**EXHIBIT 2.1**

 

**ASSIGNMENTOF ASSETS AND**

# **ASSUMPTION OFLIABILITIES**

 

This Assignment of Assets and Assumption of Liabilities Agreement(“Agreement”) is made and entered into as of May 14, 2002 by and betweenTeraGlobal Communications Corp., a Delaware Corporation (“TeraGlobal”), asassignor, and Wave Three Software, Inc., a Delaware Corporation (“Wave3”), asassignee, with respect to the following facts:

 

A.            TeraGlobalis a publicly traded corporation, engaged in the business of developingsoftware for real-time communication and collaboration over computer networks,including the Internet.

 

B.            TeraGlobaldoes not have the necessary capital to continue its operations, and has notidentified investors that are willing to purchase debt or equity instrumentsfrom it in an amount that would provide adequate capital to finance itsoperations.

 

C.            TeraGlobalhas $2.8 million in Convertible Promissory Notes outstanding which are due andpayable on June 10, 2002, which notes are secured by a first priority lien onall of TeraGlobal’s tangible and intangible assets.

 

D.            TeraGlobalhas identified investors that would be willing to invest in its core business,provided that the investors were given the ability to make such investment in aprivate, non-publicly traded entity.

 

E.             TeraGlobalformed Wave3 as its wholly owned subsidiary for the sole purpose of receivingits operating assets and liabilities and attracting additional investmentthrough the sale of Wave3’s capital stock to third party investors.

 

F.             Inorder to increase the opportunity to secure the financing necessary to continuethe operations of its business, TeraGlobal now desires to transfer certainassets and liabilities to Wave3 and Wave3 is willing to accept such assets andliabilities, all on the terms and conditions contained in this Agreement.

 

NOW, THEREFORE, in consideration of the foregoingpremises and the mutual covenants contained herein, the parties agree asfollows:

 

1.             Assignment and Assumption ofAssets and Liabilities.

 

1.1            Assignment of Assets.TeraGlobal, does hereby assign, transfer, convey and deliver to Wave3, andWave3 does hereby accept, all of TeraGlobal’s rights, titles and interests,legal and equitable, in and to the following assets (collectively, the“Assets”):

 

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(a)           Working Capital.  All cash and cash equivalents of TeraGlobal,accounts receivable, shares of the capital stock of third parties held forinvestment purposes, certificates of deposit, security deposits, and prepaidaccounts.

 

(b)           Tangible Assets.  All of the personal property used in theoperation of TeraGlobal’s business, including without limitation furniture,fixtures, equipment, computers, printers, supplies, files, books and records.

 

(c)           Intangible Assets.  All of the intellectual property rights,software, licenses, telephone numbers, website addresses, copyright, trademark,tradename, trade secret and patent rights of TeraGlobal used in the operationof its business, including without limitation those items identified onSchedule 1.1(c) of this Agreement.

 

(d)           Contract Rights.  All of TeraGlobal’s rights in and to thecontacts and agreements listed on Schedule 1.1(d) of this Agreement.

 

(e)           Claims.  All claims of TeraGlobal relating to the Assets or theLiabilities, whether in the nature of tax refunds, insurance proceeds, contractobligations, tort, product warranty, guaranties or other sources.

 

1.2           Excluded Assets.  The following tangible and intangible assetsof TeraGlobal are specifically excluded from the definition of Assets forpurposes of this Agreement, and will remain the property of TeraGlobal:

 

(a)           Rights in and to the names“TeraGlobal”, “TeraConference”, “TeraScan” “TeraScanner”, “Distanceless Education”, “EthernetGQ”, “The Pots Box”,“ServiceCell” and any logo or variation of the same.

 

(b)           Accounts Receivable from TGCAcquisition, Inc. or any other subsidiary of TeraGlobal.

 

(c)           Goodwill associated with any of theassets of TeraGlobal, other than the Assets.

 

(d)           The following books and records ofTeraGlobal: (i) accounting records, including general ledger, accounts payableand accounts receivable records, (ii) bank statements, (iii) cancelled checksfor general and payroll accounts, (iv) audit and SEC workpapers and schedules,(v) internal audit workpapers, (vi) files concerning TeraGlobal’s acquisitionof entities, (vii) files concerning litigation against TeraGlobal, (viii)insurance files, including property, workman’s compensation and professionalliability, and (ix) employee benefit plan files.

 

(e)           Any contract rights not assumed underSection 1.1(d) above.

 

(f)            Any proceeds from obligations owedto TeraGlobal which are not assigned under this Agreement.

 

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1.3           Assumption of Liabilities.  Wave3 hereby agrees to assume, perform anddischarge the following liabilities of TeraGlobal (collectively, the“Liabilities”) and to hold TeraGlobal free and harmless from:

 

(a)           All liabilities and obligationsarising under those certain contracts listed on Schedule 1.1(d) of thisAgreement.

