Exhibit 10.18
ASSET PURCHASE AGREEMENT
between
PHOENIX TECHNOLOGIES LTD.
and
XTOOL MOBILE SECURITY, INC.
Dated as of August 2, 2007

 

--------------------------------------------------------------------------------

 

ASSET PURCHASE AGREEMENT
     This Asset Purchase Agreement (the “Agreement”) is entered into as of
August 2, 2007, by and between Phoenix Technologies Ltd., a Delaware corporation
(“Buyer”) and XTool Mobile Security, Inc., a Nevada corporation (“Seller”).
RECITALS
     A. Buyer is in the business of developing and selling core system software
and platform software products for connected digital devices;
     B. Seller is in the business of developing and selling laptop computer
software security products, including products for anti-theft tracking recovery,
data encryption and back-up, asset audits and remote delete (all Seller products
hereinafter referred to as the “Business Products”); and
     C. Buyer desires to acquire from Seller, and Seller desires to sell to
Buyer, intellectual property and technology assets relating to the Business
Products on the terms and subject to the conditions set forth in this Agreement
(the “Purchase Transaction”).
AGREEMENT
     NOW, THEREFORE, in consideration of the mutual agreements, representations,
warranties and covenants set forth below, Buyer and Seller agree as follows:
1. Definitions.
     1.1 Definitions. As used in this Agreement, the following terms shall have
the following meanings:
          (a) “Absolute Litigation Matters” means (i) the patent infringement
litigation between Absolute Software, Inc. and Absolute Software Corp.
(together, “Absolute”) on the one hand and Seller on the other hand (Absolute
Software, Inc. et al v. Stealth Signal, Inc., U.S. District Court Southern
District of Texas – Case No. H-05-1416) and (ii) any other current or future
dispute between Seller and Absolute:
          (b) “Affiliate” means with respect to any Person, a Person directly or
indirectly controlling or controlled by or under common control with such
Person.
          (c) “Baran Amendment” means the Amendment to Patent License Agreement
between Seller and David Baran in the form attached hereto as Exhibit E.
          (d) “Baran Consent” means the amendment request letter from Seller to
David Baran in the form attached hereto as Exhibit A.
          (e) “Baran License Agreement” means the Patent License Agreement dated
August 3, 2005 between Seller and David Baran as the same may be amended from
time to time.
          (f) “Bill of Sale and Assignment” means the Bill of Sale and
Assignment of Purchased Assets between Seller and Buyer in the form attached
hereto as Exhibit G, assigning to Buyer all of Seller’s right, title and
interest in and to the Purchased Assets

 

--------------------------------------------------------------------------------

 

          (g) “Change of Control” means the occurrence of any of the following:
(i) the sale, lease, conveyance or other disposition of all or substantially all
of Buyer’s assets to any “person” (as such term is used in Section 13(d) of the
Securities Exchange Act of 1934, as amended (the “Act”)), entity or group of
persons acting in concert; (ii) any person or group of persons becoming the
“beneficial owner” (as defined in Rule 13d-3 under the Act), directly or
indirectly, of securities of Buyer representing 50% or more of the total voting
power represented by Buyer’s then outstanding voting securities; (iii) a merger
or consolidation of Buyer with any other corporation, other than a merger or
consolidation that would result in the voting securities of Buyer outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving entity
or its controlling entity) more than 50% of the total voting power represented
by the voting securities of Buyer or such surviving entity (or its controlling
entity) outstanding immediately after such merger or consolidation; or (iv) a
contest for the election or removal of members of the board of directors of
Buyer that results in the removal from the board of at least 50% of the
incumbent members of the board.
          (h) “Closing” means the consummation of the transactions contemplated
hereby.
          (i) “Closing Date” has the meaning set forth in Section 3.1.
          (j) “Consulting Services” means the consulting services to be provided
by Seller to Buyer following the Closing as set forth in the Exhibit A
(Statement of Work or “SOW”) to the Consulting Services Agreement.
          (k) “Consulting Services Agreement” means the Consulting Services
Agreement between Buyer and Seller in the form attached hereto as Exhibit B.
          (l) “Governmental Authorizations” means the permits, authorizations,
consents or approvals of any Governmental Entity which are a condition to the
lawful consummation of the transactions contemplated hereby listed on
Schedule 1.1(m) to this Agreement.
          (m) “Governmental Entity” means any court, or any federal, state,
provincial, territory, municipal or other governmental authority, department,
commission, board, agency or other instrumentality (domestic or foreign).
          (n) “Intellectual Property Assets” means all intellectual property
owned or licensed (as licensor or licensee) by Seller in which Seller has a
proprietary interest, including:
                 (i) Seller’s domain names, trade names, registered and
unregistered trademarks, service marks and applications;
                 (ii) all patents, patent applications and inventions and
discoveries that may be patentable;
                 (iii) all registered and unregistered copyrights in both
published works and unpublished works;
                 (iv) all technology, ideas, inventions, designs, proprietary
information, license rights, specifications, know-how, formulae, routines, trade
secrets, technical data and manuals, product information and data, software,
source code, design and code documentation, design information, methodologies,
testing procedures, processes, engineering work papers, and notes, development
work-in-process, and other proprietary information and materials of any kind;

-2-

--------------------------------------------------------------------------------

 

                 (v) all other intangible assets, properties and rights (whether
or not appropriate steps have been taken to protect, under applicable law, such
other intangible assets, properties or rights); and
                 (vi) all goodwill associated with each and all of the
foregoing.
          (o) “Lien” means any mortgage, pledge, lien, security interest,
option, covenant, condition, restriction, encumbrance, charge or other
third-party claim of any kind, but excluding all obligations, restrictions and
limitations contained in contracts or licenses disclosed in this Agreement or
the Seller Disclosure Schedules.
          (p) “New Product Contract” means a customer contract between Buyer and
a third party Buyer customer for the license of a New Product from Buyer to such
customer. [**]
          (q) “New Products” means any product sold, licensed or distributed by
the Buyer after Closing that contains, utilizes or incorporates the Purchased
Assets, in whole or in part.
          (r) “Non-Competition Agreement” means the Non-Competition Agreement
between Buyer on the one hand and each of the Principals on the other hand in
the form attached hereto as Exhibit C.
          (s) “Person” means an individual, corporation, partnership,
association, trust, government or political subdivision or agent or
instrumentality thereof, or other entity or organization.
          (t) “Principals” refers to Pedro Camargo and Victoria Correa Camargo.
          (u) “Seller Disclosure Schedules” or “Schedules” means the Disclosure
Schedules delivered by the Seller simultaneously with the execution and delivery
of this Agreement.
          (v) “Sub-License Agreement” means the Sub-License Agreement between
Seller and Buyer in the form attached hereto as Exhibit D.
          (w) “Taxes” means all taxes, however denominated, including any
interest, penalties or other additions to tax that may become payable in respect
thereof, (i) imposed by any federal, territorial, state, local, province or
foreign government or any agency or political subdivision of any such
government, for which Buyer could become liable as successor to or transferee of
the Purchased Assets or which could become a charge against or lien on any of
the Purchased Assets, which taxes shall include, without limiting the generality
of the foregoing, all sales and use taxes, ad valorem taxes, excise taxes,
business license taxes, occupation taxes, real and personal property taxes,
stamp taxes, environmental taxes, real property gains taxes, transfer taxes,
payroll and employee withholding taxes, unemployment insurance contributions,
social security taxes, and other governmental charges, and other obligations of
the same or of a similar nature to any of the foregoing, which are required to
be paid, withheld or collected, or (ii) any liability for amounts referred to in
(i) as a result of any obligations to indemnify another person.
2. Sale and Purchase
     2.1 Transfer of Assets. Subject to the terms and conditions of this
Agreement, except as set forth on Schedule 2.2, Seller shall sell, assign,
grant, transfer, and deliver (or cause to be sold, assigned, granted,
transferred and delivered) to Buyer, or to any Affiliate of Buyer designated by
Buyer (so long as such Affiliate joins in this Agreement as a signatory and is
bound by its terms and conditions), and Buyer shall purchase and accept from
Seller as of the Closing Date, free and clear of all Liens, all of Seller’s
[THE SYMBOL [**] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SEC. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTION.]

