Exhibit 10.31
EXECUTION COPY
 
 
ASSET PURCHASE AGREEMENT
by and among
iWatt, Inc.
IKOR Acquisition Corporation
and
Advanced Energy Industries, Inc.
Dated November 23, 2005
 
 

 

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TABLE OF CONTENTS

                      Page   ARTICLE 1 DEFINITIONS     1  
 
           
1.1
  Defined Terms.     1  
 
            ARTICLE 2 TRANSFER OF ASSETS     9  
 
           
2.1
  Closing     9  
2.2
  Transfer of Assets     9  
2.3
  Assumption of Liabilities     10  
2.4
  Excluded Liabilities     10  
2.5
  Payments to Seller     11  
2.6
  Allocation of Purchase Price     11  
2.7
  Closing Deliveries; Collateral Agreements     11  
2.8
  Further Assurances, Conveyances, Agreement to Perform Necessary Acts     12  
2.9
  Responsibility for Taxes and Tax Returns     13  
2.10
  Withholding Rights     14  
2.11
  Transfer Taxes     14  
 
            ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLER     14  
 
           
3.1
  Organization of Seller     15  
3.2
  Authorization of Transaction     15  
3.3
  Non-contravention; Consents     15  
3.4
  Title of Properties; Absence of Liens and Encumbrances; Condition     16  
3.5
  Intellectual Property Rights     16  
3.6
  Brokers’ and Finders’ Fees     19  
3.7
  Legal and Other Compliance     19  
3.8
  Transferred Assets and Transferred Technology     19  
3.9
  Environmental Matters     20  
3.10
  Litigation     20  
3.11
  Employment Matters     20  
3.12
  Bulk Transfer Laws     22  
3.13
  Business Financial Information     22  
3.14
  Contracts; No Defaults     23  
3.15
  Warranties; Defects; Liabilities.     23  
3.16
  Insurance     23  
3.17
  Tax Matters     24  
3.18
  Accounts Receivable     24  
3.19
  Inventory     24  
3.20
  Representations and Disclosures Complete     25  
 
            ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PARENT AND BUYER     25
 
 
           
4.1
  Organization     25  
4.2
  Authority for Agreement     25  
4.3
  Noncontravention     25  

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TABLE OF CONTENTS
(Continued)

                      Page   ARTICLE 5 ADDITIONAL AGREEMENTS OF THE PARTIES    
26  
 
           
5.1
  Operation of the Business     26  
5.2
  Access     27  
5.3
  Post-Closing Audits of Business Financial Statements     28  
5.4
  Third Party Consents; Assignment of Transferred Contracts     28  
5.5
  Renewal Fees     29  
5.6
  Transition Services     29  
5.7
  Software Other than IT Systems     30  
5.8
  Technology Documentation     30  
5.9
  Intellectual Property     31  
5.10
  Reasonable Best Efforts     31  
5.11
  No Other Bids     31  
5.12
  Confidentiality; Public Announcements     32  
5.13
  Covenant Not to Compete     32  
5.14
  Covenant Not to Solicit or Hire     33  
5.15
  Notification of Certain Matters     33  
5.16
  Severability of Covenants     34  
5.17
  SEC Support Letter     34  
 
            ARTICLE 6 EMPLOYEES     34  
 
           
6.1
  Seller Cooperation     34  
6.2
  Employment Offers     34  
6.3
  Waiver     35  
6.4
  Employees     35  
6.5
  COBRA Continuation Coverage     35  
6.6
  Employee Liability Claims     36  
 
            ARTICLE 7 CLOSING, PURCHASE PRICE AND PAYMENTS     37  
 
           
7.1
  Conditions to Obligations of Buyer     37  
7.2
  Conditions to Obligations of Seller     38  
 
            ARTICLE 8 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
INDEMNIFICATION     40  
 
           
8.1
  Survival of Representations and Warranties     40  
8.2
  Indemnification by Seller     40  
8.3
  Limitation on Indemnification     41  
8.4
  Indemnification Procedure     41  
8.5
  Escrow     42  
8.6
  Purchase Price Adjustment     43  
 
            ARTICLE 9 TERMINATION AND ABANDONMENT     43  
 
           
9.1
  Methods of Termination     43  
9.2
  Procedure upon Termination     44  
9.3
  Survival of Certain Provisions     44  

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TABLE OF CONTENTS
(Continued)

                      Page   ARTICLE 10 GENERAL     44  
 
           
10.1
  No Agency     44  
10.2
  Fees and Expenses     44  
10.3
  Notices     45  
10.4
  Governing Law     45  
10.5
  Forum and Venue     45  
10.6
  Construction     46  
10.7
  Breaches and Remedies     46  
10.8
  Waiver     46  
10.9
  Assignment     47  
10.10
  Severability     47  
10.11
  Entire Agreement     47  
10.12
  Amendments     47  
10.13
  Counterparts     47  

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ASSET PURCHASE AGREEMENT
     THIS ASSET PURCHASE AGREEMENT (this “Agreement”) is made and entered into
as of November 23,2005 (the “Effective Date”), by and among iWatt, Inc., a
California corporation (the “Parent”), IKOR Acquisition Corporation, a Delaware
corporation and wholly owned subsidiary of Parent (the “Buyer”), and Advanced
Energy Industries, Inc., a Delaware corporation (the “Seller”), each, a “Party,”
together, the “Parties”.
RECITALS
     WHEREAS, Seller is currently engaged in, among other things, the Business
(as defined below) in its IKOR division;
     WHEREAS, Parent and Buyer wish to purchase all assets, tangible and
intangible, of Seller used in or necessary for the operation of the Business;
     WHEREAS, Seller wishes to sell such assets to Parent and Buyer; and
     WHEREAS, the Parties desire that certain current employees of Seller become
employees of Buyer.
     NOW, THEREFORE, in consideration of the covenants, promises,
representations and warranties set forth herein, and for other good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged by
the Parties), intending to be legally bound hereby, the Parties agree as
follows:
Article 1
DEFINITIONS
     1.1 Defined Terms.
     The following capitalized terms shall have the meanings set forth below:
          (a) “Affiliate” means with respect to a Person, a Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by, or is under common Control with, such Person, including any
Subsidiary of such Person. A “Subsidiary” means with respect to a Person, a
Person that directly, or indirectly through one or more intermediaries, is
Controlled by such Person. For the purposes of this definition of “Affiliate”,
“Control” (including derivative forms such as “Controlling,” “Controlled by” and
“under common Control with”) means the ownership or possession, direct or
indirect by the controlling Person of: (a) voting shares or other securities,
representing more than fifty percent (50%) of the outstanding shares or
securities entitled to vote for the election of the board of directors or
similar managing authority of such controlled Person; or (b) if such controlling
Person does not have voting shares or other securities, more than fifty percent
(50%) of the ownership interest that represents the right to make decisions,
including the election of directors, for such controlled Person.

 

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          (b) “Assigned IPR” means (i) the Assigned Patents and (ii) the
Assigned Trademarks.
          (c) “Assigned Patents” means each of the Patents and invention
disclosures set forth in Schedule 1.1(c) and any Patents that are a member of
the same Patent Family as any one of such scheduled Patents, in each case
whether pending, issued, expired, abandoned or closed, and all foreign
counterparts of any such Patent.
          (d) “Assigned Trademarks” means each of the Trademarks listed or
described in Schedule 1.1(d), in each case whether or not such Trademarks are
Registered IP or registerable as Registered IP.
          (e) “Benefit Plan” means any plan, program, policy, practice,
contract, agreement or other arrangement providing for compensation, severance,
termination pay, deferred compensation, performance awards, stock or
stock-related awards, fringe benefits or other employee benefits or remuneration
of any kind, whether written or unwritten or otherwise, funded or unfunded,
including without limitation, each “employee benefit plan,” within the meaning
of Section 3(3) of ERISA which is maintained, contributed to, or required to be
contributed to, by Seller or any ERISA Affiliate for the benefit of any
Employee, or with respect to which Seller or any ERISA Affiliate has or may have
any liability or obligation.
          (f) “Bill of Sale” means one or more fully executed bills of sale for
the Transferred Tangible Assets, in a form set forth in Schedule 1.1(f).
          (g) “Books and Records” means the books and records of Seller and its
Affiliates that are or have been related to, used in or necessary for the
operation of the Business, the Transferred Assets or the Designated Employees,
including books of account; the sales records; customer lists and information;
supplier lists and information; Transferred Product records; marketing
materials; distributor and other sales information; copies of Transferred
Contracts; product and design materials (for internal or external use); plans;
drawings; general financial and accounting data; documentation sufficient to
fully utilize, understand and implement the Transferred Assets (including the
Transferred Tangible Assets and Assigned IPR); technical and operating materials
(for internal or external use); in each case in whatever form (hard copy or
electronic) relating to the Transferred Assets, copies of policies and
procedures or other communications regarding marketing and customer matters, and
the Patent Files.
          (h) “Business” means the development, sale, licensing, distribution
and support of power supply components, modules and systems utilized in
computing, office automation and communications products, including the
business, intellectual property, technology, assets and operations of Seller and
its Affiliates currently conducted in its “IKOR” business unit, and the
activities and operations of the Designated Employees.
          (i) “Closing Date” means the date upon which the Closing occurs in
accordance with Section 2.1.
          (j) “Code” means the Internal Revenue Code of 1986, as amended.

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          (k) “Confidential Information” means any nonpublic information
disclosed by one Party (the “Disclosing Party”) to the other (the “Receiving
Party”) (including any nonpublic information disclosed in the course of the
performance of the Transition Services): (a) which relates to the actual or
anticipated business or research and development of the Disclosing Party,
technical data, trade secrets or know-how, including, but not limited to,
research, product plans or other information regarding the Disclosing Party’s
products or services and markets therefor, customer lists and customers,
software, developments, inventions, processes, formulas, technology, designs,
drawings, engineering, hardware configuration information, marketing, finances
or other business information or (b) which is otherwise deemed to be
“Confidential Information” by the terms of this Agreement, other than
information the Receiving Party can demonstrate was in the public domain at the
time of disclosure through no act or omission on the part of the Receiving
Party.
          (l) “Consent” means any consent, approval, permit, or authorization of
any Person not a Party to this Agreement.
          (m) “Control,” “Controls,” “Controlled” or “Controlling” means, with
respect to any Intellectual Property Rights, the possession by Seller or its
Affiliates of the right to grant a license or sublicense under such Intellectual
Property Rights of the scope provided herein without incurring an obligation to
pay additional consideration to a third party (except for payments among such
Party and its Affiliates, and payments to employees for inventions made by them
while employed by such Party or its Affiliates made in the ordinary course of
their employment).
          (n) “Designated Employees” means the individuals listed on
Schedule 1.1(n) (including individuals identified between the Effective Date and
the Closing Date and added to Schedule 1.1(n) in accordance with Section 6.1) as
“Designated Employees.” For clarity, any reference in this Agreement to
“Designated Employees” shall include all individuals on Schedule 1.1(n) that are
also designated as “Key Employees.”
          (o) “Employee” shall mean any current or former employee, consultant
or director of Seller or any ERISA Affiliate, who has provided services to the
Business.
          (p) “Employment Agreement” shall mean each management, employment,
severance, consulting, relocation, repatriation, expatriation, visa, work permit
or other agreement, contract or understanding between Seller or any ERISA
Affiliate and any Employee.
          (q) “Employment Liabilities” shall mean any and all claims, debts,
liabilities, commitments and obligations, whether fixed, contingent or absolute,
matured or unmatured, liquidated or unliquidated, accrued or unaccrued, known or
unknown, whenever or however arising, including all costs and expenses relating
thereto arising under law, rule, regulation, permit, action or proceeding before
any governmental authority, order or consent decree or any award of any
arbitrator of any kind relating to any Benefit Plan, Employment Agreement or
otherwise relating to an Employee and his or her employment with Seller or any
ERISA Affiliate.
          (r) “ERISA Affiliate” shall mean each subsidiary of Seller and any
other person or entity under common control with Seller or any of its
subsidiaries within the meaning of Section 414(b), (c), (m) or (o) of the Code
and the regulations issued thereunder.

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          (s) “ERISA” means the Employee Retirement Income Security Act of 1974,
as amended.
          (t) “Escrow Agent” means the escrow agent identified in the Escrow
Agreement.
          (u) “Escrow Agreement” means an Escrow Agreement among Parent, Buyer,
Seller and Escrow Agent (as identified therein) effective as of the Closing
Date, in the form attached hereto as Exhibit A.
          (v) “Excluded Assets” means (a) all of Seller’s tangible assets other
than the Transferred Assets, (b) all cash, (c) all amounts prepaid on any
insurance policy maintained by the Seller on behalf of the Business and (d) such
other assets of Seller as are listed on Schedule 1.1(v).
          (w) “Exploit” or “Exploitation” means with respect to any Technology,
process or product, to make, have made, use, modify, enhance, sell, offer for
sale, market, import, make derivative works from, perform, copy, disclose, or
distribute such product or Technology (or derivative thereof) or practice such
process (or derivative thereof), as the case may be.
          (x) “Governmental Entity” means any court, administrative agency or
commission or other federal, state, provincial, county, local or other
governmental authority, instrumentality, agency or commission in any country
worldwide.
          (y) “Hazardous Material” means any substance that has been designated
by any Governmental Entity or by applicable federal, state or local law to be
radioactive, toxic, hazardous or otherwise a danger to health or the
environment, including, without limitation all substances listed as hazardous
substances pursuant to the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as amended, or defined as a hazardous waste pursuant
to the United States Resource Conservation and Recovery Act of 1976, as amended,
and the regulations promulgated pursuant to said laws.
          (z) “Intellectual Property Rights” or “IPR” means any or all of the
following and all statutory and/or common law rights throughout the world in,
arising out of, or associated therewith: (a) all patents and applications
therefor and all reissues, divisions, renewals, extensions, provisionals,
continuations and continuations-in-part thereof and all rights that claim
priority therefrom, along with each foreign patent or patent application that
shares common disclosure therewith (collectively, “Patents”); (b) all inventions
(whether patentable or not), invention disclosures and improvements, all trade
secrets, proprietary information, know-how and technology; (c) all works of
authorship, copyrights, rights in Mask Works, copyright and Mask Work
registrations and applications; (d) all industrial designs and any registrations
and applications therefor; (e) all trade names, logos, trademarks and service
marks; trademark and service mark registrations and applications (collectively,
“Trademarks”); (f) all databases and data collections (including knowledge
databases, customer lists and customer databases) and all rights therein;
(g) all rights in Software; (h) rights to Uniform Resource Locators, Web site
addresses and domain names; (i) any similar, corresponding or equivalent rights
to any of the foregoing and (j) all moral and equivalent rights throughout the
world.

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          (aa) “Key Employees” means the Designated Employees listed on
Schedule 1.1(n) that are specified as “Key Employees”.
          (bb) “Liability” means any liability, duty, obligation or indebtedness
(whether known or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
whether incurred or consequential and whether due or to become due), including
any liability for Taxes.
          (cc) “License Agreement” means that license agreement entered into
between Seller and Parent and Buyer effective as of the Closing Date, in the
form attached hereto as Exhibit F pursuant to which Seller licenses to Parent
and Buyer the Licensed IPR.
          (dd) “Licensed IPR” means all Intellectual Property Rights (other than
the Assigned IPR) used in or necessary for the operation of the Business.
          (ee) “Lien” means any mortgage, pledge, lien, security interest,
charge, claim, equity, encumbrance, limitation, restriction on use or transfer,
conditional sale or other title retention device or arrangement (including,
without limitation, a capital lease), transfer for the purpose of subjection to
the payment of any indebtedness, or restriction on the creation of any of the
foregoing, whether relating to any property or right or the income or profits
therefrom.
          (ff) “Loss” means any and all Liabilities, losses, damages, claims,
costs and expenses, interest, awards, judgments and penalties (including without
limitation legal costs and expenses and interest on the amount of any Loss from
the date suffered or incurred).
          (gg) “Mask Works” means the physical mask works or reticles for the
manufacture or customization of a semiconductor device.
          (hh) “Open Source Software” means Software or other material that is
distributed as “free software,” “open source software” or under a similar
licensing or distribution model (including but not limited to the GNU General
Public License (GPL) and GNU Lesser General Public License (LGPL)) that require,
as a condition of use, modification and/or distribution of such Open Source
Software that other Software incorporated into, derived from or distributed with
such Open Source Software be (a) disclosed or distributed in source code form;
(b) be licensed for the purpose of making derivative works; or (c) be
redistributable at no charge.
          (ii) “Patent Family” means a set comprised of all Patents that (a) are
directly or indirectly linked or entitled to be linked through one or more
Priority Claims or by a terminal disclaimer (including under 35 U.S.C. Sec. 253
or 37 CFR 1.321 or the equivalent laws or regulation of any other patent
authority); (b) are foreign counterparts, reissues, divisionals, renewals,
extensions, parents, continuations or continuations-in-part with respect to any
other Patent in such set; or (c) issue from any of the foregoing.
          (jj) “Patent Files” means complete prosecution files for the Assigned
Patents, including all correspondence and filings with patent authorities with
respect to such Patents and any related materials or documents in the possession
or control of Seller or its Affiliates or any attorney or patent agent involved
in the prosecution or enforcement of such Patents.