 

(b)           Accounts payable as reflected onTeraGlobal’s accounts payable ledger as of the date of this Agreement.

 

(c)           All obligations to employees forwages and under employment agreements and employee benefit plans, includingwithout limitation all medical, dental and insurance plans, accrued paid timeoff, 401(k), including vesting for any benefits requiring vesting.

 

(d)           All product warranty, service andsupport obligations arising out of the sale or transfer of licenses ofTeraMedia or Session software to customers of TeraGlobal.

 

(e)           The repayment of all of theConvertible Promissory Notes issued by TeraGlobal under that certain PromissoryNote and Warrant Purchase Agreement dated December 10, 2001, by and amongTeraGlobal and certain investors named therein, as amended.

 

1.4           Excluded Liabilities.  Except for those Liabilities expresslytransferred herein, TeraGlobal will retain, and shall continue to be obligatedto perform and discharge all other liabilities, including without limitation:

 

(a)           All liabilities and obligations undercontracts, written or oral, which are not listed on Schedule 1.1(d) of thisAgreement, including but not limited to liabilities or obligations relating toany leases for real property which are not occupied by TeraGlobal as of thedate hereof.

 

(b)           Any liabilities or obligations owedto marketing service providers that are no longer performing marketing servicesfor TeraGlobal, including the Bacon’s Information, Inc., Gartner Group, IDGWorld Expo, Stoorza Communications, Inc., and Xplain Corporation, Inc.

 

(c)           Any liabilities or obligations owedto communication service providers that are not currently providing services toTeraGlobal, including AT&T Conferencing, Broadwing Communications,Cachenet, and Rhythms Network.

 

(d)           Any liabilities or obligations owingto the NASD or NASDAQ or because of the listing of TeraGlobal’s shares on theOTC Bulletin Board maintained by the NASD or to NASDAQ stock market.

 

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(e)           Any liabilities or obligations arisingout of pending or threatened litigation against TeraGlobal, includingliabilities arising out of the U.S. Attorney Investigation into the securitiesoffering conducted by TechnoVision Communications, Inc.

 

(f)            Any liabilities arising our of orresulting from or in any way related to the registration of TeraGlobal’s commonstock under the Securities Act of 1933, as amended, including but not limitedto any liabilities to stockholders of TeraGlobal.

 

(g)           Any and all contingent or unknownclaims, debts, obligations or liabilities and any liabilities of TeraGlobalarising after the date hereof.

 

2.             Consideration.  In consideration for the assignment of theAssets from TeraGlobal, as described herein, Wave3 hereby agrees to (i) issueto TeraGlobal 55,000 shares of Wave3’s authorized but unissued Class B CommonStock and (ii) assume the Liabilities.

 

3.             Further Assurances  TeraGlobal shall from time to time and atWave3’s request, promptly and without further consideration, execute anddeliver to Wave3 such additional instruments of transfer, conveyance andassignment as Wave3 may reasonably request to evidence the assignment of theAssets to Wave3.  Similarly, Wave3 shallfrom time to time and at TeraGlobal’s request, promptly and without furtherconsideration, execute and deliver such additional instruments and documentsevidencing the assignment of the Assets and the assumption of the Liabilitiesas TeraGlobal may reasonably request. The parties will cooperate and take such actions as may be necessary tosecure any required third party consent to the assignment of the Assets and theassumption of the Liabilities.

 

4.             Access to Books and Records.

 

4.1  TeraGlobal Access.  Following the date of this Agreement, Wave3will permit TeraGlobal and its affiliates and representatives to havereasonable access upon reasonable notice and during regular business hours to,and, at its own expense to make copies of, all books and records transferred toWave3 under this Agreement.  For aperiod of three years following the date of this Agreement, Wave3 agrees toprovide TeraGlobal with notice of its intention to destroy any records.  If TeraGlobal desires to obtain any of suchrecords or documents, they may do so by delivering written notice of theirrequest to Wave3, along with instructions on delivery.  All costs associated with the delivery willbe born by TeraGlobal.

 

4.2  Wave3 Access.  Following the date of this Agreement,TeraGlobal will permit Wave3 and its affiliates and representatives to havereasonable access upon reasonable notice and during regular business hours to,and, at its own expense to make copies of, all books and records retained byTeraGlobal under this Agreement but in any way relating to the Assets andLiabilities.  For a period of threeyears following the date of this Agreement, TeraGlobal agrees to provide Wave3with notice of its intention to

 

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destroy any records.  If Wave3desires to obtain any of such records or documents, they may do so by deliveringwritten notice of their request to TeraGlobal, along with instructions ondelivery.  All costs associated with thedelivery will be born by Wave3.