-3-

--------------------------------------------------------------------------------

 

rights, title and interest in and to all of the Intellectual Property Assets of
Seller that are necessary for the use of the Business Products or relate to, are
used in, or are derived from the Business Products as of the date of this
Agreement (the “Purchased Assets”).
     2.2 Excluded Assets. Buyer agrees that any Intellectual Property Assets
listed in Schedule 2.2 shall be excluded from the Purchased Assets (the
“Excluded Assets”), including, but not limited to, the Baran License Agreement
and Seller’s rights thereunder and (b) the domain names, web-pages, e-mail
addresses and trademarks of the Seller listed therein. For purposes of
clarification, any cause of action or claim of right that Seller has or may have
against Absolute in connection with any Absolute Litigation Matters, and any
resulting judgment, settlement or award in Seller’s favor, shall be deemed an
Excluded Asset.
     2.3 Excluded Liabilities. Buyer shall not assume and shall not be liable
for, and Seller and its direct or indirect subsidiaries shall retain and remain
solely liable for and obligated to discharge, all of the debts, contracts,
agreements, royalty and license fees, commitments, obligations and other
liabilities of any nature whatsoever of Seller and its direct and indirect
subsidiaries, whether known or unknown, accrued or not accrued, fixed or
contingent, including, but not limited to (i) any fees or amounts relating to
the Excluded Assets; (ii) any fees or amounts owed or due on any of the
Purchased Assets as of the Closing Date; and (iii) any costs, expenses,
judgment, settlement, award or other liabilities relating to any Absolute
Litigation Matters.
     2.4 Purchase Price. Subject to the performance by Seller and Buyer of all
of their obligations under this Agreement, in consideration of the acquisition
of the Purchased Assets under Section 2.1, Buyer agrees to pay to an account or
accounts designated by Seller, from time to time, up to an aggregate amount
equal to $5,000,000 (such aggregate amount, the “Total Purchase Price”) in
immediately available funds in accordance with the following payment schedule,
subject to the conditions, terms and adjustments set forth in this Agreement:
          (a) On the Closing Date, Buyer will pay Seller $3,500,000 (the
“Initial Purchase Price”);
          (b) Buyer will pay Seller $750,000 following [**] (the “First
Earn-out”), [**] (the “First Earn-out Date”); and
          (c) Buyer will pay Seller $750,000 upon [**] (the “Second Earn-out”),
[**] (the “Second Earn-out Date”).
Each earn-out shall be subject to complete forfeiture if achievement of the
applicable metric does not occur by the stated date. Any such forfeiture will be
deemed an adjustment to the Total Purchase Price in an amount equal to the
forfeited earn-out. [**]
     2.5 Purchase Price Allocation. The Total Purchase Price shall, for purposes
of complying with the requirements of Section 1060 of the Internal Revenue Code
of 1986, as amended, and the regulations thereunder, be allocated in accordance
with the allocation statement attached hereto as Exhibit F (the “Allocation
Statement”). If the Total Purchase Price is adjusted as a result of the
forfeiture of the First Earn-out and/or the Second Earn-out pursuant to
Section 2.4, or as a result of any indemnification claims pursuant to
Section 10, then the parties agree that such adjusted Total Purchase Price (the
“Adjusted Purchase Price”) shall be allocated in the same proportion as set
forth on the attached Allocation Statement. Buyer and Seller agree to each
prepare and file on a timely basis with the Internal Revenue Service (and
applicable state tax authorities) substantially identical Internal Revenue
Service Forms 8594 (and corresponding state tax forms) consistent with such
allocation of the Total Purchase
[THE SYMBOL [**] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SEC. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTION.]

-4-

--------------------------------------------------------------------------------

 

Price (or, if applicable, the Adjusted Purchase Price). If any Tax authority
challenges such allocation, the party receiving notice of such challenge shall
give the other prompt written notice thereof and the parties shall cooperate in
order to preserve the effectiveness of such allocation.
3. Closing
     3.1 Closing. Subject to the terms and conditions of this Agreement, the
Closing shall take place on the date that is three (3) business days after all
conditions precedent in Sections 8 and 9 have been satisfied or waived or as the
parties may otherwise agree, but in any case no later than thirty (30) days from
the date hereof (the “Closing Date”).
     3.2 Actions at the Closing. At the Closing, Seller shall deliver the
Purchased Assets to Buyer, Buyer shall deliver the Initial Purchase Price to
Seller, and Buyer and Seller shall take such actions and execute and deliver
such agreements, bills of sale and other instruments and documents as necessary
or appropriate to effect the transactions contemplated by this Agreement in
accordance with its terms, including without limitation the following:
          (a) Purchase Price. Buyer shall deliver the Initial Purchase Price to
Seller.
          (b) Title. Seller shall provide reasonable evidence of valid title to
such of the Purchased Assets as Buyer may reasonably request in writing prior to
the Closing, in form and substance reasonably satisfactory to Buyer.
          (c) Seller Documents. At the Closing, Seller shall deliver to Buyer
any and all documents required to satisfy the conditions set forth in Section 8
of this Agreement and any other closing documents reasonably requested by Buyer.
          (d) Buyer Documents. At the Closing, Buyer shall deliver to Seller any
and all documents required to satisfy the conditions set forth in Section 9 of
this Agreement and any other closing documents reasonably requested by Seller.
          (e) Non-Competition Agreements. At the Closing, the Seller shall
deliver to the Buyer the duly executed Non-Competition Agreements.
          (f) Consulting Services Agreement. At the Closing, the Seller shall
deliver to the Buyer a duly executed Consulting Services Agreement.
          (g) Sub-License Agreement. At the Closing, the Seller shall deliver to
the Buyer a duly executed Sub-License Agreement.
          (h) Bill of Sale and Assignment. At the Closing, the Seller shall
deliver to Buyer a duly executed Bill of Sale and Assignment.
          (i) Post-Closing Actions. Subsequent to the Closing Date, Seller
shall, and shall cause any Affiliate of Seller to, from time to time execute and
deliver, upon the request of Buyer, all such other and further materials and
documents and instruments of conveyance, transfer or assignment as may
reasonably be requested by Buyer to effect, record or verify the transfer to and
vesting in Buyer of Seller’s and any of Seller’s Affiliates’ right, title and
interest in and to the Purchased Assets, free and clear of all Liens in
accordance with the terms of this Agreement.
4. Representations and Warranties of Seller

