Document:

exv10w2

 

Exhibit 10.2

****Certain confidential information contained in this document, marked by brackets, has been omitted and filed with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

ASSET PURCHASE AGREEMENT

     This Asset Purchase Agreement (the “Agreement”) is entered into as of February 15,
2007, by and between SiS Holding Limited, a company organized under the laws of the Cayman Islands
(“Buyer”), ESS Technology, Inc., a California corporation (“US Seller”) and ESS
Technology International, Inc., a Cayman corporation (“Cayman Seller,” and collectively
with US Seller, “Seller”).

AGREEMENT

     In consideration of the mutual agreements, representations, warranties and covenants set forth
below, Buyer and Seller agree as follows:

1. Definitions.

     1.1 Definitions. As used in this Agreement, the following terms shall have the
following meanings:

          (a) “Affiliate” means, with respect to any Person, a Person directly or indirectly
controlling, controlled by, or under common control with such Person. For these purposes,
“control” shall refer to (i) the possession, directly or indirectly, of the power to direct
the management or policies of the subject entity, whether through the ownership of voting
securities, by contract, or otherwise, or (ii) the ownership, directly or indirectly, of at least
fifty percent (50%) of the voting securities or other ownership interest of the subject entity, or
in the event such entity resides in a country where such level of ownership is not permitted, the
maximum percentage ownership therein allowed.

          (b) “Acquisition Proposal” means, other than the transactions contemplated by this
Agreement and the SiS-US Agreement, any offer, proposal or inquiry relating to, or any Third Party
indication of interest in (i) any acquisition, purchase or transfer, direct or indirect, of the
Assets to be transferred and sold hereunder or of the tangible assets of Seller or the Transferred
Employees to be transferred pursuant to the SiS-US Agreement, and (ii) any transaction, including
without limitation, a merger, consolidation, share exchange, business combination, sale of
substantially all assets of Seller, or tender offer, the consummation of which could reasonably be
expected to impede, interfere with, prevent or materially delay the transactions contemplated by
this Agreement or the SiS-US Agreement or dilute materially the benefits to Buyer or SiS-US of the
transactions contemplated hereby or by the SiS-US Agreement.

          (c) “Assigned Technology” means the Owned Technology related exclusively to the
Business existing as of the Closing Date and/or otherwise described in Schedule 1.1(c)
hereto, which schedule indicates what part of the Assigned Technology is subject to the License
Back in Section 7 herein below, and what part of the Assigned Technology is not subject to the
License Back.

 

 

          (d) “Assigned Technology Modification” means any modification or enhancement to the
Assigned Technology that is developed by Seller for a period of 6 months following the Effective
Date.

          (e) “Base Technology” means all Owned Technology which is not itself Assigned
Technology (because it is or may be embodied or incorporated in or is necessary or useful to
design, develop, modify, enhance, manufacture, implement or otherwise exploit one or more Seller
Products being retained by Seller), but which Owned Technology is necessary or useful to design,
develop, modify, enhance, manufacture, implement or otherwise exploit the Assigned Technology for
the Business or is embodied or incorporated in any design, configuration or combination which is
part of or used in connection with the Assigned Technology for the Business. Base Technology
includes, but is not limited to, the “Sublicensable Base Technology” listed on Schedule
1.1(e)(i) hereto, the “Royalty-Bearing Base Technology” listed on Schedule
1.1(e)(ii) hereto, the “Referenceable Base Technology” listed on Schedule 1.1(e)(iii)
hereto, and any Assigned Technology Modification(s) and any Base Technology Modification(s).

          (f) “Base Technology Modification” means any modification or enhancement to the Base
Technology that is developed by Seller within twelve (12) months following the Closing Date.

          (g) “Business” means the business of designing, developing, modifying and enhancing,
manufacturing, having manufactured, marketing and distributing Products that are designed to: (i)
support all current or future video and/or audio formats for play-back from optical or other media
(except for applications in the Restricted Field of Use); or (ii) principally control blue-laser
based optical drives, but which may also support red-laser based optical drives as a matter of
backward compatibility, and all derivatives thereof, as well as Products designed to support any
successor formats or standards, and the provision of services relating thereto.

          (h) “Buyer Products” means any Products designed, developed, modified, enhanced,
manufactured, marketed and distributed by or on behalf of Buyer or an Affiliate that are primarily
used in the Business, including all successor products and new versions thereof for use in the
Business, and includes the provision of services related to such Products.

          (i) “Closing” means the consummation of the transactions contemplated hereby and
“Closing Date” means the date of the Closing.

          (j) “Code” means the Internal Revenue Code of 1986, as amended.

          (k) “Confidential Information” means nonpublic information that a party to this
Agreement (“Disclosing Party”) designates in writing as being confidential to the party
that receives such information (“Receiving Party”). “Confidential Information”
includes, without limitation, information in tangible or intangible form relating to and/or
including released or unreleased Disclosing Party software or hardware products, the marketing or
promotion of any Disclosing Party product, Disclosing Party’s business policies or practices, and
information received from others that Disclosing Party is obligated to treat as confidential.
Confidential
Information which is disclosed in tangible form shall be marked as “confidential” or words of

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similar import. Confidential Information which is disclosed verbally shall be designated as
“confidential” by the Disclosing Party when disclosed. Notwithstanding the foregoing, the failure
by the Disclosing Party to designate any tangible or intangible information as Confidential
Information shall not give the Receiving Party the right to treat such information as free from the
restrictions imposed by Section 6.17 of this Agreement if the circumstances would lead a reasonable
person to believe that such information is Confidential Information. Except as otherwise indicated
in this Agreement, the term “Disclosing Party” also includes all Affiliates of the
Disclosing Party and, except as otherwise indicated, the term “Receiving Party” also
includes all Affiliates of the Receiving Party. Confidential Information shall not include any
information, however designated, that: (i) is or subsequently becomes publicly available without
Receiving Party’s breach of any obligation owed to Disclosing Party; (ii) became known to Receiving
Party prior to Disclosing Party’s disclosure of such information to Receiving Party pursuant to the
terms of this Agreement without an obligation of confidentiality prior to the Disclosing Party’s
disclosure; (iii) became known to Receiving Party from a source other than Disclosing Party other
than by the breach of an obligation of confidentiality owed to Disclosing Party; or (iv) is
independently developed by Receiving Party.

          (l) “Consulting Agreement” means each agreement between Seller and Buyer (or an
Affiliate of Buyer) dated as of January 1, 2007, pursuant to which Buyer (or its Affiliate) agrees
to provide consulting services to Seller to be performed by certain Transferred Employees in
accordance with the terms thereof.

          (m) “Domain Names” means all Internet domain names owned by Seller or which Seller is
authorized to license to Buyer, and which exclusively relate to the Assigned Technology or the
Business, and/or those domain names that are otherwise identified on Schedule 1.1(m)
hereto.

          (n) “Exclusive Field of Use” means the business of designing, developing, modifying
and enhancing, manufacturing, having manufactured, marketing and distributing Products that are
designed to support current or future video and/or audio formats for play-back from optical or
other media (except for applications in the Restricted Field of Use), as well as Products designed
to support any successor formats or standards, and the provision of services relating thereto.

          (o) “GAAP” means generally accepted accounting principles of the United States as set
forth by the Financial Accounting Standards Board.

          (p) “Governmental Authorizations” means the permits, authorizations, consents or
approvals of any Governmental Entity that are a condition to the lawful consummation of the
transactions contemplated hereby listed on Schedule 1.1(p) hereto.

          (q) “Governmental Entity” means any court, or any federal, state, municipal or other
governmental authority, department, commission, board, agency or other instrumentality domestic or
foreign.

          (r) “Intellectual Property Rights” means any and all rights existing now or in the
future under patent law (including, but not limited to the Patents), copyright law, industrial

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design rights law, semiconductor chip and mask work protection law, moral rights law, trade secret
law, trademark law (including, but not limited to the Marks), domain name law (including, but not
limited to the Domain Names), unfair competition law, publicity rights law, privacy rights law, and
any and all similar proprietary rights, and any and all applications for registration,
registrations, letters patent, renewals, extensions, divisions, continuations, reissues, and
restorations thereof, now or hereafter in force and effect anywhere in the world.

          (s) “Knowledge” means that which is known by a Person and that of which a Person
should have constructive knowledge after conducting a reasonable examination of all matters
relating thereto.

          (t) “Licensed Technology” means the Base Technology licensed to Buyer hereunder as
well as any Third Party Technology licensed to Buyer hereunder.

          (u) “Lien” means any mortgage, pledge, lien, security interest, option, covenant,
condition, restriction, encumbrance, charge or other third-party claim of any kind.

          (v) “Marks” means all trademarks and service marks owned by Seller or which Seller is
authorized to license to Buyer, and which relate exclusively to the Assigned Technology or the
Business, and specifically include the marks identified on Schedule 1.1(v) hereto.

          (w) “Material Adverse Effect” with respect to a Person means any event, change or
effect that is materially adverse to the condition (financial or otherwise), properties, assets,
liabilities, business, operations, results of operations, or prospects of such Person and its
Affiliates, taken as a whole, or an effect which prevents or materially delays a Person’s ability
to consummate the transactions contemplated by this Agreement.

          (x) “Owned Technology” means any Technology that is owned or exclusively licensed to
Seller.

          (y) “Patents” means all patents owned by Seller or which Seller is authorized to
license to Buyer, that, absent the licenses granted hereunder would be infringed upon by the
exploitation of the Assigned Technology and/or the Base Technology in the Business, whether
presently issued or issued in the future, and specifically including the patents identified in
Schedule_1.1(y), and any and all continuations, continuations-in-part, or divisions
thereof.

          (z) “Person” means an individual, corporation, partnership, association, trust,
government or political subdivision or agent or instrumentality thereof, or other entity or
organization.

          (aa) “Products” means semiconductor products, or components, boards or assemblies
incorporating such semiconductor products.

          (bb) “Restricted Field of Use” means the business of designing, developing, modifying
and enhancing, manufacturing, having manufactured and distributing Products that (i) do not have HD
video decoding capability; and (ii) are used or marketed for the purpose of

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supporting standard
definition DVD optical disc technologies that utilize red laser technology to read and write data,
including desktop/portable DVD players, mini-combo DVD players, DVD home theater systems and
automotive DVD players which utilize such technology.

          (cc) “Seller Products” means all current SD DVD Products of Seller, including all
successor SD DVD Products and new SD DVD versions thereof.

          (dd) “SiS-US Agreement” means that certain Asset Purchase Agreement of even date
herewith between Seller and Silicon Integrated Systems Corporation, a California corporation and an
Affiliate of Buyer (“SiS-US”), pursuant to which SiS-US is acquiring substantially all the
tangible assets of the Business, and either SiS-US or another Affiliate of Buyer has offered
employment to certain individuals who have been involved in developing the Business for Seller.

          (ee) “Taxes” means all taxes, however denominated, including any interest, penalties
or other additions to tax that may become payable in respect thereof, (i) imposed by any federal,
territorial, state, local or foreign government or any agency or political subdivision of any such
government, for which Buyer could become liable as successor to or transferee of the Business or
the Purchased Assets or which could become a charge against or lien on any of the Purchased Assets,
which taxes shall include, without limiting the generality of the foregoing, all sales and use
taxes, ad valorem taxes, excise taxes, business license taxes, occupation taxes, real and personal
property taxes, stamp taxes, environmental taxes, real property gains taxes, transfer taxes,
payroll and employee withholding taxes, unemployment insurance contributions, social security
taxes, and other governmental charges in the nature of a tax, and other obligations of the same or
of a similar nature to any of the foregoing, which are required to be paid, withheld or collected,
or (ii) any liability for amounts referred to in (i) as a result of any obligations to indemnify
another person.

          (ff) “Technology” means technical information, software, software code, knowledge,
semiconductor masks, topologies and architectures, layouts, schematics, databases, net lists, test
data, test methodologies, test vectors, emulation and simulation tools and reports, development
tools, interfaces, specifications, works of authorship, inventions and discoveries, and any and all
Intellectual Property Rights pertaining thereto, and specifically includes any documentation or
items referenced in any Schedules describing the Technology to be sold, licensed or otherwise
transferred under this Agreement.

          (gg) “Third Party” means any Person other than Buyer or Seller or their respective
Affiliates.

          (hh) “Third Party Technology” means Technology owned by a Third Party that is embodied
or incorporated into the Assigned Technology or the Base Technology as of the Closing Date.

          (ii) “Transferred Employee” means any employee who was employed by Seller in the
Business as of December 31, 2006, who received and accepted an offer of employment by Buyer or an
Affiliate of Buyer, including without limitation SiS-US, or a designated co-employer of any of the
foregoing (each, a “Buyer Party”), to commence work for

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such Buyer Party effective as of
12:01 a.m. on January 1, 2007 and who transferred employment to Buyer Party pursuant to such offer.
Transferred Employees shall not include any person on a disability leave of more than twenty-six
(26) weeks.

          (jj) “Transferred Third Party Technology” means the Third Party Technology, listed on
Schedule 1.1(jj), the license of which shall be transferred to Buyer on the Closing Date.

          (kk) “Transition Services Agreement” means each agreement between Seller and Buyer (or
an Affiliate of Buyer) dated as of January 1, 2007, pursuant to which Seller has agreed to provide
Buyer (or its indicated Affiliate) with certain transition services in accordance with the terms
thereof.

          (ll) “Working Day” means a day other than Saturday or Sunday and on which commercial
banks are open for business in California and Taiwan.

2. Transfer of Assets to Buyer

     2.1 Purchased Assets.

          (a) Purchase and Sale. Subject to the terms and conditions of this Agreement, Seller
hereby sells, assigns, grants, transfers, conveys and delivers (or causes to be sold, assigned,
granted, transferred, conveyed and delivered) to Buyer, or to any Affiliate of Buyer designated by
Buyer, and Buyer hereby purchases and accepts from Seller as of the Closing Date, free and clear of
all Liens:

                (i) all of Seller’s right, title and interest existing as of the Closing Date in and
to the Assigned Technology and all Intellectual Property Rights thereto (subject to the
License-Back to Seller of certain rights pursuant to Section 7 herein below);

                (ii) all of Seller’s rights existing as of the Closing Date to the Transferred Third
Party
Technology, including licensed rights and express or implied warranties in favor of Seller (subject
to the License-Back to Seller of certain rights pursuant to Section 7 herein below, if permitted by
such Third Party);

                (iii) all of Seller’s causes of action, judgments, and claims or demands of whatever
kind or
description existing as of the Closing Date (whether known or unknown as of that date) arising out
of or relating to the Assigned Technology and all Intellectual Property Rights relating thereto,
and the rights conveyed under Section 2.1(a)(ii), other than such causes of action, judgments, and
claims or demands arising under this Agreement;

                (iv) all of Seller’s right, title and interest existing as of the Closing Date in
and to such
other properties or assets that are listed on Schedule 2.1(a)(iv) (“Other Assets”);
and

                (v) all goodwill associated with all of the foregoing, together with the right to
represent to
third parties that Buyer, together with its Affiliates, is the successor to the

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Business.

The assets, properties, and rights to be conveyed, sold, transferred, assigned, and delivered to
Buyer pursuant to this Section 2.1(a) are sometimes hereinafter collectively referred to as the
“Purchased Assets”.

          (b) Existing Licenses. Seller previously has granted licenses to Third Parties to use
the Assigned Technology as set forth in Schedule 2.1(b), and Buyer takes the Assigned
Technology subject to such licenses. Any executory obligations and any liabilities to Third
Parties under such license agreements or arising out of such license agreements (“Remaining
License Obligations”) shall remain the obligation of Seller. Seller agrees to provide
reasonable assistance to Buyer, at Buyer’s expense and upon its request, to enforce the terms and
conditions of such license agreements against any Third Party.