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          (kk) “Person” means an individual, partnership, corporation, limited
liability company, association, joint venture, trust, unincorporated
organization or Governmental Entity.
          (ll) “Priority Claim” means a claim to priority made in any Patent or
Patent application to any other Patent or Patent application pursuant to 35
U.S.C. Secs. 120 or 119(e) or the equivalent claim to priority under the laws
and regulations applicable to a foreign Patent or Patent application, as the
case may be.
          (mm) “Product Software” means all Software that is included in or part
of any version of the Transferred Products as firmware or otherwise, or that is
part of or related to the use, operation, programming, verification, design,
simulation, testing, support or application of a Transferred Product or the
reference design related thereto, including the Software listed or described on
Schedule 1.1(mm), all versions of any of the foregoing, and any Software from
which any of the foregoing Software was derived or that was derived from such
Software.
          (nn) “Registered IP” means all United States, international and
foreign: (a) Patents; (b) registered Trademarks, applications to register
Trademarks, intent-to-use applications, or other registrations or applications
related to Trademarks; (c) registered copyrights and applications for copyright
registration; (d) domain name registrations; and (e) any other Intellectual
Property Rights that are the subject of an application, certificate, filing,
registration or other document issued, filed with, or recorded by any
Governmental Entity.
          (oo) “Software” means any and all computer software and code,
including assemblers, applets, compilers, source code, object code, data
(including image and sound data), design tools and user interfaces, in any form
or format, however fixed. Software includes source code listings and
documentation.
          (pp) “Tax” and “Taxes” means (a) any and all federal, provincial,
state, and local taxes in any country worldwide (including estimated taxes),
assessments, and other governmental charges, duties, impositions and
liabilities, including taxes based upon or measured by gross receipts, income,
profits, sales, use and occupation, and value-added, ad valorem, transfer,
franchise, withholding, payroll, recapture, employment, excise and property
taxes, together with all interest, penalties and additions imposed with respect
to such amounts; (b) any liability for the payment of any amounts of the type
described in clause (a) of this definition as a result of being a member of an
affiliated, consolidated, combined or unitary group for any period; and (c) any
liability for the payment of any amounts of the type described in clause (a) or
(b) of this definition as a result of any express or implied obligation to
indemnify any other person or as a result of any obligations under any
agreements or arrangements with any other person or entity with respect to such
amounts and including any liability for taxes of a predecessor entity.
          (qq) “Technology” means all technology, including all know-how,
show-how, techniques, design rules, trade secrets, inventions (whether or not
patented or patentable) and invention disclosures, algorithms, routines,
Software, files, databases, works of authorship, processes, devices, prototypes,
lab notebooks, reference designs, test boards, test fixtures, test programs,
development and lab equipment, schematics, netlist, Mask Works, test
methodologies, documentation, hardware development tools, any media on which any
of the foregoing is recorded, and any other tangible embodiments of any of the
foregoing.

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          (rr) “Transferred Claims” means all rights and claims of Seller or its
Subsidiaries related to the Business against any third parties, including all
rights under express or implied warranties relating to the Business or the
ownership, use, function or value of any Transferred Asset.
          (ss) “Transferred Contracts” means those contracts listed on
Schedule 1.1(ss), and all open purchase agreements and other agreements to
purchase work in progress with respect to the Transferred Products.
          (tt) “Transferred Inventory” means any and all inventory, wherever
located, including raw materials, work in process, finished products, recycled
materials, inventoriable supplies, and spare parts owned by Seller and its
Affiliates and related to, used in, or necessary for the operation of the
Business, and any rights of Seller and its Affiliates to the warranties received
from suppliers of such inventory and any and all rights of Seller and its
Affiliates to related claims, credits, rights of recovery and setoff with
respect to such inventory, but only to the extent such rights are assignable.
          (uu) “Transferred Permits” means all governmental permits and
licenses, certificates of inspection, approvals or other authorizations issued
to Seller with respect to the Business or the premises used in connection with
the Business and necessary for the operation or conduct of the Business as
currently conducted under applicable laws.
          (vv) “Transferred Personal Property” means any and all personal
property (including equipment, computers, servers, machinery, furniture, office
equipment, furnishings, office supplies, storage devices, etc.) that are or have
been, related to, used in or necessary for the operation of the Business. For
the avoidance of doubt, such Transferred Personal Property shall include any
personal property related to, used in or necessary for the operation of the
Business that was previously provided to Seller under a leasing arrangement that
is not covered under a Transferred Contract (e.g. copy machines, phone systems,
etc.).
          (ww) “Transferred Products” means any and all products, in whatever
stage of development and in whatever form, that are (a) designed by or for, or
related to, the Business; or (b) otherwise listed or described on
Schedule 1.1(ww) and any Product Software that is part of such Transferred
Products, and any reference designs or development boards or platforms for such
Transferred Products (including boards and systems for the simulation, test or
verification of such Products) (x) that are of the type provided to actual or
potential purchasers for use with or evaluation of such Transferred Products or
(y) otherwise listed or described on Schedule 1.1(ww).
          (xx) “Transferred Tangible Assets” means all tangible assets of any
type or nature, other than Excluded Assets, that are or have been: (a) used in
or necessary for the operation of the Business, including the Transferred
Products, Transferred Personal Property and Transferred Inventory; (b) reflected
on the Business’s balance sheet, including accounts receivable; or (c) otherwise
described on Schedule 1.1(xx).
          (yy) “Transferred Technology” means all Technology used in or
necessary to the operation of the Business or constituting any of the
Transferred Products or otherwise listed or described on Schedule 1.1(yy) and
including all (a) know-how and other Technology known by any

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and all Designated Employees, whether or not such Technology was reduced to any
tangible media on or prior to the Closing Date; (b) copies and versions of the
Product Software; (c) Technology that is used in the design, development,
manufacture or testing Transferred Products (including all versions of any
design tools or development environments used in the design of any Transferred
Product); (d) Mask Works, netlists, GERBER files and other representations of
any Transferred Product; and (e) files necessary for the operation of the
Transferred Websites, including all of the content therein.
          (zz) “Transferred Websites” means those Web sites (including content)
and the Uniform Resource Locators set forth in Schedule 1.1(zz).
          (aaa) Each of the following terms is defined in the Section or Exhibit
set forth opposite such term:

          TERM   SECTION/EXHIBIT
“Allocation”
      Section 2.6
“Assumed Liabilities”
      Section 2.3
“Audit Completion Date”
      Section 5.3
“Buyer Indemnitee”
      Section 8.2
“Buyer Indemnitees”
      Section 8.2
“Cash Amount”
      Section 2.5(a)
“Claim”
      Section 8.4(a)
“Closing”
      Section 2.1
“Closing Date”
      Section 2.1
“COBRA”
      Section 6.5
“Collateral Agreements”
      Section 2.7(b)
“Conflict”
      Section 3.3
“Disclosing Party”
      Section 1.1(k)
“Disclosure Schedule”
      Article 3
“Employee Excluded Liabilities”
      Section 6.6(a)
“Escrow Amount”
      Section 2.5(b)
“Excluded Liabilities”
      Section 2.4
“Indemnifiable Audit Costs”
      Section 5.3
“International Employee Plan”
      Section 3.11(a)
“IP Assignments”
      Section 2.7(b)
“M&A Qualified Beneficiaries”
      Section 6.5
“Multiemployer Plan”
      Section 3.11(a)
“Non-Assignable Contract”
      Section 5.4
“Non-Paying Party”
      Section 2.9(c)
“Patents”
      Section 1.1(z)
“Paying Party”
      Section 2.9(c)
“Pension Plan”
      Section 3.11(a)
“Purchase Price”
      Section 2.5(b)
“Receiving Party”
      Section 1.1(k)
“Selling Group”
      Section 6.5
“Straddle Period Taxes”
      Section 2.9(c)

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          TERM   SECTION/EXHIBIT
“Tax Returns”
      Section 2.9
“Termination Date”
      Section 9.1
“Trademarks”
      Section 1.1(z)
“Transfer Taxes”
      Section 2.11
“Transferred Assets”
      Section 2.2
“Transition Services”
      Section 5.6
“Transition Services Fees”
      Section 5.6

Article 2
TRANSFER OF ASSETS
     2.1 Closing. Subject to the terms hereof, the closing of the transactions
contemplated by this Agreement (the “Closing”) will take place on a date
occurring as promptly as reasonably practicable but no later than two (2) days
following the date on which all conditions set forth in Sections 7.1 and 7.2
have been satisfied or waived, or on such date as may be agreed upon by the
Parties (the “Closing Date”), at the offices of Wilson Sonsini Goodrich &
Rosati, Professional Corporation, 650 Page Mill Road, Palo Alto, CA 94304.
     2.2 Transfer of Assets. Upon the terms and subject to the conditions set
forth in this Agreement, effective as of the Closing Date, Seller shall, and
shall cause its Affiliates to, grant, deliver, sell, convey, transfer and assign
to Buyer or its Affiliate(s) (with the allocation among such entities to be
designated by Buyer) all rights, title and interest in and to the following
assets (the “Transferred Assets”), free and clear of all Liens:

  (a)   the Transferred Tangible Assets;     (b)   the Transferred Contracts;  
  (c)   the Assigned IPR;     (d)   the Books and Records;     (e)   the
Transferred Permits;     (f)   the Transferred Claims;     (g)   the Transferred
Websites;     (h)   the Transferred Technology; and     (i)   all goodwill
relating to the Business.

For the purposes of this Section 2.2, Assigned IPR shall include the right to
register, prosecute, maintain or record any of such Intellectual Property Rights
with any Governmental Entity and the right to all past and future income,
royalties, damages and payments due with respect to such

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Intellectual Property Rights, including without limitation rights to damages and
payments for past, present or future infringements or misappropriations thereof,
as well as all goodwill associated with such Intellectual Property Rights or the
Business. Notwithstanding the foregoing transfers, Buyer shall grant to Seller a
royalty-free, perpetual, non-exclusive, non-assignable, non-transferable,
license (without right to sublicense) under the Assigned Patents to make, use,
sell, offer to sell and import any products (and modifications and derivatives
thereof) offered by units of Seller other than the IKOR unit Business as of the
Closing Date, all of which Seller represents, warrants and covenants are
unrelated to and are not and will not be competitive with any products offered
or under development by the Business.
     2.3 Assumption of Liabilities. Upon the terms and subject to the conditions
set forth in this Agreement, effective at the time of the Closing Date, Buyer
shall assume the following Liabilities, and only the following Liabilities, of
Seller (collectively, the “Assumed Liabilities”):
          (a) Liabilities under or arising out of the Transferred Contracts,
which are required to be paid or performed from or after the Closing Date,
through no act, omission or fault of Seller (other than the Liabilities of
Seller under Section 5.4 and Section 5.5).
          (b) Liabilities relating to any warranty, returns, refunds, support
obligation or similar claims with respect to any Transferred Products sold prior
to the Closing Date and required to be performed after the Closing Date, which
obligations arise under any Transferred Contract; and
          (c) Trade accounts payable of the Business existing on the Closing
Date, it being understood that Seller will continue to pay all trade payables at
the times and in a manner consistent with prior practices from the Effective
Date until the Closing Date.
          (d) Liabilities arising out of Parent’s or Buyer’s operation and
ownership of the Transferred Assets, but only to the extent such Liabilities
accrue after the Closing Date.
     2.4 Excluded Liabilities. Notwithstanding the foregoing, unless otherwise
expressly set forth in this Agreement and other than the Assumed Liabilities,
nothing set forth herein shall constitute the transfer to, or the assumption by,
Parent or Buyer of any Liability or Lien of the Seller, including but not
limited to the following (collectively, the “Excluded Liabilities”):
          (a) any indebtedness of Seller;
          (b) any Liability with respect to any Employee who does not accept in
writing an offer of employment with Buyer by the Closing Date;
          (c) any Liability to an Affiliate of Seller;
          (d) any Liability not disclosed on the Disclosure Schedule or the
Financial Statements;
          (e) Employee Excluded Liabilities;
          (f) any Liability related to or arising from any asset that is not a
Transferred Asset; or

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          (g) any Liability of Seller for Taxes for any taxable period, and any
Liability for Taxes arising from or attributable to the Business, the
Transferred Assets or Seller’s operation of the Business for all taxable periods
(or portions thereof) ending on or prior to the Closing Date, including any
Transfer Taxes for which Seller is liable pursuant to Section 2.11 and the
portion of any Straddle Period Taxes allocated to Seller pursuant to
Section 2.9(c) (and all Employment Liabilities).
     2.5 Payments to Seller. In consideration of the grant, delivery, sale,
conveyance, transfer and assignment of the Transferred Assets, and in addition
to the assumption of certain Liabilities, upon the terms and subject to the
conditions set forth in this Agreement:
          (a) At the Closing, Parent shall pay to Seller, in cash by wire
transfer of immediately available funds to an account number provided to Parent
by the Seller prior to the Closing, a total of $9,425,000 (the “Cash Amount”).
          (b) At the Closing, Parent shall deposit $1,000,000 (the “Escrow
Amount,” together with the Cash Amount, the “Purchase Price”) in the Escrow Fund
pursuant to the Escrow Agreement and Section 8.5.
     2.6 Allocation of Purchase Price. Within ninety (90) days of the Closing
Date, Parent or Buyer shall provide Seller with an allocation of the Purchase
Price (and the Assumed Liabilities to the extent properly taken into account)
among the Transferred Assets and any other rights acquired hereunder in
accordance with Section 1060 of the Code and the regulations promulgated
thereunder (the “Allocation”) (as adjusted to take into account any indemnity
payments pursuant to Article 8). The Parties agree that the amount allocated to
the Transferred Personal Property shall be the depreciated book value of such
property as of the Closing Date. The Allocation shall be conclusive and binding
upon Parent, Buyer and Seller for all purposes, and the parties agree that all
returns and reports (including IRS Form 8594) and all financial statements shall
be prepared in a manner consistent with (and the Parties shall not otherwise
file a Tax Return position inconsistent with) the Allocation unless required by
the IRS or any other applicable taxing authority.
     2.7 Closing Deliveries; Collateral Agreements.
          (a) On the Closing Date, Seller shall, and shall cause its Affiliates
to, at Seller’s sole cost, in the manner and form and to the locations specified
by Buyer, deliver to Buyer all of the Transferred Assets, or in the case of the
Assigned IPR or other intangible assets, deliver such instruments as are
necessary or desirable to transfer title to such assets from Seller (or its
Affiliates) to Buyer. Transfer and delivery of the Transferred Tangible Assets
shall include physical or electronic delivery of all Transferred Technology,
including delivery or production of Books and Records and other appropriate
documentation thereof as reasonably requested by Buyer to facilitate the
transfer and operation of the Business. The Parties shall cooperate in good
faith to define and transfer such Transferred Technology, but it is understood
and acknowledged that Seller is ultimately responsible for delivering all
Transferred Tangible Assets. It is further understood and acknowledged that any
Transferred Tangible Assets not delivered on the Closing Date shall be held by
Seller for and on behalf of Buyer until such time as Buyer is granted possession
thereof and that, during that period, Seller shall bear all risk of loss with
respect to such Transferred Tangible Assets. To the maximum extent practicable,
all Software to be delivered hereunder shall be delivered by