-5-

--------------------------------------------------------------------------------

 

     Except as may be set forth in a Seller Disclosure Schedule and any limiting
or qualifying language contained in the representation and warranty, each
representation and warranty set out in this Section 4 is not qualified in any
way whatsoever; will not merge on Closing or by reason of the execution and
delivery of any agreement, document or instrument at the Closing; and will
remain in force on and after the Closing Date until the one (1) year anniversary
of the Closing Date Seller represents and warrants to Buyer as follows:
     4.1 Organization. Seller is a company duly organized, validly existing and
in good standing under the laws of its jurisdiction of organization and has full
corporate power and authority and the legal right to execute and deliver this
Agreement and all of the other agreements and instruments to be executed and
delivered by Seller pursuant hereto, and to consummate the transactions
contemplated hereby and thereby.
     4.2 Authority. The execution and delivery of this Agreement (and all other
agreements and instruments contemplated under this Agreement) by Seller, the
performance by Seller of its obligations hereunder and thereunder, and the
consummation by Seller of the transactions contemplated hereby and thereby have
been duly authorized by all necessary action, if any, by the Board of Directors
and shareholders of Seller, and no other act or proceeding on the part of or on
behalf of Seller or its shareholders is necessary to approve the execution and
delivery of this Agreement and such other agreements and instruments, the
performance by Seller of its obligations hereunder and thereunder and the
consummation of the transactions contemplated hereby and thereby. The signatory
officers of Seller have the power and authority to execute and deliver this
Agreement and all of the other agreements and instruments to be executed and
delivered by Seller pursuant hereto, to consummate the transactions hereby and
thereby contemplated and to take all other actions required to be taken by
Seller pursuant to the provisions hereof and thereof.
     4.3 Execution and Binding Effect. This Agreement has been duly and validly
executed and delivered by Seller and constitutes, and the other agreements and
instruments to be executed and delivered by Seller pursuant hereto, upon their
execution and delivery by Seller, will constitute (assuming, in each case, the
due and valid authorization, execution and delivery thereof by Buyer), legal,
valid and binding agreements of Seller, enforceable against Seller in accordance
with their respective terms except as enforceability may be limited by
bankruptcy, insolvency, moratorium, or other laws affecting the enforcement of
creditors’ rights generally or provisions limiting competition, and by equitable
principles.
     4.4 Consents and Approvals of Governmental Entities. Other than the
Governmental Authorizations, there is no requirement applicable to Seller to
make any filing, declaration or registration with, or to obtain any permit,
authorization, consent or approval of, any Governmental Entity as a condition to
the lawful consummation by Seller of the transactions contemplated by this
Agreement and the other agreements and instruments to be executed and delivered
by Seller pursuant hereto or the consummation by Seller of the transactions
contemplated herein or therein.
     4.5 No Violation. Neither the execution, delivery and performance of this
Agreement and all of the other agreements and instruments to be executed and
delivered pursuant hereto, nor the consummation of the transactions contemplated
hereby or thereby, will, with or without the passage of time or the delivery of
notice or both, (a) conflict with, violate or result in any breach of the terms,
conditions or provisions of the organizational documents of Seller, (b)  result
in a violation or breach of, or constitute a default or require the consent of
any Person (or give rise to any right of termination, cancellation or
acceleration) under, any of the terms, conditions or provisions of any contract,
notice, bond, mortgage, indenture, license, franchise, permit, agreement, lease
or other instrument or obligation to which Seller is a party or by which Seller
or any of the Purchased Assets may be bound, (c) to Seller’s

-6-

--------------------------------------------------------------------------------

 

knowledge, violate any statute, ordinance or law or any rule, regulation, order,
writ, injunction or decree of any Governmental Entity applicable to Seller or by
which any properties or assets of Seller may be bound, or (d) result in any
cancellation of, or obligation to repay, any grant, loan or other financial
assistance received by Seller from any Governmental Entity.
     4.6 Intellectual Property.
          (a) Other than the Excluded Assets set forth on Schedule 2.2, the
Purchased Assets include all of Seller’s rights, title and interest in and to
all of the Intellectual Property Assets of Seller that relate to, are used in,
or are derived from the Business Products as of the date of this Agreement.
          (b) Seller holds good and conveyable title or license to the Purchased
Assets and has the complete and unrestricted power and the unqualified right to
sell, assign, transfer and deliver the Purchased Assets.
          (c) Upon consummation of the transactions contemplated by this
Agreement, Buyer will acquire good and conveyable title or license to the
Purchased Assets, free and clear of any Liens.
          (d) There exists no restriction (contractual, governmental or
otherwise) on the use or transfer of the Purchased Assets.
          (e) Except for the licensor under any license, no Person other than
Seller has any right or interest in any of the Purchased Assets, including the
right to grant interests in any of the Purchased Assets to third parties.
          (f) No notice of any violation of any law relating to any of the
Purchased Assets has been received by Seller.
          (g) Except as set forth in the Schedule 4.6(g), the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby (including without limitation the incorporation
of any of the Purchased Assets in any product of Buyer or an affiliate of Buyer)
will not (i) breach or violate any instrument or agreement relating to any of
the Purchased Assets, (ii) to Seller’s knowledge, cause the forfeiture or
termination or give rise to a right of forfeiture or termination of any of the
Purchased Assets or (iii) to Seller’s knowledge, in any way impair the right of
Buyer or any of its affiliates to display, make, use, sell, offer for sale,
license or dispose of, or to bring any action for the infringement of, any of
the Purchased Assets or portion thereof.
          (h) None of the Purchased Assets violate any license or agreement to
which Seller is a party or, to Seller’s knowledge, infringes any copyright,
patent, trademark, service mark, trade secret or other intellectual property or
other proprietary right of any other party.
          (i) There is, to Seller’s knowledge, no unauthorized use, infringement
or misappropriation on the part of any third party of any of the Purchased
Assets.
          (j) Seller has taken commercially reasonable steps to maintain the
secrecy and confidentiality of, and its proprietary rights in, the Purchased
Assets, including, without limitation, entering into confidentiality and
invention assignment agreements (“CIAA”) with all current and former officers
and employees of and consultants to Seller with access to or knowledge of the
Purchased Assets. To Seller’s knowledge, none of such current or former
officers, employees or consultants is in breach of their CIAA with Seller.