     2.2 Licensed Assets.

          (a) Sublicensable Base Technology License. In connection with the purchase and sale
of the Purchased Assets hereunder, effective as of the Closing Date, and subject to the terms and
conditions hereof, Seller hereby grants Buyer, under Seller’s Intellectual Property Rights in the
Sublicensable Base Technology, any Base Technology Modifications thereof, and any Assigned
Technology Modifications, a worldwide, perpetual, irrevocable license, with the right to sublicense
:

                (i) to design, develop, modify, enhance and use, and to have any of the foregoing
performed on
its behalf, the Sublicensable Base Technology, any Base Technology Modifications thereof, and any
Assigned Technology Modifications, in each instance in connection with the Business; and

                (ii) to manufacture, have manufactured, market, distribute and sell, and to have any of
the
foregoing performed on its behalf, Buyer Products.

The foregoing license is restricted solely for use in the Business. The foregoing license shall be
exclusive in the Business as to Buyer and its Affiliates, non-transferable (except for transfers to
Buyer’s Affiliates or successors in interest to the Business or to one or more successors in
interest to any Buyer Product), and shall be royalty-free and fully paid up. The foregoing license
may not be exercised or otherwise exploited by Buyer in the Restricted Field of Use. Seller shall
retain all rights to the Sublicensable Base Technology outside of the Business.

          (b) Royalty-Bearing Base Technology License. In connection with the purchase and sale
of the Purchased Assets hereunder, effective as of the Closing Date, and subject
to the terms and conditions hereof, Seller hereby grants Buyer, under Seller’s Intellectual
Property Rights in the Royalty-Bearing Base Technology and any Base Technology Modifications
thereof, a worldwide, perpetual, non-sublicensable (except the right to sublicense to Buyer’s
Affiliates and its and their respective OEMs, distributors and customers), irrevocable license:

                (i) to design, develop, modify, enhance and use, and to have any of

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the foregoing performed on
its behalf, the Royalty-Bearing Base Technology and any Base Technology Modifications thereof, in
each instance in connection with the Business; and

                (ii) to manufacture, have manufactured, market, distribute and sell, and to have any of
the
foregoing performed on its behalf, Buyer Products.

The foregoing license is restricted solely for use in the Business. The foregoing license shall be
non-exclusive, non-transferable (except for transfers to Buyer’s Affiliates or successors in
interest to the Business or to one or more successors in interest to any Buyer Product), and shall
be royalty-free and fully paid up (except for applications outside the Exclusive Field of Use, in
which event the license shall be subject to payment of a royalty to be negotiated in good faith by
the parties). Seller shall retain all rights to the Royalty-Bearing Base Technology except for the
limited license granted herein.

          (c) Reference License. In connection with the purchase and sale of the Purchased
Assets hereunder, effective as of the Closing Date, and subject to the terms and conditions hereof,
Seller hereby grants Buyer a worldwide, perpetual, non-sublicensable (except the right to
sublicense to Buyer’s Affiliates) irrevocable license to use and copy the Referenceable Base
Technology and any Base Technology Modifications thereof solely for purposes of internal reference
in connection with Buyer Products. The foregoing license shall be non-exclusive, non-transferable
(except for transfers to Buyer’s Affiliates or successors in interest to the Business or to one or
more successors in interest to any Buyer Product), and shall be royalty-free and fully paid up.
The foregoing license may not be exercised or otherwise exploited in the Restricted Field of Use or
in any way outside of the Business.

          (d) Patent License. Without limiting the generality of anything contained in this
Agreement, effective as of the Closing Date, subject to the terms and conditions hereof, Seller
hereby grants to Buyer, during the term of the Patents and under Seller’s rights to the Patents, a
non-exclusive, non-transferable (except for transfers to Buyer’s Affiliates or successors in
interest to the Business or to one or more successors in interest to any Buyer Product) and
non-sublicensable (except for sublicenses to Buyer’s Affiliates and Buyer’s and its Affiliates’
respective OEMs, distributors and customers of Buyer Products), worldwide, perpetual, irrevocable,
royalty-free and fully paid up license (the “Patent License”) to make (including the right
to practice methods, processes and procedures), have made, use, lease, sell, offer for sale and
import any Buyer Products embodying or made in accordance with any invention of the Patents. The
foregoing license may not be exercised or otherwise exploited in the Restricted Field of Use or
otherwise outside of the Business.

The assets, properties, Patents, and rights licensed and delivered to Buyer pursuant to this
Section 2.2 are sometimes hereinafter collectively referred to as the “Licensed Assets”,
and together with the Purchased Assets, the “Assets”.

     2.3 Certain Excluded Assets. Buyer agrees that the assets of Seller set forth on
Schedule 2.3 shall be excluded from the Assets (the “Excluded Assets”).

     2.4 Third Party Technology. Seller shall use commercially reasonable efforts to
obtain any consent required from any Third Party set forth on Schedule 2.4 hereto, to
convey or

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grant to Buyer Seller’s rights to Transferred Third Party Technology; provided that
Seller shall not be obligated to pay any amounts to any third parties (other than amounts accrued
but unpaid by Seller) that may be requested by such third parties in consideration for obtaining
such consents. The consents set forth in Schedule 2.4 shall constitute “Required
Consents” hereunder.

     2.5 Assumed Liabilities. Effective as of the Closing, Buyer (or its designated
Affiliate(s), as the case may be) in accordance with Section 3.2 shall, without any further
responsibility or liability of or recourse to Seller or any of Seller’s Affiliates, subsidiaries,
stockholders, officers, directors, employees, agents, successors or assigns, absolutely and
irrevocably assume, pay, perform and be liable and responsible for any and all of the following
liabilities (collectively, the “Assumed Liabilities”):

          (a) all liabilities and obligations arising after the Closing Date with respect to the
Purchased Assets, provided however, that all liabilities arising prior to the Closing Date with
respect to the Purchased Assets and all unperformed or unmatured obligations and covenants of
Seller incurred by Seller prior to the Closing Date with respect to the Purchased Assets shall
remain the sole responsibility of Seller; and provided further that any claim arising after the
Closing Date that would not have occurred but for the inaccuracy of a representation or warranty of
Seller hereunder shall also remain the sole responsibility of Seller;

          (b) all liabilities and obligations arising after the Closing Date with respect to Transferred
Third Party Technology set forth on Schedule 2.5 hereto, provided however, that all
liabilities arising prior to the Closing Date with respect to the Transferred Third Party
Technology and all unperformed or unmatured obligations and covenants of Seller incurred by Seller
prior to the Closing Date with respect to the Transferred Third Party Technology shall remain the
sole responsibility of Seller.

     2.6 Excluded Liabilities. Except for the Assumed Liabilities and any other
liabilities specifically assumed pursuant to this Agreement, Buyer shall not assume and shall not
be liable for, and Seller and its Affiliates shall retain and remain solely liable for and
obligated to discharge, all of the debts, contracts, agreements, commitments, obligations and other
liabilities of any nature whatsoever of Seller and its Affiliates, whether known or unknown,
accrued or not accrued, fixed or contingent, including without limitation, the following
(collectively, with the foregoing, the “Excluded Liabilities”):

          (a) Any liability for breaches by Seller or any of its Affiliates on or prior to the Closing
Date of any contract (including without limitation any contracts relating to Third Party
Technology), instrument or purchase order, or any liability for payments or amounts due under
any contract (including without limitation any contracts relating to Third Party Technology),
instrument, or purchase order on or prior to the Closing Date;

          (b) Any liability or obligation for Taxes attributable to or imposed upon Seller or any of its
Affiliates, or attributable to or imposed upon the Assets for any period (or portion thereof) up to
but excluding the Closing Date, other than transfer taxes, sales, value-added or other similar
taxes on the Assets directly attributable to or arising from the transactions contemplated by this
Agreement (for purposes of determining the amount of Taxes attributable to the period up to the
Closing Date, the amount of any Taxes based on or measured by income

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or receipts shall be
determined based on a closing of the books as of the close of business on the day before the
Closing Date, and the amount of other Taxes shall be deemed to be the amount of such Tax for the
entire taxable period multiplied by a fraction the numerator of which is the number of days in the
taxable period ending on the day before the Closing Date and the denominator of which is the number
of days in such entire taxable period);

          (c) Any liability or obligation for or in respect of any loan, other indebtedness for money
borrowed, or account payable of Seller or any of its Affiliates, including any such liabilities
owed to Affiliates of Seller;

          (d) Any liability or obligation arising as a result of any legal or equitable action or
judicial or administrative proceeding initiated at any time, to the extent relating to any action
or omission on or prior to the Closing Date by or on behalf of Seller or any of its Affiliates,
including, without limitation, any liability for infringement of intellectual property rights,
breach of product warranty, injury or death caused by products, or violations of federal or state
securities or other laws;

          (e) Any liability or obligation arising on or prior to the Closing Date out of any “employee
benefit plan,” as such term is defined by the Employee Retirement Income Security Act of 1974
(“ERISA”) or other employee benefit plans;

          (f) Any liability or obligation for making payments of any kind (including as a result of the
sale of the Assets or as a result of the termination of employment by Seller of employees, or other
claims arising out of the terms and conditions of employment with Seller, or for vacation or
severance pay or otherwise) to employees of Seller or in respect of payroll taxes for employees of
Seller;

          (g) Any liability of Seller incurred in connection with the making or performance of this
Agreement and the transactions contemplated hereby;

          (h) Any liability of Seller arising out of the violation of or failure to comply with any
environmental laws applicable to any aspect of the Business;

          (i) Any costs or expenses of Seller incurred in connection with shutting down, deinstalling
and removing equipment not purchased by Buyer, and the costs associated with all contracts and
agreements not assumed by Buyer; and

          (j) Any Remaining License Obligation.

     2.7 Purchase Price.

          (a) Subject to the performance by Seller of all of its obligations under this Agreement
(including delivering all documents required to be delivered) at the Closing, in consideration of
the acquisition of the Purchased Assets under Section 2.1 and the Base Technology licenses and
Patent License granted under Section 2.2, Buyer agrees (i) to deliver to Seller evidence of Buyer’s
instruction to its bank (“Bank Instruction”) to release funds within one (1) business day
of the Closing Date in the amount of $9,450,000.00 to be wire transferred to

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an account or accounts
designated by Seller (the “Initial Installment”); (ii) within seven (7) business days of
the date on which Seller, Buyer and Chinatrust Commercial Bank (Taiwan) (the “Escrow
Agent”) shall have executed that certain Indemnity Escrow Agreement in substantially the form
attached hereto as Exhibit A (the “Escrow Agreement”), to deposit on behalf of Seller into
an account or accounts designated by Escrow Agent (the “Escrow Fund”) $2,000,000.00 in
immediately available funds (the “Escrow Consideration” and together with the Initial
Installment and the Employee Bonus Funds set forth in Section 2.8(a) below, the “Immediate
Consideration”), which consideration shall be subject to the provisions of the Escrow Agreement
and (iii) to assume the Assumed Liabilities. Also at such time as all Technology embodied in the
Assigned Technology, Licensed Technology and Transferred Third Party Technology shall have been
copied and certified by Buyer, Buyer shall deliver to Seller’s designated bank account an
additional $2,000,000.00 (the “Hold Back Amount”, and together with the Immediate
Consideration, the “Purchase Price”).

          (b) Upon Seller’s receipt of the Bank Instruction set forth in subsection 2.7(a)(i) above,
Seller shall arrange to release within three (3) Working Days thereafter and return to Silicon
Integrated Systems Corporation of Hsin-Chu, Taiwan, R.O.C., the sole shareholder of Buyer
(“Parent”), the $1,500,000.00 previously paid by Parent to Seller as a good-faith fully
refundable deposit (the “Deposit”).

          (c) The Purchase Price shall be allocated to the intellectual property (including, but not
limited to, trademarks, trade names, patents, licenses, copyrights) allocated [*****] to the Cayman
Seller and [*****] to the US Seller. For purposes of this allocation, no value is being attributed
to goodwill or going concern, covenant not to compete or contingent or assumed liabilities. Each
party agrees to report the federal, foreign, state, local and other Tax consequences of the
transactions contemplated by this Agreement in a manner consistent with such allocation (including
any modifications thereto as a result of any payments or other adjustments made after the Closing
Date) and shall not take any position inconsistent therewith upon examination of any Tax return or
report, or in any litigation, investigation or otherwise, unless otherwise required by a taxing
authority. Each party shall cooperate in the timely filing of Forms 8594 (if required) with the
Internal Revenue Service.

          (d) All payments made to Seller pursuant to this Agreement (including payments of the
Immediate Consideration, the Escrow Consideration, future royalty payments or amounts from the
Bonus Plan) shall be made free and clear of and without deduction or
withholding for or on account of any present or future income, stamp or other taxes, levies,
imposts, duties, charges, fees, deductions or withholdings of any kind, now or hereafter imposed,
levied, collected, withheld or assessed by any Governmental Entity.

     2.8 Employee Retention Bonus Pool; Forfeited Bonuses.

          (a) In addition, within seven (7) business days of the date on which Seller, Buyer and the
Escrow Agent shall have executed that certain Escrow Bonus Agreement substantially in the form
attached hereto as Exhibit C, Buyer agrees to deliver to the Escrow Agent, or to an account
or accounts designated by Escrow Agent, $[*****] in immediately available funds (the “Employee
Bonus Funds”) pursuant to which bonuses shall be paid to Transferred Employees in accordance
with the terms of the Employee Retention Bonus Plan

 

**** Confidential Treatment Requested.

 

 

attached hereto as Exhibit B (the
“Bonus Plan”) and the provisions of the Bonus Escrow Agreement.

          (b) Transferred Employees who remain employed by the applicable Buyer Party on the first and
second anniversaries of January 1, 2007 (each, a “Bonus Payment Date”) are eligible to
receive bonuses allocated to such individuals under the Bonus Plan from the Employee Bonus Funds.
However, amounts that would have been payable to any Transferred Employee who is no longer employed
by the applicable Buyer Party on a Bonus Payment Date, and associated interest, if any, shall not
be paid to the Transferred Employee and such forfeited bonus shall be split 50/50 between Buyer and
Seller after deduction of: (i) any applicable escrow service fee under the Bonus Pool Escrow
Agreement, (ii) taxes due on interest that has accrued on the Employee Bonus Funds, and (iii) all
withholding fees and payroll taxes (including the Transferred Employees’ and employer’s portion of
payroll taxes) owed to any Government Entity due to payment of bonuses under the Bonus Plan. The
Buyer and Seller agree to treat only the portion of the payment, if any, that is paid to Seller
from the Escrow Bonus Funds in the event of a failure by a Transferred Employee to remain employed
as a contingent payment and an adjustment to the Purchase Price for federal, state and local income
tax purposes.

3. Closing

     3.1 Closing. Subject to the terms and conditions of this Agreement, the Closing shall
take place on such date, as soon as practicable after all conditions precedent in Sections 8 and 9
have been satisfied or waived, as the parties may agree (the “Closing Date”), but in any
case, no later than February 28, 2007, provided however that the parties may mutually agree to
extend the time permitted to effect the Closing beyond February 28, 2007.