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electronic means in a manner specified by Buyer. Seller shall not retain in its
possession or control any Transferred Tangible Assets or Transferred Technology
or any copy thereof.
          (b) On the Closing Date, Seller shall deliver to Buyer (i) the Bill of
Sale; (ii) fully executed documents in a form reasonably satisfactory to Parent
and Buyer, sufficient to enable transfer of all Assigned IPR and proper
recordation thereof in each jurisdiction in which such Assigned IPR exist or
have been filed, registered or issued (“IP Assignments”); (iii) the sublease, in
the form attached hereto as Exhibit E, covering the space presently occupied by
the Business at 4424 Innovation Drive, Fort Collins, Colorado as set forth in
Section 7.1(d) hereof; (iv) the Escrow Agreement; (v) the License Agreement; and
(vi) any other transfer documents reasonably requested by, and in a form
reasonably satisfactory to, Buyer (collectively, the “Collateral Agreements”).
     2.8 Further Assurances, Conveyances, Agreement to Perform Necessary Acts.
          (a) From time to time following the Closing, Seller and Buyer shall,
and shall cause their respective Affiliates to, execute, acknowledge and deliver
all such further conveyances, notices, assumptions, releases and acquittances
and such other instruments, and shall take such further actions, as may be
necessary or appropriate to fully and effectively transfer, assign and convey
onto Buyer and its Affiliates and their respective successors or assigns, all of
the properties, rights, titles, interests, estates, remedies, powers and
privileges intended to be conveyed to Buyer under this Agreement and the
Collateral Agreements, to fully and effectively transfer, assign and convey onto
Buyer and its Affiliates and their successors and assigns, any Assumed
Liabilities and obligations intended to be assumed by Buyer under this Agreement
and the Collateral Agreements, to otherwise make effective the transactions
contemplated hereby and thereby and to confirm Buyer’s title to or interest in
the Transferred Assets, to put Buyer in actual possession and operating control
thereof and to assist Buyer in exercising all rights with respect thereto. If it
is determined that any material Transferred Asset (including any Patent owned or
Controlled by Seller) that falls within the definition of a “Transferred Asset,”
was not included on a Schedule and transferred to Buyer as of the Closing,
Seller shall promptly, without payment of further consideration by Parent or
Buyer, transfer and assign such asset to Seller, which assignment shall be
deemed to have been effective as of the Closing Date, and the relevant Schedule
shall be amended accordingly.
          (b) Seller agrees that, if requested by Parent or Buyer, it will
cooperate with Parent or Buyer in enforcing the terms of any agreements between
Seller and any third party involving the Business, including without limitation
terms relating to confidentiality and the protection of Intellectual Property
Rights. In the event that Parent or 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 Parent or Buyer by assigning to Parent or Buyer such
rights as may be required by Parent or Buyer to enforce its Intellectual
Property Rights in its own name. If such assignment still does not permit Parent
or 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 Seller shall be entitled to participate in such proceedings, all
at Parent’s or Buyer’s expense.
          (c) Following the Closing and without demanding further consideration
therefor, Seller shall, and shall cause its Affiliates and its and their
Employees (including any named

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inventors on any Patents included in the Transferred Assets) and agents, to
provide Parent or Buyer with access to relevant information and otherwise to
provide Parent or Buyer with reasonable cooperation and assistance in the
enforcement or prosecution of any Assigned IPR and the proper recordation of the
transfer thereof. Assistance under this Section 2.8 shall include, upon Parent’s
or Buyer’s reasonable request, the execution, acknowledgment and recordation of
specific assignments, oaths, declarations and other documents on a
jurisdiction-by-jurisdiction and/or a country-by-country basis and such other
instruments of sale, transfer, conveyance, and assignment as Parent or Buyer may
reasonably request.
          (d) Seller hereby grants Parent and Buyer the irrevocable power of
attorney to represent Seller, where such representation is legally permissible,
without restrictions towards legal entities and natural persons, public
authorities and courts, to do, sign under hand (or, as required, under personal
seal), deliver, receive and perform all and any acts, matters, statements and
things which may be necessary to put Buyer or its Affiliates in ownership,
possession, and operating control of the Transferred Assets, including
execution, acknowledgment and recordation of specific assignments, oaths,
declarations and other documents on a country-by-country basis and such other
instruments of sale, transfer, conveyance, and assignment as may be required for
this purpose. Under this power of attorney, Parent and Buyer is entitled to
enter into transactions on behalf of Seller with itself in its own name or in
its capacity as attorney-in-fact of a third party and, therefore, Parent and
Buyer are released from any prohibition or restriction of self-dealing which may
exist under any applicable law. Parent and Buyer shall be entitled to delegate
the rights granted to it by this power-of-attorney and to grant dispensation
from any legal prohibition or restriction of self-dealing that may exist. The
foregoing power of attorney is coupled with an interest and as of the closing
shall be irrevocable. Notwithstanding anything to the contrary in this
Section 2.8(d), Parent and Buyer shall not exercise the foregoing power of
attorney unless and to the extent Seller does not comply with its obligations
under this Section 2.8.
     2.9 Responsibility for Taxes and Tax Returns.
          (a) Subject to Section 2.9(c) below, Seller will be responsible for
the preparation and filing of all returns, estimates, information statements and
reports required to be filed with a taxing authority (“Tax Returns”) (including
Tax Returns required to be filed after the Closing Date), to the extent such Tax
Returns include or relate to the operation of the Business or the use or
ownership of the Transferred Assets on or prior to the Closing Date. Seller will
be responsible for and make all payments of Taxes shown to be due on such Tax
Returns to the extent they relate to the Transferred Assets or the Business.
          (b) Parent will be responsible for the preparation and filing of all
Tax Returns it is required to file with respect to Buyer’s ownership or use of
the Transferred Assets or its operation of the Business attributable to taxable
periods (or portions thereof) commencing after the Closing Date. Parent will
make all payments of Taxes shown to be due on such Tax Returns to the extent
they relate to the Transferred Assets or the Business.
          (c) In the case of any real or personal property taxes (or other
similar Taxes) attributable to the Transferred Assets for which Taxes are
reported on a Tax Return covering a period commencing before the Closing and
ending thereafter (a “Straddle Period Tax”), any such Straddle Period Taxes
shall be prorated between Parent and Seller on a per diem basis. The party

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required by law to pay any such Straddle Period Tax (the “Paying Party”) shall
file the Tax Return related to such Straddle Period Tax within the time period
prescribed by law and shall timely pay such Straddle Period Tax. To the extent
any such payment exceeds the obligation of the Paying Party hereunder, the
Paying Party shall provide the other party (the “Non-Paying Party”) with notice
of payment, and within ten (10) days of receipt of such notice of payment, the
Non-Paying Party shall reimburse the Paying Party for the Non-Paying Party’s
share of such Straddle Period Taxes.
          (d) To the extent relevant to the Business or the Transferred Assets,
each Party shall (a) provide the other with such assistance as may reasonably be
required in connection with the preparation of any Tax Return and the conduct of
any audit or other examination by any taxing authority or in connection with
judicial or administrative proceedings relating to any liability for Taxes and
(b) retain and provide the other with all records or other information that may
be relevant to the preparation of any Tax Returns, or the conduct of any audit
or examination, or other proceeding relating to Taxes. Seller shall retain all
documents, including prior years’ Tax Returns, supporting work schedules and
other records or information with respect to all sales, use and employment tax
returns and, absent the receipt by Seller of the relevant tax clearance
certificates, shall not destroy or otherwise dispose of any such records for six
(6) years after Closing Date without the prior written consent of Parent or
Buyer.
     2.10 Withholding Rights. Parent shall be entitled to deduct and withhold
from the consideration otherwise payable pursuant to this Agreement such amounts
as Parent 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. To
the extent that amounts are so withheld by Parent, such withheld amounts shall
be treated for all purposes of this Agreement as having been paid to Seller.
     2.11 Transfer Taxes . All sales, use, value-added, gross receipts, excise,
registration, stamp duty, transfer or other similar taxes or governmental fees
(“Transfer Taxes”) imposed or levied by reason of, in connection with or
attributable to this Agreement and the transactions contemplated hereby shall be
borne by Seller; provided, however, the sales tax on the transfer of the
Transferred Personal Property to Buyer pursuant to this Agreement by the state
of Colorado shall be shared equally by Seller and Parent. The Parties shall
cooperate with each other to the extent reasonably requested and legally
permitted to minimize any such Transfer Taxes. The Party required by law to file
a Tax Return with respect to such Transfer Taxes shall do so within the time
period prescribed by law, and the other Party shall reimburse the filing Party
for its share of such tax upon receipt of notice that such Transfer Taxes have
been paid.
Article 3
REPRESENTATIONS AND WARRANTIES OF SELLER
     Seller represents and warrants to Parent and Buyer, subject to such
exceptions as are specifically set forth in the disclosure schedule (referencing
the appropriate Section numbers) attached hereto as Exhibit C (the “Disclosure
Schedule”) and dated as of the Closing Date, as follows. Nothing in the
Disclosure Schedule shall be deemed adequate to disclose an exception to a
representation or warranty made herein, however, unless the Disclosure Schedule
identifies the exception with reasonable particularity and describes the
relevant facts in reasonable detail. Without

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limiting the generality of the foregoing, the mere listing (or inclusion of a
copy) of a document or other item shall not be deemed adequate to disclose an
exception to a representation or warranty made herein unless the representation
or warranty has to do with the existence of the document or other item itself.
     3.1 Organization of Seller. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
full power and authority (corporate and governmental) to conduct the Business as
it is presently being conducted and to own and lease its properties and assets
including the Transferred Assets. Seller is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where the
character of its properties owned or leased or the nature of its activities make
such qualification necessary, except where the failure to be so qualified or in
good standing would not, either individually or in the aggregate, have a
material adverse effect on the Transferred Assets or Business.
     3.2 Authorization of Transaction. Seller has all requisite corporate power
and authority to enter into this Agreement, the Collateral Agreements and all
related agreements and instruments to be executed and delivered by Seller and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement, the Collateral Agreements and all related agreements
and instruments to be executed and delivered by Seller and the consummation of
the transactions contemplated hereby and thereby have been duly authorized by
all other necessary corporate action on the part of Seller. The signatory
officers of Seller have the power and authority to execute and deliver this
Agreement and the Collateral Agreements and to consummate the transactions
contemplated hereby and thereby and to take all other actions required to be
taken by Seller pursuant to the provisions hereof and thereof. This Agreement
and the Collateral Agreements have been duly executed and delivered by Seller
and constitute the legal, valid and binding obligation of Seller, enforceable in
accordance with their terms, except as such enforceability may be subject to the
laws of general application relating to bankruptcy, insolvency and the relief of
debtors and rules of law governing specific performance, injunctive relief or
other equitable remedies.
     3.3 Non-contravention; Consents.
          (a) None of the execution, delivery or performance of this Agreement
or the Collateral Agreements, the consummation of the transactions contemplated
hereby or thereby, nor compliance by Seller with any of the provisions hereof or
thereof, will, with or without the passage of time or the delivery of notice or
both, (a) violate or conflict with any terms, conditions or provision of the
certificate of incorporation or bylaws, each as in effect, of Seller,
(b) violate, conflict with, result in a breach of or constitute a default under,
or result in the termination of, or accelerate the performance required by, or
result in a right to terminate, accelerate or modify under, or require a notice
under, or result in the creation of any Lien upon any of the Transferred Assets
under any contract, lease, sublease, license, sublicense, franchise, patent,
permit, indenture, agreement for borrowed money or mortgage, instrument of
indebtedness, security interest or other arrangement to which Seller or any
Affiliate of Seller is a party or by which it is bound or to which any of its
assets are subject, (c) violate any statute, ordinance, law, rule, regulation,
order, writ, injunction or decree of any Governmental Entity, or (d) impose any
Lien on any Transferred Assets or the Business (any such event, a “Conflict”).

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          (b) Except as set forth on Schedule 3.3(b), no consent, waiver, or
order of, or registration, declaration or filing with, any Governmental Entity
or any third party is required by or with respect to Seller or any of its
Affiliates in connection with the execution and delivery of this Agreement or
the Collateral Agreements or the consummation of the transactions contemplated
hereby or thereby.
          (c) There is no agreement (not to compete or otherwise), commitment,
judgment, injunction, order or decree to which Seller or any Affiliate of Seller
is a party or otherwise binding upon Seller or any of its Affiliates which has
or may have the effect of prohibiting the transactions contemplated by this
Agreement or the Collateral Agreements or impairing the Business or the
Transferred Assets or the value thereof in any material respect. Neither Seller
nor any Affiliate of Seller has entered into any agreement that restricts Seller
or any of its Affiliates with respect to selling, licensing or distributing the
Transferred Products, providing services related to the Transferred Products, or
otherwise conducting the Business.
     3.4 Title of Properties; Absence of Liens and Encumbrances; Condition.
Seller has good and valid title to all of the Transferred Assets and the
unrestricted power and the unqualified right to sell, assign and deliver to
Buyer the Transferred Assets free and clear of any Liens, and at Closing Seller
will transfer to Buyer good, valid and marketable title to all of the
Transferred Assets free and clear of any Liens. To the knowledge of the Seller,
no basis exists for the assertion of any claim which, if adversely determined,
would result in a Lien on any Transferred Asset or result in a material adverse
effect. The Transferred Tangible Assets are (i) adequate for the conduct of the
Business by Seller as currently conducted and as currently contemplated to be
conducted, and (ii) in good operating condition, regularly and properly
maintained, subject to normal wear and tear. Except as set forth on
Schedule 3.4, Seller is in custody and control of all the Transferred Assets
being sold and transferred by Seller to Buyer pursuant to this Agreement and the
Collateral Agreements.
     3.5 Intellectual Property Rights.
          (a) Schedules. All schedules referenced in this Section 3.5 are
complete and accurate in all material respects.
          (b) Assigned IPR. Schedule 3.5(b) lists all Transferred Assets that
are Registered IP, including the Assigned Patents and Assigned Trademarks. All
such Registered IP is currently in compliance with formal legal requirements
(including payment of filing, examination and maintenance fees and proofs of
use), and is not subject to any unpaid maintenance fees or taxes or actions
falling due within one hundred twenty (120) days after the date hereof. All
Assigned IPR is, to the best of Seller’s knowledge, valid and subsisting and is
free and clear of all Liens. There are no proceedings or actions known to Seller
before any court, tribunal (including the United States Patent and Trademark
Office or equivalent authority anywhere in the world) related to any such
Assigned IPR. Seller has not made any misrepresentations to any Governmental
Entity in the prosecution and maintenance of any Transferred Assets that are
Registered IP, or otherwise impaired the enforceability of such Registered IP
through action or inaction. Immediately prior to the Closing, all Assigned
Patents are solely and exclusively owned by Seller, and all assignments of the
Assigned Patents (from the inventors thereof and any and all intermediate
assignees) are effective and have been properly recorded with the appropriate
Governmental Entity. The Assigned

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IPR transferred to Buyer and the Licensed IPR hereunder constitute all of the
Intellectual Property Rights of Seller, which absent such transfer would be
infringed by the operation of the Business by Parent or Buyer following the
Closing in the manner the Business as conducted by Seller immediately prior to
the Closing.
          (c) Non-Infringement. To the best of Seller’s knowledge, neither
(i) the Transferred Assets when Exploited by Buyer after the Closing (including
the development, use, distribution, sales, licensing and support of the
Transferred Products), nor (ii) conduct of the Business or the use of
Transferred Assets or Licensed IPR by Seller prior to the Closing will or did:
(A) infringe or misappropriate the Intellectual Property Rights of any Person,
(B) violate the rights of any Person (including rights to privacy or publicity),
or (C) constitute unfair competition or trade practices under the laws of any
jurisdiction. Neither Seller nor any of its Affiliates have received notice from
any Person claiming or alleging any such infringement, misappropriation, or
violation. To the best of Seller’s knowledge, there has been and is no
unauthorized use, disclosure, infringement or misappropriation of any Assigned
IPR by any person or entity, including any employee or former employee of
Seller. Seller has not brought any action, suit or proceeding for infringement
of Assigned IPR against any third party and does not currently have any plans to
do so.
          (d) Ownership. Seller owns and has the right to transfer ownership to
Buyer of all Assigned IPR and Transferred Technology free and clear of all
Liens. Following the Closing, Buyer will own exclusively all such Transferred
Technology and Assigned IPR except pursuant to non-exclusive licenses pursuant
to the Transferred Contracts. All of the Transferred Technology and the
Intellectual Property Rights therein and thereto, either (i) were created by an
Employee of Seller, within the scope of that Employee’s employment, such that
ownership of and all Intellectual Property Rights in and to the Transferred
Assets has vested in Seller pursuant to a written agreement under which the
Employee agreed to assign ownership of all inventions to Seller, or (ii) were
created by another Person exclusively for Seller, and Seller has a written
agreement with that Person that has been provided to Buyer under which Seller
has obtained ownership of, and is the exclusive owner of, all such Transferred
Technology and Intellectual Property Rights. Seller has taken all steps that are
reasonably required to protect Seller’s rights in confidential information and
trade secrets of Seller or provided by any other person to Seller, including
entering into a binding proprietary information, confidentiality and assignment
agreement with each of its current and former Employees, consultants and
contractors, each of which have been provided to Buyer. Except with respect to
any individuals separately identified on Schedule 3.5(d), all current and former
employees, consultants and contractors of Seller who have created or modified
any of the Transferred Technology have executed such an agreement assigning all
of such employees’, consultants’ and contractors’ rights in and to the
Transferred Technology and the Intellectual Property Rights to Seller. With
respect to any individuals identified on Schedule 3.5(d), the description of
such individual’s activities related to the Transferred Technology and
Intellectual Property Rights provided in Schedule 3.5(d) is accurate and
complete in all material respects. Except as set forth in Schedule 3.5(d),
neither Seller nor any of its Affiliates has transferred ownership of or,
granted any exclusive licenses to, any Intellectual Property Rights of Seller or
any of its Affiliates otherwise required to be transferred to Buyer as a
Transferred Asset.

