ASSET PURCHASE AGREEMENT

Asset Purchase Agreement

You are currently viewing:

This Asset Purchase Agreement involves

TRIPOS INC | TRIPOS (CAYMAN) LP

. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here.

Title: ASSET PURCHASE AGREEMENT
Governing Law: New York Date: 11/21/2006
Industry: Biotechnology and Drugs Law Firm: Hogan & Hartson L.L.P.;

EXECUTION COPY

ASSET PURCHASE AGREEMENT

dated as of

November 19, 2006

between

TRIPOS (CAYMAN) LP

and

TRIPOS, INC.

TABLE OF CONTENTS

Page

Article 1
Definitions

Section 1.01 . Definitions . 1

Section 1.02 . Other Definitional and Interpretative Provisions . 6

Article 2
Purchase and Sale

Section 2.01 . Purchase and Sale . 7

Section 2.02 . Excluded Assets . 8

Section 2.03 . Assumed Liabilities . 9

Section 2.04 . Excluded Liabilities . 9

Section 2.05 . Assignment of Contracts and Rights . 10

Section 2.06. Purchase Price; Allocation of Purchase Price . 11

Section 2.07. Closing . 12

Section 2.08 . Purchase Price Adjustment 12

Article 3
Representations and Warranties of Seller

Section 3.01. Corporate Existence and Power . 15

Section 3.02. Corporate Authorization . 15

Section 3.03. Governmental Authorization . 15

Section 3.04. Noncontravention . 15

Section 3.05. Required and Other Consents . 16

Section 3.06. Financial Statements . 16

Section 3.07. Absence of Certain Changes . 16

Section 3.08. No Undisclosed Material Liabilities . 18

Section 3.09 . Material Contracts . 19

Section 3.10. Litigation . 21

Section 3.11. Compliance with Laws and Court Orders . 21

Section 3.12. Properties . 21

Section 3.13. Sufficiency of and Title to the Purchased Assets . 22

Section 3.14. Products . 22

Section 3.15. Intellectual Property . 23

Section 3.16. Insurance Coverage . 25

Section 3.17. Licenses and Permits . 25

Section 3.18. Inventories . 25

Section 3.19. Receivables . 25

Section 3.20. Seller SEC Reports . 26

Section 3.21. Finders' Fees . 26

Page

Section 3.22. Employees . 27

Section 3.23. Environmental Compliance . 27

Section 3.24 . Solvency . 28

Section 3.25 . Vote Required . 28

Section 3.26 . Opinion of Financial Advisor . 28

Section 3.27. Representations . 29

Article
Representations and Warranties of Buyer

Section 4.01. Corporate Existence and Power . 29

Section 4.02. Corporate Authorization . 29

Section 4.03. Governmental Authorization . 29

Section 4.04. Noncontravention . 29

Section 4.05. Financing . 29

Section 4.06. Litigation . 30

Section 4.07 . Disclosure Documents . 30

Article 5
Covenants of Seller

Section 5.01 . Conduct of the Business . 30

Section 5.02. Access to Information; Confidentiality . 32

Section 5.03. Notices of Certain Events . 32

Section 5.04. Noncompetition . 33

Section 5.05 . Liquidating Distributions . 34

Section 5.06 . Stockholder Meeting; Proxy Materials . 34

Section 5.07 . Pro Forma Financial Statements. 35

Section 5.08. Acquisition Proposals . 35

Section 5.09 . Financing . 37

Section 5.10 . Seller Disclosure Schedule . 37

Section 5.11 . Liens; Security Interests . 37

Section 5.12 . Contracts . 38

Article
Covenant of Buyer

Article 7
Covenants of Buyer and Seller

Section 7.01 . Commercially Reasonable Efforts; Further Assurances . 38

Section 7.02 . Certain Filings . 39

Section 7.03 . Public Announcements . 39

Section 7.04 . WARN Act 39

Page

Article 8
Tax Matters

Section 8.01 . Tax Definitions . 40

Section 8.02 . Tax Matters . 40

Section 8.03 . Tax Cooperation; Allocation of Taxes . 40

Article 9
Employee Benefits

Section 9.01 . Employee Benefits Definitions . 42

Section 9.02 . ERISA Representations . 42

Section 9.03 . Employees and Offers of Employment 44

Section 9.04 . Seller's Employee Benefit Plans . 44

Section 9.05 . Buyer Benefit Plans . 46

Section 9.06 . No Third Party Beneficiaries . 46

Article 10
Conditions to Closing

Section 10.01 . Conditions to Obligations of Buyer and Seller . 47

Section 10.02 . Conditions to Obligation of Buyer . 47

Section 10.03 . Conditions to Obligation of Seller . 48

Article 1
Survival; Indemnification

Section 11.01 . Survival 49

Section 11.02 . Indemnification . 49

Section 11.03 . Procedures . 50

Article 12
Termination

Section 12.01 . Grounds for Termination . 51

Section 12.02 . Effect of Termination. 52

Article 13
Miscellaneous

Section 13.01 . Notices . 54

Section 13.02 . Amendments and Waivers . 55

Section 13.03 . Disclosure Schedule References . 55

Section 13.04 . Expenses . 55

Section 13.05 . Successors and Assigns . 55

Section 13.06 . Governing Law . 55

iii

Page

Section 13.07 . Dispute Resolution. 55

Section 13.08 . Counterparts; Effectiveness; Third Party Beneficiaries . 57

Section 13.09 . Entire Agreement 57

Section 13.10 . Bulk Sales Laws . 57

Section 13.11. Severability . 57

Section 13.12 . Specific Performance . 58

Section 13.13 . Waiver of Certain Rights . 58

Exhibit A Support Agreement
Exhibit B Pro Forma Balance Sheet

Exhibit C Assignment and Assumption Agreement

Exhibit D Transition Services Agreement

Exhibit E License Agreement

Exhibit F Lease

ASSET PURCHASE AGREEMENT