     3.2 Actions at the Closing. On the Closing Date, Seller shall have delivered the
Purchased Assets and the Licensed Assets to Buyer as follows. Seller shall have made available for
download by Buyer via a restricted FTP site all source code or other electronic files embodied or
included in the Assets (including all Seller files, libraries, binaries, object code, headers,
modules, type definitions, project file settings, installation scripts, release notes, web pages,
graphics, icons, color pallets, encryption keys, and scripts required to build and package the
Technology comprising any part of the Assets, but excluding any third-party products or materials
for which Seller has not obtained consent from the owner to transfer and assign such products or
materials to Buyer hereunder) and all end-user documentation source (including all files,
graphics, icons, snapshots, text, binaries, web pages, scripts, help files, help source, word
documents, adobe acrobat documents and release notes). Seller shall have delivered the remaining
Assets promptly to Buyer, each by placement on a restricted FTP site for download by Buyer, to the
extent such Assets were downloadable, and otherwise by a manner that was mutually agreed upon by
Buyer and Seller. All Intellectual Property Rights transferred by Seller hereunder together with
their tangible embodiments shall be held physically and legally by Buyer. Buyer and Seller shall
take such actions and execute and deliver such agreements, bills of sale, and other instruments and
documents as necessary or appropriate to effect the transactions contemplated by this Agreement in
accordance with its terms, including without limitation the following:

 

			
	****	 	Confidential Treatment Requested.

 

 

          (a) Bill of Sale; Assignment and Assumption Agreement. Seller shall deliver to Buyer
a general Bill of Sale substantially in the form attached as Exhibit D and with respect to
the Intellectual Property Rights in the Assigned Technology, an Assignment and Assumption Agreement
substantially in the form attached as Exhibit E (collectively, the “Transfer
Documents”) in each case duly executed by Seller, and in the aggregate assigning to Buyer all
of Seller’s right, title and interest in and to the Purchased Assets existing as of the Closing
Date. Buyer may designate one or more of its Affiliates as the recipient of certain of the
Purchased Assets, and as the party to assume certain of the Assumed Liabilities (provided that
Buyer remains liable therefor), in which case Seller shall transfer such Purchased Assets and
Assumed Liabilities to Buyer or the Affiliate(s) designated by Buyer pursuant to such Transfer
Documents.

          (b) Consideration. Buyer shall deliver a copy of the Bank Instruction regarding the
payment of the Immediate Consideration to Seller.

          (c) Title. Seller shall provide reasonable evidence of valid title to such of the
Purchased Assets as Buyer may reasonably request in writing prior to the Closing, in form and
substance reasonably satisfactory to Buyer.

          (d) Third Party Consents and Assignments. Seller shall deliver to Buyer any
assignments and the Required Consents it has obtained in respect of any of the Assets, duly
executed by parties having the authority to so assign or consent to assign, in form and substance
as Buyer shall reasonably request, as well as a written confirmation from such third parties that
the Assets are in good standing.

          (e) Seller Documents. At the Closing, Seller shall deliver to Buyer any and all
documents required to satisfy the conditions set forth in Section 9 of this Agreement that have not
been waived by Buyer and any other closing documents reasonably requested by Buyer.

          (f) Buyer Documents. At the Closing, Buyer shall deliver to Seller any and all
documents required to satisfy the conditions set forth in Section 8 of this Agreement that have not
been waived by Seller and any other closing documents reasonably requested by Seller.

          (g) Post-Closing Actions. Subsequent to the Closing Date, Seller shall, and shall
cause any Affiliate of Seller to, from time to time execute and deliver, upon the request of Buyer,
all such other and further materials and documents and instruments of conveyance, transfer or
assignment as may reasonably be requested by Buyer to effect, record or verify the transfer to and
vesting in Buyer of Seller’s and any of Seller’s Affiliates’ right, title and interest in and to
the Assets, free and clear of all Liens in accordance with the terms of this Agreement. Buyer,
Seller and the Escrow Agent shall work diligently to finalize and execute the Indemnity Escrow
Agreement and the Bonus Escrow Agreement on or before February 28, 2007, and within seven (7) days
of the date on which the parties execute each of those agreements, Buyer shall deposit the Escrow
Consideration and the Employee Bonus Funds, respectively, into a designated account or accounts
with the Escrow Agent.

- 13 -

 

4. Representations and Warranties of Seller

     Each representation and warranty set forth below is qualified by any exception or disclosures
set forth in the Seller Disclosure Schedule attached hereto, which exceptions specifically
reference the Section(s) to be qualified. In all other respects, each representation and warranty
set out in this Section 4 is not qualified in any way whatsoever, will not merge on Closing or by
reason of the execution and delivery of any agreement, document or instrument at the Closing, will
remain in force on and after the Closing Date, is given with the intention that liability is not
confined to breaches discovered before Closing, is separate and independent and is not limited by
reference to any other representation or warranty or any other provision of this Agreement, and is
made and given with the intention of inducing the Buyer to enter into this Agreement. Except as
otherwise set forth in the Seller Disclosure Schedule, Seller represents and warrants to Buyer as
follows:

     4.1 Organization, Standing and Power. US Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of California, and Cayman Seller
is a corporation duly organized, validly existing and in good standing under the laws of the Cayman
Islands. Seller has the requisite corporate power and authority and all necessary permits,
authorizations, consents, and approvals of all Governmental Entities to own, lease and operate its
properties and to carry on the Business as now being conducted and as proposed to be conducted,
except where the failure to have such power, authority and governmental approvals would not,
individually or in the aggregate, have a Material Adverse Effect. Seller is duly qualified or
licensed as a foreign corporation to do business, and is in good standing, in each jurisdiction
where the character of the properties owned, leased or operated by it or the nature of its business
makes such qualification or licensing necessary, except for failures to be so qualified or licensed
and in good standing that would not, individually or in the aggregate, have a Material Adverse
Effect. US Seller has previously delivered to Buyer true and complete copies of the Articles of
Incorporation and Bylaws of US Seller as presently in effect. Cayman Seller has delivered to
Buyer true and complete copies of the Articles of Association and related charter documents of
Cayman Seller as presently in effect.

     4.2 Authority. The execution and delivery of this Agreement (and all other agreements
and instruments contemplated under this Agreement) by Seller, the performance by Seller of its
obligations hereunder and thereunder, and the consummation by Seller of the transactions
contemplated hereby and thereby have been duly authorized by all necessary action by the Board of
Directors and shareholders of Seller, and no other act or proceeding on the part of or on behalf of
Seller or its shareholders is necessary to approve the execution and delivery of this Agreement and
such other agreements and instruments, the performance by Seller of its obligations hereunder and
thereunder and the consummation of the transactions contemplated hereby and thereby. The signatory
officers of Seller have the power and authority to execute and deliver this Agreement and all of
the other agreements and instruments to be executed and delivered by Seller pursuant hereto, to
consummate the transactions hereby and thereby contemplated and to take all other actions required
to be taken by Seller pursuant to the provisions hereof and thereof.

- 14 -

 

     4.3 Execution and Binding Effect. This Agreement has been duly and validly executed
and delivered by Seller and constitutes, and the other agreements and instruments to be executed
and delivered by Seller pursuant hereto, upon their execution and delivery by Seller, will
constitute (assuming, in each case, the due and valid authorization, execution and delivery thereof
by Buyer), legal, valid and binding agreements of Seller, enforceable against Seller in accordance
with their respective terms.

     4.4 Consents and Approvals of Governmental Entities. Other than the Governmental
Authorizations there is no requirement applicable to Seller to make any filing, declaration or
registration with, or to obtain any permit, authorization, consent or approval of, any Governmental
Entity as a condition to the lawful consummation by Seller of the transactions contemplated by this
Agreement and the other agreements and instruments to be executed and delivered by Seller pursuant
hereto or the consummation by Seller of the transactions contemplated herein or therein.

     4.5 No Violation. Neither the execution, delivery and performance of this Agreement
and all of the other agreements and instruments to be executed and delivered pursuant hereto, nor
the consummation of the transactions contemplated hereby or thereby, will, with or without the
passage of time or the delivery of notice or both, (a) conflict with, violate or result in any
breach of the terms, conditions or provisions of the Articles of Incorporation or Bylaws of Seller,
(b) conflict with or result in a violation or breach of, or constitute a default or require consent
of any Person (or give rise to any right of termination, cancellation or acceleration) under, any
of the terms, conditions or provisions of any contract, notice, bond, mortgage, indenture, license,
franchise, permit, agreement, lease or other instrument or obligation to which Seller is a party or
by which Seller or any of the Assets may be bound, (c) violate any statute, ordinance or law or any
rule, regulation, order, writ, injunction or decree of any Governmental Entity applicable to Seller
or by which any properties or assets of Seller may be bound, or (d) result in any cancellation of,
or obligation to repay, any grant, loan or other financial assistance received by Seller from any
Governmental Entity. No “bulk sales” legislation applies to the transactions contemplated by
this Agreement.

     4.6 Consents. Schedule 4.6 sets forth each agreement, contract, license or
other instrument binding upon Seller requiring a consent as a result of the execution, delivery and
performance of this Agreement or the consummation of the transactions contemplated hereby.

     4.7 SEC Documents; Financial Information. Seller has delivered to Buyer a true and
complete copy of all filings it has made with the Securities and Exchange Commission
(“SEC”) since January 1, 2005 (the “SEC Documents”). The SEC Documents contain an
audited consolidated balance sheet of Seller as of December 31, 2005 and the related audited
consolidated statements of operations and cash flows for the year then ended and the Seller’s
unaudited consolidated balance sheet as of September 30, 2006, and the related unaudited
consolidated statements of operations and cash flows for the nine month period then ended. Seller
has also provided its unaudited balance sheet as of September 30, 2006, a copy of which is set
forth in the Seller Disclosure Schedule (the “Last Balance Sheet” and together with the SEC
Documents, “Seller’s Financials”). Seller’s Financials, and the notes thereto are correct
and complete in all material respects and were prepared in accordance with GAAP applied on a

- 15 -

 

consistent basis throughout the periods indicated and consistent with each other. Seller’s
Financials present fairly the financial condition and operating results and cash flows of Seller as
of the dates and during the periods indicated therein, subject, in the case of the unaudited
statements, to normal year-end adjustments, which will not be material in amount or significance.
Seller’s Financials accurately record the Assets as assets of Seller on each applicable balance
sheets included in the SEC Documents as well as on the Last Balance Sheet. Since the date of the
Last Balance Sheet, there has been no material change in Seller’s accounting policies and as of
their respective filing dates, the SEC Documents complied in all material respects with the
requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and
none of the SEC Documents nor the Last Balance Sheet contained any untrue statement of a material
fact or omitted to state a material fact required to be state therein or necessary to make the
statement made therein, in light of the circumstances in which they were made, not misleading,
except to the extent corrected by a document subsequently filed with the SEC and provided to Buyer
prior to the date hereof.

     4.8 No Undisclosed Liabilities. The Assets do not have any liability, Lien,
indebtedness, obligation, expense, claim, deficiency, guaranty or endorsement of any type
associated with them, whether accrued, absolute, contingent, matured, unmatured or other (whether
or not required by GAAP to be reflected in the Seller’s Financials) which (i) have not been
reflected in the Last Balance Sheet or the US Seller’s annual report on Form 10-K, or (ii) have not
arisen in the ordinary course of Seller’s business since the date of the Last Balance Sheet, and
are disclosed in the Seller Disclosure Schedule.

     4.9 Assets Generally.

          (a) The Assets include all intangible properties, including those intangible formats,
currently used by Seller in operating the Business and necessary for Buyer to operate the Business
after the Closing Date. Other than the Required Consents and the Governmental
Approvals, no licenses or other consents from, or payments to, any other Person are or will be
necessary for Buyer (i) to operate the Business and use the Assets in the manner in which Seller
has operated the same, and (ii) to exercise the licensed rights granted in Section 2.2.

          (b) Upon consummation of the transactions contemplated by this Agreement, Buyer will acquire
good and marketable title, license or leasehold interest to the Assets free and clear of any Liens
and there exists no restriction on the use or transfer of the Assets, except as may be assumed
hereunder by Buyer as an Assumed Liability or as may otherwise be expressly disclosed in
Schedule 4.9(b) hereto. No Person other than Seller has any right or interest in the
Assets, including the right to grant interests in the Assets to third parties, except for Third
Party Technology.

          (c) None of the Purchased Assets is held under any lease, security agreement, conditional
sales contract, Lien, or other title retention or security arrangement.

          (d) Except as provided in this Agreement, no restrictions will exist on Buyer’s right to sell,
resell, license or sublicense any of the Assets or engage in the Business, nor will any such
restrictions be imposed on Buyer as a consequence of the transactions contemplated by this
Agreement or by any agreement referenced in this Agreement.

- 16 -

 

          (e) All of the Purchased Assets, including those that exist in tangible formats, are in
operating condition and repair as required for their reasonable use in the Business as presently
conducted, and all of the Assets conform to all applicable laws, and no notice of any violation of
any law relating to any of the Assets or Assumed Liabilities has been received by Seller.

     4.10 Intellectual Property.

          (a) The execution, delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby (including without limitation the conduct by Buyer after the
Closing Date of the Business and the incorporation of any of the Assets in any Buyer Product) will
not breach, violate or conflict with any instrument or agreement governing any Technology or
Intellectual Property Rights necessary or required for, or used in, the conduct of the Business,
and will not cause the forfeiture or termination or give rise to a right of forfeiture or
termination of any such Technology or Intellectual Property Rights or in any material way impair
the right of Buyer or any of its Affiliates to use, sell, license or dispose of, or to bring any
action for the infringement of, any such Technology or Intellectual Property Rights or portion
thereof.

          (b) Schedule 4.10(b) contains a true and complete list of: (i) all patents, registered
copyrights, registered mask works, registered trademarks, registered service marks, any renewal
rights for any of the foregoing, and any applications for registrations for any of the foregoing,
owned by Seller or which Seller is authorized to license to Buyer, that cover or are included in
the Assigned Technology and/or the Base Technology; (ii) all licenses, sublicenses and other
agreements to which Seller is a party and pursuant to which any other Person is authorized to have
access to or use the Assigned Technology and/or the Base Technology or
exercise any other right with regard thereto; (iii) all Third Party Technology and with respect to
each such item of Third Party Technology (A) the date of any license or agreement with respect
thereto and whether it is transferable to Buyer in connection with the transactions contemplated by
this Agreement, (B) the identity of all parties thereto, (C) a description of the nature and
subject matter thereof, (D) any applicable royalties payable thereunder, and (E) the term thereof;
(iv) any obligations of exclusivity to which Seller is subject with respect to the Assigned
Technology and/or the Base Technology or any of the Assets.

          (c) The Third Party Technology, the Assigned Technology and the Base Technology embody all
Intellectual Property Rights incorporated or embodied in, and presently used in connection with or
necessary to exploit the Assets. There exist no restrictions on the disclosure, use or transfer of
the Purchased Assets or the license of the Licensed Assets to Buyer as contemplated hereunder. The
consummation of the transactions contemplated by this Agreement will not alter, impair or
extinguish any of Seller’s rights in the Assets that existed prior to the Closing that are being
transferred to Buyer hereunder, except that Seller’s ownership of the Purchased Assets shall
terminate as of the Closing Date and the Licensed Technology will be licensed in accordance with
the terms and conditions hereof.