-7-

--------------------------------------------------------------------------------

 

          (k) Schedule 4.6(k) sets forth a complete and accurate list of all
applications, filings, publications and other formal actions made or taken
pursuant to federal, state, local and foreign laws by Seller to perfect or
protect its interest in the Purchased Assets, including, without limitation, all
patents, patent applications, trademarks, trademark applications, service marks
and copyright or mask work registrations.
          (l) All fees payable by the Seller to maintain Seller’s rights in the
Purchased Assets, including, without limitation, royalties and license fees in
connection therewith due and payable on or before the Closing Date, have been
paid by Seller or will be paid by Seller within a reasonable period after the
Closing and are listed on Schedule 4.6(l).
          (m) Schedule 4.6(m) sets forth a complete and accurate list of all
intellectual property licensed by Seller that are a part of, incorporated into
or are otherwise used in the Business Products as of the date of this Agreement
including, but not limited to, any off-the-shelf software and any source code
developed by and licensed from any third parties. The Purchased Assets do not
contain, use or otherwise link to any GNU Public License Code or other open
source code or libraries. Seller has provided Buyer copies of all licenses and
license agreements (or links thereto) for the intellectual property listed on
Schedule 4.6(m).
          (n) Neither Seller nor any other Person authorized to act on its
behalf has disclosed or delivered to any Person, or permitted the disclosure or
delivery to any escrow agent or other Person of, any Seller source code included
in the Purchased Assets. No event has occurred, and no circumstance or condition
exists, that (with or without notice or lapse of time, or both) shall, or would
reasonably be expected to, result in the disclosure or delivery by Seller or any
other Person authorized to act on its behalf to any Person of any such source
code.
     4.7 Tools. Schedule 4.7 sets forth a complete and accurate list of all
software and hardware tools necessary for the development, debugging, building,
testing, maintenance and use of the Business Products as of the date of this
Agreement.
     4.8 Litigation; Other Claims.
          (a) Other than the Absolute Litigation Matters and the matters
disclosed on Schedule 4.8, there is no pending or, to Seller’s knowledge,
threatened claim or litigation contesting the validity, ownership or right to
display, make, use, sell, offer for sale, import, license or dispose of any of
the Purchased Assets, nor is there, to Seller’s knowledge, any basis for any
such claim, nor has Seller received any notice asserting that any of the
Purchased Assets or the proposed use, sale, license or disposition thereof
conflicts or will conflict with the rights of any other party, nor is there any
basis for any such assertion.
          (b) There are no claims, actions, suits, inquiries, proceedings, or
investigations against Seller, or any of its officers, directors or
shareholders, relating to the Purchased Assets which challenges or seeks to
prevent, enjoin, alter or materially delay any of the transactions contemplated
hereby, nor is Seller aware of any basis for such claims, actions, suits,
inquiries, proceedings, or investigations.
     4.9 Defaults. Seller is not in default under or with respect to any
judgment, order, writ, injunction or decree of any court or any Governmental
Entity which could reasonably be expected to have an adverse effect on any of
the Purchased Assets. There does not exist any default by Seller or, to Seller’s
knowledge, by any other Person, or event that, with notice or lapse of time, or
both, would constitute a default under any agreement entered into by Seller
which could reasonably be expected to

-8-

--------------------------------------------------------------------------------

 

have an adverse effect on the Purchased Assets, and no notices of breach thereof
have been received by Seller.
     4.10 Schedules. The Seller Disclosure Schedules are complete and accurate.
     4.11 Brokers and Finders; Other Parties.
          (a) Neither Seller nor any of its officers, directors or employees has
employed any broker or finder or incurred any liability for any brokerage fee,
commission or finder’s fee in connection with the Purchase Transaction
contemplated by this Agreement.
          (b) Schedule 4.11 lists all of the contingent fee agreements or any
other agreements or arrangements between Seller and David Baran or any Person
whereby such Person may have a right to receive any payments from Seller or
Buyer upon the consummation of the Purchase Transaction or a portion of the
consideration to be paid to Seller in connection with the Purchase Transaction
(the amounts payable under any such agreements or arrangements, the “Transaction
Fees”). Buyer has provided copies of all agreements set forth on Schedule 4.11.
     4.12 Fair Consideration; No Fraudulent Conveyance. The sale of the
Purchased Assets pursuant to this Agreement is made in exchange for fair and
equivalent consideration. Seller is not entering into this Agreement or any of
the other agreements referenced in this Agreement with the intent to defraud,
delay or hinder its creditors and the consummation of the transactions
contemplated by this Agreement, and the other agreements referenced in this
Agreement, will not have any such effect. The transactions contemplated in this
Agreement or any agreements referenced in this Agreement will not constitute a
fraudulent conveyance, or otherwise give rise to any right of any creditor of
Seller to any of the Purchased Assets after the Closing.
     4.13 Tax Matters. Seller has paid, or will pay, all Taxes for any Tax
period (or portion thereof) ending before the close of business on the date
preceding the Closing Date.
5. Representations and Warranties of Buyer
     Buyer represents and warrants to Seller as follows:
     5.1 Organization. Buyer is a corporation duly formed and validly existing
under the laws of Delaware, and has full corporate power and authority and the
legal right to execute and deliver this Agreement and all of the other
agreements and instruments to be executed and delivered by Buyer pursuant
hereto, and to consummate the transactions contemplated hereby and thereby.
     5.2 Authority. The execution and delivery of this Agreement (and all other
agreements and instruments contemplated hereunder) by Buyer, the performance by
Buyer of its obligations hereunder and thereunder, and the consummation by Buyer
of the transactions contemplated hereby and thereby have been duly authorized by
all necessary action, if any, by the Board of Directors of Buyer, and no other
act or proceeding on the part of Buyer or its shareholders is necessary to
approve the execution and delivery of this Agreement and such other agreements
and instruments, the performance by Buyer of its obligations hereunder and
thereunder and the consummation of the transactions contemplated hereby and
thereby. The signatory officers of Buyer have the power and authority to execute
and deliver this Agreement and all of the other agreements and instruments to be
executed and delivered by Buyer pursuant hereto, to consummate the transactions
hereby and thereby contemplated and to take all other actions required to be
taken by Buyer pursuant to the provisions hereof and thereof.