AGREEMENT (this " Agreement ") dated as of November 19, 2006 between Tripos (Cayman) LP, a Cayman Islands limited partnership (" Buyer "), and Tripos, Inc., a Utah corporation (" Seller "),

W I T N E SS E T H :

WHEREAS, Seller conducts a business which develops, sells and distributes discovery informatics software to the pharmaceutical industry (the " Business ");

WHEREAS, Buyer desires to purchase substantially all of the assets of the Business from Seller, and Seller desires to sell substantially all of the assets of the Business to Buyer, upon the terms and subject to the conditions hereinafter set forth;

WHEREAS, Buyer does not desire to purchase Seller's discovery research business and certain other assets of Seller, all of which will be retained by Seller;

WHEREAS, Seller intends, promptly after the consummation of the transactions contemplated hereby, to liquidate and commence the orderly dissolution and winding up of its remaining business; and

WHEREAS, simultaneously with the execution and delivery of this Agreement, certain stockholders of Seller have entered into Support Agreements in the form of Exhibit A hereto, dated as of the date hereof, with Buyer, pursuant to which such stockholders have agreed to vote their shares in favor of the transactions contemplated hereby and against any competing proposals;

NOW THEREFORE, the parties hereto agree as follows:

Article 1
Definitions

Section 1.01 . Definitions. (a) The following terms, as used herein, have the following meanings:

" Adjusted Deferred Revenues " means the deferred revenues of the Business increased by the amount of any contra deferred revenues, in each case as reflected on the Closing Pro Forma Balance Sheet.

" Adjusted Purchase Price " means the Purchase Price, as adjusted pursuant to 2.08 hereof.

" Affiliate " means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with such other Person.

" Applicable Law " means, with respect to any Person, any federal, state or local law (statutory, common or otherwise), constitution, treaty, convention, ordinance, code, rule, regulation, order, injunction, judgment, decree, ruling or other similar requirement enacted, adopted, promulgated or applied by a Governmental Authority that is binding upon or applicable to such Person, as amended unless expressly specified otherwise.

" Balance Sheet Date " means September 30, 2006.

"Business Day" means a day, other than Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by Applicable Law to close.

" CERCLA " means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, and any rules or regulations promulgated thereunder.

" Closing Adjusted Net Working Capital " means (A) the sum of cash, net accounts receivable aged not more than 120 days and prepaid expenses, minus (B) the sum of accounts payable, current portion of long‑term debt related to capital leases, other accrued liabilities and Adjusted Deferred Revenues, in each case as reflected on the Closing Pro Forma Balance Sheet, excluding any asset or liability attributable to Apportioned Obligations.

" Closing Date " means the date of the Closing.

" Closing Pro Forma Balance Sheet " means the pro forma balance sheet of the Business as of the close of business on the day before the Closing Date.

" Environmental Laws " means any Applicable Law or any agreement with any Governmental Authority or other third party, relating to human health and safety, the environment or to Hazardous Substances.

" Environmental Liabilities " means any and all liabilities arising in connection with or in any way relating to Seller (or any predecessor of Seller or any prior owner of all or part of its business and assets), any property now or previously owned, leased or operated by Seller, the Business (as currently or previously conducted), the Purchased Assets or any activities or operations occurring or conducted at the Real Property (including offsite disposal), whether accrued, contingent, absolute, determined, determinable or otherwise, which (i) arise under or relate to any Environmental Law and (ii) relate to actions occurring or conditions existing on or prior to the Closing Date.

A-2

" Environmental Permits " means all permits, licenses, franchises, certificates, approvals and other similar authorizations of Governmental Authorities relating to or required by Environmental Laws and affecting, or relating in any way to, the Business, the Purchased Assets or the Real Property.

" GAAP " means generally accepted accounting principles in the United States.

" Governmental Authority " means any transnational, domestic or foreign federal, state or local, governmental authority, department, court, agency or official, including any political subdivision thereof.

" Hazardous Substances " means any pollutant, contaminant, waste or chemical or any toxic, radioactive, ignitable corrosive, reactive or otherwise hazardous substance, waste or material or any substance, waste or material having any constituent elements displaying any of the foregoing characteristics including petroleum, its derivatives, by-products and other hydrocarbons, and any substance, waste or material regulated under any Environmental Law.