          (d) There is no claim, action, suit, investigation or proceeding pending against, or, to the
Knowledge of Seller, threatened within the last 24 months against Seller, which (i) is based upon,
or challenges or seeks to deny or restrict, the rights of Seller in or to any

- 17 -

 

of the Assigned
Technology, the Base Technology or Third Party Technology, or any Intellectual Property Right
related thereto, (ii) alleges that any of the Assigned Technology, the Base Technology or Third
Party Technology, or the use of any of the Assigned Technology, Base Technology or Third Party
Technology, or any Intellectual Property Right related thereto, conflicts with, misappropriates,
infringes or otherwise violates any Intellectual Property Right of any Third Party or breaches any
obligation owed to a Third Party with respect to such party’s Intellectual Property Rights. Seller
has not received from any Third Party a written offer for a license of patent rights that
reasonably may be related to the Assigned Technology, Base Technology or the Third Party Technology
within the twenty-four (24) month period preceding the Closing Date, other than customary product
sales and promotional literature.

          (e) None of Seller’s Intellectual Property Rights in any Assigned Technology or Base
Technology has been adjudged invalid or unenforceable in whole or part.

          (f) The Assigned Technology (excluding any Third Party Technology) and the Base Technology
necessary for or used in the Business, and the use, reproduction, modification, manufacture,
distribution, licensing, sublicensing, and/or sale thereof do not infringe or misappropriate any
Intellectual Property Right of any Third Party as of the Closing Date. To Seller’s Knowledge, the
Third Party Technology necessary for or used in the Business, and the use, reproduction,
modification, manufacture, distribution, licensing, sublicensing, and/or sale thereof do not
infringe or misappropriate any Intellectual Property Right of any Third Party as of the Closing
Date.

          (g) Seller holds all right, title and interest in and to the Assigned Technology, the Base
Technology and its licenses with respect to the Third Party Technology, free and clear of any
mortgage, Lien, security interest, encumbrance or other adverse claim in respect thereof. Seller
is not contractually restricted from designing, developing, modifying and enhancing, manufacturing,
having manufactured, marketing and distributing products, services or derivative works based on,
and otherwise exploiting by any and all means and in any and all media now or hereafter known, the
Assigned Technology or the Base Technology in any country throughout the world. In each case where
a patent or patent application, trademark registration or trademark application, service mark
registration or service mark application, copyright registration or copyright application, mask
work registration or mask work application, or domain name included in the Assigned Technology or
the Base Technology is held by assignment, the assignment has been duly recorded with the
governmental authority or other authority from which the patent or registration issued or before
which the application or application for registration is pending.

          (h) Seller is not in material breach of any obligation under any license or other agreement
respecting the Third Party Technology, and all such agreements are in full force and effect.

          (i) To the Knowledge of Seller, no person has infringed, misappropriated, breached or
otherwise violated any Intellectual Property Right of Seller in the Assigned Technology, Base
Technology, Patents or Marks. Seller has taken reasonable steps in accordance with normal industry
practice to maintain the confidentiality of all confidential Assigned Technology and Base
Technology.

- 18 -

 

          (j) Seller has taken reasonable steps in accordance with normal industry practice to preserve
and maintain reasonably complete notes and records relating to the Assigned Technology and the Base
Technology.

          (k) Except as described in the file histories provided to Buyer prior to the Closing Date,
none of the Marks included in the Assigned Technology or Base Technology has been the subject of an
opposition or cancellation procedure, and none of the Patents included in the Assigned Technology
or Base Technology has been the subject of an interference, protest, public use proceeding or
third-party reexamination request.

          (l) No party other than Seller and Buyer possesses any current or contingent rights to any
Assigned Technology or Base Technology, except for the right to distribute and use completed Seller
Products.

          (m) Schedule 4.10(m) lists all parties (including contractors and consultants) who
have created any material portion of the Assigned Technology or Base Technology, other than
employees of Seller. Seller has secured from all such parties written assignments of any such work
to Seller and has provided true and complete copies of such assignments or licenses to Buyer or its
counsel.

          (n) Seller has obtained written agreements from all Third Parties with whom Seller has shared
confidential proprietary information concerning the Assigned Technology, the
Base Technology and the Assets, which agreements require such Third Parties to keep such
information confidential.

          (o) None of the Assets in the form delivered to Buyer pursuant to this Agreement contains any
computer code designed to disrupt, disable, harm, distort or otherwise impede in any manner the
operation of such software, or any other associated software, firmware, hardware, computer system
or network (sometimes referred to as “viruses” or “worms”). Seller has not included in any of the
Assets delivered to Buyer pursuant to this Agreement any computer code (i) that would disable such
software or impair in any way its operation based on the elapsing of a period of time, advancement
of a particular date or other numeral (sometimes referred to as “time bombs,” “time locks,” or
“drop dead” devices) or (ii) that would permit Seller or any Third Party to access such software to
intentionally cause such disablement or impairment (sometimes referred to as “lockups,” “traps,”
“access codes,” or “trap door” devices), or any other similar harmful, malicious or hidden
procedures, routines or mechanisms which would cause the software to cease functioning or to damage
or corrupt data, storage media, programs, equipment or communications, or otherwise interfere with
operations.

          (p) The Assets as of the Closing Date do not include any software that contains, or is derived
in any manner (in whole or in part) from any software that is distributed under the GNU General
Public License (“GPL”) or which is Open Source Software as defined in the next sentence. As used
herein, the term “Open Source Software” means any software code that contains, or is derived in any
manner (in whole or in part) from, any software that is distributed under any of the following
licenses or distribution models, or licenses or distribution models similar to any of the
following: (i) The Artistic License (e.g., PERL); (ii) the Mozilla Public License; (iii) the
Netscape Public License; (iv) the Berkeley Software Design (BSD) License

- 19 -

 

including Free BSD or
BSD-style license; (v) the Sun Community Source License (SCSL); (vi) an Open Source Foundation
License (e.g., CDE and Motif UNIX user interfaces); and (vii) the Apache Server License.

          (q) Seller has, in all material respects, performed all material obligations required to be
performed by it and is not in default under any agreement, license or other instrument to which it
is a party or by which it is bound, in each case that pertains to the Assigned Technology or the
Base Technology. To the Knowledge of Seller, all other parties to such agreements, licenses or
other instruments are in material compliance therewith, and no event has occurred which with notice
or lapse of time or both would constitute a default thereunder.

          (r) All fees to maintain Seller’s rights in the Intellectual Property Rights in the Assigned
Technology and the Base Technology, including, without limitation, patent and trademark
registration and prosecution fees and all professional fees in connection therewith pertaining to
Intellectual Property Rights due and payable on or before the Closing Date, have been paid by
Seller or will be paid by Seller within a reasonable period after the Closing.

     4.11 Licenses and Permits. Seller holds all material consents, approvals,
registrations, certifications, authorizations, permits and licenses of, and has made all material
filings with, or notifications to, all Governmental Entities pursuant to applicable requirements of
all federal, state,
local and foreign laws, ordinances, governmental rules or regulations applicable to the
Business, including, but not limited to, all such laws, ordinances, governmental rules or
regulations relating to the Assets (at their current level of development and use). The Business
is in compliance with all federal, state, local and foreign laws, ordinances, governmental rules
and regulations relating to the Assets and products manufactured by the Business or otherwise
related to the Business and Seller has no reason to believe that any material consents, approvals,
authorizations, registrations, certifications, permits, filings or notifications that it has
received or made to operate the Business or own and freely dispose of the Assets are invalid or
have been or are being suspended, canceled, revoked or questioned. There is no investigation or
inquiry to which Seller is a party or, to Seller’s knowledge, pending or threatened, relating to
the Assets or the Business and their compliance with applicable foreign, state, local or foreign
laws, ordinances, governmental rules or regulations. Each such consent, approval, registration,
certification, authorization, permit or license is transferable and shall be transferred to Buyer
in accordance with the terms of this Agreement.

     4.12 Employees.

          (a) Schedule 4.12 sets forth the names, compensation levels, and job titles of all of
the employees of Seller currently engaged in the Business. All employees, consultants, officers,
directors and shareholders of Seller or any Seller Subsidiary that have had access to the Assigned
Technology or Base Technology are parties to a written agreement in Seller’s standard forms (copies
of which have been provided to Buyer) (each, a “Confidentiality Agreement”), under which
each such person or entity (i) is obligated to disclose and transfer to Seller, without the receipt
by such person of any additional value therefor (other than normal salary or fees for consulting
services), all inventions, developments and discoveries which, during the period of employment with
or performance of services for Seller, he or she makes or conceives of either

- 20 -

 

solely or jointly
with others, that relate to any subject matter with which his or her work for Seller may be
concerned, or relate to or are connected with the Business and the Assigned Technology or Base
Technology, and (ii) is obligated to maintain the confidentiality of proprietary information of
Seller. None of Seller’s employees, consultants, officers or directors is obligated under any
contract (including licenses, covenants or commitments of any nature) or other agreement, or
subject to any judgment, decree or order of any court or administrative agency, that would conflict
with their obligation to promote the interests of Seller with regard to the Business or the Assets
or that would conflict with the Business or the Assets. Neither the execution nor the delivery of
this Agreement, nor the carrying on of the Business by its employees and consultants, will conflict
with or result in a breach of the terms, conditions or provisions of, or constitute a default
under, any contract, covenant or instrument under which any of such persons or entities are now
obligated. It is currently not necessary nor will it be necessary for Seller to utilize in the
Business any inventions of any of such persons or entities (or people it currently intends to hire)
made or owned prior to their employment by or affiliation with Seller, nor is it or will it be
necessary to utilize any other assets or rights of any such persons or entities (or people it
currently intends to hire) made or owned prior to their employment with or engagement by Seller, in
violation of any registered patents, trade names, trademarks or copyrights or any other limitations
or restrictions to which any such persons or entity is a party or to which any of such assets or
rights may be subject. To the Seller’s knowledge, none of Seller’s employees, consultants,
officers, directors or
shareholders that has had knowledge or access to information relating to the Assigned
Technology or Base Technology has taken, removed or made use of any proprietary documentation,
manuals, products, materials, or any other tangible item from his or her previous employer relating
to the Assigned Technology or Base Technology by such previous employer which has resulted in
Seller’s access to or use of such proprietary items included in the Assigned Technology or Base
Technology, and pursuant to the transaction hereunder, Buyer will not gain access to or
inadvertently make use of any such proprietary items.

          (b) Except for the Confidentiality Agreements, there are no written or oral contracts of
employment between Seller and any of its employees.

     4.13 Taxes. All Taxes owed by Seller for all periods (or portions thereof) prior to
and including the Closing Date have been or will be paid by Seller. Seller has duly and timely
filed (or will file prior to the Closing Date) all returns and reports of Taxes required to be
filed by it prior to their due dates (with regard to extensions), and all such returns and reports
are true, correct, and complete in all material respects. There are no liens for Taxes on any of
the Purchased Assets. Seller has complied with all record keeping and tax reporting obligations
relating to sales taxes and income and employment taxes due with respect to compensation paid to
employees or independent contractors providing services to the Business. US Seller is not a
“foreign person” within the meaning of Section 1445(f)(3) of the Code. There are no pending or, to
Seller’s knowledge, threatened proceedings with respect to Taxes of the Seller, and there are no
outstanding waivers or extensions of statutes of limitations with respect to assessments of Taxes
with respect to the Seller.

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     4.14 Compliance with Law. The operation of the Business has been conducted in
accordance with all applicable laws, regulations and other requirements of Governmental Entities
having jurisdiction over the same.

     4.15 Products. Each of the products and services produced, sold or provided by Seller
in connection with the Business is, and at all times has been, in compliance in all material
respects with all applicable federal, state, local and foreign laws and regulations and is, and at
all relevant times has been, fit for the ordinary purposes for which it is intended to be used and
conforms in all material respects to any promises or affirmations of fact made in connection with
the sale of such product or service. There is no design defect with respect to any of such
products, and each of such products contains adequate warnings, presented in a reasonably prominent
manner, in accordance with applicable laws and current industry practice with respect to its
contents and use.

     4.16 Product Liability. There are no claims, actions, suits, inquiries, proceedings
or investigations pending by or against Seller, relating to any of the Assets or products of the
Business and containing allegations that such Assets or products are defective or were improperly
designed or manufactured or improperly labeled or otherwise improperly described for use.

     4.17 Litigation; Other Claims. There are no claims, actions, suits, inquiries,
proceedings, or investigations against Seller, or any of its officers, directors or shareholders,
relating to the Business, the Assigned Technology or the Base Technology which are currently
pending or threatened, at law or in equity or before or by any Governmental Entity, or which
challenges or seeks to prevent, enjoin, alter or materially delay any of the transactions
contemplated hereby, nor is Seller aware of any basis for such claims, actions, suits, inquiries,
proceedings, or investigations; and no Governmental Entity has at any time challenged or questioned
the legal right of Seller to manufacture, offer or sell any of its products or services in the
present manner or style thereof.

     4.18 Defaults. Seller is not in default under or with respect to any judgment, order,
writ, injunction or decree of any court or any Governmental Entity which could reasonably be
expected to have a Material Adverse Effect on the Business, the Assigned Technology, the Base
Technology or any of the Assets. There does not exist any default by Seller or by any other
Person, or event that, with notice or lapse of time, or both, would constitute a default under any
agreement entered into by Seller as part of the operations of the Business which could reasonably
be expected to have a Material and Adverse Effect on the Business, the Assigned Technology, the
Base Technology or the Assets, and no notices of breach thereof have been received by Seller.

     4.19 [Intentionally blank.]

     4.20 Full Disclosure. Neither this Agreement nor any other agreement, exhibit,
schedule or officer’s certificate being entered into or delivered pursuant to this Agreement
contains any untrue statement of a material fact or, in light of the facts stated therein, omits to
state any material fact necessary in order to make the statements contained in such document not
misleading.

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     4.21 Brokers and Finders. Except as may be solely paid for by Seller, neither Seller
nor any of its officers, directors or employees has employed any broker or finder or incurred any
liability for any brokerage fee, commission or finder’s fee in connection with the transactions
contemplated by this Agreement.

     4.22 Fair Consideration; No Fraudulent Conveyance. The sale and license of the Assets
pursuant to this Agreement is made in exchange for fair and equivalent consideration. Seller is
not now insolvent and will not be rendered insolvent by the sale, transfer and assignment of, or
the license of, any of the Assets pursuant to the terms of this Agreement. Seller is not entering
into this Agreement or any of the other agreements referenced in this Agreement with the intent to
defraud, delay or hinder its creditors and the consummation of the transactions contemplated by
this Agreement, and the other agreements referenced in this Agreement, will not have any such
effect. The transactions contemplated in this Agreement or any agreements referenced in this
Agreement will not constitute a fraudulent conveyance, or otherwise give rise to any right of any
creditor of Seller to any of the Assets after the Closing.

     4.23 Insurance. The Seller Disclosure Schedule lists all insurance policies and
fidelity bonds covering the Assets. There is no claim by Seller pending under any of such policies
or bonds as to which coverage has been questioned, denied or disputed by the underwriters of such
policies and bonds. All premiums due and payable under all such policies and bonds have been paid
and Seller is otherwise in material compliance with the terms of such policies and bonds (or
other policies and bonds providing substantially similar insurance coverage). There is no
threatened termination of, or material premium increase with respect to, any of such policies.

5. Representations and Warranties of Buyer 

     Buyer represents and warrants to Seller as follows:

     5.1 Organization. Buyer is a corporation duly formed and validly existing under the
laws of the Cayman Islands, and has full corporate power and authority and the legal right to
execute and deliver this Agreement and all of the other agreements and instruments to be executed
and delivered by Buyer pursuant hereto, and to consummate the transactions contemplated hereby and
thereby.