-9-

--------------------------------------------------------------------------------

 

     5.3 Execution and Binding Effect. This Agreement has been duly and validly
executed and delivered by Buyer and constitutes, and the other agreements and
instruments to be executed and delivered by Buyer pursuant hereto, upon their
execution and delivery by Buyer, will constitute (assuming, in each case, the
due and valid authorization, execution and delivery thereof by Seller), legal,
valid and binding agreements of Buyer, enforceable against Buyer in accordance
with their respective terms, except as enforceability may be limited by
bankruptcy, insolvency, moratorium, or other laws affecting the enforcement of
creditors’ rights generally or provisions limiting competition, and by equitable
principles.
     5.4 Consent and Approvals. There is no requirement applicable to Buyer to
make any filing, declaration or registration with, or to obtain any permit,
authorization, consent or approval of, any Governmental Entity as a condition to
the lawful consummation by Buyer of the transactions contemplated by this
Agreement and the other agreements and instruments to be executed and delivered
by Buyer pursuant hereto, except for filings (a) which are referred to in the
Seller Disclosure Schedule or (b) the failure of making which would not have a
material adverse effect on the transactions contemplated hereby.
     5.5 No Violation. Neither the execution, delivery and performance of this
Agreement and of all the other agreements and instruments to be executed and
delivered pursuant hereto, nor the consummation of the transactions contemplated
hereby or thereby, will, with or without the passage of time or the delivery of
notice or both, (a) conflict with, violate or result in any breach of the terms,
conditions or provisions of the organizational documents of Buyer, (b) conflict
with or result in a violation or breach of, or constitute a default or require
consent of any Person (or give rise to any right of termination, cancellation or
acceleration) under, any of the terms, conditions or provisions of any notice,
bond, mortgage, indenture, license, franchise, permit, agreement, lease or other
instrument or obligation to which Buyer is a party or by which Buyer or any of
its properties or assets may be bound, or (c) to Buyer’s knowledge, violate any
statute, ordinance or law or any rule, regulation, order, writ, injunction or
decree of any Governmental Entity applicable to Buyer or by which any of its
properties or assets may be bound.
[**]
6. Covenants.
     6.1 Third Party Consents. Seller and Buyer shall use commercially
reasonable efforts to obtain, within the applicable time periods required, all
waivers, permits, consents (including the Baran Consent and Baran Amendment),
Governmental Authorizations and approvals and to effect all registrations,
filings and notices with or to third parties or Governmental Entities which are
necessary to consummate the transactions contemplated by this Agreement so as to
preserve all rights of, and benefits to, the Buyer in the Purchased Assets.
     6.2 No Other Bids. Until the earlier to occur of (a) the Closing or (b) the
termination of this Agreement pursuant to its terms, Seller shall not, and
Seller shall not authorize any of its officers, directors, employees or other
representatives to, directly or indirectly, (i) initiate, solicit or encourage
(including by way of furnishing information regarding the Seller’s business or
the Purchased Assets) any inquiries, or make any statements to third parties
which may reasonably be expected to lead to any proposal concerning the sale of
the Purchased Assets (or any proposal for a transaction that would include the
disposition of any or all of the Purchase Assets, including a sale of any of
Seller’s outstanding capital stock or a merger of Seller with another Person) or
(ii) negotiate, engage in any substantive discussions, or enter into any
agreement, with any Person concerning the sale of the Purchased Assets (or any
transaction that would include the disposition of any or all of the Purchase
Assets, including a sale of any of Seller’s outstanding capital stock or a
merger of Seller with another Person).
[THE SYMBOL [**] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SEC. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTION.]

-10-

--------------------------------------------------------------------------------

 

     6.3 Post-Closing Access to Information. If, after the Closing Date, it is
necessary for a party hereto to obtain additional information within the other
party’s possession relating to the Purchased Assets or any other transaction
contemplated herein, such other party will furnish or cause its representatives
to furnish such information to the requesting party.
     6.4 Post-Closing Cooperation. Seller agrees that, if reasonably requested
by Buyer, it will cooperate with Buyer, at Buyer’s expense, in enforcing the
terms of any agreements between Seller and any third party involving the
Purchased Assets, including without limitation terms relating to confidentiality
and the protection of intellectual property rights (but, for purposes of
clarity, excluding any claim or enforcement action relating to the Baran License
Agreement). In the event that Buyer is unable to enforce its intellectual
property rights against a third party as a result of a rule or law barring
enforcement of such rights by a transferee of such rights, Seller agrees to
reasonably cooperate with Buyer by assigning to Buyer such rights as may be
required by Buyer to enforce its intellectual property rights in its own name.
If such assignment still does not permit Buyer to enforce its intellectual
property rights against the third party, Seller agrees to initiate proceedings
against such third party in Seller’s name, provided that Buyer shall be entitled
to participate in such proceedings and provided further that Buyer shall be
responsible for the expenses of such proceedings. If the Seller or its
representatives participate in any proceedings pursuant to this Section 6.4, the
Seller shall be reimbursed for all costs associated with such participation
including, but not limited to, the Seller’s legal fees, travel costs and
reasonable compensation as agreed to by the parties for time spent by the Seller
or its representatives in participating in the proceedings.
     6.5 Public Announcements. Seller shall not make any public disclosure
regarding this Agreement and the transactions contemplated herein without the
prior written consent of Buyer; provided, however, that nothing contained herein
shall prevent Seller from furnishing any information required by a Governmental
Entity. Buyer will provide prior notice to and consult with Seller prior to
making any public disclosure regarding this Agreement and the transactions
contemplated herein.
     6.6 Confidentiality. This Agreement and the transactions and other
agreements contemplated herein are subject to the Mutual Non-Disclosure
Agreement dated July 6, 2007 between Buyer and Seller (the “Mutual NDA”).
     6.6 Post-Closing Actions. Subsequent to the Closing Date, the Seller and
the Buyer shall each deliver or cause to be delivered to the other following the
Closing Date such additional instruments as the other may reasonably request for
the purpose of fully carrying out this Agreement. Without limiting the
foregoing, Seller shall, from time to time, execute and deliver, upon the
request of Buyer, all such other and further materials and documents and
instruments of conveyance, transfer or assignment as may reasonably be requested
by Buyer to effect, record or verify the transfer to, and vesting in Buyer, of
Seller’s right, title and interest in and to the Purchased Assets, free and
clear of all Liens, in accordance with the terms of this Agreement.
     6.7 Taxes. Seller shall be responsible for paying, shall promptly discharge
when due, and shall reimburse, indemnify and hold harmless Buyer from, any sales
or use, transfer, real property gains, excise, stamp, or other similar Taxes
arising from, imposed on or attributable to the transactions contemplated by
this Agreement.
     6.8 Seller’s Conduct of the Business Prior to Closing. During the period
from the date of this Agreement to the Closing Date, Seller shall promptly
notify Buyer of any material, adverse event, occurrence or emergency not in the
ordinary course of business involving the Purchased Assets. Except as approved
in writing by Buyer in advance, prior to the Closing, Seller will not
(a) create, incur or assume any obligation which would in any material way
affect the Purchased Assets; (b) sell, dispose of