" HSR Act " means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

" Intellectual Property " shall mean any or all of the following and all rights associated therewith: (i) all domestic and foreign patents and applications therefor and all reissues, divisions, renewals, extensions, continuations and continuations-in-part thereof; (ii) all inventions (whether patentable or not), invention disclosures, improvements, trade secrets, proprietary information, know‑how, technology, algorithms; technical data; models; databases and customer lists, and all documentation relating to any of the foregoing; (iii) all copyrights, copyrights registrations and applications therefor, and all other rights corresponding thereto throughout the world; (iv) all mask works, mask work registrations and applications therefor; (v) all industrial designs and any registrations and applications therefor; (vi) all domain names; trade names, logos, common law trademarks and service marks; trademark and service mark registrations and applications therefor and all goodwill associated therewith; (vii) all computer software including all source code, object code, firmware, development tools, files, records and data, all media on which any of the foregoing is recorded, all documentation related to any of the foregoing; and (viii) all tangible or intangible proprietary information or materials.

" Intellectual Property of Seller " shall mean any Intellectual Property that is owned by Seller or its subsidiaries other than Intellectual Property listed in Schedule 2.02(g).

" knowledge " of any Person that is not an individual means the knowledge of such Person's officers after reasonable inquiry.

A-3

" Lien " means, with respect to any property or asset, any mortgage, lien, pledge, charge, security interest, encumbrance or other adverse claim of any kind in respect of such property or asset. For the purposes of this Agreement, a Person shall be deemed to own subject to a Lien any property or asset which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such property or asset.

" Material Adverse Effect " means any adverse effect, change, event, occurrence or state of facts (A) affecting the condition (financial or otherwise), business, assets, properties, liabilities (including contingent liabilities), operations or results of operations of the Business that is material to the Business, or (B) that would prevent or materially impair Seller from consummating the transactions contemplated hereby, that has occurred or would reasonably be expected to occur as a result of any such change, effect, event, occurrence or state of facts, excluding in each case (i) any changes or effects resulting from general changes in economic and financial market conditions (whether in the United States or internationally), (ii) changes in conditions (including as a result of changes in laws, including without limitation, common law, rules and regulations or the interpretations thereof) generally applicable to the types of businesses in which Seller and its subsidiaries are engaged, (iii) the effect of any change arising in connection with earthquakes, acts of war, sabotage or terrorism, military actions or escalation thereof, and (iv) any failure, in and of itself, by Seller to meet any internal or published projections, forecasts or revenue or earnings predictions or projections (it being understood that the facts or circumstances giving rise to or contributing to such failure may be taken into account in determining whether there has been a Material Adverse Effect unless otherwise excluded pursuant to this paragraph) and (v) changes resulting from the announcement of the transactions contemplated hereby or the identity of Buyer, except, in the cases of clauses (i) through (iii), to the extent such effect, change, event, occurrence or state of facts disproportionately affects the Business.

" 1934 Act " means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

" Owned Intellectual Property Rights " means all Intellectual Property Rights owned by Seller or an Affiliate of Seller and held for use or used in the conduct of the Business.

" Person " means an individual, corporation, partnership, limited liability company, association, trust or other entity or organization, including a Governmental Authority.

" Pro Forma Balance Sheet " means the unaudited balance sheet of the Business as of June 30, 2006 attached hereto as Exhibit B.

A-4

" Transaction Agreements " means, collectively, this Agreement, the Support Agreements, the Transition Services Agreement, the License Agreement and the Lease.

(b) Each of the following terms is defined in the Section set forth opposite such term:

Term	Section
1933 Act	3.20
AAA	13.07
Accounting Referee	2.06
Acquisition Proposal	5.08
active employee	9.03
Adverse Recommendation Change	5.08
Agreement	Preamble
Allocation Statement	2.06
Apportioned Obligations	8.03
Arbitration Costs	13.07
Assumed Liabilities	2.03
Attorney's Costs	13.07
Business	Recitals
Buyer	Preamble
Capex Budget	3.07
Closing	2.07
Code	8.01
Confidentiality Agreement	13.09
Contracts	2.01
Damages	11.02
Demand	13.07
Dispute	2.08
Disputed Claim	13.07
e-mail	13.01
Employee Plans	9.02
ERISA	9.01
ERISA Affiliate	9.01
Excluded Assets	2.02
Excluded Liabilities	2.04
Indemnified Party	11.03
Indemnifying Party	11.03
Material Contract	3.09
Multiemployer Plan	9.02
Other Consents	3.05
Permits	3.17
Permitted Liens	3.12
Petty Cash	2.01

A-5

Term	Section
Post‑Closing Tax Period	8.03
Pre‑Closing Tax Period	8.01
Purchased Assets	2.01
Purchase Price	2.06
Real Property	3.12
Required Consents	3.05
Resolution of Sale	5.06
SEC	3.20
Seller	Preamble
Seller Proxy Statement	5.06
Seller SEC Reports	3.20
Series C Preferred Stock	3.25
Superior Proposal	5.08
Tax	8.01
Taxing Authority	8.01
Termination Date	12.01
Transfer Taxes	8.03
Transferred Employees	9.03
Uncontested Purchase Price	2.08
WARN Act	7.04
Warranty Breach	11.02