     5.2 Authority. The execution and delivery of this Agreement (and all other agreements
and instruments contemplated hereunder) by Buyer, the performance by Buyer of its obligations
hereunder and thereunder, and the consummation by Buyer of the transactions contemplated hereby and
thereby have been duly authorized by all necessary action by the Directors of Buyer, and no other
act or proceeding on the part of Buyer or its shareholders is necessary to approve the execution
and delivery of this Agreement and such other agreements and instruments, the performance by Buyer
of its obligations hereunder and thereunder and the consummation of the transactions contemplated
hereby and thereby. The signatory officers of Buyer have the power and authority to execute and
deliver this Agreement and all of the other agreements and instruments to be executed and delivered
by Buyer pursuant hereto, to

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consummate the transactions hereby and thereby contemplated and to
take all other actions required to be taken by Buyer pursuant to the provisions hereof and thereof.

     5.3 Execution and Binding Effect. This Agreement has been duly and validly executed
and delivered by Buyer and constitutes, and the other agreements and instruments to be executed and
delivered by Buyer pursuant hereto, upon their execution and delivery by Buyer, will constitute
(assuming, in each case, the due and valid authorization, execution and delivery thereof by
Seller), legal, valid and binding agreements of Buyer, enforceable against Buyer in accordance with
their respective terms, except as enforceability may be limited by bankruptcy, insolvency,
moratorium, or other laws affecting the enforcement of creditors’ rights generally or provisions
limiting competition, and by equitable principles.

     5.4 Consent and Approvals. There is no requirement applicable to Buyer to make any
filing, declaration or registration with, or to obtain any permit, authorization, consent or
approval of, any Governmental Entity as a condition to the lawful consummation by Buyer of the
transactions contemplated by this Agreement and the other agreements and instruments to be executed
and delivered by Buyer pursuant hereto, except for filings (a) which are referred to in the Seller
Disclosure Schedule or (b) the failure of making which would not have a Material Adverse Effect on
the transactions contemplated hereby.

     5.5 No Violation. Neither the execution, delivery and performance of this Agreement
and of all the other agreements and instruments to be executed and delivered pursuant hereto, nor
the consummation of the transactions contemplated hereby or thereby, will, with or without the
passage of time or the delivery of notice or both, (a) conflict with, violate or result in any
breach of the terms, conditions or provisions of the Articles and Memorandum of Association of
Buyer, (b) conflict with or result in a violation or breach of, or constitute a default or require
consent of any Person (or give rise to any right of termination, cancellation or acceleration)
under, any of the terms, conditions or provisions of any notice, bond, mortgage, indenture,
license, franchise, permit, agreement, lease or other instrument or obligation to which Buyer is a
party or by which Buyer or any of its properties or assets may be bound, or (c) violate any
statute, ordinance or law or any rule, regulation, order, writ, injunction or decree of any
Governmental Entity applicable to Buyer or by which any of its properties or assets may be bound.

     5.6 Adequate Funds. As of the date the parties execute this Agreement, Buyer has
sufficient cash on hand to pay the Purchase Price and otherwise consummate the transactions
contemplated by this Agreement.

6. Covenants.

     6.1 Access to Information.

          (a) Prior to the Closing, Seller will permit Buyer to make a full and complete investigation
of the Assets and to receive from Seller all information of Seller relating to the Assets or
reasonably related to Seller’s conduct of the Business. Without limiting this right, Seller will
give to Buyer and its accountants, legal counsel, and other representatives full access, during
normal business hours, at a mutually agreeable location arranged in advance, to all of the

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books,
records, files, documents, properties, and contracts of Seller relating to the Assets or
reasonably related to Seller’s conduct of the Business and allow Buyer and any such representatives
to make copies thereof, all of which shall be made available in an organized fashion and so as to
facilitate an orderly review. This Section 6.1 shall not affect or be deemed to modify any
representation or warranty contained herein or the conditions to the obligations of the parties to
consummate the transactions contemplated by this Agreement. Seller shall maintain and make
available the information and records specified in this Section 6.1(a) in the ordinary course of
Seller’s business, as if the transactions contemplated by this Agreement had not occurred.

          (b) At all times following the Closing, 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 employees, as
may be reasonably requested by either of them in connection with the preparation of any financial
statement or tax return, any audit or examination by any taxing authority, any judicial or
administrative proceeding relating to liability for Taxes, or other matters that may be related to
or involving the Assets.

     6.2 Third Party Consents. Seller and Buyer shall use commercially reasonable efforts
to obtain, within the applicable time periods required, all Required Consents, waivers, permits,
consents and approvals and to effect all registrations, filings and notices with or to third
parties or Governmental Entities which are necessary to consummate the transactions
contemplated by this Agreement so as to preserve all rights of, and benefits to, the Buyer in
the Purchased Assets.

     6.3 Certain Notifications. At all times prior to the Closing, Seller and Buyer shall
promptly notify the other party in writing of the occurrence of any event which will result, or has
a reasonable prospect of resulting, in the failure to satisfy any of the conditions specified in
Section 8 or Section 9 of this Agreement.

     6.4 Best Efforts. The Seller shall use its best efforts (i) to cause to be fulfilled
and satisfied all of the conditions to the Closing set forth in Section 8 below, (ii) to cause to
be performed all of the matters required of it at the Closing and (iii) to cause any contractual
rights Seller has to the Third Party Technology to be assigned to Buyer.

     6.5 Seller’s Conduct of the Business Prior to Closing. During the period from the
date of this Agreement to the Closing Date, Seller will conduct the Business in its ordinary and
usual course, consistent with past practice, and will use all reasonable efforts to preserve intact
all rights, privileges, franchises and other authority of the Business, to retain the employees,
and to maintain favorable relationships with licensors, licensees, suppliers, contractors,
distributors, customers, and others having relationships with the Business. Seller shall promptly
notify Buyer of any event or occurrence or emergency not in the ordinary course of business, and
any material event involving the Business or the Assets. Without limiting the generality of the
foregoing, and except as approved in writing by Buyer in advance, prior to the Closing, Seller:

          (a) will not create, incur or assume (i) any borrowings under capital leases to be transferred
to Buyer hereunder, or (ii) any obligation which would in any material way affect

- 25 -

 

the Business, the
Assets or Buyer’s ability to conduct the Business in substantially the same manner and condition as
conducted by Seller on the date of this Agreement;

          (b) will not change in any manner the compensation of, or agree to provide additional benefits
to, or enter into any employment agreement with, any Transferred Employee;

          (c) will maintain insurance coverage in amounts adequate to cover the reasonably anticipated
risks of the business conducted with the Assets;

          (d) will not acquire or agree to acquire by merging or consolidating with, or by purchasing
any assets or equity securities of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof, or otherwise acquire
or agree to acquire any assets which are material, individually or in the aggregate, to the
Business.

          (e) will not sell, dispose of or encumber any of the Assets or license any Assets to any
Person;

          (f) will not enter into any agreements or commitments relating to the Assigned Technology, the
Assets or the Business;

          (g) will comply in all material respects with all laws and regulations applicable to the
Business;

          (h) will not enter into any agreement with any Third Party for the distribution of any of the
Assets;

          (i) will not change or announce any change to the products or services sold by the Business
except with Buyer’s written consent or at Buyer’s request;

          (j) will not expand the use of the Assets within the organization of Seller;

          (k) will not violate, amend or otherwise change in any way the terms of any contracts relating
to the Assigned Technology, the Assets or the Business; and

          (l) will not commence a lawsuit related to or involving the Assets other than (i) for the
routine collection of bills; (ii) for injunctive relief on the grounds that Seller has suffered
immediate and irreparable harm not compensable in money damages, provided that Seller has obtained
the prior written consent of Buyer, such consent not to be unreasonably withheld; or (iii) for a
breach of this Agreement.

     6.6 No Other Bids. Until the earlier to occur of (a) the Closing or (b) the
termination of this Agreement pursuant to its terms, Seller shall not, and Seller shall not
authorize any of its officers, directors, employees or other representatives to, directly or
indirectly, (i) initiate, solicit or encourage (including by way of furnishing information
regarding the Business or the Assets) any Acquisition Proposal,
or make any statements to third
parties which may reasonably be expected to lead to any Acquisition Proposal, or (ii) negotiate,
engage in any substantive discussions, or enter into any agreement, with any Person concerning any
Acquisition Proposal

- 26 -

 

     6.7 [Intentionally Blank]

     6.8 Post-Closing Access to Information. If, after the Closing Date, in order properly
to operate the Business or prepare documents or reports required to be filed with governmental
authorities or Buyer’s financial statements, it is necessary that Buyer obtain additional
information within Seller’s possession relating to the Assets or the Business, Seller will furnish
or cause its representatives to furnish such information to Buyer. Such information shall include,
without limitation, all agreements between Seller and any Person relating to the Business. Seller
shall maintain and make available the information and records specified in this Section 6.8 for a
period of ten (10) years after the Closing Date.

     6.9 Post-Closing Cooperation. Seller agrees that, if reasonably requested by Buyer,
it will cooperate with Buyer, at Buyer’s expense, in enforcing the terms of any agreements between
Seller and any Third Party involving the Assets or the Business, including without limitation terms
relating to confidentiality and the protection of intellectual property rights. In the event that
Buyer is unable to enforce its intellectual property rights against a Third Party as a result of a
rule or law barring enforcement of such rights by a transferee of such rights, Seller agrees to
reasonably cooperate with Buyer by assigning to Buyer such rights as may be required
by Buyer to enforce its intellectual property rights in its own name. If such assignment
still does not permit Buyer to enforce its intellectual property rights against the Third Party,
Seller agrees to initiate proceedings against such Third Party in Seller’s name, provided that
Buyer shall be entitled to participate in such proceedings and provided further that Buyer shall be
responsible for the expenses of such proceedings.

     6.10 [Intentionally Blank]

     6.11 Public Announcements. Until otherwise mutually agreed, Buyer and Seller shall
advise and confer with each other prior to the issuance of any reports, statements or releases
concerning this Agreement (including the exhibits and schedules hereto) and the transactions
contemplated herein. Neither Buyer nor Seller will make any public disclosure with respect to the
transactions contemplated herby or with respect to the Closing unless both parties mutually agree
on the text and timing of such public disclosure. Notwithstanding the foregoing, nothing contained
herein shall prevent either party at any time from furnishing any information to any Governmental
Entity as may be required by law, provided however, that the parties shall consult with each other
and use all reasonable efforts to agree on the content and manner of any disclosure that may be
permitted or required in the future.

     6.12 Post-Closing Actions. Subsequent to the Closing Date, Seller shall, from time to
time, execute and deliver, upon the request of Buyer, all such other and further materials and
documents and instruments of conveyance, transfer or assignment as may reasonably be requested by
Buyer to effect, record or verify the transfer to, and vesting in Buyer, of Seller’s right, title
and interest in and to the Assets, free and clear of all Liens, in accordance with the terms of
this Agreement. Buyer, Seller and the Escrow Agent shall work diligently to finalize and execute
the Indemnity Escrow Agreement and the Bonus Escrow Agreement on or before February 28, 2007, and
within seven (7) days of the date on which the parties execute each of

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those agreements, Buyer
shall deposit the Escrow Consideration and the Employee Bonus Funds, respectively, into a
designated account or accounts with the Escrow Agent.

     6.13 Non-Competition Covenant.

          (a) In consideration of Buyer entering into this Agreement to acquire the Assets, Seller
undertakes that for thirty (30) months after the Closing Date neither it nor any Affiliate of it
will:

                (i) participate, assist or otherwise be directly or indirectly involved or concerned,
financially or otherwise, as a member, shareholder, unitholder, director, consultant, adviser,
contractor, principal, agent, manager, beneficiary, partner, associate, trustee, financier or
otherwise in any business or activity which is the same as or substantially similar to the Business
or any material part of it (a “Restricted Business”);

                (ii) solicit, canvass, induce or encourage directly or indirectly any employee of Buyer
to
leave the employment of Buyer, nor shall it hire any employee who left the employment of Buyer
during such thirty (30) month period without Buyer’s prior written consent,
not to be unreasonably withheld in the case of an employee for whom Buyer no longer can
provide a viable position; or

                (iii) solicit, canvass, approach or accept any offer from any person or entity who was at
any
time during the twenty-four (24) months immediately preceding the Closing Date a customer or
supplier of the Business with a view to establishing a relationship with or obtaining the patronage
of that person or entity in a Restricted Business.

Notwithstanding the foregoing, it is understood that Buyer and Seller and their respective
Affiliates may from time to time sell to or purchase from, or solicit sales or purchases to or
from, the same suppliers and/or customers. Such sales, purchases and solicitations are not
precluded under this Agreement except to the extent any such sales, purchases or solicitations by
Seller or its Affiliates are made with respect to Products or services in the Restricted Business
or are intended to benefit or support the participation of Seller or its Affiliates in the
Restricted Business.

          (b) If any of the separate and independent covenants and restraints referred to in clause (a)
of this Section 6.13 are or become invalid or unenforceable for any reason then that invalidity or
unenforceability will not affect the validity or enforceability of any other separate and
independent covenants and restraints.

          (c) If any prohibition or restriction contained in clause (a) of this Section 6.13 is judged
to go beyond what is reasonable in the circumstances, but would be judged reasonable if that
activity was deleted or that period or area was reduced, then the prohibitions or restrictions
apply with that activity deleted or period or area reduced by the minimum amount necessary.

          (d) Seller acknowledges that:

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                (i) the prohibitions and restrictions contained in clause (a) of this
Section 6.13 are
reasonable and necessary; and

                (ii) Seller has received valuable consideration for agreeing to the covenants in clause
(a) of
this Section 6.13.

          (e) Seller and Buyer acknowledge and agree that it will be difficult to compute the amount of
damage or loss to Buyer if Seller violated any of their agreements under this Section 6.13, that
Buyer will be without an adequate legal remedy if Seller violated the provisions of this Section
6.13, and that any such violation may cause substantial irreparable injury and damage to Buyer not
fully compensable by monetary damages. Therefore, Seller and Buyer agree that in the event of any
violation by Seller of this Section 6.13, Buyer shall be entitled (i) to recover from Seller
monetary damages, (ii) to obtain specific performance, injunctive or other equitable relief, of
either a preliminary or permanent type, and (iii) to seek any other available rights or remedies at
law or in equity which may be exercised concurrently with the rights granted hereunder.

     6.14 Permits. Seller will assist Buyer in obtaining any licenses, permits or
authorizations required for carrying on the Business but which are not transferable.

     6.15 Taxes. Buyer shall be responsible for paying, shall promptly discharge when due,
and shall reimburse, indemnify and hold harmless Seller from, any sales or use, import or export,
value added or similar tax or duty, transfer, excise, stamp, or other similar Taxes arising from,
imposed on or attributable to the transfer of the Assets pursuant to this Agreement or otherwise as
a direct result of the transactions contemplated by this Agreement.

     6.16 Employee Retention Bonus Plan. Effective and contingent upon the occurrence of
the Closing, Buyer shall adopt the Employee Retention Bonus Plan (the “Bonus Plan”) in the
form attached hereto as Exhibit B, which Bonus Plan specifies the amounts of retention
bonuses payable to Transferred Employees who remain in the employment of the Buyer Party as of the
first and second anniversaries of January 1, 2007 (the “Employment Date”). The indicated
amount of the retention bonus designated for each Transferred Employee shall be payable to that
Transferred Employee on the first anniversary of the Employment Date, provided such Transferred
Employee is still employed by the Buyer Party as of such date; and the indicated balance of the
retention bonus designated for each Transferred Employee shall be payable to that Transferred
Employee on the second anniversary of the Employment Date, provided such Transferred Employee is
still employed by the Buyer Party as of such date. Retention bonuses allocated for payment under
the Bonus Plan to Transferred Employees who are no longer employed by the Buyer Party on either the
first or second anniversary of the Employment Date shall be forfeited by each such Transferred
Employee and handled in accordance with Section 2.8 (b) herein above. Buyer shall be responsible
for deducting and withholding any amounts that are required to be deducted and withheld with
respect to payments made to the Transferred Employees after the Closing Date, including any income,
employment and other payroll taxes or charges with respect to amounts paid to the Transferred
Employees pursuant to the Bonus Plan, and for paying such deducted and withheld amounts to the
applicable Governmental Entities and filing necessary Tax and other returns as required by law.