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          (e) Transferred Products and Product Software.
               (i) Schedule 1.1(ww) together with Schedule 3.5(e) is a complete
and accurate list of all Transferred Products that are or have been sold or
offered for sale by Seller or its Affiliates in the five year period prior to
the Effective Date or that are currently under development by Seller or any of
its Affiliates.
               (ii) Seller has taken reasonable steps and implemented reasonable
procedures (based on standard industry practices) to ensure that the Transferred
Products are free from defects, bugs, viruses and other disabling codes that
would have an adverse effect on the Transferred Products, and Seller has
disclosed to Parent and Buyer all information about material defects, bugs,
viruses and other disabling codes in the Transferred Products about which Seller
has knowledge, and has used a system and a procedure for tracking those bugs,
the results of which have been shared with Parent and Buyer and are included in
the Transferred Assets. Each of the Transferred Products complies in all
material respects with the specifications therefor. There are no defects or
errors in any of the designs for any of the Transferred Products. All of the
Transferred Products when manufactured in accordance with the design and
specifications therefor will be free from defects.
               (iii) To the extent the Transferred Products or other Transferred
Technology include or incorporate any open source, public source or freeware
code, or any modification or derivative thereof, including any version of any
Open Source Software, Seller has disclosed and described to Parent and Buyer, in
writing, the manner in which such Open Source Software is incorporated or
included. No third party possesses any copy of any material source code to any
Product Software or other Software included in the Transferred Assets. Other
than as explicitly set forth in Section 2.8, as of the Closing Seller will have
delivered to Parent and Buyer, and neither Seller nor any of its Affiliates will
have retained any copy of, any source code to any Product Software or other
material Software included in the Transferred Assets.
               (iv) With respect to Transferred Products in commercial
production as of the Closing Date, all design databases, GERBER files and other
information necessary to manufacture, design, test and simulate, and necessary
for the verification of, all of such Transferred Products will correspond in all
material respects (except with respect to the GERBER files which shall
correspond exactly) to such Transferred Products at the time of the relevant
Closing. Schedule 1.1(mm) lists any Product Software and other material Software
that is included in or part of the current version of the Transferred Products
as firmware or otherwise or that is part of, used in or necessary to the use,
operation, programming, verification, testing, support or application Software
of any Transferred Product or the reference design related thereto that is owned
by a third Person, and neither Seller nor its Affiliates is a party or subject
to any contract, license or agreement with respect to such Product Software or
other material Software except as set forth on Schedule 3.5(f)(i).
          (f) Agreements.
               (i) Schedule 3.5(f)(i) lists all contracts, licenses or
agreements to which Seller or any Affiliate of Seller is a party (A) related to
the licensing to, or acquisition of, any third party Intellectual Property
Rights or Technology related to or used in the Business or incorporated

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into the Transferred Products or (B) related to the sale or licensing of any
Assigned IPR, including any covenants not to sue thereunder, other than
non-exclusive object code-only licenses granted by Seller in the ordinary course
and provided that forms of such licenses have been provided to Parent and Buyer.
There are no contracts, licenses or agreements between Seller and any other
Person with respect to the Transferred Assets under which there is any dispute
or, to the knowledge of Seller, any threatened dispute regarding the scope of
such agreement or performance under such agreement.
               (ii) Neither this Agreement nor the transactions contemplated by
this Agreement, including the assignment to Buyer, by operation of law or
otherwise, of any contracts or agreements to which Seller is a Party, will
result, under the terms of any contract, license or agreement of Seller, in
(A) Buyer granting to any third party any right to or with respect to any
Technology or Intellectual Property Rights Right owned by, or licensed to,
Buyer, (B) Parent or Buyer being bound by, or subject to, any non-compete or
other restriction on the operation or scope of its businesses, or (C) Parent or
Buyer being obligated to pay any royalties or other amounts to any third party
in excess of those payable by Parent or Buyer upon Closing.
               (iii) The Transferred Contracts when transferred to Buyer in
accordance with Section 2.8 will confer and grant to Buyer all rights and
licenses with respect to third party Intellectual Property Rights and Technology
previously licensed to Seller under such agreements that are necessary to enable
Parent or Buyer to operate the Business following the Closing without infringing
the Intellectual Property Right or incurring any liability to such third parties
(other than as expressly set forth in such Transferred Contracts).
          (g) Standards Bodies. Schedule 3.5(g) lists all industry standards
bodies or similar organizations related to the Business or Transferred Assets to
which Seller or its Affiliates participates and has or is required to contribute
or disclose any Technology or Intellectual Property Rights related to the
Business or the Transferred Assets.
     3.6 Brokers’ and Finders’ Fees. Except as set forth on Schedule 3.6,
neither Seller nor any of its Affiliates has employed any broker or finder or
incurred, nor will they, Parent or Buyer (except for Parent or Buyer with
respect to any such person engaged directly by Parent or Buyer) incur, directly
or indirectly, any liability for brokerage or finders’ fees or agents’
commissions or any similar charges in connection with the Agreement or any
transaction contemplated hereby.
     3.7 Legal and Other Compliance. Seller and each Affiliate of Seller have
been and are in compliance with all applicable laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and
charges thereunder) of Governmental Entities applicable to the Business,
Transferred Assets, and Designated Employees, and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, or notice alleging any
failure to so comply has been made, filed or commenced. Neither Seller nor any
Affiliate of Seller holds, nor is it required by any applicable law, rule or
regulation of any Governmental Entity to hold, any permits, government
approvals, licenses, registrations, clearances, authorizations or consents
necessary for the conduct of the Business.
     3.8 Transferred Assets and Transferred Technology. The Transferred Assets
comprise all of the tangible and intangible assets, properties and rights of
every type and description (other than real property) used in or necessary to
the operation of the Business and are sufficient for the

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operation of the Business by Parent and Buyer following the Closing in the
manner the Business was conducted by Seller immediately prior to the Closing.
The Transferred Technology comprises all of the Technology used in or necessary
to the operation of the Business by Parent and Buyer following the Closing in
the manner the Business was conducted by Seller immediately prior to the
Closing. Neither Seller nor any Affiliate of Seller has made or entered into any
agreement, written or oral, to sell or transfer any part of the Transferred
Assets, or has sold or transferred any part of the Transferred Assets, to any
party other than Parent and Buyer.
     3.9 Environmental Matters. No Hazardous Materials are present in, on or
under any property, including the land and the improvements, ground water and
surface water thereof, that Seller or any of its Affiliates has at any time
owned, operated, occupied or leased in connection with operation of the
Business. Neither Seller nor any of its Affiliates have, in connection with
operation of the Business, transported, stored, used, manufactured, disposed of,
released or exposed its Employees or others to Hazardous Materials or any
product containing a Hazardous Material in violation of any rule, regulation,
treaty or statute promulgated by any Governmental Entity in effect prior to or
as of the Effective Date. No action, proceeding, revocation proceeding,
amendment procedure, writ, injunction or claim is pending or, to the knowledge
of Seller or any of its Affiliates, threatened concerning any activities of
Seller or any of its Affiliates related to Hazardous Materials in connection
with operation of the Business. Neither Seller nor any of its Affiliates have
knowledge of any fact or circumstance which could involve any Person in any
environmental litigation or impose upon any Person any environmental liability
in connection with operation of the Business.
     3.10 Litigation. There are no claims, actions, suits, inquiries,
proceedings or investigations against Seller or any of its Affiliates relating
to the Business, the Designated Employees or the Transferred Assets which are
currently pending or, to Seller’s knowledge, threatened, at law or in equity or
before or by any Governmental Entity. There are no grievance or arbitration
proceedings pending or, to Seller’s knowledge, threatened. There are no
judgments, orders, decrees, citations, fines or penalties heretofore assessed
against Seller or any of its Affiliates affecting or involving the Business, the
Designated Employees or the Transferred Assets under any foreign, federal,
state, provincial or local law.
     3.11 Employment Matters.
          (a) Definitions. The following terms, when used in this Section 3.11,
shall have the following meanings:
               (i) “International Employee Plan” shall mean each Benefit Plan
that has been adopted or maintained by Seller or any ERISA Affiliate, whether
informally or formally, or with respect to which Seller or any ERISA Affiliate
will or may have any liability, for the benefit of Employees who perform or
performed services outside the United States.
               (ii) “Multiemployer Plan” means any Pension Plan which is a
“multiemployer plan,” as defined in Section 3(37) of ERISA.
               (iii) “Pension Plan” shall mean each Benefit Plan which is an
“employee pension benefit plan,” within the meaning of Section 3(2) of ERISA.

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          (b) Designated Employees and Key Employees. Schedule 1.1(n) contains a
complete and accurate list of the Employees and shows: (i) Employee name,
position held, annual base salary, target incentive compensation and equity
compensation; (ii) net credited service date; (iii) vacation eligibility for
calendar year 2005; (iv) visa status; (v) leave status (including type of leave,
expected return date for non-disability related leaves and expiration dates for
disability leaves); and (vi) the name of any union, collective bargaining
agreement or other similar labor agreement covering such Employee.
          (c) Pension and Benefit Plans.
               (i) Neither Seller nor any ERISA Affiliate has ever maintained,
established, sponsored, participated in, contributed to, or had or could have
any obligation to, any (A) Pension Plan which is subject to Part 3 of Subtitle B
of Title I of ERISA, Title IV of ERISA or Section 412 of the Code, (B) multiple
employer plan or to any plan described in Section 413 of the Code, or (C)
Multiemployer Plan. The Seller does not now, nor has it ever had the obligation
to, maintain, establish, sponsor, participate in, or contribute to any
International Employee Plan.
               (ii) Section 3.11(c)(ii) of the Disclosure Schedule contains a
complete list of all Benefit Plans for which Employees are eligible or that that
currently provide, or have provided, benefits to Employees. Seller and, as
applicable, its ERISA Affiliates, are in material compliance with Benefit Plan
terms and all applicable laws for each Benefit Plan including, but not limited
to, ERISA and the Code.
          (d) No Post-Employment Obligations. No Benefit Plan provides, or has
any liability to provide, life insurance, medical or other employee benefits to
any current or former Employee upon his or her retirement or termination of
employment for any reason, except as may be required by statute, and neither
Seller nor any of its ERISA Affiliates has ever represented, promised or
contracted (whether in oral or written form) to any Employee (either
individually or to Employees as a group) that such Employee(s) would be provided
with life insurance, medical or other employee welfare benefits upon their
retirement or termination of employment, except to the extent required by
statute.
          (e) Employment Matters. Seller and its ERISA Affiliates: (i) are in
compliance with all applicable federal, state and local laws, rules and
regulations respecting employment, employment practices, terms and conditions of
employment and wages and hours, in each case, with respect to Employees;
(ii) have withheld and reported all amounts required by law or by agreement to
be withheld and reported with respect to the wages, salaries and other payments
to Employees by virtue employment, the transactions specifically contemplated by
this Agreement or otherwise; (iii) are not liable for any arrears of wages or
any taxes or any penalty for failure to comply with any of the foregoing; and
(iv) are not liable for any payment to any trust or other fund or to any
governmental or administrative authority, with respect to unemployment
compensation benefits, social security or other benefits or obligations for
Employees (other than routine payments to be made in the normal course of
business and consistent with past practice). There are no pending or, to the
knowledge of Seller or any ERISA Affiliate, any threatened or reasonably
anticipated claims or actions against Seller or any ERISA Affiliate under any
worker’s compensation policy or long-term disability policy with respect to any
Employees.

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          (f) Labor. No work stoppage or labor strike against Seller or any
ERISA Affiliate is pending, threatened or reasonably anticipated with respect to
the Business. Seller does not know of any activities or proceedings of any labor
union to organize any current Employees (including Designated Employees). There
are no actions, suits, claims, labor disputes or grievances pending, or, to the
knowledge of Seller, threatened or reasonably anticipated relating to any labor,
safety or discrimination matters involving any Employee (including Designated
Employees), including, without limitation, charges of unfair labor practices or
discrimination complaints, which, if adversely determined, would, individually
or in the aggregate, result in any material liability to Seller or any of its
subsidiaries. Neither Seller nor any of its subsidiaries has engaged in any
unfair labor practices within the meaning of the National Labor Relations Act.
Seller is not presently, nor has it been in the past, a party to, or bound by,
any collective bargaining agreement or union contract with respect to Employees
(including Designated Employees) and no collective bargaining agreement is being
negotiated with respect to Employees (including Designated Employees).
          (g) No payment or benefit which will or may be made by Seller or its
ERISA Affiliates with respect to any Employee or any other “disqualified
individual” (as defined in Code Section 280G and the regulations thereunder)
will be characterized as a “parachute payment,” within the meaning of
Section 280G(b)(2) of the Code.
     3.12 Bulk Transfer Laws. There are no current or past creditors of Seller
to whom any law, rule or regulation requires the delivery of notice or from whom
any form of consent is required in conjunction with undertaking the transactions
contemplated by this Agreement, and the “bulk transfer laws” of any state in
which the Transferred Assets are located do not apply to the transfer of those
Transferred Assets under this Agreement.
     3.13 Business Financial Information.
          (a) Seller has delivered to Parent and Buyer, and Schedule 3.13(a)
contains, true, correct and complete copies of (i) the unaudited partial balance
sheet of the Business at September 30, 2005 which includes only the categories
of Transferred Assets and Assumed Liabilities as of such date and (ii) unaudited
statements of revenue and direct expenses of the Business for the year ended
December 31, 2004 and the nine months ended September 30, 2005 (the “Financial
Statements”). The Financial Statements were compiled from books and records
regularly maintained by management of Seller used to prepare financial
statements of Seller and fairly present the financial condition and results of
operations at the date and for the periods covered thereby.
          (b) Since September 30, 2005, there has not occurred any event or
condition of any character that has had or is reasonably likely to have a
material adverse effect on the Business, the Transferred Products or the
Transferred Assets, or any damage, destruction or loss, whether or not covered
by insurance.
          (c) Except as and to the extent reflected on the Financial Statements
or on Schedule 3.13(c), Seller does not have Liabilities that are within the
definition of Assumed Liabilities and are of a nature customarily reflected on a
balance sheet. The amount of Seller’s warranty obligations with respect to the
Transferred Products sold by Seller prior to Closing Date does not exceed
$75,000.

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     3.14 Contracts; No Defaults.
          (a) Contracts. Schedule 3.14(a) sets forth a complete and accurate
list, with respect to the Business, the Transferred Assets and the Designated
Employees, of each agreement, contract, understanding or commitment (including,
without limitation, any of the Transferred Contracts) entered into by Seller or
any of its Affiliates with respect to the Business or the Transferred Assets.
          (b) Defaults. Neither Seller nor any Affiliate of Seller is in default
under or with respect to any judgment, order, writ, injunction or decree of any
Governmental Entity. There does not exist any default by Seller or, to the
knowledge of Seller, by any other Person, or event that, with notice or lapse of
time, or both, would constitute a default under any agreement, contract,
understanding or commitment (including, without limitation, any of the
Transferred Contracts) entered into by Seller or any of its Affiliates with
respect to the Business or the Transferred Assets, and no notices of breach
thereof have been received by Seller or any of its Affiliates. Except as set
forth on Schedule 3.14(b), neither the Seller nor any Affiliate of Seller is a
party to or bound by any agreement, contract, understanding, or commitment with
respect to the Business or the Transferred Assets which is not immediately
terminable by Seller without penalty. Each of the Transferred Contracts is fully
assignable to Buyer without giving rise to any obligation, loss of rights or
penalty and when assigned to Buyer, shall place Buyer in the position of Seller
(or its Affiliate) under the terms of such Transferred Contract.
     3.15 Warranties; Defects; Liabilities. Each Transferred Product
manufactured, sold, licensed, leased or delivered by Seller, and all services
performed by Seller, have been in conformity with all applicable contractual
commitments and all express and implied warranties except where the failure to
be in such conformity would not have a material adverse effect. Except for
Seller’s standard product warranty, the Seller has no Liability (and to the
knowledge the Seller, there is no current reasonable basis for any present or
future action, suit, proceeding, hearing, investigation, charge, complaint,
claim or demand against any of them giving rise to any Liability) for
replacement or repair thereof or other damages in connection therewith. No
Transferred Product manufactured, sold, licensed, leased, or delivered by
Seller, and no service performed by Seller, is subject to any guaranty, warranty
or other indemnity beyond the applicable standard terms and conditions of sale,
license or lease or beyond that implied or imposed by applicable law.
Schedule 3.15 includes copies of the standard terms and conditions of license or
services for Seller (each Contract setting forth such standard terms and
conditions for licensing a Transferred Product shall be referred to herein as a
“Standard Product License Agreement”) and sets forth all Contracts under which
Seller has manufactured, sold, or licensed Transferred Products or performed
services or provided any guaranty, warranty or indemnity to a third party in
connection therewith which contains terms that materially deviate from such
standard terms and conditions.
     3.16 Insurance. There is no claim by Seller pending under any insurance
policy or fidelity bond covering the Business, the Transferred Products or the
Transferred Assets. All premiums payable under all such policies and bonds have
been paid, and Seller is otherwise in compliance with the terms of such policies
and bonds. To the knowledge of the Seller, such policies of insurance and bonds
are of the type and in amounts customarily carried by persons conducting
businesses similar to those of Seller in the jurisdictions in which Seller
operates.