Section 1.02 . Other Definitional and Interpretative Provisions. The words "hereby", "hereof", "herein" and "hereunder" and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof. References to Articles, Sections, Exhibits and Schedules are to Articles, Sections, Exhibits and Schedules of this Agreement unless otherwise specified. All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Any capitalized terms used in any Exhibit or Schedule but not otherwise defined therein, shall have the meaning as defined in this Agreement. Any singular term in this Agreement shall be deemed to include the plural, and any plural term the singular. Whenever the words "include", "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation", whether or not they are in fact followed by those words or words of like import. "Writing", "written" and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form. References to any agreement or contract are to that agreement or contract as amended, modified or supplemented from time to time in accordance with the terms hereof and thereof; provided that with respect to any agreement or contract listed on any schedules hereto, all such amendments, modifications or supplements must also be listed in the appropriate

A-6

schedule. References to any Person include the successors and permitted assigns of that Person. References from or through any date mean, unless otherwise specified, from and including or through and including, respectively. References to "law", "laws" or to a particular statute or law shall be deemed also to include any and all Applicable Law.

Article 2
Purchase and Sale

Section 2.01 . Purchase and Sale. Except as otherwise provided below, upon the terms and subject to the conditions of this Agreement, Buyer agrees to purchase from Seller and Seller agrees to sell, convey, transfer, assign and deliver, or cause to be sold, conveyed, transferred, assigned and delivered, to Buyer at the Closing, free and clear of all Liens, other than Permitted Liens, all of Seller's right, title and interest in, to and under the assets, properties and business, of every kind and description, wherever located, personal or mixed, tangible or intangible, known or unknown, owned, held or used in or arising from the conduct of the Business by Seller as the same shall exist on the Closing Date, including all assets shown on the Closing Pro Forma Balance Sheet and not disposed of in the ordinary course of business as permitted by this Agreement, and all assets of the Business thereafter acquired by Seller (the " Purchased Assets "), and including all right, title and interest of Seller in, to and under:

(a) all personal property and interests in personal property of the Business, including machinery, equipment, furniture, office equipment, communications equipment and other tangible property to the extent listed on Schedule 3.12(b);

(b) all raw materials, work‑in‑process, finished goods, supplies and other inventories of the Business;

(c) all rights under all contracts, agreements, leases (except leases of real property (other than the leases listed on Schedule 2.02(c))), licenses, commitments, sales and purchase orders and other instruments of the Business (collectively, the " Contracts ");

(d) all accounts, notes and other receivables of the Business (other than accounts receivables aged more than 120 days as of the Closing Date);

(e) all prepaid expenses, excluding ad valorem taxes;

(f) $900,000 in cash, plus all petty cash located at the operating facilities of the Business (" Petty Cash ");

A-7

(g) all of Seller's rights, claims, credits, causes of action or rights of set-off against third parties relating to or arising from the Purchased Assets, including unliquidated rights under manufacturers' and vendors' warranties;

(h) subject to Section 2.02(g), all Intellectual Property owned by or licensed to Seller and its subsidiaries and including the items listed on Schedule 3.15;

(i) all transferable licenses, permits or other governmental authorization affecting, or relating in any way to, the Business, including the items listed on Schedule 3.17;

(j) all books, records, files and papers, whether in hard copy or computer format, used in the Business, including copies of financial information and related work papers in possession of Seller or its accountants, engineering information, sales and promotional literature, manuals and data, sales and purchase correspondence, lists of present and former suppliers, lists of prospective, present and former customers, personnel and employment records relating to Transferred Employees, scientific research and publications and any information relating to any Tax imposed on the Purchased Assets;

(k) all goodwill associated with the Business or the Purchased Assets, together with the right to represent to third parties that Buyer is the successor to the Business; and

(l) all rights under all research or other grants listed on Schedule 2.01(l).

Section 2.02 . Excluded Assets. Buyer expressly understands and agrees that the following assets and properties of Seller (the " Excluded Assets ") shall be excluded from the Purchased Assets:

(a) all of Seller's cash and cash equivalents on hand and in banks, except as set forth in Section 2.01(f);

(b) insurance policies;

(c) all real property and leases of, and other interests in, real property, in each case together with all buildings, fixtures and improvements erected thereon except as set forth on Schedule 2.02(c) (it being understood that all such assets and properties are Excluded Assets whether or not they are used in the Business);

A-8

(d) subject to Section 2.01(h), all assets used exclusively in Seller's discovery research business or that are not used in or otherwise relate to the Business;

(e) all assets and rights associated with Seller's investment in the A.M. Pappas Life Sciences Venture Fund;

(f) any Purchased Assets sold or otherwise disposed of in the ordinary course of business and not in violation of any provisions of this Agreement during the period from the date hereof until the Closing Date;

(g) the Intellectual Property of Seller identified on Schedule 2.02(g); and

(h) all accounts receivables aged more than 120 days as of the Closing Date.

Section 2.03 . Assumed Liabilities. Upon the terms and subject to the conditions of this Agreement, Buyer agrees, effective at the time of the Closing, to assume only the following liabilities (the " Assumed Liabilities "):

(a) all liabilities set forth on the Closing Pro Forma Balance Sheet;

(b) all liabilities and obligations of Seller arising under the Contracts and the grants listed on Schedule 2.01(l) (other than liabilities or obligations attributable to any failure by Seller to comply with the terms thereof); and

(c) all liabilities arising under capital leases used to finance the acquisition of assets that are included in Purchased Assets pursuant to Section 2.01(a).