- 29 -

 

     6.17 Confidential Information. Each party shall treat as confidential all
Confidential Information of the other party, shall not use such Confidential Information except as
set forth herein, and shall not disclose such Confidential Information to any Third Party without
the prior written consent of the Disclosing Party. Without limiting the foregoing, each of the
parties shall use at least the same degree of care which it uses to prevent the disclosure of its
own Confidential Information of like importance to prevent the disclosure of Confidential
Information disclosed to it by the other party under this Agreement. Each party hereby
acknowledges as to the other’s Confidential Information that such Confidential Information is
commercially and competitively valuable, that, by this Agreement, each party is taking reasonable
steps to protect its legitimate interest in its Confidential Information and that the restrictions
contained in this Agreement are reasonably necessary in order to protect each party’s legitimate
interest in its Confidential Information. For the avoidance of doubt, the parties hereby
acknowledge and agree that the Assets being transferred hereunder to Buyer by Seller shall
hereafter be considered Confidential Information of Buyer to the maximum extent they have not been
previously disclosed by Seller to third parties who are not bound by an obligation of
confidentiality with respect thereto. The parties further agree that the exceptions to
Confidential Information set forth in subparts (ii), (iii) and (iv) of the last sentence of Section
1.1(j) shall not be applicable to Seller’s confidentiality obligations with respect to the Assets
being acquired by Buyer hereunder.

     6.18 Buyer’s Non-Solicit and No Hire. For a period of thirty (30) months following
the Closing, Buyer shall not, without Seller’s prior written consent, solicit, canvass, induce or
encourage directly or indirectly any employee of Seller to leave the employment of Seller, nor
shall it hire any employee who left the employment of Seller during such thirty (30) month period
without Seller’s prior written consent, not to be unreasonably withheld in the case of an employee
for whom Seller no longer can provide a viable position.

     6.19 Covenant Not to Sue. Seller hereby covenants and agrees, on behalf of itself,
its Affiliates and any successors in interest, that it and they shall not commence, or otherwise
assist in the prosecution of (except as compelled by action of a Governmental Entity), any action
against Buyer or its Affiliates (or their respective successors and assigns) claiming that any
Technology transferred or licensed to Buyer under this Agreement in any respect infringes,
misappropriates or otherwise violates any Intellectual Property Right of Seller, its Affiliates,
anyone claiming by or through Seller or its Affiliates, or any Third Party.

7. License-Back To Seller

     7.1 License-Back of Assigned Technology. Effective as of the Closing Date, subject to
Section 6.13 herein above, Buyer hereby grants Seller a worldwide, non-transferable (except for
transfers to Seller’s Affiliates or successors in interest), non-sublicensable (except for the
right to sublicense to Seller’s Affiliates and to its and their respective OEMs, distributors and
customers), perpetual, irrevocable, royalty-free, paid-up license (the “License-Back”) :

          (a) to copy, compile, modify, use and create derivative works from the Assigned Technology set
forth on Schedule 7.1(a) in source code and object code form solely to the extent
contractually required to perform the Remaining License Obligations, developing,

- 30 -

 

correcting,
maintaining, enhancing and supporting the Assigned Technology as licensed by Seller to Third
Parties prior to the Closing Date and otherwise fulfilling the Remaining License Obligations; and

          (b) to use Assigned Technology to design, develop, modify and enhance, manufacture, have
manufactured, market and distribute (itself and through one or more distribution tiers) the
Assigned Technology solely as integrated into Seller Products on the Closing Date.

The foregoing license shall be exclusive as to Seller and its Affiliates, except for Buyer and its
Affiliates and Buyer’s and its Affiliates’ respective OEMs, distributors and customers and any
successors in interest to the Business or any Buyer Product. All rights not expressly granted
herein are reserved by Buyer.

     7.2 No Warranty from Buyer. Seller acknowledges and agrees that the License-Back
granted by Buyer to Seller hereunder is on an “AS IS” basis without any warranty whatsoever and may
only be exercised by Seller at its sole risk and expense.

8. Conditions to Buyer’s Obligations

     The obligations of Buyer under this Agreement are subject to the fulfillment, prior to or on
the Closing Date, of each of the following conditions, all or any of which may be waived by Buyer
in writing, except as otherwise provided by law:

     8.1 Representations and Warranties True; Performance; Certificate.

          (a) The representations and warranties of Seller contained in this Agreement shall be true and
correct in all material respects as of the Closing Date with the same effect as though such
representations and warranties had been made or given again at and as of the Closing Date;

          (b) Seller shall have performed and complied with all of its agreements, covenants and
conditions required by this Agreement to be performed or complied with by them prior to or on the
Closing Date;

          (c) The conditions set forth in this Section 8 have been fulfilled or satisfied, unless
otherwise waived in writing by Buyer; and

          (d) 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 to the matters set forth in Sections 8.1(a)
and 8.1(b) above.

     8.2 Consents. All Governmental Authorizations and Required Consents shall have been
obtained.

     8.3 No Proceedings or Litigation.

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          (a) No preliminary or permanent injunction or other order shall have been issued by any
Governmental Entity, nor shall any statute, rule, regulation or executive order be promulgated or
enacted by any Governmental Entity which prevents the consummation of the transactions contemplated
by this Agreement.

          (b) No suit, action, claim, proceeding or investigation before any Governmental Entity shall
have been commenced and be pending against any of the parties, or any of their respective
Affiliates, associates, officers or directors, (i) seeking to prevent transactions contemplated by
this Agreement, including, without limitation, the sale of the Purchased Assets or the license of
the Licensed Assets; (ii) asserting that the sale of the Purchased Assets or the license of the
Licensed Assets would be illegal or create liability for damages; or (iii) which may have a
Material Adverse Effect on the Business or the Assets.

     8.4 Documents and Actions. This Agreement, the exhibits and schedules attached
hereto, and any other instruments of conveyance and transfer and all other documents to be
delivered by Seller at the Closing, except for the Indemnity Escrow Agreement and the Bonus Escrow
Agreement, and all actions of Seller required by this Agreement and the exhibit
agreements, or incidental thereto, and all related matters, except for actions required
pursuant to the Indemnity Escrow Agreement and the Bonus Escrow Agreement, shall be in form and
substance reasonably satisfactory to Buyer and Buyer’s counsel and shall be in full force and
effect.

     8.5 Governmental Filings. The parties shall have made any required filing with
Governmental Entities in connection with this Agreement and the exhibit agreements, and any
approvals related thereto shall have been obtained or any applicable waiting periods shall have
expired. If a proceeding or review process by a Governmental Entity is pending in which a decision
is expected, Buyer shall not be required to consummate the transactions contemplated by this
Agreement until such decision is reached or rendered, notwithstanding Buyer’s legal ability to
consummate the transactions contemplated by this Agreement prior to such decision being reached or
rendered.

     8.6 No Material Adverse Change. There shall have occurred no change that could
have a Material Adverse Effect on in the Assets or the Business as of the Closing Date as compared
with the date of this Agreement.

     8.7 Execution and Delivery of Asset Purchase Agreement between Seller and Silicon
Integrated Systems Corporation. Concurrently with the execution and delivery of this
Agreement, Seller and SiS-US shall execute and deliver the SiS-US Agreement, pursuant to which
SiS-US is purchasing certain tangible assets from Seller in connection with the Business and SiS-US
shall have received acceptances of offers of employment from at least [*****] of the [*****] (as
defined in the SiS-US Agreement) and at least [*****] of the [*****] (as defined in the SiS-US
Agreement) prior to December 22, 2006.

     8.8 Execution and Delivery of Transition Services Agreement. Seller and Buyer
(and/or an Affiliate of Buyer) shall have entered into the Transition Services Agreement in the
form attached hereto as Exhibit F.

- 32 -

     Confidential
Treatment Requested

 

     8.9 Legal Opinion. Buyer shall have received a legal opinion from Orrick, Herrington
& Sutcliffe, LLP, legal counsel to Seller, dated the Closing Date, in a form satisfactory to Buyer.

     8.10 Intentionally Omitted.

     8.11 Approval and Verification of Assets. Seller shall have delivered the Assets to
Buyer and Buyer shall have identified, reviewed, verified and approved those Assets considered to
be of first priority that are being transferred pursuant to the terms hereof.

     8.12  Wire Transfer Instructions. Seller shall have delivered to Buyer wire transfer
instructions sufficient to enable Buyer to provide to its bank the Bank Instruction contemplated in
Section 2.7(a)(i) above.

     8.13 Invoice. Seller shall have delivered to Buyer an invoice in the amount of the
total Purchase Price, also setting forth the amounts payable with respect to the Initial
Installment, Escrow Consideration, Employee Bonus Funds and Hold-Back Amount.

9. Conditions to Seller’s Obligations.

     The obligations of Seller under this Agreement are subject to the fulfillment, prior to or on
the Closing Date, of each of the following conditions, all or any of which may be waived in writing
by Seller, except as otherwise provided by law:

     9.1 Representations and Warranties True; Performance.

          (a) The representations and warranties of Buyer contained in this Agreement shall be true and
correct in all material respects as of the Closing Date with the same
effect as though such
representations and warranties had been made or given again at and as of the Closing Date;

          (b) Buyer shall have performed and complied with all of its agreements, covenants and
conditions required by this Agreement to be performed or complied with by them prior to or on the
Closing Date;

          (c) Seller shall have received a certificate, dated as of the Closing Date, signed and
verified by an officer of Buyer on behalf of Buyer certifying to the matters set forth in Sections
9.1(a) and 9.1(b) above.

     9.2 No Proceeding or Litigation.

          (a) No preliminary or permanent injunction or other order shall have been issued by any
Governmental Entity, nor shall any statute, rule, regulation or executive order be promulgated or
enacted by any Governmental Entity which prevents the consummation of the transactions contemplated
by this Agreement.

- 33 -

 

          (b) No suit, action, claim, proceeding or investigation before any Governmental Entity shall
have been commenced and be pending against any of the parties, or any of their respective
Affiliates, associates, officers or directors, seeking to prevent the sale of the Purchased Assets
or asserting that the sale of the Assets would be illegal or create liability for damages.

     9.3 Documents. This Agreement, any other instruments of conveyance and transfer and
all other documents to be delivered by Buyer to Seller at the Closing, except for the Indemnity
Escrow Agreement and the Bonus Escrow Agreement, and all actions of Buyer required by this
Agreement and the exhibit agreements, or incidental thereto, and all related matters, except for
actions required pursuant to the Indemnity Escrow Agreement and the Bonus Escrow Agreement, shall
be in form and substance reasonably satisfactory to Seller and Seller’s counsel.

     9.4 Governmental Filings. The parties shall have made any filing required with
Governmental Entities, and any approvals shall have been obtained or any applicable waiting periods
shall have expired. If a proceeding or review process by a Governmental Entity is pending in which
a decision is expected, Seller shall not be required to consummate the transactions contemplated by
this Agreement until such decision is reached or rendered, notwithstanding Seller’s legal ability
to consummate the transactions contemplated by this Agreement prior to such decision being reached
or rendered.

10. Escrow and Indemnification.

     10.1 Survival of Representations and Warranties. All covenants to be performed by Seller
prior to the Closing Date, and all representations and warranties of Seller in this Agreement, in
the SiS-US Agreement or in any instrument delivered pursuant hereto or thereto shall survive the
consummation of the transactions contemplated hereby and continue until the same day of the month
as the Closing Date in the 18th month following the Closing Date (the “Escrow
Termination Date”); provided that if any claims for indemnification have been asserted
with respect to any such representations, warranties and covenants prior to the Escrow Termination
Date, the representations, warranties and covenants on which any such claims are based shall
continue in effect until final resolution of any claims, provided, further, that
representations, warranties and covenants relating to Taxes shall survive until 30 days after
expiration of all applicable statutes of limitations relating to such Taxes, and provided,
further, that the representations and warranties of Seller contained in Sections 4.2,
4.9(b), and 4.21, shall survive indefinitely. All covenants to be performed after the Closing Date
shall continue indefinitely.

     10.2 Indemnification. Subject to the limitations set forth in this Section 10, from
and after the Effective Time, Seller shall protect, defend, indemnify and hold harmless Buyer and
Buyer’s Affiliates, and their respective officers, directors, employees, representatives and agents
(each of the foregoing Persons is hereinafter referred to individually as an “Indemnified
Person” and collectively as “Indemnified Persons”) from and against any and all losses,
costs, damages, liabilities, fees (including without limitation attorneys’ fees) and expenses
(collectively, the “Damages”), that any of the Indemnified Persons incurs by reason of or
in connection with any

- 34 -

 

claim, demand, action or cause of action alleging misrepresentation, breach
of, or default in connection with, any of the representations, warranties, covenants or agreements
of the Seller contained in this Agreement or in the SiS-US Agreement, including any exhibits or
schedules attached hereto or thereto, known to Buyer prior to the Escrow Termination Date. Damages
in each case shall be net of the amount of any insurance proceeds and indemnity and contribution
actually recovered by Buyer. The Buyer and Seller agree to treat any indemnification payment made
pursuant to this Agreement or the SiS-US Agreement as an adjustment to the Purchase Price for
federal, state and local income tax purposes.

     10.3 Damages Threshold. Notwithstanding the foregoing, Buyer may not receive any
amount of the Escrow Consideration from the Escrow Fund unless and until a certificate or
certificates signed by an officer of Buyer (each, an “Officer’s Certificate”) identifying
Damages in
the aggregate amount in excess of $[*****] (the “Escrow Threshold”) for claims under
this Agreement together with claims submitted by an officer of SiS-US under the SiS-US Agreement
have been delivered to the Escrow Agent and such amount is determined pursuant to this Section 10
to be payable, in which case upon the Escrow Termination Date Buyer shall be entitled to receive
Escrow Consideration equal in value to the full amount of such Damages without deduction. In
determining the amount of any Damages attributable to a breach, any materiality standard contained
in a representation, warranty or covenant of Buyer shall be disregarded.

     10.4 Escrow Period. The Escrow Consideration shall be retained by the Escrow Agent
until the Escrow Termination Date. Subject to the last sentence of this Section 10.4, upon the
Escrow Termination Date, the Escrow Agent shall deliver to Buyer such amount of the Escrow
Consideration as shall have been determined by the parties to be payable to Buyer pursuant to
Officer’s Certificates delivered to Seller and Escrow Agent during the Escrow period in accordance
with Section 10.3 herein above, and the Escrow Agent shall deliver to Seller the remaining Escrow
Consideration; provided, however, that the amount of Escrow Consideration, which in the
reasonable judgment of Buyer, subject to the objection of the Seller and the subsequent arbitration
of the claim in the manner provided in the Escrow Agreement, is necessary to satisfy any
unsatisfied claims specified in any Officer’s Certificate delivered to the Escrow Agent prior to
the Escrow Termination Date with respect to facts and circumstances existing on or prior to the
Escrow Termination Date, shall remain in the possession of the Escrow Agent until such claims have
been resolved. As soon as all such claims have been resolved, any remaining Escrow Consideration
not required to satisfy such claims shall be distributed to Seller. Notwithstanding the foregoing,
any fees owed to the Escrow Agent and any taxes that may be payable (including taxes of the owner
of the Escrow Consideration) due to accrued interest on funds held by the Escrow Agent shall be
paid from the Escrow Fund prior to the final distribution of remaining Escrow Consideration.