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     3.17 Tax Matters.
          (a) To the extent relevant to the Transferred Assets or the Business,
Seller has prepared and timely filed all required Tax Returns relating to any
and all Taxes concerning or attributable to the Seller and such Tax Returns are
true and correct and have been completed in accordance with applicable law.
          (b) To the extent failure to do so could adversely impact Parent or
Buyer, the Business, the Transferred Assets, or Parent’s or Buyer’s use or
ownership of the Transferred Assets or operation of the Business, Seller has
timely paid all Taxes it is required to pay and has timely withheld and paid
over to the appropriate Governmental Entity all income taxes, social security
and national insurance contributions and other Taxes required to be withheld.
          (c) Neither Parent nor Buyer shall have any liability or obligation,
nor shall Parent or Buyer incur any loss, expense or cost, and none of the
Transferred Assets shall be subject to any Liens, by reason of any Taxes arising
out of (i) the Business as conducted by Seller prior to the consummation of the
sale hereunder of the Transferred Assets or (ii) any other operations or
activities of Seller whether conducted prior to the date hereof or hereafter.
Seller is not aware of, and has no knowledge of a factual basis for the
assertion of, any claim for Taxes for which Parent or Buyer would become liable
as a result of the transactions contemplated by this Agreement.
          (d) To the extent failure to do so could adversely impact Parent or
Buyer, the Business, the Transferred Assets, or Parent’s or Buyer’s use or
ownership of the Transferred Assets or operation of the Business, as of the
Closing Date, Seller will not be delinquent in the payment of any Tax, nor will
there be any Tax deficiency outstanding, assessed or proposed against Seller.
          (e) Seller has not executed any waiver of any statute of limitations
on or extending the period for assessment or collection of any Tax.
          (f) No audit or other examination of any Tax Return of Seller’s with
respect to the Business or Transferred Assets is presently in progress, nor has
any Seller been formally or informally notified of any request for such an audit
or other examination.
     3.18 Accounts Receivable. All of the accounts receivable of the Business
(a) arose from bona fide sales transactions in the ordinary course of business,
and are payable on ordinary trade terms, (b) are legal, valid, and binding
obligations of the respective debtors enforceable in accordance with their
respective terms, (c) are not subject to any valid set-off or counterclaim, and
(d) do not represent obligations for goods sold on consignment, on approval or
on a sale-or-return basis or subject to any other repurchase or return
arrangement. No person has any Lien on any accounts receivable of the Business
and no request or agreement for deduction or discount has been made with respect
to any accounts receivable of the Business.
     3.19 Inventory. The Transferred Inventory is of a quality and quantity
usable and salable in the ordinary course of business. All items included in the
Transferred Inventory of the Business are the property of the Seller, free and
clear of any Lien, have not been pledged as collateral, are not held on
consignment from others and conform in all material respects to all standards
applicable to such Transferred Inventory and its use or sale imposed by any
Governmental Entity.

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     3.20 Representations and Disclosures Complete. Seller is not aware of any
facts or circumstances that affect the Business, the Transferred Assets or the
Designated Employees in a material adverse manner or that are reasonably likely
to affect the Business, the Transferred Assets or the Designated Employees in a
material adverse manner. None of the representations or warranties made by
Seller (as modified by the Disclosure Schedule), nor any statement made in any
Schedule, Exhibit, agreement or certificate furnished by Seller pursuant to this
Agreement, contains or will contain at the Closing any untrue statement of a
material fact, or omits or will omit at the Closing to state any material fact
necessary in order to make the statements contained herein or therein, in light
of the circumstances under which made, not misleading. Seller has delivered or
made available true and complete copies of each existing document that has been
requested by Parent, Buyer or its counsel.
Article 4
REPRESENTATIONS AND WARRANTIES OF PARENT AND BUYER
     Parent and Buyer represent and warrant to Seller as follows:
     4.1 Organization. Parent is duly organized, validly existing, and in good
standing under the laws of the jurisdiction of the State of California. Buyer is
duly organized, validly existing, and in good standing under the laws of the
jurisdiction of the State of Delaware.
     4.2 Authority for Agreement. Parent and Buyer have all requisite corporate
power and authority to enter into this Agreement, the Collateral Agreements to
which Parent and Buyer are a party and all related agreements and instruments to
be executed and delivered by Parent and Buyer and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement,
the Collateral Agreements to which Parent and Buyer are a party and the related
agreements and instruments and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate action
on the part of Parent and Buyer. This Agreement has been duly executed and
delivered by Parent and Buyer and constitutes, and the related agreements and
instruments, when duly executed and delivered by Parent and Buyer, will
constitute the valid and binding obligations of Parent and Buyer, enforceable in
accordance with their terms, except as such enforceability may be subject to the
laws of general application relating to bankruptcy, insolvency and the relief of
debtors and rules of law governing specific performance, injunctive relief or
other equitable remedies.
     4.3 Noncontravention(a) . As of the Closing Date, neither the execution and
the delivery of this Agreement, the related agreements and instruments to be
executed and delivered by Parent and Buyer nor the consummation of the
transactions contemplated hereby or thereby, will (a) violate any provision of
the certificate of incorporation or bylaws, each as in effect, of each of Parent
and Buyer or (b) Conflict with any material agreement, contract, lease, license,
instrument, or other arrangement to which Parent and Buyer are a party or by
which it is bound or to which any of its assets is subject except for such
Conflicts which would not, either individually or in the aggregate, have a
material adverse effect on Parent and Buyer.

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Article 5
ADDITIONAL AGREEMENTS OF THE PARTIES
     5.1 Operation of the Business.
          (a) Between the Effective Date and the Closing Date, unless otherwise
agreed in writing in advance by Parent or Buyer, Seller shall: (i) except as
otherwise allowed or required pursuant to the terms of this Agreement, conduct
the Business in the usual, regular and ordinary course in substantially the same
manner as heretofore conducted; (ii) pay the debts, trade payables and Taxes of
the Business when due and in a manner consistent with prior practices; (iii) pay
or perform other obligations of the Business when due; (iv) preserve intact the
current business organization of Seller relating to the Business, keep available
the services of the Designated Employees, and maintain the relations and
goodwill with the suppliers, customers, distributors, licensors, licensees,
landlords, trade creditors, Employees, agents, and others having business
relationships with Seller relating to the Business, with the goal of preserving
unimpaired the goodwill and ongoing business of the Business; (v) maintain all
of the Transferred Assets in their current condition, ordinary wear and tear
excepted, and, in the event of any damage to or destruction of any of the
Transferred Assets prior to the Closing Date, promptly replace, repair or
restore such Transferred Assets; (vi) promptly notify Parent and Buyer in
writing of any event or occurrence not in the usual, regular and ordinary course
of the operation of the Business, or that has resulted, will result, or is
reasonably likely to result, in the failure to satisfy any of the conditions
specified in this Section 5.1 hereof;
          (b) Except as otherwise expressly permitted by this Agreement, between
the Effective Date and the Closing Date, Seller will not, without the prior
written consent of Parent or Buyer:
               (i) sell, lease or otherwise transfer or dispose of, or enter
into any outbound license agreement with respect to any of the Transferred
Assets;
               (ii) take any action to impair, encumber, create a Lien against
or otherwise adversely affect the Transferred Assets;
               (iii) revalue any of the Transferred Assets, including without
limitation writing down the value of any inventory;
               (iv) amend or modify, or violate the terms of, any of the
Transferred Contracts;
               (v) make or change any election in respect of Taxes, adopt or
change any accounting method in respect of Taxes, enter into any closing
agreement, settle any claim or assessment in respect of Taxes, or consent to any
extension or waiver of the limitation period applicable to any claim or
assessment in respect of Taxes, in each case relating to the Business, the
Transferred Products or the Transferred Assets;
               (vi) create, incur or assume any Liability that would materially
and adversely affect the Business, the Transferred Assets or Parent’s and
Buyer’s ability to conduct the

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Business in substantially the same manner and condition as conducted by Seller
on the Effective Date;
               (vii) commence or settle any legal actions or proceedings or
obtain any releases of threatened actions or proceedings involving or relating
to the Business or the Transferred Assets;
               (viii) accelerate any accounts receivable or defer any accounts
payable in any manner outside the ordinary course of business;
               (ix) take any action, or fail to take any action, that would
result in any of the representations and warranties set forth in Article 3 not
being true and correct on and as of the Closing Date with the same force and
effect as if such representations and warranties had been made on and as of the
Closing Date; or
               (x) agree to take any action described in subsection (i) through
(ix) above.
     5.2 Access.
          (a) During the period commencing on the Effective Date and continuing
through the Closing Date, Seller will permit Parent and Buyer to make a full and
complete investigation of the Transferred Assets and the Business and to receive
all information of Seller relating to the Transferred Assets or reasonably
related to Seller’s conduct of the Business. In addition, to the maximum extent
permitted by applicable laws and regulations, Seller will provide Parent and
Buyer access to the employee files of the Designated Employees or Employees that
would potentially be Designated Employees. Without limitation on this right,
Seller, upon reasonable prior notice from Parent or Buyer to Seller, will
(i) afford to Parent and Buyer and their representatives, at all reasonable
times during normal business hours, full and complete access to the Transferred
Assets and Seller’s personnel, professional advisors, properties, contracts,
files, Books and Records, and other documents and data; (ii) furnish Parent or
Buyer and its representatives with copies of all such Transferred Contracts,
Books and Records, and other existing documents and data as Parent or Buyer may
reasonably request; and (iii) furnish Parent or Buyer and their representatives
with such additional financial (including Tax Returns and supporting
documentation), operating, and other data and information as Parent or Buyer may
reasonably request, in each case relating to the Business. Seller shall maintain
and make available the information and records specified in this Section 5.2 in
the ordinary course of Seller’s business and document retention policies, as if
the transactions contemplated by this Agreement had not occurred. No information
or knowledge obtained in any investigation pursuant to this Section 5.2 shall
affect or be deemed to modify any representation or warranty contained herein or
the conditions to the obligations of the Parties hereto to consummate the
transactions contemplated hereby.
          (b) During the period commencing on the Effective Date and continuing
through the Closing Date, each Party shall provide the other Party (at such
other Party’s expense) with such reasonable assistance, including the provision
of available relevant records or other information and reasonable access to and
cooperation of any personnel within their employ, as may be reasonably requested
by either of them in connection with the preparation of any financial statement
or Tax

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Return, or any audit or examination by any taxing authority, or any judicial or
administrative proceeding relating to liability for Taxes.
          (c) For two (2) years after the Closing Date, Seller shall give Parent
and Buyer reasonable access, during normal business hours, to all books, records
and files requested by Parent and Buyer that are reasonably necessary in order
for Parent and Buyer to respond to any third party or governmental inquiries,
investigations, claims or audits related to the Transferred Assets or the
Business.
     5.3 Post-Closing Audits of Business Financial Statements. During the period
commencing on the Closing Date and ending on the date that the audits of the
Business’s financial statements for the years ended December 31, 2004 and the
period from January 1, 2005 through the Closing Date by third party auditors are
completed (the “Audit Completion Date”), Seller shall provide Parent (at
Seller’s expense) with such reasonable assistance, including the provision of
available relevant records or other information and reasonable access to and
cooperation of any personnel within Seller’s employ, as may be reasonably
requested by Parent in connection with the preparation of the audits of the
Business’s financial statements for the years ended December 31, 2004 and the
period from January 1, 2005 through the Closing Date (the “Post-Closing
Audits”). Parent shall select the third party auditor for the Post-Closing
Audits and will bear the fees of the third party auditor for the Post-Closing
Audits up to $125,000 for a so-called “carve out” audit. Any third party auditor
fees in excess of $125,000 for the “carve out” audit shall be referred to as
“Indemnifiable Audit Costs” and shall constitute “Losses” for purposes of
Article 8.
     5.4 Third Party Consents; Assignment of Transferred Contracts.
          (a) Seller, Parent and Buyer shall use reasonable best efforts to
obtain, within the applicable time periods required, all waivers, permits,
consents, assignments and approvals and to effect all registrations, filings and
notices with or to third parties or Governmental Entities that are necessary to
consummate the transactions contemplated by this Agreement, including without
limitation by cooperating in good faith to effect any required assignment to
Buyer or its designees of each of the Transferred Contracts in such a manner
that Buyer or its designees shall assume only those obligations under such
Transferred Contracts arising from Buyer’s or its designee’s performance or
non-performance of its obligations under such Transferred Contracts from and
after the Closing Date.
          (b) With respect to contracts that are to be Transferred Assets,
Seller shall use prior to the Closing commercially reasonable efforts to obtain
the consent of the other Persons to the assignment thereof to Buyer or its
designees (at no cost to Buyer) such that Buyer or its designees shall be able
to secure the benefits of such Transferred Contracts directly. If such consent
is not obtained prior to the Closing, or if an attempted assignment thereof
would be ineffective or would adversely affect the rights thereunder so that
Buyer or its designees would not receive substantially all such rights, (i) this
Agreement shall not constitute an agreement to assign such contracts (a
“Non-Assignable Contract”) and (ii) Seller shall (x) continue to use reasonable
best efforts to obtain the consent of the other Persons for the assignment
thereof to Buyer or its designees, and (y) use reasonable best efforts so as to
ensure that Buyer or its designees would obtain the benefits and assume the
obligations thereunder in accordance with this Agreement, including
subcontracting, sublicensing or subleasing to Buyer or its designees, or enter
into

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arrangements under which Seller would enforce for the benefit of Buyer or its
designees, with Buyer or its designee, assuming Seller’s obligations, any and
all rights of Seller against a third party thereto. Seller shall promptly pay to
Parent all monies received by Seller with respect to such Non-Assignable
Contracts, except to the extent the same represents an Excluded Asset. To the
extent the benefits therefrom and obligations thereunder have been provided by
alternative arrangements as provided above reasonably acceptable to Parent or
Buyer, any such Non-Assignable Contract shall be deemed to be a Transferred
Asset or Assumed Liability, as the case may be, provided Parent and Buyer shall
not be responsible for any Liabilities (i) arising out of a claim of breach of
such Non-Assignable Contract due to the establishment of the alternative
arrangements, or (ii) arising out of such Non-Assignable Contract as a result of
Seller’s action without Parent’s or Buyer’s approval in a manner inconsistent
with the alternative arrangements. Parent and Buyer will use commercially
reasonable efforts to assist Seller in obtaining such consents (such
commercially reasonable efforts shall not include the payment of money).
          (c) In furtherance, and not in limitation of the foregoing subsection
(a), in the event that Seller is unable to obtain any required consent to the
transfer at the Closing to the Buyer or its designees of any Non-Assignable
Contract and Seller and Buyer have failed to agree on alternate arrangements to
an assignment reasonably satisfactory to Buyer, then (i) the party thereto shall
remain a party and shall continue to be bound by such Non-Assignable Contract,
(ii) Buyer or its designee shall pay, perform and discharge fully all of the
obligations of such party from and after the Closing Date, upon the terms and
subject to the conditions of such Non-Assignable Contract, (iii) such party
shall, without further consideration therefor, pay, assign and remit to Buyer or
its designee promptly all monies, rights and other consideration received in
respect of such Non-Assignable Contract on and after the Closing Date, and
(iv) such party shall, without further consideration therefor, exercise its
rights and options under such Non-Assignable Contract in the manner and only to
the extent directed by Buyer. If and when any consent shall be obtained
following the Closing Date with respect to the transfer by Seller to Buyer of
any such Non-Assignable Contract or such Non-Assignable Contract shall otherwise
become assignable following the Closing Date, Seller shall promptly assign all
of its rights and obligations thereunder to Buyer or its designee, without
further consideration therefor, and Buyer shall, without further consideration
therefor, assume such rights and obligations, to the fullest extent permitted
and such Non-Assignable Contract shall be deemed to be a Transferred Asset or
Assumed Liability, as the case may be. The existence of the provisions of this
Section 5.4 shall not reduce or otherwise adversely affect any party’s ability
to enforce any of its rights under this Agreement.
     5.5 Renewal Fees. In furtherance, and not in limitation of the foregoing
Section 5.4, Seller agrees to pay for Buyer’s renewal fees of all agreements and
licenses with respect to third party Software previously licensed to Seller that
are (i) listed on Schedule 5.5; (ii) Non-Assignable Contracts or (iii) otherwise
necessary to enable Parent or Buyer to operate the Business following the
Closing.
     5.6 Transition Services. For a period of not more than 9 months from the
Closing Date, Seller will continue to provide Parent and Buyer with support
services to the Business as detailed in Exhibit B-1 (the “Transition Services”).
The cost of such support services will be paid by Parent or Buyer to Seller at
the rates set forth on Exhibit B-1 (the “Transition Services Fees”), pro-rated
for partial months. Parent and Buyer may terminate each or all of such
Transition Services at any time, provided, however, that Seller’s provision of
IT system services shall not be terminated until Parent

