved by arbitration undertaken pursuant to Section 10.11, such Dispute shall be resolved only in the Courts of the State of New York or the United States District Court, in each case, located in the Borough of Manhattan in the City of New York (the “ New York Courts ”).  In that context, and without limiting the generality of the foregoing, each of the Seller and the Buyer by this Agreement irrevocably and unconditionally:
 
(i)            submits for itself and its property in any Action relating to this Agreement, or for recognition and enforcement of any judgment in respect thereof, to the exclusive jurisdiction of the New York Courts, and agrees that all claims in respect of any such Action shall be heard and determined in the New York Courts;
 
(ii)           consents that any such Action may and shall be brought in the New York Courts and waives any objection that it may now or hereafter have and agrees not to assert, as a defense in any action, suit or proceeding that it is not subject thereto or that such Action may not be brought or is not maintainable in said courts or that the venue thereof may not be appropriate or that this Agreement may not be enforced in or by such courts;
 
(iii)          agrees that service of process in any such Action may be effected by mailing a copy of such process by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such party at its address as provided in Section 10.03;
 
(iv)          agrees that it will not bring any Action in any court other than the New York Courts; and
 
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(v)           agrees that nothing in this Agreement shall affect the right to effect service of process in any other manner permitted by the Laws of the State of New York.
 
Section 10.13      Specific Performance.  The parties hereby acknowledge and agree that the failure of any party to perform its agreements and covenants hereunder, including its failure to take all actions as are necessary on its part to consummate the transactions contemplated hereby, will cause irreparable injury to the other party, for which damages, even if available, will not be an adequate remedy.  Accordingly, each party hereby consents to the issuance of temporary, preliminary and permanent injunctive relief by the New York Courts to compel performance of such party’s obligations, or to prevent breaches or threatened breaches of this Agreement, and to the granting by the New York Courts of the remedy of specific performance of its obligations hereunder, without, in any such case, the requirement to post any bond or other undertaking, in addition to any other rights or remedies available hereunder or at law or in equity.
 
Section 10.14      Rules of Construction.  Interpretation of this Agreement shall be governed by the following rules of construction:  (a) words in the singular shall be held to include the plural and vice versa, and words of one gender shall be held to include the other gender as the context requires; (b) references to the terms Article, Section, paragraph, Exhibit and Schedule are references to the Articles, Sections, paragraphs, Exhibits and Schedules to this Agreement unless otherwise specified; (c) the terms “hereof,” “herein,” “hereby,” “hereto,” and derivative or similar words refer to this entire Agreement, including the Schedules and Exhibits hereto; (d) references to “$” shall mean United States dollars; (e) the word “including” and words of similar import when used in this Agreement shall mean “including without limitation,” unless otherwise specified; (f) the word “or” shall not be exclusive; (g) references to “written” or “in writing” include in electronic form; (h) provisions shall apply, when appropriate, to successive events and transactions; (i) 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; (j) the Seller and the Buyer have each participated in the negotiation and drafting of this Agreement and if an ambiguity or question of interpretation should arise, this Agreement shall be construed as if drafted jointly by the parties thereto and no presumption or burden of proof shall arise favoring or burdening either party by virtue of the authorship of any of the provisions in this Agreement; (k) a reference to any Person includes such Person’s successors and permitted assigns; (l) any reference to “days” means calendar days unless Business Days are expressly specified; (m) when calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded and if the last day of such period is not a Business Day, the period shall end on the next succeeding Business Day; and (n) an item arising with respect to a specific representation or warranty shall be deemed to be “reflected on,” “reflected in” or “set forth in” a balance sheet or financial statements, if (i) there is a reserve, accrual or other similar item underlying a number on such balance sheet or financial statement that is related to the subject matter of such representation, (ii) such item is otherwise specifically set forth on the balance sheet or financial statement or (iii) such item is reflected on the balance sheet or financial statement and is specifically referred to in the notes thereto.
 
Section 10.15      Counterparts.  This Agreement may be executed in one or more counterparts, and by the different parties to this Agreement in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall
 
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constitute one and the same agreement.  Delivery of an executed counterpart of a signature page to this Agreement by facsimile or other electronic transmission shall be as effective as delivery of a manually executed counterpart of this Agreement.
 
Section 10.16      Waiver of Jury Trial.  EACH PARTY HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.  EACH PARTY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY 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 AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.16.
 