     10.5 Method of Asserting Claims. All claims for indemnification by the Buyer or any
other Indemnified Person pursuant to this Section 10 shall be made in accordance with the
provisions of the Escrow Agreement.

     10.6 Damages Limitation. Subject to Section 11.3 below and the following sentence,
the maximum liability of Seller to the Indemnified Persons taken together for all Damages

 

**** Confidential Treatment Requested.

 

 

arising
with respect to this Agreement and/or the SiS-US Agreement shall be limited to $[*****].

Notwithstanding the foregoing the limitations of this Section 10.6 shall not apply to
indemnification for breaches of the representations and warranties contained in Sections 4.2,
4.9(b), and 4.21, any breach of any covenant made by Seller hereunder or any Excluded Liability.

11. Termination.

     11.1 Termination of Agreement. This Agreement may be terminated at any time prior to
the Closing:

          (a) By mutual written consent of Buyer and Seller;

          (b) By either party, if the other party goes into liquidation, has an application or order
made for its winding up or dissolution, has a resolution passed or steps taken to pass a resolution
for its winding up or dissolution, becomes unable to pay its debts as and when they fall due, or
has a receiver, receiver and manager, administrator, liquidator, provisional liquidator, official
manager or administrator appointed to it or any of its assets; or

          (c) By Buyer or Seller if any Governmental Entity shall have issued an order, decree or ruling
or taken any other action restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement; or

          (d) By Buyer or Seller if the Closing does not occur by February 28, 2007 (the
“Termination Date”).

     11.2 Procedure and Effect of Termination. In the event of termination of this Agreement by
any or all of the parties pursuant to Section 11.1, written notice shall be given to each other
party specifying the provision of Section 11.1, pursuant to which such termination is made and
shall become void and there shall be no liability on the part of Buyer or Seller (or their
respective officers, directors, partners or Affiliates), except as a result of any breach of this
Agreement by such party or to the extent such a party is entitled to indemnification under
Section 10 of this Agreement.

     11.3 Break-Up Provision. In the event Seller or any Affiliate of Seller breaches
Section 6.6 hereof and such breach prevents the parties from consummating the transactions
contemplated hereunder, then Seller shall return the Deposit to Buyer within five (5) Working Days
of the earlier of the Termination Date or the date on which Seller notifies Buyer that it does not
intend to consummate the Closing. If Seller fails to effect the Closing hereunder and has also
received an Acquisition Proposal, then Seller shall pay Buyer an additional amount equal to
$1,500,000.00 within five (5) Working Days of the earlier of the closing of the transaction
contemplated by such Acquisition Proposal, or the date on which Seller notifies Buyer that it does
not intend to consummate the Closing.

 

**** Confidential Treatment Requested.

 

 

     11.4 Buyer Liability. All covenants to be performed by Buyer prior to the Closing
Date, and all representations and warranties of Buyer in this Agreement or in any instrument
delivered pursuant to this Agreement shall terminate as of the Closing Date and shall not survive
thereafter, provided however that the representation and warranty of Buyer contained in Section 5.2
shall survive indefinitely. After the parties have executed this Agreement but prior to the
Closing, if Buyer breaches any Buyer representation or warranty or covenant, or if Buyer terminates
the Agreement for any reason and fails to effect the Closing, Buyer’s maximum liability to Seller
and Seller’s Affiliates, and their respective officers, directors, employees, representatives,
agents and shareholders, shall not exceed the amount of the Deposit. Notwithstanding the foregoing
the limitations of this Section 11.4 shall not apply to Buyer’s liability for breach of the
representation and warranty contained in Section 5.2, any breach of any covenant made by Buyer
which is to be performed after the Closing hereunder or any Assumed Liability.

12. Dispute Resolution.

     12.1 Required Negotiation. Subject to the rights of the parties set forth in Section
12(c) below, in case of any dispute between the parties relating to this Agreement, transfer of the
Assets, payment therefor, or other matters governed by the terms of this Agreement, Seller and
Buyer shall attempt in good faith to resolve such dispute for a period of 15 days after notice
thereof has been delivered by the party seeking relief to the other party or parties involved (the
“Negotiation Period”). Each party shall designate an executive who is knowledgeable about the
facts giving rise to the dispute, and the executives shall confer and seek to resolve the dispute
in a manner that is acceptable to both parties. If the executives should so agree during the
Negotiation Period, a memorandum setting forth such agreement shall be prepared and signed by the
parties and the matter shall be handled accordingly.

     12.2 Arbitration. If no such agreement has been reached by the end of the Negotiation
Period, any party may demand arbitration of the matter unless the amount of any claimed damages
from the dispute is at issue in pending litigation with a third party, in which event arbitration
shall not be commenced until such amount is ascertained by settlement or a non-appealable decision
of a court of competent jurisdiction or all the parties agree to arbitration; and in either such
event the matter shall be settled by arbitration conducted by a single arbitrator, selected by
mutual agreement of the parties or otherwise in accordance with the then prevailing rules of the
American Arbitration Association as adopted by the State of California. The arbitration shall be
conducted in Santa Clara County, California. The written decision of the arbitrator shall be
binding and conclusive upon the parties, and the parties shall be entitled to act in accordance
with such decision. The arbitrator shall award reimbursement to the prevailing party in the
arbitration of its reasonable expenses of the arbitration (including costs and reasonable
attorneys’ fees). The award of the arbitrator shall be the sole and exclusive monetary remedy of
the parties and shall be enforceable in any court of competent jurisdiction.

     12.3 Enforcement of Equitable Rights. Notwithstanding the foregoing, the parties
agree that irreparable damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to seek injunctive relief or

- 37 -

 

other equitable
remedies from any court of competent jurisdiction to prevent breaches of this Agreement and to
enforce specifically the terms and provisions of this Agreement, this being in addition to any
other remedy to which they are entitled at law or in equity subject to the terms hereof.

13. Miscellaneous.

     13.1 Amendments and Waivers. Any term of this Agreement may be amended or waived with
the written consent of the parties or their respective successors and assigns. Any amendment or
waiver effected in accordance with this Section 13.1 shall be binding upon the parties and their
respective successors and assigns.

     13.2 Successors and Assigns. The terms and conditions of this Agreement shall inure
to the benefit of and be binding upon the respective permitted successors and assigns of the
parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other
than the parties hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as expressly provided in
this Agreement.

     13.3 Governing Law; Jurisdiction. This Agreement and all acts and transactions
pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed
and interpreted in accordance with the laws of the State of California, without giving effect to
principles of conflicts of law. Each of the parties to this Agreement consents to the exclusive
jurisdiction and venue of the courts of the state and federal courts of Santa Clara County,
California.

     13.4 Counterparts. This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original and all of which together shall constitute one instrument.

     13.5 Titles and Subtitles. The titles and subtitles used in this Agreement are used
for convenience only and are not to be considered in construing or interpreting this Agreement.

     13.6 Notices. Any notice required or permitted by this Agreement shall be in writing
and shall be deemed sufficient upon receipt, when delivered personally or by courier, overnight
delivery service or confirmed facsimile, or forty-eight (48) hours after being deposited in the
regular mail as certified or registered mail (airmail if sent internationally) with postage
prepaid, if such notice is addressed to the party to be notified at such party’s address or
facsimile number as set forth below, or as subsequently modified by written notice.

     13.7 Severability. If one or more provisions of this Agreement are held to be
unenforceable under applicable law, the parties agree to renegotiate such provision in good faith,
in order to maintain the economic position enjoyed by each party as close as possible to that under
the provision rendered unenforceable. In the event that the parties cannot reach a mutually
agreeable and enforceable replacement for such provision, then (i) such provision shall be excluded
from this Agreement, (ii) the balance of the Agreement shall be interpreted as if such

- 38 -

 

provision
were so excluded and (iii) the balance of the Agreement shall be enforceable in accordance with its
terms.

     13.8 Entire Agreement. This Agreement and the documents referred to herein are the
product of both of the parties hereto, and constitute the entire agreement between such parties
pertaining to the subject matter hereof and thereof, and merge all prior negotiations and drafts of
the parties with regard to the transactions contemplated herein and therein. Any and all other
written or oral agreements existing between the parties hereto regarding such transactions are
expressly canceled.

     13.9 Advice of Legal Counsel. Each party acknowledges and represents that, in
executing this Agreement, it has had the opportunity to seek advice as to its legal rights from
legal counsel and that the person signing on its behalf has read and understood all of the terms
and provisions of this Agreement. This Agreement shall not be construed against any party by
reason of the drafting or preparation thereof.

     13.10 No Assignment. This Agreement may not be assigned by Seller without the express
written consent of Buyer.

     13.11 Fees and Expenses. Each party shall bear its own fees and expenses (including
the fees and expenses of its financial, legal, accounting and other advisors) incurred in the
negotiation, documentation and delivery of the Agreement and the transactions contemplated hereby,
whether or not the Closing occurs.

[Signature pages follow]

- 39 -

 

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

	 	 	 	 	 	 	 
	 	 	SIS HOLDING LIMITED	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Address:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Facsimile:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	ESS TECHNOLOGY, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Address:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Facsimile:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	ESS TECHNOLOGY INTERNATIONAL, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Address:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Facsimile:	 	 	 	 
	 

	 	 	 	 	 	 

- 40 -

 

List of Exhibits and Schedules

	 	 	 
	Exhibit A

	 	Escrow Agreement (for indemnification of representations and warranties
of Seller)
	 
	 	 
	Exhibit B

	 	Employee Retention Bonus Plan
	 
	 	 
	Exhibit C

	 	Bonus Pool Escrow Agreement (for payment of Employee Retention
Bonuses)
	 
	 	 
	Exhibit D

	 	Bill of Sale
	 
	 	 
	Exhibit E

	 	Assignment and Assumption Agreement for transfer of Intellectual Property
(may include separate assignment for registered IP)
	 
	 	 
	Exhibit F

	 	Form of Consulting Agreement
	 
	 	 
	Exhibit G

	 	Form of Transition Services Agreement
	 
	 	 
	Schedule 1.1(c)

	 	Assigned Technology
	 
	 	 
	Schedule 1.1(e)(i)

	 	Sublicensable Base Technology
	 
	 	 
	Schedule 1.1(e)(ii)

	 	Royalty-Bearing Base Technology
	 
	 	 
	Schedule 1.1(e)(iii)

	 	Referenceable Base Technology
	 
	 	 
	Schedule 1.1(m)

	 	Domain Names
	 
	 	 
	Schedule 1.1(p)

	 	Governmental Authorizations
	 
	 	 
	Schedule 1.1(v)

	 	Marks
	 
	 	 
	Schedule 1.1(y)

	 	Patents
	 
	 	 
	Schedule 1.1(ii)

	 	Transferred Third Party Technology
	 
	 	 
	Schedule 2.1(a)(iv)

	 	Other Assets
	 
	 	 
	Schedule 2.1(b)

	 	Licenses Granted by Seller to Third Parties with respect to Assigned Technology
	 
	 	 
	Schedule 2.3

	 	Excluded Assets
	 
	 	 
	Schedule 2.4

	 	Required Consents
	 
	 	 
	Schedule 2.5

	 	Assumed Liabilities
	 
	 	 
	Schedule 4.6

	 	Consents
	 
	 	 
	Schedule 4.9(b)

	 	Restrictions on Assets
	 
	 	 
	Schedule 4.10(b)

	 	Rights in Assigned Technology and Base Technology

	 	(a)	 	Registered Intellectual Property Rights and
Applications for Registration of Intellectual Property Rights
	 
	 	(b)	 	Licenses to Third Parties of Assigned
Technology and Base Technology
	 
	 	(c)	 	Contracts for Third Party Technology

	 	 	 
	Schedule 4.10(m)

	 	Third Parties (contractors and consultants) who have
contributed to Assigned Technology or Base Technology
	 
	 	 
	Schedule 4.12

	 	Seller Employees
	 
	 	 
	Schedule 7.1(a)

	 	Remaining License Obligations which require License-Back
of Assigned Technology

Seller Disclosure Schedule

Seller Counsel Legal Opinionexv10w1

 

Exhibit 10.1

EMPLOYMENT AGREEMENT

     This Employment Agreement is entered into as of November 1, 2000 (the “Effective Date”), by
and between Travelzoo.com Sales, Inc., a California corporation (the “Company”), with principal
corporate offices at 800 W. El Camino Real, Suite 180, Mountain View, CA 94040, and Holger Bartel,
whose address is currently xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx (“Employee”). The Company
and Employee are collectively referred to herein as “the Parties.”

     WHEREAS, the Company desires to retain Employee as Senior Vice President Sales & Marketing,
and Employee desires to perform such service for the Company, on the terms and conditions as set
forth herein;

     NOW, THEREFORE, in consideration of the promises and mutual covenants herein contained, and
other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged,
it is mutually agreed by the parties as follows:

     1. Duties and Scope of Employment.

     (a) Position. Employee shall be employed as Senior Vice President Sales &
Marketing.

     (b) Duties. During the term of Employee’s employment with the Company, Employee
shall devote her full time, skill and attention to her duties and responsibilities, which
Employee shall perform faithfully, diligently and competently, and Employee shall use her
best efforts to further the business of the Company. During the term of the Agreement,
Employee agrees not to actively engage in any other employment, occupation or consulting
activity for any direct or indirect remuneration without the prior approval of the Board,
except that this provision shall not be interpreted to prohibit Employee from involvement in
any charitable or community activity/organization that he is currently involved in and that
does not materially interfere with her ability to perform her duties under this Agreement.
Employee shall report to Chief Executive Officer. Employee shall be permitted, to the extent
such activities do not materially and adversely affect the ability of Employee to fully
perform her duties and responsibilities hereunder, to (i) manage Employee’s personal,
financial and legal affairs, (ii) serve on civic or charitable boards or committees, and
(iii) with the consent of the Board of Directors (which consent shall not be unreasonably
withheld), serve as a member of the board of directors of any noncompeting business.

     2. Nature of Employment.  Employee agrees not to leave or discontinue her employment
with the Company during the first three (3) months of her employment. Similarly, the Company
agrees not to terminate Employee during the first three (3) months of employment with the Company,
except for cause as defined in paragraph 2(b). After the three month period has ended, Employee
will become an “at-will” employee which means that the employment relationship may be terminated at
any time, with or without cause, at the option of either the Company or Employee, upon two weeks
written notice to the other party.

     (a) Termination by Company without Cause. If Employee is terminated by the
Company without Cause (as defined in paragraph 2(b)) after the initial three months of
employment, Employee shall receive her salary and benefits earned through the date of
termination.

     (b) Termination for Cause. If Employee is terminated for “Cause” as defined
herein at any time, Employee will receive only payment of her salary and benefits through the
date of termination. For purposes of this Agreement, “Cause” is defined as (i) gross
misconduct by Employee that is materially injurious to the Company’s business; (ii) the
commission by Employee of a felony; or (3) the willful failure or refusal of the Employee,
following receipt of an explicit directive from the Company, to comply with the material
terms of this Agreement.