Section 2.04 . Excluded Liabilities. Notwithstanding any provision in this Agreement or any other writing to the contrary, Buyer is assuming only the Assumed Liabilities and is not assuming any other liability or obligation of Seller (or any predecessor of Seller or any prior owner of all or part of its businesses and assets) of whatever nature, whether presently in existence or arising hereafter. All such other liabilities and obligations shall be retained by and remain obligations and liabilities of Seller (all such liabilities and obligations not being assumed being herein referred to as the " Excluded Liabilities "). Notwithstanding any provision in this Agreement or any other writing to the contrary, Excluded Liabilities include:

(a) any liability or obligation of Seller, or any member of any consolidated, affiliated, combined or unitary group of which Seller is or has been a member, for Taxes; provided that Apportioned Obligations shall be paid in the manner set forth in 8.03 hereof;

A-9

(b) except to the extent provided in Section 9.03, any liability or obligation relating to employee benefits or compensation arrangements existing on or prior to the Closing Date, including any liability or obligation under any of Seller's employee benefit agreements, plans or other arrangements listed on Schedule 9.02;

(d) all liabilities relating to or arising out of any research or other grants to which Seller was the recipient (including, for example, all research or other grants relating to the Seller's discovery research business in the United Kingdom) other than those grants listed on Schedule 2.01(l);

(e) except as set forth under Section 2.03(c), all indebtedness for borrowed money or capital leases;

(f) all liabilities related to or arising out of litigation pending as of the Closing Date, including the proceedings described on Schedule 2.04(f);

(g) any liability or obligation relating to an Excluded Asset; and

(h) except to the extent expressly provided for in Section 2.03, liabilities relating to the Business, the Purchased Assets or the Transferred Employees arising out of the operation or ownership of the Business prior to the Closing Date.

A-10

Section 2.05 . Assignment of Contracts and Rights. Anything in this Agreement to the contrary notwithstanding, this Agreement shall not constitute an agreement to assign any Purchased Asset or any claim or right or any benefit arising thereunder or resulting therefrom if such assignment, without the consent of a third party thereto, would constitute a breach or other contravention of such Purchased Asset or in any way adversely affect the rights of Buyer or Seller thereunder. Seller and Buyer will use their commercially reasonable efforts (but without any payment of money by Seller or Buyer) to obtain the consent of the other parties to any such Purchased Asset or any claim or right or any benefit arising thereunder for the assignment thereof to Buyer as Buyer may request. If such consent is not obtained, or if an attempted assignment thereof would be ineffective or would adversely affect the rights of Seller thereunder so that Buyer would not in fact receive all such rights, Seller and Buyer will cooperate in a mutually agreeable arrangement under which Buyer would obtain the benefits and assume the obligations thereunder in accordance with this Agreement, including sub-contracting, sub‑licensing, or sub‑leasing to Buyer, or under which Seller would enforce for the benefit of Buyer, with Buyer assuming Seller's obligations, any and all rights of Seller against a third party thereto. Seller, or the assigns of Seller in the event of a liquidation and dissolution of Seller, shall promptly pay to Buyer when received all monies received by Seller under any Purchased Asset or any claim or right or any benefit arising thereunder, except to the extent the same represents an Excluded Asset. In such event, Seller and Buyer shall, to the extent the benefits therefrom and obligations thereunder have not been provided by alternate arrangements satisfactory to Buyer and Seller, negotiate in good faith an adjustment in the consideration paid by Buyer for the Purchased Assets, to the extent not otherwise adjusted pursuant to 0.

Section 2.06. Purchase Price; Allocation of Purchase Price . (a) The purchase price for the Purchased Assets (the " Purchase Price ") is $25,600,000 in cash. The Purchase Price shall be paid as provided in Section 2.07 and shall be subject to adjustment as provided in 0.

(b) As soon as practicable after the Closing and in no event more than 30 days after the Closing, Buyer shall deliver to Seller a statement (the " Allocation Statement "), allocating the Adjusted Purchase Price or, in the event of a Dispute, the Uncontested Purchase Price (plus Assumed Liabilities, to the extent properly taken into account under Section 1060 of the Code) among the Purchased Assets in accordance with Section 1060 of the Code. If within 10 days after the delivery of the Allocation Statement Seller notifies Buyer in writing that Seller objects to the allocation set forth in the Allocation Statement, Buyer and Seller shall use commercially reasonable efforts to resolve such dispute within 10 days. In the event that Buyer and Seller are unable to resolve such dispute within 10 days, Buyer and Seller shall, within 10 days thereafter, jointly retain a nationally recognized accounting firm mutually acceptable to both Buyer and Seller that does not have a business relationship with Buyer or Seller or an Affiliate of either (the " Accounting Referee ") to resolve the disputed items, and the Accounting Referee shall resolve the disputed items within 10 days of its engagement, which resolution shall be conclusive and binding on the Buyer and Seller. Upon resolution of the disputed items, the allocation reflected on the Allocation Statement shall be adjusted to reflect such resolution. The costs, fees and expenses of the Accounting Referee shall be borne equally by Buyer and Seller.