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or Buyer implements a system capable of handling such IT system services. For
any support service that Parent and Buyer is utilizing after 90 days, the
Transition Services Fees will increase for such services by 20% each quarter
after such 90 days. Seller agrees to transfer all data of or related to the
Business which resides on Seller’s IT system for use with Parent’s or Buyer’s IT
system, at Parent’s or Buyer’s request and at Seller’s cost. Seller shall
provide the Transition Services, or cause the Transition Services to be
provided, in a diligent and workmanlike manner, in good faith and in a manner
consistent with the historical provision of such services in the ordinary course
of business, with at least the same degree of skill, duty, care and timeliness
as such services have been provided in Seller’s Fort Collins facilities prior to
the Closing Date, but in no event less than reasonable care. Seller will provide
the Transition Services to Parent and Buyer with the same priority as it
provides similar services to its own subsidiaries and businesses, including
similar treatment with respect to critical and time-sensitive needs. Seller
shall not have the right to subcontract the provision of the Transition Services
without the prior written consent of Parent or Buyer except to the extent such
Services were subcontracted prior to the Closing Date. Prior to termination of
such Transition Services, Seller will provide any transition-related assistance
and migrate to Parent or Buyer all data reasonably necessary for Parent or Buyer
to effect the transition of Transition Services, so that Parent or Buyer will be
able to perform the Transition Services itself or through a third party service
provider. Seller will be responsible for costs or expenses incurred in support
of Parent’s or Buyer’s migration plan.
     5.7 Software Other than IT Systems
     Seller has provided Parent and Buyer, and attached hereto as Exhibit B-2, a
complete list of third- party software presently utilized by Employees of the
Business including the relicensing costs which are required to continue such use
after the Closing. Seller has allowed Parent a credit against the purchase price
for the Transferred Assets to enable Parent or Buyer to acquire such software as
Parent or Buyer deems necessary. All license payments to third parties shall be
at Parent’s and Buyer’s expense. Seller shall allow Parent and Buyer to acquire
an unlimited, perpetual license to Seller’s P-Tools software in exchange for a
onetime payment of $10,000. Such license to Seller’s P-Tools software shall be
transferable in the event of a change in control or acquisition of Parent or
Buyer.
     5.8 Technology Documentation. Commencing on the Effective Date, Seller
shall fully cooperate with Parent and Buyer to perform a detailed technical
review of all Transferred Technology and shall diligently prepare such
documentation sufficient to enable Parent and Buyer to fully utilize, understand
and implement the Transferred Technology for delivery to Buyer at the Closing.
It is understood and acknowledged that any Technology created solely or jointly
by either Party in the creation of such documentation shall be Transferred
Tangible Assets, and any Intellectual Property Rights therein shall be Assigned
IPR.

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     5.9 Intellectual Property.
          (a) Except as otherwise expressly permitted by this Agreement, between
the Effective Date and the Closing Date, Seller will not, without the prior
written consent of Parent or Buyer:
               (i) enter into any inbound license agreement with respect to
Intellectual Property Rights or Technology of any third party to be incorporated
in or used in connection with the Transferred Assets or the Business;
               (ii) sell, lease or otherwise transfer or dispose of or encumber
(including any Lien), or enter into any outbound license agreement (including
any covenant not to sue a third party) with respect to, any of the Transferred
Assets or the Business;
               (iii) propose, enter into or negotiate a contract with any
Person, other than Parent and Buyer, providing for the possible acquisition,
transfer or disposition (whether by way of merger, purchase of capital stock,
purchase of assets or otherwise) of any of the Transferred Assets or the
Business; or
               (iv) enter into any other contract relating to (A) the sale or
distribution of any Transferred Technology; (B) the provision of any services
related to the Business; or (C) any other of the Transferred Assets.
          (b) Between the Effective Date and the Closing Date, Seller shall, and
shall cause its Affiliates to, take all actions, and not omit to take any
action, necessary to preserve and maintain all Assigned IPR, including payment
of any Patent issuance, maintenance or other fees when due and the filing of any
documents, certificates or notices when due related to the prosecution or
maintenance of any Assigned IPR.
     5.10 Reasonable Best Efforts . The Parties shall use reasonable best
efforts (a) to cause to be fulfilled and satisfied all of the conditions to the
Closing to be fulfilled and satisfied by each of them and (b) to cause to be
performed all of the matters required of each of them at the Closing.
     5.11 No Other Bids. Until the earlier to occur of (a) the Closing or
(b) the termination of this Agreement pursuant to its terms, neither Seller nor
any of its Affiliates, officers, directors, Employees, stockholders, agents or
other representatives shall, directly or indirectly: (i) initiate, solicit,
entertain or encourage (including by way of furnishing information regarding the
Business or the Transferred Assets) any proposals, inquiries or offers, or make
any statements to third parties which may reasonably be expected to lead to any
proposal, inquiry or offer, from any Person concerning the acquisition or
license of all or any material portion of the Business or the Transferred
Assets; or (ii) negotiate, engage in any substantive discussions, or enter into
any agreement, with any Person concerning the acquisition or license of all or
any material portion of the Business or the Transferred Assets. Seller will
promptly inform Parent and Buyer in writing of any third party inquiries or
proposals received by Seller and shall provide to Parent and Buyer the name of
such third party and the terms of any such proposal. The covenants in this
Section 5.11 will apply to any and all discussions in which Seller is currently
involved with third parties, and Seller shall immediately terminate all such
discussions.

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     5.12 Confidentiality; Public Announcements.
          (a) The Receiving Party shall treat as confidential all of the
Disclosing Party’s Confidential Information and shall not use or disclose to
third parties such Confidential Information except as expressly permitted under
this Agreement. Without limiting the foregoing, the Receiving Party shall use at
least the same degree of care that it uses to prevent the disclosure of its own
confidential information, but in no event with less than reasonable care, to
prevent the disclosure of the Disclosing Party’s Confidential Information.
          (b) Notwithstanding the foregoing Section 5.12(a), after the Closing
the following shall be deemed the Confidential Information of Parent and Buyer
and the obligations set forth in Section 5.12(a) shall no longer apply to Parent
and Buyer with respect thereto: any Confidential Information related to the
Business or the Transferred Assets or constituting or included with the
Transferred Assets.
          (c) Seller agrees that the terms, conditions and existence of this
Agreement shall be treated as Confidential Information of Parent and Buyer and
that no reference to this Agreement or the transactions contemplated herein may
be made by Seller in any form of public or commercial announcement or
advertising without the prior written consent of the other; provided, however,
that Seller may disclose, upon prior written notice to the other, the terms,
conditions and existence of this Agreement: (a) as required by any Governmental
Entity (including the United States Securities and Exchange Commission) in which
case, the Parties shall confer as to the appropriate disclosure; (b) as
otherwise required by law; (c) in confidence, to legal counsel and accountants
of Seller; or (d) in confidence, in connection with the enforcement of this
Agreement or Seller’s rights under this Agreement.
          (d) In the event the Receiving Party must disclose the Disclosing
Party’s Confidential Information pursuant to the order or requirement of a
court, administrative agency, or other Governmental Entity, the Receiving Party
shall provide prompt notice thereof to the Disclosing Party to allow the
Disclosing Party to obtain a protective order, and the Receiving Party shall
also use its reasonable efforts to obtain a protective order, assist Disclosing
Party in obtaining a protective order or otherwise prevent public disclosure of
such information.
          (e) The Parties agree that Seller’s Confidential Information related
to the Business and known to the Designated Employees is included in the
Transferred Assets under this Agreement. Accordingly, to the extent a Designated
Employee hired by Buyer would, as a result of an employment or other agreement
between Seller and that Designated Employee, be restricted from disclosing
Confidential Information to Parent or Buyer or from using information on
Parent’s or Buyer’s behalf or otherwise in connection with its employment by
Parent or Buyer, Seller agrees to, and hereby does waive, in favor or Parent and
Buyer, any right that it may have to enforce such restrictions and consents to
Parent’s or Buyer’s use and disclosure of such information for its own benefit
and on its own behalf, without restriction.
     5.13 Covenant Not to Compete. Beginning on the Closing Date and ending on
the third (3rd) anniversary of the Closing Date, neither Seller nor any of its
Affiliates or permitted successors or assigns shall, directly or indirectly,
without the prior written consent of Parent or Buyer, engage anywhere in the
world in (whether as an agent, consultant, advisor, independent contractor,

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proprietor, partner, officer, director or otherwise), or have any ownership
interest in, or participate in the financing, operation, management or control
of, any firm, partnership, corporation, entity or business that engages or
participates in the design, development, manufacture, marketing or sale of
Transferred Products or other products intended for use in the Business, or
otherwise engages in the Business; provided, however, that it shall not be a
violation of this Section 5.13 for Seller to (a) own debt securities or other
debt obligations (other than convertible debt) of any Person, or (b) invest in
securities representing less than one percent (1%) of the outstanding capital
stock of any Person, whose stock is traded on a national securities exchange or
through the automated quotation system of a registered securities association.
Notwithstanding Section 1.1(a), any entity that (i) in the future acquires
Control of Seller in an acquisition or merger transaction and (ii) at the time
of such transaction sells products intended for use in the Business shall not be
deemed an “Affiliate” for purposes of this Section 5.13 only.
     5.14 Covenant Not to Solicit or Hire.
          (a) Beginning on the Closing Date and ending on the third (3rd)
anniversary of the Closing Date, neither Seller nor its Affiliates shall,
directly or indirectly, without the prior written consent of Parent: (i) hire
any employee of Parent or Buyer (including any Designated Employees) for
employment by Seller or any of its Affiliates; or (ii) solicit any employee of
Parent or Buyer (including any Designated Employees) to terminate his or her
employment or consultancy with Parent or Buyer or any of their Affiliates;
provided, however, that this Section 5.14(a) shall not prohibit Seller or any
Affiliate of Seller from: (i) soliciting employees through, or hiring employees
who respond to, general job advertisements or similar notices that are not
targeted specifically at the employees of a party; or (ii) engaging any
recruiting firm or similar organization to identify or solicit persons for
employment on its behalf as long as such recruiting firm or organization is not
instructed or otherwise informed to target any employee of Buyer.
          (b) Beginning on the Closing Date and ending on the third (3rd)
anniversary of the Closing Date, neither Parent, Buyer nor their Affiliates
shall, directly or indirectly, without the prior written consent of Seller:
(i) hire any employee of Seller (other than any Designated Employee) for
employment by Parent, Buyer or any of their Affiliates; or (ii) solicit any
employee of Seller (other than any Designated Employee) to terminate his or her
employment or consultancy with Seller or any Affiliate of Seller; provided,
however, that Section 5.14(b) shall not prohibit Parent, Buyer or any of their
Affiliates from: (i) soliciting employees through, or hiring employees who
respond to, general job advertisements or similar notices that are not targeted
specifically at the employees of a party; or (ii) engaging any recruiting firm
or similar organization to identify or solicit persons for employment on its
behalf as long as such recruiting firm or organization is not instructed or
otherwise informed to target any employee of Seller.
     5.15 Notification of Certain Matters. Seller shall give prompt notice to
Parent and Buyer of (a) Seller becoming aware of the occurrence or
non-occurrence of any event that is likely to cause any representation or
warranty of Seller contained in this Agreement to be untrue or inaccurate in any
material respect at or prior to the Closing, and (b) any failure of Seller to
comply with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it hereunder; provided, however,
that the delivery of any notice pursuant to this Section 5.15 shall not
(i) limit or otherwise affect any remedies available to the party receiving such
notice or (ii) constitute an acknowledgment or admission of a breach of this
Agreement. No disclosure by pursuant to this

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Section 5.15, however, shall be deemed to amend or supplement the Disclosure
Schedule or prevent or cure any misrepresentations, breach of warranty or breach
of covenant.
     5.16 Severability of Covenants. The covenants contained in the preceding
paragraphs shall be construed as a series of separate covenants, one for each
county, city and state of any geographic area where any business is carried on
by Parent or Buyer or their Affiliates. Except for geographic coverage, each
such separate covenant shall be deemed identical in terms to the covenant
contained in the preceding paragraphs. If, in any judicial proceeding, a court
refuses to enforce any of such separate covenants (or any part thereof), then
such unenforceable covenant (or such part) shall be eliminated from this
Agreement to the extent necessary to permit the remaining separate covenants (or
portions thereof) to be enforced. If the provisions of Sections 5.13 and 5.14
are deemed to exceed the time, geographic or scope limitations permitted by
applicable law, then such provisions shall be reformed to the maximum time,
geographic or scope limitations, as the case may be, permitted by applicable
laws.
     5.17 SEC Support Letter. Seller covenants to provide a letter to the
Securities and Exchange Commission (the “SEC”), similar to the forms provided by
Parent to Seller as of the Closing (the “Support Letter”), in support of the
request by Parent or Buyer to the SEC for permission to file certain financial
information in lieu of the full financial statements that may otherwise be
required in any future SEC filings by Parent or Buyer, such as a registration
statement on Form S-1 or Form S-4 (the “SEC Request”). Seller shall provide
Parent and Buyer with such reasonable assistance, including the provision of
available relevant records or other information and reasonable access to and
cooperation of any personnel within Seller’s employ, as may be reasonably
requested by Parent or Buyer, in preparing the SEC Request, providing
information requested by the SEC, or complying with the SEC’s response to the
SEC Request. Seller covenants to provide Parent and Buyer a draft of the Support
Letter by December 31, 2005.
Article 6
EMPLOYEES
     6.1 Seller Cooperation. During the period commencing on the Effective Date
and continuing through the Closing Date, Seller shall assist and cooperate with
Parent and Buyer to identify Seller’s Employees employed in connection with the
Business who will be Designated Employees, including by permitting Parent and
Buyer to review employee files, compensation data, and job descriptions for any
such Employees. In the event Parent or Buyer identifies additional Employees as
Designated Employees in its discretion during such period, Parent or Buyer shall
notify Seller thereof in writing and Schedule 1.1(n) shall thereafter be amended
to include such additional Designated Employees. After the Effective Date,
Seller shall promptly provide Parent and Buyer with copies of the employment
files of all Designated Employees to the extent not already provided to Parent
and Buyer, and shall promptly provide any additional information about such
Employees upon Parent’s or Buyer’s reasonable request. After the Effective Date,
Seller shall permit Parent and Buyer to contact and interview Designated
Employees at Seller’s premises during normal business hours, and Seller shall
cooperate fully with Parent and Buyer in all such respects.
     6.2 Employment Offers.