     3. Compensation and Fringe Benefits

     (a) Base Salary. Employee will receive a base salary at the annualized rate of
$240,000.00 (the “Base Salary”), which shall be paid periodically in accordance with normal
Company payroll practices and subject to the usual and applicable required withholding.
Employee understands and agrees that neither her job performance nor promotions,
commendations, bonuses or the like from the Company give rise to or in any way serve as the
basis for modification, amendment, or extension, by implication or otherwise, of this
Agreement.

 

 

     (b) Productivity Bonus Plan. In addition to the Base Salary, Employee shall
participate in the company’s Productivity Bonus Plan. A copy of the bonus plan is attached.

     (c) Vacation and Holiday Pay. Employee shall receive two weeks of paid vacation
per year, which accrues over the course of the year. In addition, the Company provides eight
(8) paid holidays each year, along with two (2) “floating holidays” which can be used by
Employee at any time.

     (d) Health Insurance. The Company shall pay Employee up to $600.00 per month
(upon submission of receipts or other proof of payment) as reimbursement for the costs of
Employee’s health insurance.

     (e) Other Benefits.  Employee will be entitled to participate in or receive such
benefits under the Company’s employee benefit plans and policies and such other benefits
which may be made available as in effect from time to time and as are provided to similarly
situated employees of the Company, subject in each case to the generally applicable terms and
conditions of the plans and policies in question.

     4. Expenses. The Company will pay or reimburse Employee for reasonable travel,
entertainment or other expenses incurred by Employee in the furtherance of or in connection with
the performance of Employee’s duties hereunder in accordance with the Company’s established
policies.

     5. Certain Covenants.

     (a) Intellectual Property Rights.

     (i) Employee agrees that the Company will be the sole owner of any and all of
Employee’s “Discoveries” and “Work Product,” hereinafter defined, made during the term
of her employment with the Company, whether pursuant to this Agreement or otherwise.
For purposes of this Agreement, “Discoveries” means all inventions, discoveries,
improvements, and copyrightable works (including, without limitation, any information
relating to the Company’s software products, source code, know-how, processes, designs,
algorithms, computer programs and routines, formulae, techniques, developments or
experimental work, work-in-progress, or business trade secrets) made or conceived or
reduced to practice by Employee during the term of her employment by the Company,
whether or not potentially patentable or copyrightable in the United States or
elsewhere. For purposes of this Agreement, “Work Product” means any and all work
product relating to Discoveries.

     (ii) Employee shall promptly disclose to the Company all Discoveries and Work
Product. All such disclosures must include complete and accurate copies of all source
code, object code or machine-readable copies, documentation, work notes, flow-charts,
diagrams, test data, reports, samples, and other tangible evidence or results
(collectively, “Tangible Embodiments”) of such Discoveries or Work Product. All
Tangible Embodiments of any Discoveries or Work Project will be deemed to have been
assigned to the Company as a result of the act of expressing any Discovery or Work
Product therein.

     (iii) Employee hereby assigns and agrees to assign to the Company all of her
interest in any country in any and all Discoveries and Work Product, whether such
interest arises under patent law, copyright law, trade-secret law, semiconductor chip
protection law, or otherwise. Without limiting the generality of the preceding
sentence, Employee hereby authorizes the Company to make any desired changes to any
part of any Discovery or Work Product, to combine it with other materials in any manner
desired, and to withhold Employee’s identity in connection with any distribution or use
thereof alone or in combination with other materials. This assignment and assignment
obligation applies to all Discoveries and Work Product arising during Employee’s
employment with the Company (or its predecessors), whether pursuant to this Agreement
or otherwise. Employee’s agreement to assign to the Company any of her rights as set
forth in this Section 5(a)(iii) shall not apply to any invention that qualifies fully
under the provisions of California Labor Code Section 2870, where no equipment,
supplies, facility or trade secret information of the Company was used and that was
developed entirely upon Employee’s own time, and (i) that does not relate to Company
business or to the Company’s actual or anticipated research or development, or (ii)
that does not result from any work performed by Employee for the Company.

     (iv) At the request of the Company, Employee shall promptly and without additional
compensation execute any and all patent applications, copyright registration
applications, waivers of moral rights, assignments, or other

 

 

instruments that the Company deems necessary or appropriate to apply for or obtain
Letters Patent of the United States or any foreign country, copyright registrations or
otherwise to protect the Company’s interest in such Discovery and Work Product, the
expenses for which will be borne by the Company. Employee hereby irrevocably
designates and appoints the Company and its duly authorized officers and agents as her
agents and attorneys-in-fact to, if the Company is unable for any reason to secure
Employee’s signature to any lawful and necessary document required or appropriate to
apply for or execute any patent application, copyright registration application, waiver
of moral rights, or other similar document with respect to any Discovery and Work
Product (including, without limitation, renewals, extensions, continuations, divisions,
or continuations in part), (i) act for and in her behalf, (ii) execute and file any
such document, and (iii) do all other lawfully permitted acts to further the
prosecution of the same legal force and effect as if executed by him; this designation
and appointment constitutes an irrevocable power of attorney coupled with an interest.

     (v) To the extent that any Discovery or Work Product constitutes copyrightable or
similar subject matter that is eligible to be treated as a “work made for hire” or as
having similar status in the United States or elsewhere, it will be so deemed. This
provision does not alter or limit Employee’s other obligations to assign intellectual
property rights under this Agreement.

     (vi) The obligations of Employee set forth in this Section 5 (including, without
limitation, the assignment obligations) will continue beyond the termination of
Employee’s employment with respect to Discoveries and Work Product conceived or made by
Employee alone or in concert with others during Employee’s employment with the Company,
whether pursuant to this Agreement or otherwise. Those obligations will be binding
upon Employee, her assignees permitted under this Agreement, executors, administrators,
and other representatives.

     (b) Exposure to Proprietary Information.

     (i) As used in this Agreement, “Proprietary Information” means all information of
a business or technical nature that relates to the Company including, without
limitation, all information about software products whether currently released or in
development, all inventions, discoveries, improvements, copyrightable work, source
code, know-how, processes, designs, algorithms, computer programs and routines,
formulae and techniques, and any information regarding the business of any customer or
supplier of the Company or any other information that the Company is required to keep
confidential. Notwithstanding the preceding sentence, the term “Proprietary
Information” does not include information that is or becomes publicly available through
no fault of Employee, or information that Employee learned prior to the Effective Date.

     (ii) In recognition of the special nature of her employment under this Agreement,
including her special access to the Proprietary Information, and in consideration of
her employment pursuant to this Agreement, Employee agrees to the covenants and
restrictions set forth in Section 5 of this Agreement.

     (c) Use of Proprietary Information; Restrictive Covenants.

     (i) Employee acknowledges that the Proprietary Information constitutes a
protectible business interest of the Company, and covenants and agrees that during the
term of her employment, whether under this Agreement or otherwise, and after the
termination of such employment, he will not, directly or indirectly, disclose, furnish,
make available or utilize any of the Proprietary Information, other than in the proper
performance of her duties for the Company.

     (ii) Employee will not, during the term of this Agreement or, solely with respect
to clauses 2 and 3 of this subparagraph (ii), for a period of one year thereafter (the
“Restricted Period”), anywhere within the United States (the “Restricted Territory”),
directly or indirectly (whether as an owner, partner, shareholder, agent, officer,
director, employee, independent contractor, consultant, or otherwise):

     1. perform services for, or engage in, any business that develops or sells
products or services which are competitive with any products or services sold or
developed by the Company for which Employee has provided any assistance in
planning, development, marketing, training, support, or maintenance during the
period of Employee’s employment with the Company (the “Products”);

 

 

     2. except on behalf of the Company, solicit any person or entity who is, or
was at any time during the twelve-month period immediately prior to the
termination of Employee’s employment with the Company, a customer of the Company
for the sale of the Products or any product or service of a type then sold by the
Company for which Employee provided any assistance in planning, development,
marketing, training, support, or maintenance; or

     3. solicit for employment any person who is, or was at any time during the
twelve-month period immediately prior to the termination of Employee’s employment
with the Company, an employee of the Company.

          (d) Scope/Severability. The Parties acknowledge that the business of the Company is
and will be national and international in scope and thus the covenants in this Section 5 would be
particularly ineffective if the covenants were to be limited to a particular geographic area of the
United States. If any court of competent jurisdiction at any time deems the Restricted Period
unreasonably lengthy, or the Restricted Territory unreasonably extensive, or any of the covenants
set forth in this Section 5 not fully enforceable, the other provisions of this Section 5, and this
Agreement in general, will nevertheless stand and to the full extent consistent with law continue
in full force and effect, and it is the intention and desire of the parties that the court treat
any provisions of this Agreement which are not fully enforceable as having been modified to the
extent deemed necessary by the court to render them reasonable and enforceable and that the court
enforce them to such extent (for example, that the Restricted Period be deemed to be the longest
period permissible by law, but not in excess of the length provided for in Section 5(c), and the
Restricted Territory be deemed to comprise the largest territory permissible by law under the
circumstances).

          (e) Return of Company Materials upon Termination.  Employee acknowledges that all
records, documents, and Tangible Embodiments containing or of Proprietary Information prepared by
Employee or coming into her possession by virtue of her employment by the Company are and will
remain the property of the Company. Upon termination of her employment with the Company, Employee
shall immediately return to the Company all such items in her possession and all copies of such
items.

     6. Equitable Remedies.

          (a) Employee acknowledges and agrees that the agreements and covenants set forth in Sections
5(a), (b), (c), (d) and (e) are reasonable and necessary for the protection of the Company’s
business interests, that irreparable injury will result to the Company if Employee breaches any of
the terms of said covenants, and that in the event of Employee’s actual or threatened breach of any
such covenants, the Company will have no adequate remedy at law. Employee accordingly agrees that,
in the event of any actual or threatened breach by him of any of said covenants, the Company will
be entitled to immediate injunctive and other equitable relief, without bond and without the
necessity of showing actual monetary damages. Nothing in this Section 6 will be construed as
prohibiting the Company from pursuing any other remedies available to it for such breach or
threatened breach, including the recovery of any damages that it is able to prove.

          (b) Each of the covenants in Sections 5(a), (b), (c), (d) and (e) will be construed as
independent of any other covenants or other provisions of this Agreement.

          (c) In the event of any judicial determination that any of the covenants in Sections 5(a),
(b), (c), (d), and (e) are not fully enforceable, it is the intention and desire of the parties
that the court treat said covenants as having been modified to the extent deemed necessary by the
court to render them reasonable and enforceable, and that the court enforce them to such extent.

     7. Assignment. This Agreement shall be binding upon and inure to the benefit of (a)
the heirs, executors and legal representatives of Employee upon Employee’s death and (b) any
successor of the Company. Any such successor of the Company shall be deemed substituted for the
Company under the terms of this Agreement for all purposes. As used herein, “successor” shall
include any person, firm, corporation or other business entity which at any time, whether by
purchase, merger or otherwise, directly or indirectly, acquires all or substantially all of the
assets or business of the Company. None of the rights of Employee to receive any form of
compensation payable pursuant to this Agreement shall be assignable or transferable except through
a testamentary disposition or by the laws of descent. Any attempted assignment, transfer,
conveyance or other disposition (other than as aforesaid) of any interest in the rights of Employee
to receive any form of compensation hereunder shall be null and void.

     8. Notices. All notices, requests, demands and other communications called for
hereunder shall be in writing and shall be deemed given if delivered personally, one (1) day after
mailing via Federal Express overnight or a similar overnight delivery service, or three (3) days
after being mailed by registered or certified mail, return receipt requested, prepaid and addressed
to the parties or

 

 

their successors in interest at the addresses listed above, or at such other addresses as the
parties may designate by written notice in the manner aforesaid.

     9. Severability. In the event that any provision hereof becomes or is declared by a
court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue
in full force and effect without said provision.

     10. Entire Agreement. This Agreement, and the Stock Option Agreement, represent the
entire agreement and understanding between the Company and Employee concerning Employee’s
employment relationship with the Company, and supersede in their entirety any and all prior
agreements and understandings concerning Employee’s employment relationship with the Company.

     11. Resolution of Disputes Regarding Employment.

          (a) The Parties agree to submit any dispute or controversy arising out of, relating to, or in
connection with this Agreement, or the interpretation, validity, construction, performance, breach,
or termination thereof, to mediation. The Parties shall mutually select the mediator and shall
equally pay for the costs of the mediator.

          (a) If and only if a mediation is unsuccessful, and the dispute or controversy is not resolved
within 30 days after a mediation, either party may submit the matter to binding arbitration, to the
extent permitted by law, to be held in or near San Jose, California in accordance with the National
Rules for the Resolution of Employment Disputes then in effect of the American Arbitration
Association (the “Rules”). The arbitrator may grant injunctions or other relief in such dispute or
controversy. The decision of the arbitrator shall be final, conclusive and binding on the parties
to the arbitration. Judgment may be entered on the arbitrator’s decision in any court having
jurisdiction. The arbitrator may award the prevailing party in any such attorneys’ fees and costs
incurred in connection therewith.

          (b) The arbitrator shall apply California law to the merits of any dispute or claim, without
reference to rules of conflict of law. Employee hereby expressly consents to the personal
jurisdiction of the state and federal courts located in Santa Clara County, California or the
Northern District of California for any action or proceeding arising from or relating to this
Agreement and/or relating to any arbitration in which the Parties are participants.

          (c) Employee understands that nothing in this Section modifies Employee’s at-will status.
Either the Company or Employee can terminate the employment relationship at any time, with or
without cause, subject only to the restrictions set forth in Section 2 above.

          (d) Employee has read and understands Section 11, which discusses arbitration. employee
understands that by signing this agreement, employee agrees to submit any future claims arising out
of, relating to, or in connection with this agreement, or the interpretation, validity,
construction, performance, breach, or termination thereof to binding arbitration to the extent
permitted by law, and that this arbitration clause constitutes a waiver of employee’s right to a
jury trial and relates to the resolution of all disputes relating to all aspects of the
employer/employee relationship, including but not limited to, the following claims:

               (i) Any and all claims for wrongful discharge of employment; breach of contract, both express
and implied; breach of the covenant of good faith and fair dealing, both express and implied;
negligent or intentional infliction of emotional distress; negligent or intentional
misrepresentation; negligent or intentional interference with contract or prospective economic
advantage; and defamation;

               (ii) Any and all claims for violation of any federal state or municipal statute, including,
but not limited to the California Fair Employment and Housing Act, the Civil Rights Act of 1991,
the Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act of 1990, and
the Fair Labor Standards Act;

               (iii) Any and all claims arising out of any other laws and regulations relating to employment
or employment discrimination.

          (e) The Parties may apply to any court of competent jurisdiction for a temporary restraining
order, preliminary injunction, or other interim or conservatory relief, as necessary, without
breach of this arbitration agreement and without abridgment of the powers of the arbitrator.

 

 

     12. No Oral Modification, Cancellation or Discharge. This Agreement may only be
amended, canceled or discharged in writing signed by Employee and the Company.

     13. Governing Law. This Agreement shall be governed by the internal substantive laws,
but not the choice of law rules, of the State of California.

     14. Acknowledgment. Employee acknowledges that he has had the opportunity to discuss
this matter with and obtain advice from her private attorney, has had sufficient time to, and has
carefully read and fully understands all the provisions of this Agreement, and is knowingly and
voluntarily entering into this Agreement,

     IN WITNESS WHEREOF, the undersigned have executed this Agreement on the respective dates set forth
below.

	 	 	 	 	 	 	 
	 	 	COMPANY:	 	 
	 
	 	 	 	 	 	 
	 	 	TRAVELZOO.COM SALES, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Date:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	EMPLOYEE:	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	Holger Bartel	 	 
	 
	 	 	 	 	 	 
	 

	 	Date:

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