-11-

--------------------------------------------------------------------------------

 

or encumber any of the Purchased Assets or license any Purchased Assets to any
third party; or (c) make any material changes to any of the Purchased Assets
without Buyer’s prior written consent or at Buyer’s request.
     6.9 Seller’s Customers. Seller shall be responsible for all of its
commitments and obligations under any license, service, consulting or other
agreement with any customer, vendor or other third party and shall indemnify
Buyer against any Damages relating to or arising from such commitments and
obligations in accordance with Section 10. Pursuant to the Non-Competition
Agreements, Seller shall not, and shall cause its resellers and distributors and
other partners not to, license or sell any Business Products from and after the
three (3) month anniversary of the Closing Date.
     6.10 Payments to Third Parties. Seller shall be responsible for the payment
of all Transaction Fees and shall indemnify Buyer against any Damages relating
to or arising from any Transaction Fees in accordance with Section 10.
[**]
7. License to Seller.
     7.1 License. Subject to the terms and conditions of this Agreement, upon
the Closing of the Purchase Transaction, Buyer shall grant to Seller a
non-exclusive, non-transferable, worldwide and royalty-free license to utilize
the Purchased Assets (the “Seller License”) for the sole purpose of supporting
Business Products sold and licensed by Seller prior to, and for a period of up
to three (3) months following, the Closing Date. The Seller License does not
give Seller any right to sub-license the Purchased Assets to any third party.
     7.2 Term. The Seller License shall be effective on the Closing Date and
shall expire on the [**]. Buyer may terminate the Seller License for any
material failure by Seller to perform Seller’s obligations under this Section 7
or the Agreement that is not remedied within thirty (30) days of written notice
from Buyer. At the expiration or termination of the Seller License Term, Seller
shall return or destroy all copies of the Purchased Assets and related
materials, and an authorized officer shall certify such return or destruction to
Buyer in writing.
     7.3 Confidential Information. The Purchased Assets shall be and remain the
confidential and proprietary information of Buyer during and following the
Seller License Term and shall be subject to the Mutual NDA.
     7.4 Disclaimer of Warranty. THE PURCHASED ASSETS SHALL BE LICENSED “AS IS”
TO SELLER. BUYER MAKES NO REPRESENTATIONS OR WARRANTIES, EITHER EXPRESS OR
IMPLIED, INCLUDING WITHOUT LIMITATION ANY REPRESENTATIONS OR WARRANTIES AS TO
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR NON-INFRINGEMENT. IN NO
EVENT WILL BUYER BE LIABLE TO THE SELLER FOR ANY INDIRECT, INCIDENTAL, SPECIAL
OR CONSEQUENTIAL PENALTIES OR DAMAGES, INCLUDING LOST PROFITS, ARISING FROM THE
SELLER LICENSE OR SELLER’S USE OF THE PURCHASED ASSETS, EVEN IF BUYER HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
8. Conditions to Buyer’s Obligations.
     The obligations of Buyer under this Agreement are subject to the
fulfillment, prior to or on the Closing Date, of each of the following
conditions, all or any of which may be waived by Buyer in writing, except as
otherwise provided by law:
[THE SYMBOL [**] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SEC. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTION.]

-12-

--------------------------------------------------------------------------------

 

     8.1 Representations and Warranties True; Performance; Certificate.
          (a) The representations and warranties of Seller contained in this
Agreement shall be true and correct in all material respects as of the Closing
Date with the same effect as though such representations and warranties had been
made or given again at and as of the Closing Date;
          (b) Seller shall have performed and complied with all of its
agreements, covenants and conditions required by this Agreement to be performed
or complied with by them prior to or on the Closing Date; and
          (c) The conditions set forth in this Section 8 have been fulfilled or
satisfied, unless otherwise waived in writing by Buyer.
     8.2 Consents. All Governmental Authorizations and required third-party
consents, including the Baran Consent and Baran Amendment, shall have been
obtained.
     8.3 No Proceedings or Litigation.
          (a) No preliminary or permanent injunction or other order shall have
been issued by any Governmental Entity, nor shall any statute, rule, regulation
or executive order be promulgated or enacted by any Governmental Entity which
prevents the consummation of the transactions contemplated by this Agreement.
          (b) No suit, action, claim, proceeding or investigation before any
Governmental Entity shall have been commenced and be pending against any of the
parties, or any of their respective Affiliates, associates, officers or
directors, seeking to prevent transactions contemplated by this Agreement,
including, without limitation, the sale of the Purchased Assets or asserting
that the sale of the Purchased Assets would be illegal or create liability for
damages or which may have a Material Adverse Effect on the Purchased Assets.
     8.4 Documents. This Agreement, the exhibits and schedules attached hereto,
and any other instruments of conveyance and transfer and all other documents to
be delivered by Seller at the Closing and all actions of Seller required by this
Agreement and the exhibit agreements, or incidental thereto, and all related
matters, shall be in form and substance reasonably satisfactory to Buyer and
Buyer’s counsel and shall be in full force and effect.
     8.5 Governmental Filings. The parties shall have made any required filing
with Governmental Entities in connection with this Agreement and the exhibit
agreements, and any approvals related thereto shall have been obtained or any
applicable waiting periods shall have expired. If a proceeding or review process
by a Governmental Entity is pending in which a decision is expected, Buyer shall
not be required to consummate the transactions contemplated by this Agreement
until such decision is reached or rendered, notwithstanding Buyer’s legal
ability to consummate the transactions contemplated by this Agreement prior to
such decision being reached or rendered. Buyer shall be liable for any fees and
expenses relating to filings with any Governmental Entities.
     8.6 Material Adverse Change. There has not been a material adverse change
to the Purchased Assets.

-13-

--------------------------------------------------------------------------------

 

9. Conditions to Seller’s Obligations
     The obligations of Seller under this Agreement are subject to the
fulfillment, prior to or on the Closing Date, of each of the following
conditions, all or any of which may be waived in writing by Seller, except as
otherwise provided by law:
     9.1 Representations and Warranties True; Performance.
          (a) The representations and warranties of Buyer contained in this
Agreement shall be true and correct in all material respects as of the Closing
Date with the same effect as though such representations and warranties had been
made or given again at and as of the Closing Date;
          (b) Buyer shall have performed and complied with all of its
agreements, covenants and conditions required by this Agreement to be performed
or complied with by them prior to or on the Closing Date; and
          (c) The conditions set forth in this Section 9 have been fulfilled or
satisfied, unless otherwise waived in writing by Seller.
     9.2 No Proceeding or Litigation. No preliminary or permanent injunction or
other order shall have been issued by any Governmental Entity, nor shall any
statute, rule, regulation or executive order be promulgated or enacted by any
Governmental Entity which prevents the consummation of the transactions
contemplated by this Agreement.
     9.3 Documents. This Agreement, any other instruments of conveyance and
transfer and all other documents to be delivered by Buyer to Seller at the
Closing and all actions of Buyer required by this Agreement or incidental
thereto, and all related matters, shall be in form and substance reasonably
satisfactory to Seller and Seller’s counsel.
     9.4 Consents. All Governmental Authorizations and required third-party
consents, including the Baran Consent and Baran Amendment, shall have been
obtained.
10. Indemnification.
     10.1 Survival of Representations and Warranties. All representations and
warranties in this Agreement or in any instrument delivered pursuant to this
Agreement shall survive the consummation of the transactions contemplated hereby
and continue until the [**] anniversary of the Closing Date (the “Indemnity
Termination Date”); provided that if any claims for indemnification have been
asserted with respect to any such representations and warranties prior to the
Indemnity Termination Date, the representations and warranties on which any such
claims are based shall continue in effect until final resolution of any claims,
and provided, further, that (a) the representations in Sections 4.1
[Organization], 4.2 [Authority], 4.3 [Execution and Binding Effect] and 4.5 [No
Violation] shall continue indefinitely; (b) the representations and warranties
set forth in Section 4.6 [Intellectual Property] shall survive [**]; and
(c) representations and warranties relating to Taxes shall survive until thirty
(30) days after expiration of all applicable statutes of limitations relating to
such Taxes. All covenants and agreements set forth in the Agreement shall
continue indefinitely.
     10.2 Indemnification by Seller. Subject to the limitations set forth in
this Section 10, from and after the Closing Date, Seller shall protect, defend,
indemnify and hold harmless Buyer and Buyer’s Affiliates, officers, directors,
employees, representatives and agents (each of the foregoing Persons is
hereinafter referred to individually as a “Buyer Indemnified Person” and
collectively as “Buyer Indemnified Persons”)
[THE SYMBOL [**] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SEC. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTION.]