(c) Seller and Buyer agree to (i) be bound by the Allocation Statement and (ii) act in accordance with the Allocation in the preparation, filing and audit of any Tax return (including filing Form 8594 with its federal income Tax return for the taxable year that includes the Closing Date).

A-11

(d) If an adjustment is made with respect to the Purchase Price pursuant to 2.08(f) and (g), the Allocation Statement shall be adjusted in accordance with Section 1060 of the Code and as mutually agreed by Buyer and Seller. In the event that an agreement is not reached within 20 days after the determination of Final Adjusted Net Working Capital, any disputed items shall be resolved in the manner described in Section 2.06(b). Buyer and Seller agree to file any additional information return required to be filed pursuant to Section 1060 of the Code and to treat the Allocation Statement as adjusted in the manner described in Section 2.06(c).

(e) Not later than 30 days prior to the filing of their respective Forms 8594 relating to this transaction, each party shall deliver to the other party a copy of its Form 8594.

Section 2.07. Closing . The closing (the " Closing ") of the purchase and sale of the Purchased Assets and the assumption of the Assumed Liabilities hereunder shall take place at the offices of Davis Polk & Wardwell, 1600 El Camino Real, Menlo Park, California, as soon as possible, but in no event later than 3 Business Days after satisfaction of the conditions set forth in Article 10, or at such other time or place as Buyer and Seller may agree. At the Closing:

(a) Buyer shall deliver to Seller the Adjusted Purchase Price, or in the event of a Dispute, the Uncontested Purchase Price, in immediately available funds by wire transfer to an account of Seller with a United States bank designated by Seller, by notice to Buyer, which notice shall be delivered not later than two Business Days prior to the Closing Date (or if not so designated, then by certified or official bank check payable in immediately available funds to the order of Seller in such amount). If, upon resolution of any Dispute, the Adjusted Purchase Price is determined to be in excess of Uncontested Purchase Price, Buyer shall within three Business Days remit the amount of such excess to Seller in the manner set forth above.

(b) Seller and Buyer shall enter into an Assignment and Assumption Agreement substantially in the form attached hereto as Exhibit C, and Seller shall deliver to Buyer such deeds, bills of sale, endorsements, consents, assignments and other good and sufficient instruments of conveyance and assignment as the parties and their respective counsel shall deem reasonably necessary or appropriate to vest in Buyer all right, title and interest in, to and under the Purchased Assets.

(d) Buyer and Seller shall enter into the License Agreement in the form attached hereto as Exhibit E.

(e) Buyer and Seller shall enter into the Lease in the form attached hereto as Exhibit F.

A-12

Section 2.08 . Purchase Price Adjustment. (a) No later than seven days prior to the Closing Date, Seller shall cause to be prepared and delivered to Buyer a good faith estimate of the Closing Pro Forma Balance Sheet and a good faith estimate of Closing Adjusted Net Working Capital. Included with the Closing Pro Forma Balance Sheet shall be, as of September 30, 2006 and the estimated Closing Date, general ledger reports including: listing of outstanding checks, accounts receivable aging, line item detail of all prepaid and deposit accounts, accounts payable aging, line item schedules of payroll and accrued vacation (related to Transferred Employees), and other liabilities, detail of current and long term portions of capital leases, and a deferred revenue waterfall by contract. Seller's estimate of Closing Adjusted Net Working Capital shall (i) accurately reflect the Closing Adjusted Net Working Capital of the Business as of the Closing Date, (ii) be based upon balance sheet line items and accounts of Seller calculated on a basis consistent with Seller's interim unaudited balance sheet as of September 30, 2006 as described in ‎Section 3.05(a) of this Agreement, (iii) be presented in a manner consistent with the Pro Forma Balance Sheet, and (iv) otherwise be prepared in accordance with this Agreement.

(b) If Buyer disagrees in good faith with any item within Seller's estimate of Closing Adjusted Net Working Capital delivered pursuant to 2.08(a), Buyer may, within three days after delivery of the documents referred to in 2.08(a), deliver a notice to Seller setting forth, in reasonable detail and to the extent practicable, each item or amount so disputed by Buyer, Buyer's calculation of such item or amount and Buyer's good faith estimate of Closing Adjusted Net Working Capital. Upon delivery of any such notice, Buyer shall be deemed to have agreed with all other items and amounts set forth in the estimate of Closing Adjusted Net Working Capital delivered pursuant to 2.08(a)that are not specifically the subject of dispute in any notice delivered by Buyer as provided above.

(c) If Buyer disagrees in good faith with Seller's estimate of Closing Adjusted Net Working Capital, Buyer and Seller shall, during the time between the delivery of such estimate and the Closing Date, use commercially reasonable efforts to reach agreement on the disputed items or amounts in order to determine the Adjusted Purchase Price. If, during such period, Buyer and Seller are unable to reach such agreement (such event, a " Dispute "), then the amount of the Purchase Price deliverable at Closing shall be determined in accordance with Section 2.08(e), below.