 

4.3  Confidentiality.  Each of the parties shall hold and shallcause their respective affiliates, employees, auditors, attorneys,representatives and other advisors and agents to hold in strict confidence allProprietary Information that either may obtain about the other.  For purposes of this Agreement, “ProprietaryInformation” includes written, oral, documentaryor other information received by one party from the other party and which ismarked proprietary, confidential, or the equivalent, or which the transmittingparty indicates in writing at the time of transmittal to, or receipt by, thereceiving party is to be considered proprietary, confidential or theequivalent.  Proprietary Informationincludes notes, extracts, analyses or materials prepared by the receiving partywhich are copies of or derivative works of the Proprietary Information, or fromwhich the substance of the Proprietary Information can be inferred or otherwiseunderstood.  Information shall not bedeemed Proprietary Information, and the receiving party shall have noobligation with respect to any such information, which the receiving party canprove by written records: (i) is already known to the receiving party withoutobligation of confidentiality, from a source other than the transmitting party;(ii) is or hereafter becomes publicly known through no wrongful act, fault ornegligence of the receiving party; (iii) is received by the receiving partywithout restriction and without breach of this or any other Agreement from athird party entitled to so disclose it; (iv) is disclosed by the transmittingparty to a third party (other than a disclosure to a direct or indirectaffiliated company or subsidiary of the transmitting party) without restrictionon the rights of such third party; (v) is approved for release by writtenauthorization of the transmitting party; or (vi) is independently developed byemployees of the receiving party who have not had, either directly orindirectly, access to, or knowledge of, such Proprietary Information

 

5.             Miscellaneous.

 

5.1 Successors and Assigns. This Agreementshall be binding on, shall inure to the benefit of, the parties hereto andtheir respective successors and assigns.

 

5.2  EntireAgreement.  This Agreement, and anyrelated agreement referred to herein, constitutes the entire agreement betweenthe parties with respect to its subject matter and there are norepresentations, warranties or agreements between the parties which are notexpressed herein.  This Agreementsupersedes and replaces all prior understandings and agreements between theparties hereto, whether written or oral, express or implied, with respect toits subject matter. This Agreement may be amended or modified at any time ortimes only by unanimous written agreement of the parties.

 

5.3  Construction.  The captions contained in this Agreement arefor convenience of reference only and are not to be considered in construingthis Agreement.  The language of thisAgreement shall be construed as to its fair meaning and not strictly for oragainst any party.

 

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5.4  Severability.  The provisions of this Agreement areindependent of and severable from each other, and no provision shall beaffected or rendered invalid or unenforceable by virtue of the fact that forany reason any other or others of them may be invalid or unenforceable in wholeor in part.  Further, if a court ofcompetent jurisdiction determines that any provision of this Agreement isinvalid or unenforceable as written, such court may interpret, construe,rewrite or revise such provision, to the fullest extent allowed by law, so asto make it valid and enforceable consistent with the intent of the partieshereto.

 

5.5  Notices.  Any demands or other notices given underthis agreement shall be in writing and shall be served either personally ordelivered by U.S. Mail postage prepaid, registered or certified mail, returnreceipt requested.  Notices may alsoeffectively be given by facsimile, provided a complete copy of any notice sotransmitted shall also be mentioned in the same manner as required for a mailednotice.  Notices shall be deemedreceived at the earliest of actual receipt or three days following deposit inU.S. Mail, postage prepaid.  Noticesshall be directed to the following addresses:

 

(a)           ifto TeraGlobal, at its offices at 9171 Towne Centre Drive, Suite 600, San Diego,CA  92122, attention of President; and

 

(b)           ifto Wave3, at its offices at 9171 Towne Centre Drive, Suite 600, San Diego,CA  92122, attention of President.

 

Either party may designate a new address for purposes of notice underthis Agreement by notice to either party in the manner provided above.

 

5.6  Attorneys’Fees.  In any legal proceedingarising out of this Agreement, including with respect to any instrument,document or agreement made under or in connection with this Agreement, theprevailing party shall be entitled to recover its costs and actual attorneys’fees.  As used in this Agreement,“actual attorneys’ fees” shall mean the full and actual cost of any legalservices actually performed in connection with the matters involved, calculatedon the basis of the usual hourly fees charged by the attorneys performing suchservices.

 

                5.7 GoverningLaw.  This Agreement shall beconstrued in accordance with and governed by the internal laws of the State ofCalifornia.  Any legal actions orproceedings with respect to this Agreement shall be brought exclusively in thefederal or state courts of the County of San Diego, State of California, and byexecution and delivery of this Agreement, TeraGlobal and Wave3 accept thejurisdiction of these courts.

 

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IN WITNESS WHEREOF, the parties have duly executedthis Agreement by their duly authorized representatives, all as of the day andyear first above written.

 
|   | TERAGLOBAL COMMUNICATIONS CORP. |
|--------|---------------------------------|
|   |                            |   |
|   | By                              |   |   |
|   |                            | President |
|   |                            |   |
|   | WAVE THREE SOFTWARE, INC.       |
|   |                            |   |
|   | By                              |   |   |
|   |                            | President |
|        |                                 |  |  |  |

 

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