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          (a) It is expected that prior to Closing, Buyer shall make offers of
“at-will” employment to all Designated Employees, provided that Buyer may elect
not to make an offer to any Designated Employees in its sole discretion. Any
such “at-will” employment offers will (a) be contingent on Closing; (b) be
subject to and in compliance with Parent’s or Buyer’s standard human resources
policies and procedures, including requirements for proof evidencing a legal
right to work in the offeree’s country of current employment; (c) have terms,
including the position, salary and responsibilities of such Employee, which will
be determined by Buyer in its sole discretion, except that all Designated
Employees will be offered a hiring bonus equal to one month’s base salary and a
retention bonus consistent with its prior discussions with Seller; and
(d) supersede any prior Employment Agreements and other arrangements with such
Employee in effect prior to the Closing Date.
          (b) For each day that the Designated Employees start employment with
Buyer after the Closing, Parent will reimburse Seller an amount equal to one
day’s salary of the Designated Employees who accept employment with Buyer at the
time of the Closing, based on the then-current salaries of the Designated
Employees with Seller, such payment to be made at the time of Buyer’s first
payment to Seller for the Transition Services.
     6.3 Waiver. Seller hereby agrees to waive any condition or restriction
which it may have the contractual right to impose on the hiring and employment
of Designated Employees by Parent or Buyer.
     6.4 Employees. Between the Effective Date and the Closing Date, Seller will
not, without the prior written consent of Parent or Buyer:
          (a) terminate the employment of any Employee, except for cause,
provided Seller provides notice to Parent and Buyer prior to any such
termination;
          (b) reassign any Designated Employee to another business unit of
Seller;
          (c) hire any employees relating to the Business;
          (d) change, increase or amend the rate of remuneration (cash, equity
or otherwise) or any other terms of employment of any of the Designated
Employees or adopt, grant extend or increase the rate or terms of any bonus,
insurance pension or other employee benefit plan, payment or arrangement made
to, for or with any Designated Employees, except increases pursuant to any
applicable law, rule or regulation;
          (e) grant any severance or termination pay (whether payable in cash,
stock or other equity instruments) to any Designated Employee, or adopt any new
severance plan, amend or modify or alter in any manner any severance plan,
agreement or arrangement relating to any Designated Employee on the date hereof;
or
          (f) adopt or amend any Employment Agreement with a Designated
Employee.
     6.5 COBRA Continuation Coverage. Seller agrees and acknowledges that the
selling group (as defined in Treasury Regulation Section 54.4980B-9, Q&A-3(a))
of which it is a part (the “Selling Group”) will continue to offer a group
health plan to employees after the Closing Date and,

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accordingly, that Seller and the Selling Group shall be solely responsible for
providing continuation coverage under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (“COBRA”) to those individuals who are
M&A qualified beneficiaries (as defined in Treasury
Regulation Section 54.4980B-9, Q&A-4(a)) with respect to the transactions
contemplated by this Agreement (collectively, the “M&A Qualified
Beneficiaries”). Seller shall indemnify, defend and hold harmless Parent and
Buyer for, from and against any and all claims, liabilities, losses, costs and
expenses (including attorney’s fees) relating to, arising out of, or resulting
from any and all COBRA obligations, liabilities and claims related to M&A
Qualified Beneficiaries and all other qualified beneficiaries (as defined in
Code Section 4980B(g)(1)) with respect to Sellers’ group health plans. Seller
further agrees and acknowledges that in the event that the Selling Group ceases
to provide any group health plan to any employee prior to the expiration of the
continuation coverage period for all M&A Qualified Beneficiaries (pursuant to
Treasury Regulation Section 54.4980B-9, Q&A-8(c)), then Seller shall provide
Parent and Buyer with (a) written notice of such cessation as far in advance of
such cessation as is reasonably practicable (and, in any event, at least thirty
(30) days prior to such cessation), and (b) all information necessary or
appropriate for Parent or Buyer to offer continuation coverage to such M&A
Qualified Beneficiaries.
     6.6 Employee Liability Claims.
          (a) As between the Parties, the Seller and any ERISA Affiliate shall
(i) sponsor and (ii) assume or retain, as the case may be, and be solely
responsible for all of the following from and after Closing, which will be
considered “Employee Excluded Liabilities” for purposes of this Agreement,
including Section 2.3 hereof:
               (i) Employment Liabilities, including but not limited to payments
or entitlements that Seller may owe or have promised to pay to the Designated
Employees or any other Employees, including wages, other remuneration, holiday
or vacation pay, bonus, severance pay (statutory or otherwise), commission,
pension contributions, taxes, and any other liability, payment or obligations
related to Employees or contractors;
               (ii) all payments with respect to the Designated Employees that
are due to be paid prior to or on the Closing Date (including, without prejudice
to the generality of the foregoing, pension contributions, insurance premiums
and taxation) to any third party in connection with the employment of any of the
Designated Employees; and
               (iii) any non-forfeitable claims or expectancies of any
Designated Employees from their prior employment with Seller or an ERISA
Affiliate which have been incurred or accrued on or prior to the Closing Date.
          (b) All costs and disbursements incurred in connection with the
termination of any employment of a Designated Employee or any other Employee
prior to or in connection with the Closing Date (including any Designated
Employee who does not accept an offer of employment with Parent or Buyer) shall
be borne by Seller.

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Article 7
CLOSING, PURCHASE PRICE AND PAYMENTS
     7.1 Conditions to Obligations of Buyer. The obligations of Parent and Buyer
to consummate the transactions contemplated by this Agreement shall be subject
to the satisfaction at or prior to the Closing Date of the conditions set forth
in this Section 7.1, any of which may be waived, in writing, exclusively by
Parent:
          (a) Representations and Warranties. The representations and warranties
of the Seller contained in this Agreement shall be true, correct and complete in
all material respects (without regard to any materiality qualifications set
forth in any such representation or warranty) as of the Effective Date and shall
be true, correct and complete in all material respects (without regard to any
materiality qualifications set forth in any such representation or warranty) as
of the Closing Date as if made on and as of the Closing Date (other than
representations and warranties which by their express terms are made solely as
of a specified earlier date, which shall be true, correct and complete in all
material respects (without regard to any materiality qualifications set forth in
any such representation or warranty) as of such specified earlier date).
Notwithstanding the foregoing, representations and warranties of the Seller
contained in this Agreement that are qualified by reference to materiality shall
be true, correct and complete in all respects as of the dates set forth in this
Section 7.1(a).
          (b) Performance. Seller shall have performed and complied in all
material respects with each agreement, covenant and obligation required by this
Agreement to be so performed or complied with by Seller on or before the Closing
Date.
          (c) Employees. All of the Key Employees and no fewer than ninety
percent (90%) of the Designated Employees shall have accepted in writing an
offer of employment with Buyer, in a form acceptable to Buyer and substantially
in the form attached as Exhibit D; provided, however, that Buyer chooses in its
sole discretion to make such offers to such Key Employees and/or Designated
Employees.
          (d) Sublease of Facility. Seller shall have provided to Buyer a
sublease in the form of Exhibit E annexed hereto with respect to that portion of
the space at 4424 Innovation Drive, Fort Collins, Colorado (approximately 12,000
sq. ft.) which is presently allocated to the Business. The sublease shall be for
the same term as the Master Lease (June 30, 2009) provided Buyer may terminate
such sublease on not less than 90 days prior notice to Seller and provided
further that Buyer will pay Seller full rent (not including utilities and other
costs of facility-related services provided by Seller to Buyer) through the
later of June 30, 2006 or the date Buyer moves out of the facility and 50% of
the rent (not including utilities and other costs of facility-related services
provided by Seller to Buyer) from the date Buyer moves out of the facility to
September 30, 2006, if Buyer moves out of the facility prior to September 30,
2006. Buyer also acknowledges that under the Master Lease both Seller and
Landlord have the right to terminate such Master Lease upon 270 days prior
notice in which event the sublease shall terminate at the same time provided
Buyer shall have been provided with a copy of the notice of termination at the
time it was given or received by Seller. The sublease rent shall be $6,720 per
month, for a total of $7,100 per month inclusive of all utilities (water, gas
and electric).

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          (e) No Material Adverse Effect. Since the Effective Date, there shall
not have occurred any event or condition of any character that has had or is
reasonably likely to have a material adverse effect on the Business, the
Transferred Products, the Transferred Assets or the financial condition or
prospects of the Business.
          (f) Closing Certificate. Parent and Buyer shall have received a
certificate, dated as of the Closing Date, signed and verified by an officer of
Seller on behalf of Seller certifying as to the matters set forth in
Sections 7.1(a), (b) and (e).
          (g) Consents. All third party consents required to transfer or assign
the Transferred Assets (free of any Liens), the Transferred Permits and the
Transferred Contracts to Buyer set forth on Schedule 7.1(g) shall have been
obtained in a form acceptable to Parent.
          (h) Other Agreements. Seller shall have executed and delivered to
Parent and Buyer each of the Collateral Agreements, and such agreements shall
remain in full force and effect.
          (i) No Proceeding or Litigation.
               (i) 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.
               (ii) No suit, action, claim, proceeding or investigation before
any Governmental Entity shall have been commenced or have been threatened
against Seller, Parent or Buyer, or any of their respective Affiliates,
associates, officers or directors, seeking to prevent the sale of the
Transferred Assets or asserting that the sale of the Transferred Assets would be
illegal or create liability for damages.
          (j) Documents. This Agreement, any other instruments of conveyance and
transfer and all other documents to be delivered by Seller to Parent and Buyer
at the Closing and all actions of Seller required by this Agreement or
incidental thereto, and all related matters, shall be in form and substance
reasonably satisfactory to Parent.
          (k) Governmental Filings. Seller, Parent and Buyer shall have made all
required filings with Governmental Entities, and any approvals related thereto
shall have been obtained or any applicable waiting periods shall have expired.
          (l) Series C Preferred Stock Financing. The sale of Parent’s Series C
Preferred Stock for an aggregate purchase price of at least $20 million shall
have been completed.
     7.2 Conditions to Obligations of Seller. The obligations of Seller to
consummate the transactions contemplated by this Agreement shall be subject to
the satisfaction at or prior to the Closing of the conditions set forth in this
Section 7.2, any of which may be waived, in writing, exclusively by Seller:
          (a) Representations and Warranties. The representations and warranties
of the Parent and Buyer contained in this Agreement shall be true, correct and
complete in all material

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respects (without regard to any materiality qualifications set forth in any such
representation or warranty) as of the Effective Date and shall be true, correct
and complete in all material respects (without regard to any materiality
qualifications set forth in any such representation or warranty) as of the
Closing Date as if made on and as of the Closing Date (other than
representations and warranties which by their express terms are made solely as
of a specified earlier date, which shall be true, correct and complete in all
material respects (without regard to any materiality qualifications set forth in
any such representation or warranty) as of such specified earlier date).
          (b) Performance. Parent and Buyer shall have performed and complied in
all material respects with each agreement, covenant and obligation required by
this Agreement to be so performed or complied with by the Parent and Buyer on or
before the Closing Date.
          (c) Closing Certificate. Seller shall have received a certificate,
dated as of the Closing Date, signed and verified by an officer of each of
Parent and Buyer on behalf of each of Parent and Buyer certifying as to the
matters set forth in Sections 7.2(a) and 7.2(b).
          (d) Other Agreements. Parent and Buyer shall have executed and
delivered to Seller each of the Collateral Agreements to which Parent and Buyer
are a party, and such agreements shall remain in full force and effect.
          (e) No Proceeding or Litigation.
               (i) 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.
               (ii) No suit, action, claim, proceeding or investigation before
any Governmental Entity shall have been commenced or have been threatened
against Seller, Parent or Buyer, or any of their respective Affiliates,
associates, officers or directors, seeking to prevent the sale of the
Transferred Assets or asserting that the sale of the Transferred Assets would be
illegal or create liability for damages.
          (f) Documents. This Agreement, any other instruments of conveyance and
transfer and all other documents to be delivered by Parent and Buyer to Seller
at the Closing and all actions of Parent and Buyer required by this Agreement or
incidental thereto, and all related matters, shall be in form and substance
reasonably satisfactory to Seller.
          (g) Governmental Filings. Seller, Parent and Buyer shall have made all
required filings with Governmental Entities, and any approvals related thereto
shall have been obtained or any applicable waiting periods shall have expired.

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Article 8
SURVIVAL OF REPRESENTATIONS,
WARRANTIES AND INDEMNIFICATION
     8.1 Survival of Representations and Warranties. The representations,
warranties, covenants and agreements of Seller in this Agreement shall survive
until the earlier to occur of (i) twelve (12) months after the Closing Date and
(ii) ninety (90) days after the Audit Completion Date, and shall thereafter
automatically expire; provided, however, that (x) Seller’s representations in
Section 3.5 (Intellectual Property) shall survive for a period of three
(3) years after the Closing Date, and shall thereafter automatically expire;
(y) Seller’s representations in Section 3.9 (Environmental Matters) and
Section 3.17 (Tax Matters) shall survive until the expiration of the applicable
statute of limitations; and (z) Seller’s representations in Section 3.4 (Title
of Properties) and Section 3.8 (Transferred Assets and Transferred Technology)
and Seller’s obligation to indemnify in Section 8.2(c) (Excluded Assets and
Excluded Liabilities), Section 8.2(f) (Transition Services) and Section 8.2(g)
(License Agreement) shall survive indefinitely. The representations and
warranties of Parent and Buyer in Article 4 shall terminate on the Closing Date.
No investigation, or knowledge acquired, by Parent or Buyer or on behalf of
Parent or Buyer with respect to any breach of any representation or warranty
made by Seller or any other matter shall affect Parent’s or Buyer’s rights to
indemnification pursuant to this Article 8.
     8.2 Indemnification by Seller. Subject to the terms and conditions of this
Article 8, following the Closing, Seller shall indemnify and hold harmless
Parent, Buyer and their Affiliates and each of their officers, directors,
employees, agents, successors and assigns (“Buyer Indemnitees”) for any and all
Losses, whether such Loss exists or accrues prior or subsequent to the Closing
Date, arising out of, resulting from or caused by:
          (a) any inaccuracy or misrepresentation in or breach of any of the
representations or warranties made by Seller contained in this Agreement or any
Collateral Agreement, it being understood that solely for purposes of
calculating Losses relevant to any such inaccuracy or misrepresentation,
materiality and knowledge qualifiers will be disregarded;
          (b) any breach of any of the covenants or agreements of Seller
contained in this Agreement or any Collateral Agreement (other than the License
Agreement);
          (c) any of the Excluded Assets or Excluded Liabilities, including any
Liability arising out of the ownership or operation of the Assets prior to the
Closing Date other than the Assumed Liabilities;
          (d) any Indemnifiable Audit Costs;
          (e) all Liabilities relating to any warranty, returns, refunds,
support obligation or similar claims with respect to any Transferred Products
sold prior to the Closing Date to the extent that such Liabilities exceed
$75,000;
          (f) any Losses of any kind or nature whatsoever which may be sustained
or suffered by any of them arising out of or based upon any gross negligence or
willful misconduct on the part of Seller in performing the Transition Services
for Parent and Buyer;

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          (g) any breach of any of the representations, covenants or agreements
of Seller contained in the License Agreement; and
          (h) any failure to comply with any applicable “bulk sales” law or
regulation in connection with the transactions contemplated by this Agreement.
Notwithstanding the foregoing, for purposes of calculating Losses relevant to
any breach, inaccuracy or misrepresentation of the first sentence of
Section 3.5(c) (the “Non-Infringement Representation”), the knowledge qualifier
of the Non-Infringement Representation will be disregarded for twelve
(12) months after the Closing Date.
     8.3 Limitation on Indemnification. Notwithstanding the foregoing,
(i) Seller shall have no liability under Section 8.2 until the aggregate of all
such Losses exceeds $100,000 (at which point the Seller will be obligated to
indemnify the Buyer Indemnitees against all Losses relating back to the first
dollar of Losses) and (ii) except for intentional fraud or willful misconduct,
the aggregate liability for Seller under Section 8.2 for all Losses shall in no
event exceed $1,500,000 for Seller. The limitations in this Section 8.3(ii)
shall not apply to matters arising in respect of Section 3.4 (Title of
Properties), Section 3.5 (Intellectual Property) (excluding the Non-Infringement
Representation), Section 3.8 (Transferred Assets and Transferred Technology),
Section 3.9 (Environmental Matters), Section 3.17 (Tax Matters), and the
limitations in this Section 8.3(i) and Section 8.3(ii) shall not apply to
matters arising in respect of Section 8.2(c) (Excluded Assets and Excluded
Liabilities), Section 8.2(f) (Transition Services), and Section 8.2(g) (License
Agreement). For purposes of clarity, any Losses related to the Non-Infringement
Representation will be subject to Section 8.3(i) and Section 8.3(ii).
     8.4 Indemnification Procedure.
          (a) Whenever any Loss shall be asserted against or incurred by a Buyer
Indemnitee, the Buyer Indemnitee shall give written notice thereof (a “Claim”)
to Seller. The Buyer Indemnitee shall furnish to the Seller in reasonable detail
such information as the Buyer Indemnitee may have with respect to the Claim
(including in any case copies of any summons, complaint or other pleading which
may have been served on it and any written claim, demand, invoice, billing or
other document evidencing or asserting the same). If the Claim has been provided
to the Seller prior to the lapse of the expiration of the right to make a Claim,
then the Seller shall continue to have the obligation to indemnify until the
resolution of such Claim. The failure to give such notice shall not relieve the
Seller of its indemnification obligations under this Agreement.
          (b) Any controversy involving only Parent, Buyer and Seller regarding
whether a Claim is properly indemnifiable under the terms of this Article 8
shall be settled by binding arbitration administered by the American Arbitration
Association (“AAA”) in accordance with its Commercial Arbitration Rules, and
judgment upon the award rendered through arbitration may be entered in any court
having jurisdiction thereof. Such arbitration shall be held in Santa Clara
County, California, unless the parties mutually agree in writing to change the
location, before a single neutral arbitrator appointed in the manner prescribed
in AAA Commercial Arbitration Rule 13 provided that Parent, Buyer and Seller
have attempted to resolve such controversy through negotiations in good faith.
Either Parent, Buyer or Seller may seek from any court, interim or