(d) The Adjusted Purchase Price shall equal:

(i) If Closing Adjusted Net Working Capital is less than ($8,307,773), the Purchase Price minus the amount by which Closing Adjusted Net Working Capital is less than ($8,307,773), but not less than $24,017,567;

A-13

(ii) If Closing Adjusted Net Working Capital is greater than or equal to ($8,307,773) but less than or equal to ($7,516,557), the Purchase Price; and

(iii) If Closing Adjusted Net Working Capital is greater than ($7,516,557), the Purchase Price plus the amount by which Closing Adjusted Net Working Capital is greater than ($7,516,577), but not greater than $27,578,041.

(e) In the event of a Dispute, the Uncontested Purchase Price shall be determined in the same manner as the Adjusted Purchase Price, but shall be determined based upon Buyer's good faith estimate of Closing Adjusted Net Working Capital.

(f) In the event of a Dispute, Buyer and Seller shall, during the 10 days following the Closing, use their best efforts to reach agreement on the disputed items or amounts in order to determine Closing Adjusted Net Working Capital, which amount shall not be less than the amount thereof shown in Buyer's calculations nor more than the amount thereof shown in Seller's calculation. If Buyer and Seller are unable to reach such agreement during such period, they shall within 5 days after the expiration of the 10‑day period described in this Section 2.08(f) cause the Accounting Referee promptly to review this Agreement and the disputed items or amounts for the purpose of calculating Closing Adjusted Net Working Capital. In making such calculation, the Accounting Referee shall consider only those items or amounts in the Closing Pro Forma Balance Sheet or Buyer's calculation of Closing Adjusted Net Working Capital as to which there is disagreement. The Accounting Referee shall deliver to Buyer and Seller, as promptly as practicable and in no event more than 15 days after its appointment, a report setting forth such calculation. Such report shall be final and binding upon Buyer and Seller. The cost of such review and report shall be borne (i) by Buyer if the difference between the finally determined Closing Adjusted Net Working Capital and Buyer's calculation of Closing Adjusted Net Working Capital is greater than the difference between the finally determined Closing Adjusted Net Working Capital and Seller's calculation of Closing Adjusted Net Working Capital, (ii) by Seller if the first such difference is less than the second such difference and (iii) otherwise equally by Buyer and Seller. Buyer and Seller agree that they will, and agree to cause their respective independent accountants to, cooperate and assist in the preparation of the Closing Pro Forma Balance Sheet and the calculation of Closing Adjusted Net Working Capital and in the conduct of the audits and reviews referred to in this 0, including making available to the extent necessary books, records, work papers and personnel.

A-14

(g) Upon resolution of any Dispute, the Adjusted Purchase Price shall be calculated as set forth in Section 2.08(d) based on the Closing Adjusted Net Working Capital determined in accordance with Section 2.08(f), and if such amount is greater than the Uncontested Purchase Price, Buyer shall promptly remit such excess to Seller as provided in Section 2.07(a).

Article 3
Representations and Warranties of Seller

Subject to Section 13.03, except as set forth in the Seller Disclosure Schedule, Seller represents and warrants to Buyer as of the date hereof and as of the Closing Date that:

Section 3.01. Corporate Existence and Power . Seller is a corporation duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation and has all corporate powers and all material governmental licenses, authorizations, permits, consents and approvals required to carry on its business as now conducted. Seller is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction where such qualification is necessary, except for those jurisdictions where failure to be so qualified would not, individually or in the aggregate, have a Material Adverse Effect. Seller has heretofore delivered to Buyer true and complete copies of the certificate of incorporation and bylaws of Seller as currently in effect.

Section 3.02. Corporate Authorization . The execution, delivery and performance by Seller of this Agreement and the consummation of the transactions contemplated hereby are within Seller's corporate powers and, except for any required approval by Seller's stockholders, have been duly authorized by all necessary corporate action on the part of Seller. This Agreement constitutes a valid and binding agreement of Seller. At a meeting duly called and held, the Board of Directors of Seller approved the Agreement and transactions contemplated hereby and recommended to the stockholders of Seller the approval thereof. Such actions by the Board of Directors of Seller were made by the director vote required under Utah law and the certificate of incorporation and bylaws of Seller.

Section 3.03. Governmental Authorization . The execution, delivery and performance by Seller of this Agreement and the consummation of the transactions contemplated hereby require no action by or in respect of, or filing with, any Governmental Authority other than (i) compliance with any applicable requirements of the HSR Act; (ii) compliance with any applicable requirements of the 1934 Act and (iii) compliance with other applicable regulatory approvals required of Seller.

A-15

Section 3.04. Noncontravention . The execution, delivery and performance by Seller of this Agreement and the consummation of the transactions contemplated hereby do not and will not (i) violate the certificate of incorporation or bylaws of Seller, (ii) assuming compliance with the matters referred to in Section 3.03, violate any Applicable Law, (iii) assuming the obtaining of all Required Consents and Other Consents, constitute a default under or give rise to any right of termination, cancellation or acceleration of any right or obligation of Buyer or to a loss of any benefit relating to the Business to which Seller is entitled under any provision of any agreement or other instrument binding upon Seller or by which any of the Purchased Assets is or may be bound or (iv) result in the creation or imposition of any Lien on any Purchased Asset, except in the case of (ii), (iii) and (iv) as would not, individually or in the aggregate, have a Material Adverse Effect.