-14-

--------------------------------------------------------------------------------

 

from and against any and all losses, costs, damages, liabilities, fees
(including without limitation attorneys’ fees) and expenses (collectively, the
“Damages”), that any of the Buyer Indemnified Persons incurs or reasonably
anticipates incurring by reason of or in connection with (a) any claim, demand,
action or cause of action alleging misrepresentation, breach of, or default in
connection with, any of the representations, warranties, covenants or agreements
of the Seller contained in this Agreement, including any exhibits or schedules
attached hereto (b) any Excluded Asset; (c) any Excluded Liability; or
(d) Seller’s utilization of the Purchased Assets prior to Closing and from and
after the Closing pursuant to Section 7. Damages in each case shall be net of
the amount of any insurance proceeds and indemnity and contribution actually
recovered by Buyer.
     10.3 Indemnification by the Buyer. Subject to the limitations set forth in
this Section 10, from and after the Closing Date, Buyer shall protect, defend,
indemnify and hold harmless Seller and Seller’s Affiliates, officers, directors,
employees, representatives and agents (each of the foregoing Persons is
hereinafter referred to individually as a “Seller Indemnified Person” and
collectively as “Seller Indemnified Persons”) from and against any and all
Damages, that any of the Seller Indemnified Persons incurs or reasonably
anticipates incurring by reason of or in connection with (a) any claim, demand,
action or cause of action alleging misrepresentation, breach of, or default in
connection with, any of the representations, warranties, covenants or agreements
of the Buyer contained in this Agreement, including any exhibits or schedules
attached hereto or (b) Buyer’s utilization of the Purchased Assets from and
after the Closing. Damages in each case shall be net of the amount of any
insurance proceeds and indemnity and contribution actually recovered by Seller.
     10.4 Procedures Relating to Indemnification.
          (a) Upon incurring or reasonably anticipating the incurrence of
Damages, a Seller Indemnified Person or Buyer Indemnified Person (an
“Indemnified Person”) will deliver to the Buyer or the Seller, as applicable (
an “Indemnifying Person”), a letter signed by an authorized representative of
Indemnified Person (a “Claim Notice”) which describes in reasonable detail the
claimed Damages. If the Indemnifying Person does not object to such Claim Notice
within ten (10) business days, the Indemnifying Person shall be deemed to have
accepted the claim or claims set forth in the Claim Notice and shall waive and
forfeit any right to dispute such claims. The Indemnifying Person shall then
promptly pay the claimed amount to an account designated by the Indemnified
Person. If Seller is the Indemnifying Person and Seller does not promptly pay
the claimed amount to the Buyer Indemnified Person or Seller disputes the
claimed amount, Buyer shall be entitled to offset the claimed amount from any
earn-out Seller may be entitled to received under Section 2.4 or, in the case of
a dispute, delay payment of any earn-out until such dispute is resolved.
          (b) If the Indemnifying Person objects to any or all claims set forth
in a Claim Notice, the Indemnifying Person shall deliver a letter signed by an
officer or duly authorized representative of the Indemnifying Person (an
“Objection Notice”) which describes in reasonable detail the Indemnifying
Person’s objections. The parties will then negotiate in good faith to resolve
any outstanding issues.
          (c) In order for an Indemnified Person to be entitled to any
indemnification provided for under this Agreement in respect of, arising out of
or involving a claim made by any third party against the Indemnified Person (a
“Third-Party Claim”), such Indemnified Person must provide the Indemnifying
Person with a Claim Notice regarding the Third-Party Claim promptly and in any
event within ten (10) days after receipt by such Indemnified Person of written
notice of the Third-Party Claim; provided, however, that failure to give such
notification shall not affect the indemnification provided hereunder except to
the extent the Indemnifying Person shall have been actually and materially
prejudiced as a result of such failure. Thereafter, the Indemnified Person shall
deliver to the Indemnifying Person, promptly

-15-

--------------------------------------------------------------------------------

 

after the Indemnified Person’s receipt thereof, copies of all notices and
documents (including court papers) received by the Indemnified Person relating
to the Third-Party Claim.
          (d) If a Third-Party Claim is made against an Indemnified Person, the
Indemnified Person shall have the right to participate in the defense thereof
and, at its own expense, to employ counsel reasonably acceptable to the
Indemnifying Person, separate from the counsel employed by the Indemnifying
Person, it being understood that the Indemnifying Person shall control such
defense. the Indemnifying Person shall be liable for the fees and expenses of
counsel employed by the Indemnified Person for any period during which the
Indemnifying Person has not assumed the defense thereof. All the parties hereto
shall cooperate in the defense or prosecution thereof. Such cooperation shall
include the retention and (upon the Indemnifying Person’s request) the provision
to the Indemnifying Person of records and information which are reasonably
relevant to such Third-Party Claim, and making officers, directors, employees
and agents of the Indemnified Person available on a mutually convenient basis to
provide information, testimony at depositions, hearings or trials, and such
other assistance as may be reasonably requested by the Indemnifying Person.
Notwithstanding the foregoing, in the event a Third-Party Claim is made against
an Indemnified Person as to which such Indemnified Person is entitled to seek
indemnification hereunder and such Indemnified Person reasonably concludes that
the Indemnifying Person lacks the financial and personnel resources to
vigorously defend such Indemnified Person, that the Indemnifying Person has
failed to assume the defense of the Indemnified Person, or that the Indemnifying
Person is not diligently defending such Indemnified Person, then in each such
case the Indemnified Person may elect to retain the defense of such Third-Party
Claim and will be entitled to be reimbursed by the Indemnifying Person for its
Losses incurred in such defense (including, without limitation, reasonable
attorneys fees), such expenditures to be reimbursed promptly after submission of
invoices therefor. Whether or not the Indemnifying Person shall have assumed the
defense of a Third-Party Claim, the Indemnified Person shall not admit any
liability with respect to, or settle, compromise or discharge, such Third-Party
Claim without the Indemnifying Person’s prior written consent (which consent
shall not be unreasonably withheld or delayed). the Indemnifying Person shall
not admit any liability with respect to, or settle, compromise or discharge any
Third-Party Claim without the Indemnified Person’s prior written consent (which
consent shall not be unreasonably withheld or delayed); provided, however, that
such consent shall not be required for any settlement, compromise or discharge
of a Third-Party Claim that by its terms obligates the Indemnifying Person to
pay the full amount of the liability in connection with such Third-Party Claim,
which releases the Indemnified Person completely in connection with such
Third-Party Claim, and which does not otherwise have any material adverse effect
on the Indemnified Person.
     10.5 Threshold and Cap. Notwithstanding any other provision of this
Section 10 to the contrary:
          (a) Except for claims relating to or arising from Section 10.2(b),
(c) and (d) and Sections 6.9 and 6.10, a Buyer Indemnified Person shall be
entitled to indemnification under Section 10.2 only when the aggregate of
Damages incurred by the Buyer Indemnified Persons exceeds $[**] (the “Threshold
Amount”), at which time the Buyer Indemnified Person shall be entitled to be
indemnified against and compensated and reimbursed for all Damages, including
the Threshold Amount;
          (b) Except for claims relating to or arising from Section 10.2(b),
(c) and (d) and Sections 6.9 and 6.10, or arising from Seller fraud or willful
misconduct, the Seller shall not be required to make any indemnification payment
pursuant to Section 10.2 after the Seller has paid to all Buyer Indemnified
Persons an amount in the aggregate equal to [**] (such sum, the “Indemnity
Cap”);
          (c) Except for claims relating to Section 10.3(b), a Seller
Indemnified Person shall be entitled to indemnification under Section 10.3 only
when the aggregate of Damages incurred by the
[THE SYMBOL [**] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SEC. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTION.]