Section 10.17      Waiver.  Neither the failure nor any delay by any party in exercising any right under this Agreement or the documents referred to in this Agreement will operate as a waiver of such right, and no single or partial exercise of any such right will preclude any other or further exercise of such right or the exercise of any other right.  To the maximum extent permitted by applicable Law:  (a) no claim or right arising out of this Agreement or the documents referred to in this Agreement can be discharged by one party, in whole or in part, by a waiver or renunciation of the claim or right unless in writing signed by the other parties; (b) no waiver that may be given by a party will be applicable except in the specific instance for which it is given; and (c) no notice to or demand on one party will be deemed to be a waiver of any obligation of such party or of the right of the party giving such notice or demand to take further action without notice or demand as provided in this Agreement or the documents referred to in this Agreement.  The rights and remedies of the parties to this Agreement are cumulative and not alternative.
 
[Remainder of page intentionally left blank.]
 
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IN WITNESS WHEREOF, the Seller and the Buyer have caused this Agreement to be executed on the date first written above by their respective duly authorized officers.
 
 	RESEARCH IN MOTION LIMITED	

 	By:	 	
 	Name:	
 	Title:	
 
[Signature page to Share Purchase Agreement]

 
 	SYNCHRONOSS TECHNOLOGIES IRELAND, LTD.	

 	By:	 	
 	Name:	
 	Title:	
 
[Signature page to Share Purchase Agreement]

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Exhibit 21

Subsidiaries of Synchronoss Technologies, Inc.

        Listed below are subsidiaries of Synchronoss Technologies, Inc. as of December 31, 2012 with their jurisdictions of organization shown in parentheses. Those subsidiaries not listed would not, in the aggregate, constitute a "significant subsidiary" of Synchronoss Technologies, Inc., as that term is defined in Rule 1-02(w) of Regulation S-X.
 	 	 	
Subsidiary Name	 	Place of
Incorporation of
Organization	
Newbay Software Limited	 	Ireland	
SpeechCycle, Inc. 	 	Delaware	
Synchronoss Technologies India Private Ltd. 	 	India	
Synchronoss Technologies Ireland Ltd. 	 	Ireland	
Miyowa SA	 	France	

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Exhibit 21
Subsidiaries of Synchronoss Technologies, Inc.

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Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

        We consent to the incorporation by reference in the following Registration Statements:

(1)
Registration Statement (Form S-8 No. 333-136088) pertaining to the 2006 Equity Incentive Plan,

(2)
Registration Statement (Form S-3 No. 333-164619) of Synchronoss Technologies, Inc.,

(3)
Registration Statement (Form S-8 No. 333-167000) pertaining to the 2006 Equity Incentive Plan,

(4)
Registration Statement (Form S-8 No. 333-168745) pertaining to the 2010 New Hire Equity Incentive Plan, and

(5)
Registration Statement (Form S-8 No. 333-179544) pertaining to the Employee Stock Purchase Plan;

of our reports dated February 21, 2013, with respect to the consolidated financial statements and schedule of Synchronoss Technologies, Inc. and the effectiveness of internal control over financial reporting of Synchronoss Technologies, Inc. included in this Annual Report (Form 10-K) of Synchronoss Technologies, Inc. for the year ended December 31, 2012.

/s/ Ernst & Young LLP
MetroPark, New Jersey
February 21, 2013

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Exhibit 23.1
Consent of Independent Registered Public Accounting Firm

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Exhibit 31.1

CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Stephen G. Waldis, certify that:1.
I have reviewed this Annual Report on Form 10-K of Synchronoss Technologies, Inc. for the year ended December 31, 2012;

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 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 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.
 	 	 	
/s/ STEPHEN G. WALDIS

Stephen G. Waldis
Chief Executive Officer	 	 	

Dated: February 21, 2013

 	

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Exhibit 31.1
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

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Exhibit 31.2

CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Lawrence R. Irving, certify that:1.
I have reviewed this Annual Report on Form 10-K of Synchronoss Technologies, Inc. for the year ended December 31, 2012;

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 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 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.
 	 	 	
/s/ LAWRENCE R. IRVING

Lawrence R. Irving
Chief Financial Officer	 	 	

Dated: February 21, 2013	

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Exhibit 31.2
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

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Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

        In connection with the Annual Report of Synchronoss Technologies Inc. (the "Company") on Form 10-K for the period ending December 31, 2012 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Steve Waldis, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
 	 	 	
/s/ STEPHEN G. WALDIS

Stephen G. Waldis
Chief Executive Officer	 	 	

February 21, 2013	

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Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

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Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

        In connection with the Annual Report of Synchronoss Technologies, Inc. (the "Company") on Form 10-K for the period ending December 31, 2012 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Lawrence Irving, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
 	 	 	
/s/ LAWRENCE R. IRVING

Lawrence R. Irving
Chief Financial Officer	 	 	

February 21, 2013	

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Exhibit 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002