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provisional, relief that is necessary to protect the rights or property of such
Party, pending the appointment of the arbitrator or the arbitrator’s
determination of the merits of the controversy. The Parties shall be entitled to
conduct discovery in accordance with the Federal Rules of Civil Procedure. The
fees and expenses of the arbitrators shall be borne equally by Buyer and Seller.
Each Party shall be responsible for its own legal fees and expenses for the
proceeding. The decision of the arbitrators shall be final and non-appealable.
The arbitration award shall be in writing and shall specify the factual and
legal bases for the award. Judgment on the award may be entered in any court
having jurisdiction.
          (c) If the Claim is based on a claim of a person that is not a party
to this Agreement, the Seller shall, at its expense, undertake the defense of
such Claim with attorneys of its own choosing reasonably satisfactory to the
Buyer Indemnitee provided that the Seller acknowledges the Buyer Indemnitee’s
right to indemnification for such Claim pursuant to this Agreement. In the event
the Seller, within ten (10) business days after receiving notice of a Claim from
the Buyer Indemnitee, fails to defend the Claim, the Buyer Indemnitee may, at
the Seller’s expense, undertake the defense of the Claim and may compromise or
settle the Claim, all for the account of the Seller. After notice from the
Seller to the Buyer Indemnitee of its election to assume the defense of such
Claim, the Seller shall not be liable to the Buyer Indemnitee under this
Section 8.4 for any legal expenses subsequently incurred by the Buyer Indemnitee
in connection with the defense thereof, except for such expenses incurred in
connection with cooperation with, or at the request of, the Seller; provided,
however, that the Buyer Indemnitee shall have the right to engage counsel to
represent it if, in the Buyer Indemnitee’s reasonable judgment, based upon the
advice of counsel, it is advisable, in light of the separate interests of the
Buyer Indemnitee and the Seller, for the Buyer Indemnitee to be represented by
separate counsel, and in that event the reasonable fees and expenses of such
separate counsel shall be paid by the Seller.
          (d) The Seller shall not consent to entry of any judgment, except with
the consent of the Buyer Indemnitee (which may be given or withheld in its sole
discretion), or enter into any settlement, except with the consent of the Buyer
Indemnitee, which such consent shall not be unreasonably withheld or delayed. In
the event the Buyer Indemnitee refuses to consent to the entry of a judgment or
a settlement for which the Seller is solely and entirely responsible and has
indicated its sole and entire responsibility in writing to the Buyer Indemnitee,
following such refusal, the liability of the Seller to the Buyer Indemnitee will
be fixed at the amount of any money damages provided in the proposed judgment or
settlement.
     8.5 Escrow. As partial security for the indemnity provided for in
Section 8.2 hereof, at the Closing, Buyer will deposit with the Escrow Agent the
Escrow Amount into an escrow fund (the “Escrow Fund”) maintained by the Escrow
Agent and established pursuant to the Escrow Agreement; it being understood that
the Escrow Fund shall not be the sole and exclusively remedy of Buyer
Indemnitees for the indemnity provided for in Section 8.2. Subject to the
following requirements, the Escrow Fund shall be in existence immediately
following the initial delivery of the Escrow Fund to the Escrow Agent and shall
expire as follows: 50% of the Escrow Fund shall be released twelve (12) months
after the Closing Date, and 50% of the Escrow Fund shall be released thirty
(30) days after the Audit Completion Date (the “Escrow Period”); provided that
the Escrow Period shall not terminate with respect to such amount as is
necessary, to satisfy any Claims previously asserted and which are being
contested. As soon as all such Claims have been resolved,

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the Escrow Agent shall deliver to Seller the remaining portion of the Escrow
Fund not required to satisfy such Claims.
          8.6 Purchase Price Adjustment. Any payment pursuant to this Article 8
shall be treated for all Tax purposes as an adjustment to the Purchase Price.
Article 9
TERMINATION AND ABANDONMENT
     9.1 Methods of Termination. The transactions contemplated herein may be
terminated and/or abandoned at any time prior to the Closing:
          (a) by the mutual written consent of the Parent, Buyer and Seller;
          (b) By Parent, Buyer or Seller, if the Closing shall not have occurred
on or before December 31, 2005 (the “Termination Date”); provided, however, that
the right to terminate this Agreement under this clause (b) of Section 9.1 shall
not be available to any party whose breach of this Agreement has resulted in the
failure of the Closing to occur on or before the Termination Date;
          (c) at the election of Parent, Buyer or Seller, if any Governmental
Entity shall have issued an order, decree or ruling or taken any other action
enjoining or otherwise prohibiting the transactions contemplated under this
Agreement and such order, decree, ruling or other action shall have become final
and nonappealable;
          (d) by the Parent or Buyer if any of the representations and
warranties of the Seller contained in this Agreement shall have been inaccurate
as of the date of this Agreement or shall have become inaccurate as of any
subsequent date (as if made on such subsequent date), in either case such that
the condition set forth in Section 7.1(a) would not be satisfied, or if any of
the Seller’s covenants contained in this Agreement shall have been breached in
any respect such that the condition set forth in Section 7.1(b) would not be
satisfied; provided, however, that if an inaccuracy in any of the
representations and warranties of the Seller as of a date subsequent to the date
of this Agreement or a breach of a covenant by the Seller is curable by the
Seller through the use of commercially reasonable efforts within 10 days after
the Parent or Buyer notifies the Seller in writing of the existence of such
inaccuracy or breach (the “Seller Cure Period”), then the Parent or Buyer may
not terminate this Agreement under this Section 9.1(d) as a result of such
inaccuracy or breach prior to the expiration of the Seller Cure Period, provided
the Seller, during the Seller Cure Period, continues to exercise commercially
reasonable efforts to cure such inaccuracy or breach (it being understood that
Parent or Buyer may not terminate this Agreement pursuant to this Section 9.1(d)
with respect to such inaccuracy or breach if such inaccuracy or breach is cured
prior to the expiration of the Seller Cure Period); or
          (e) by the Seller if any of Parent’s or Buyer’s representations and
warranties contained in this Agreement shall have been inaccurate as of the date
of this Agreement or shall have become inaccurate as of any subsequent date (as
if made on such subsequent date), in either case such that the condition set
forth in Section 7.2(a) would not be satisfied, or if any of Parent’s or Buyer’s
covenants contained in this Agreement shall have been breached in any respect
such that

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the condition set forth in Section 7.2(b) would not be satisfied; provided,
however, that if an inaccuracy in any of the representations and warranties of
Parent or Buyer as of a date subsequent to the date of this Agreement or a
breach of a covenant by Parent or Buyer is curable by Parent or Buyer through
the use of commercially reasonable efforts within 10 days after the Seller
notifies Parent or Buyer in writing of the existence of such inaccuracy or
breach (the “Buyer Cure Period”), then the Seller may not terminate this
Agreement under this Section 9.1(e) as a result of such inaccuracy or breach
prior to the expiration of the Buyer Cure Period, provided the Parent or Buyer,
during the Buyer Cure Period, continues to exercise commercially reasonable
efforts to cure such inaccuracy or breach (it being understood that the Seller
may not terminate this Agreement pursuant to this Section 9.1(e) with respect to
such inaccuracy or breach if such inaccuracy or breach is cured prior to the
expiration of the Buyer Cure Period)
     9.2 Procedure upon Termination. In the event of termination and abandonment
by a Party pursuant to Section 9.1, written notice thereof shall be given to the
other Party and the transactions contemplated by this Agreement shall be
terminated and/or abandoned, without further action by the Parties. If the
transactions contemplated by this Agreement are terminated and/or abandoned as
provided herein:
          (a) each Party will redeliver all documents, work papers and other
material (and all copies thereof) of the other Party relating to the
transactions contemplated hereby, whether so obtained before or after the
execution hereof, to the other Party furnishing the same; and
          (b) all Confidential Information received by either Party hereto with
respect to the business of the other Party shall be treated in accordance with
Section 5.12, provided that either Party shall be free to use or exploit for any
purpose the residuals resulting from access to or work with the other Party’s
Confidential Information. For the purposes of this Section 9.2(b), “residuals”
means information retained in the unaided memories of individuals who have had
access to such Confidential Information.
     9.3 Survival of Certain Provisions. The following provisions of this
Agreement shall survive any termination of this Agreement: Section 5.12
(Confidentiality), this Article 9, and Article 10 (General) and any provision
which, by its terms, must survive.
Article 10
GENERAL
     10.1 No Agency. Except as expressly provided herein, each Party shall in
all matters relating to this Agreement act as an independent contractor. Neither
Party shall have authority, nor shall either Party represent that it has any
authority, to assume or create any obligation, express or implied, on behalf of
the other, or to represent the other Party as agent or employee or in any other
capacity. Neither execution nor performance of this Agreement shall be construed
to have established any agency, joint venture, or partnership.
     10.2 Fees and Expenses. Whether or not the transactions contemplated by
this Agreement are consummated, all expenses, including without limitation all
legal, accounting, financial advisory, consulting and other fees, incurred in
connection with the negotiation or effectuation of this

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Agreement or consummation of the transactions contemplated by this Agreement,
shall be the obligation of the respective Party incurring such expenses.
     10.3 Notices. Any notice or other communication required or permitted to be
delivered to any Party under this Agreement must be in writing and shall be
deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or express delivery service or by facsimile) to the
address or facsimile telephone number set forth beneath the name of such Party
below (or to such other address or facsimile telephone number as such Party may
have specified in a written notice given to the other Party):

                  if to Parent or Buyer:   iWatt, Inc.
 
          101 Albright Way
 
          Los Gatos, California 95032-1827
 
          Attn: Curtis Davis, Chief Executive Officer
 
          Telephone: (408) 374-4200
 
          Facsimile: (408) 341-0455
 
           
 
      with a copy to:   Wilson Sonsini Goodrich & Rosati
 
          Professional Corporation
 
          650 Page Mill Road
 
          Palo Alto, California 94304-1050
 
          Attn: Neil J. Wolff
 
          Telephone: (650) 493-9300
 
          Facsimile: (650) 493-6811
 
           
 
      if to Seller:   Advanced Energy Industries, Inc.
 
          1625 Sharp Point Drive
 
          Fort Collins, Colorado 80525
 
          Attn: Michael El-Hillow, Chief Financial Officer
 
          Telephone: (800) 446-9167
 
          Facsimile: (970) 407-6550
 
           
 
      with a copy to:   Thelen Reid & Priest LLP
 
          225 W. Santa Clara Street, 12th Floor
 
          San Jose, California 95113
 
          Attn: Jay L. Margulies
 
          Telephone: (408) 282-1815
 
          Facsimile: (408) 278-8215

     10.4 Governing Law. This Agreement shall be governed in all respects by the
laws of the United States of America and the State of California as such laws
apply to agreements entered into and to be performed entirely within California
by California residents.
     10.5 Forum and Venue. Any judicial action or proceeding arising hereunder
or relating hereto shall be brought in, and the Parties hereby consent to the
exclusive, personal jurisdiction of, the state and federal courts located in the
County of Santa Clara, California. Seller hereby consents

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to the jurisdiction of such courts and hereby appoints its counsel identified in
Section 10.3 as its agent for service of process.
     10.6 Construction.
          (a) For purposes of this Agreement, whenever the context requires: the
singular number will include the plural, and vice versa; the masculine gender
will include the feminine and neuter genders; the feminine gender will include
the masculine and neuter genders; and the neuter gender will include the
masculine and feminine genders.
          (b) Any rule of construction to the effect that ambiguities are to be
resolved against the drafting Party will not be applied in the construction or
interpretation of this Agreement.
          (c) As used in this Agreement, the words “include” and “including” and
variations thereof, will not be deemed to be terms of limitation, but rather
will be deemed to be followed by the words “without limitation.”
          (d) Unless the context requires otherwise, the term “Seller” as used
herein refers to Seller and its Affiliates.
          (e) Except as otherwise indicated, all references in this Agreement to
“Schedules,” “Sections” and “Exhibits” are intended to refer to Schedules,
Sections and Exhibits to this Agreement.
          (f) The headings in this Agreement are for convenience of reference
only, will not be deemed to be a part of this Agreement, and will not be
referred to in connection with the construction or interpretation of this
Agreement.
     10.7 Breaches and Remedies. Except as otherwise provided herein, any and
all remedies herein expressly conferred upon a Party will be deemed cumulative
with and not exclusive of any other remedy conferred hereby, or by law or equity
upon such Party, and the exercise by a Party of any one remedy will not preclude
the exercise of any other remedy. Without limiting the generality of the
foregoing, Seller agrees that if it breaches any provision of Sections 5.13 and
5.14, Parent and Buyer will have available, in addition to any other right or
remedy otherwise available, the right to seek an injunction from a court of
competent jurisdiction restraining such breach or threatened breach and to
specific performance of any such provision of this Agreement without the
requirement that Parent or Buyer post a bond.
     10.8 Waiver. No failure on the part of a Party to exercise any power,
right, privilege, or remedy under this Agreement, and no delay on the part of
any Party in exercising any power, right, privilege, or remedy under this
Agreement, will operate as a waiver of such power, right, privilege, or remedy;
and no single or partial exercise of any such power, right, privilege, or remedy
will preclude any other or further exercise thereof or of any other power,
right, privilege, or remedy. No Party shall be deemed to have waived any claim
arising from this Agreement, or any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power, right, privilege or remedy is
expressly set forth in a written instrument duly executed and delivered on
behalf of such Party; and any such waiver will not be applicable or have any
effect except in the specific instance in which it is given.

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     10.9 Assignment. Neither Party may assign this Agreement in whole or in
part without the prior written consent of the other Party. After the Closing,
except as provided herein, Parent and Buyer may assign or transfer this
Agreement in whole or part. Any attempted transfer or assignment except as
provided herein shall be void and of no effect. Subject to the foregoing, this
Agreement shall be binding upon and inure to the benefit of the successors or
permitted assigns of the Parties. Nothing set forth herein shall in any way
limit the transfer, assignment or licensing by Parent or Buyer of the
Transferred Assets in their entirety or in part after the Closing.
     10.10 Severability. If, for any reason, a court of competent jurisdiction
finds any provision of this Agreement, or portion thereof, to be invalid or
unenforceable, such provision of the Agreement will be enforced to the maximum
extent permissible so as to effect the intent of the Parties, and the remainder
of this Agreement will continue in full force and effect. The Parties agree to
negotiate in good faith an enforceable substitute provision for any
unenforceable provision that most nearly achieves the intent and economic effect
of the unenforceable provision. Notwithstanding the foregoing, if a court of
competent jurisdiction determines that any restriction on any license granted
herein is invalid or unenforceable, then the license grants to which such
restriction relates shall terminate automatically.
     10.11 Entire Agreement. This Agreement (including the Collateral
Agreements, Schedules and Exhibits hereto) sets forth the entire understanding
of the Parties hereto relating to the subject matter hereof and supersedes all
prior agreements and understandings between the Parties hereto relating to the
subject matter hereof.
     10.12 Amendments. This Agreement may not be amended, modified, altered or
supplemented other than by means of a written instrument duly executed and
delivered on behalf of Seller, Parent and Buyer.
     10.13 Counterparts. This Agreement may be executed in counterparts, which,
when taken together, shall constitute one agreement.
* * * * *

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     IN WITNESS WHEREOF, the Parties, by their duly authorized representatives,
have executed this Agreement as of the date first written above.

                  “SELLER”       “PARENT”
 
                ADVANCED ENERGY INDUSTRIES, INC.       IWATT, INC.
 
               
By:
          By:    
 
               
 
               
Name:
          Name:    
 
               
 
               
Title:
          Title:    
 
               
 
                “BUYER”            
 
                IKOR ACQUISITION CORPORATION            
 
               
By:
               
 
               
 
               
Name:
               
 
               
 
               
Title:
               
 
               

[Asset Purchase Agreement]

 

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List of Schedules and Exhibits

      Schedule Number   Title of Schedule
1.1(c)
  Assigned Patents
1.1(d)
  Assigned Trademarks
1.1(f)
  Form of Bill of Sale
1.1(n)
  Designated Employees
1.1(mm)
  Product Software
1.1(v)
  Excluded Assets
1.1(ss)
  Transferred Contracts
1.1(ww)
  Transferred Products
1.1(xx)
  Transferred Tangible Assets
1.1(yy)
  Transferred Technology
1.1(zz)
  Transferred Websites
5.5
  Software Licenses
7.1(g)
  Required Consents

      Exhibit Number   Exhibit Title
A
  Escrow Agreement
B-1
  Transition Services
B-2
  Third Party Software Licenses
C
  Disclosure Schedule
D
  Form of Employment Offer Letter
E
  Form of Sublease
F
  Form of License Agreement