-16-

--------------------------------------------------------------------------------

 

Seller Indemnified Persons exceeds the Threshold Amount, at which time the
Seller Indemnified Person shall be entitled to be indemnified against and
compensated and reimbursed for all Damages, including the Threshold Amount; and
          (d) Except for claims relating to Section 10.3(b) or arising from
Buyer fraud or willful misconduct, the Buyer shall not be required to make any
indemnification payment pursuant to Section 10.3 after the Buyer has paid to all
Seller Indemnified Persons an amount in the aggregate equal to the Indemnity
Cap.
     10.6 Treatment of Indemnification Claims.  All indemnification payments
made under this Agreement shall be treated by all parties as an adjustment to
the Total Purchase Price.
11. Termination.
     11.1 Termination of Agreement. This Agreement may be terminated at any time
prior to the Closing:
          (a) By mutual written consent of Buyer and Seller;
          (b) By Buyer or Seller if any Governmental Entity shall have issued an
order, decree or ruling or taken any other action restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement; or
          (c) By either party if the Closing does not occur on or before the
thirty (30) day anniversary of the date hereof.
     11.2 Procedure and Effect of Termination. In the event of termination of
this Agreement by any or all of the parties pursuant to Section 11.1, written
notice shall be given to each other party specifying the provision of
Section 11.1, pursuant to which such termination is made and shall become void
and there shall be no liability on the part of Buyer or Seller (or their
respective officers, directors, partners or Affiliates), except as a result of
any breach of this Agreement by such party or to the extent such a party is
entitled to indemnification under Section 10 of this Agreement.

-17-

--------------------------------------------------------------------------------

 

12. Miscellaneous.
     12.1 Amendments and Waivers. Any term of this Agreement may be amended or
waived with the written consent of the parties or their respective successors
and assigns. Any amendment or waiver effected in accordance with this
Section 12.1 shall be binding upon the parties and their respective successors
and assigns.
     12.2 Successors and Assigns. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective successors and
permitted assigns of the parties. Nothing in this Agreement, express or implied,
is intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
     12.3 Governing Law; Juridiction. This Agreement and all acts and
transactions pursuant hereto and the rights and obligations of the parties
hereto shall be governed, construed and interpreted in accordance with the laws
of the State of California, without giving effect to principles of conflicts of
law. The parties agree to submit to the non-exclusive jurisdiction of the
Superior Court of Santa Clara County, California and/or to the jurisdiction of
the United States District Court for the Northern District of California with
respect to any legal action related to this Agreement.
     12.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
     12.5 Titles and Subtitles. The titles and subtitles used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.
     12.6 Notices. Any notice required or permitted by this Agreement shall be
in writing and shall be deemed sufficient upon receipt, when delivered
personally or by courier, overnight delivery service or confirmed facsimile, or
forty-eight (48) hours after being deposited in the regular mail as certified or
registered mail (airmail if sent internationally) with postage prepaid, if such
notice is addressed to the party to be notified at such party’s address or
facsimile number as set forth below, or as subsequently modified by written
notice:
If to Buyer:
Phoenix Technologies Ltd.
915 Murphy Ranch Rd.
Milpitas, CA 95035
Attn: General Counsel
Fax: (408) 570-1044
If to Seller:
XTool Mobile Security, Inc.
1849 Kingwood Dr., Ste. 104
Houston, Texas 77339
Attn: Pedro Camargo, President
Fax: (888) 671-1293
     12.7 Severability. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, the parties agree to renegotiate such
provision in good faith, in order to maintain the

-18-

--------------------------------------------------------------------------------

 

economic position enjoyed by each party as close as possible to that under the
provision rendered unenforceable. In the event that the parties cannot reach a
mutually agreeable and enforceable replacement for such provision, then (i) such
provision shall be excluded from this Agreement, (ii) the balance of the
Agreement shall be interpreted as if such provision were so excluded and
(iii) the balance of the Agreement shall be enforceable in accordance with its
terms.
     12.8 Entire Agreement. This Agreement and the documents referred to herein
are the product of both of the parties hereto, and constitute the entire
agreement between such parties pertaining to the subject matter hereof and
thereof, and merge all prior negotiations and drafts of the parties with regard
to the transactions contemplated herein and therein. Any and all other written
or oral agreements existing between the parties hereto regarding such
transactions are expressly canceled.
     12.9 Advice of Legal Counsel. Each party acknowledges and represents that,
in executing this Agreement, it has had the opportunity to seek advice as to its
legal rights from legal counsel and that the person signing on its behalf has
read and understood all of the terms and provisions of this Agreement. This
Agreement shall not be construed against any party by reason of the drafting or
preparation thereof.
[Signature pages follow]

-19-

--------------------------------------------------------------------------------

 

     This Agreement has been duly executed and delivered by the duly authorized
officers of Seller and Buyer as of the date first above written.

                  PHOENIX TECHNOLOGIES LTD.    
 
           
 
  By:        
 
     
 
   
 
  Name:        
 
           
 
           
 
  Title:        
 
           
 
                XTOOL MOBILE SECURITY, INC.    
 
           
 
  By:        
 
           
 
           
 
  Name:        
 
           
 
           
 
  Title:        
 
           

-20-