Section 3.05. Required and Other Consents . (a) Schedule 3.05(a) sets forth each agreement, contract or other instrument binding upon Seller or any Permit (including any Environmental Permit) requiring a consent or other action by any Person as a result of the execution, delivery and performance of this Agreement, except such consents or actions as would not, individually or in the aggregate, have a Material Adverse Effect if not received or taken by the Closing Date (the " Required Consents ").

(b) Schedule 3.05(b) sets forth each other consent or action by any Person (the " Other Consents ") under such agreements, contracts or other instruments or such Permits that is necessary with respect to the execution, delivery and performance of this Agreement.

Section 3.06. Financial Statements . (a) The audited balance sheets of Seller as of December 31, 2004 and 2005 and the related audited statements of income and cash flows of Seller for each of the years ended December 31, 2003, 2004 and 2005 and the unaudited interim balance sheet of Seller as of September 30, 2006 and the related unaudited interim statements of income and cash flows of Seller for the nine months ended September 30, 2006 fairly present, in conformity with GAAP applied on a consistent basis (except as may be indicated in the notes thereto), the financial position of Seller as of the dates thereof and its results of operations and cash flows for the periods then ended (subject to normal year‑end adjustments in the case of any unaudited interim financial statements).

(b) The unaudited pro forma balance sheet of the Business as of June 30, 2006 set forth in Schedule 3.06(b) although not prepared in accordance with GAAP, has been prepared by Seller in good faith based on the books and records of Seller and accurately reflects the financial position and results of operations of the Business in accordance with the assumptions and limitations described therein.

(c) As of the date of its delivery in accordance with Section 5.07(a) and as of the Closing Date, the Pro Forma Balance Sheet, although not prepared in accordance with GAAP, shall have been prepared by Seller in good faith based on the books and records of Seller and accurately reflect the financial position of the Business in accordance with the assumptions and limitations described therein.

A-16

Section 3.07. Absence of Certain Changes . Except as set forth on Schedule 3.07, since the Balance Sheet Date, the Business has been conducted in the ordinary course consistent with past practices and there has not been with respect to the Business or the Purchased Assets:

(a) any event, occurrence, development or state of circumstances or facts that has had or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect;

(b) any incurrence of any capital expenditures or any obligations or liabilities in respect thereof with respect to the Business;

(c) any acquisition (by merger, consolidation, acquisition of stock or assets or otherwise), directly or indirectly, of any assets, properties or businesses for the conduct of the Business, other than supplies in the ordinary course of business in a manner that is consistent with past practice;

(d) any sale, lease or other transfer of, or creation or incurrence of any Lien on, any Purchased Asset, other than sales of inventory or product licenses in the ordinary course of business consistent with past practice;

(e) other than in connection with actions permitted by Section 3.07(b) or Section 3.07(c), the making with respect to the Business of any loans, advances or capital contributions to, or investments in, any other Person, other than in the ordinary course of business consistent with past practice;

(f) the creation, incurrence, assumption or sufferance to exist of any indebtedness for borrowed money with respect to the Business or guarantees thereof;

(g) any damage, destruction or other casualty loss (whether or not covered by insurance) affecting the Business or Purchased Assets that has had or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect;

(h) (i) the entering into of any agreement or arrangement that limits or otherwise restricts in any material respect the conduct of the Business or that could, after the Closing Date, limit or restrict in any material respect the Business, Buyer or any of Buyer's Affiliates from engaging or competing in any line of business, in any location or with any Person or (ii) the entering into, amendment or modification in any material respect or termination of any Material Contract or waiver, release or assignment of any material rights, claims or benefits of the Business;

A-17

(i) with respect to any employee of the Business, (i) the grant or increase of any severance or termination pay to (or amendment of any existing arrangement increasing any severance or termination pay with) any employee of the Business, (ii) any increase in benefits payable under any existing severance or termination pay policies or employment agreements with employees of the Business, (iii) the entering into of any employment, deferred compensation or other similar agreement (or amendment of any such existing agreement) with any employee of the Business, (iv) the establishment, adoption or amendment (except as required by Applicable Law) of any collective bargaining, bonus, profit-sharing, thrift, pension, retirement, deferred compensation, compensation, stock option, restricted stock or other benefit plan or arrangement covering any employee of the Business or (v) any increase in compensation, bonus or other benefits payable to any employee of the Business;

(j) any material labor dispute, other than routine individual grievances, or any activity or proceeding by a labor union or representative thereof to organize any employees of the Business, which employees were not subject to a collective bargaining agreement at the Balance Sheet Date, or any material lockouts, strikes, slowdowns, work stoppages or threats thereof by or with respect to such employees;

(k) any change in the methods of accounting or accounting practice by Seller with respect to Seller or the Business, except as required by concurrent changes in GAAP as agreed to by its independent public accountants;

(l) any settlement, or offer or proposal to settle, (i) any material litigation, investigation, arbitration, proceeding or other claim involving or against Seller or the Business or (ii) any litigation, arbitration, proceeding or dispute that relates to the transactions contemplated hereby; or

(m) except for customer and distribution contracts entered into in the ordinary course of business, neither Seller nor any of its subsidiaries has renegotiated or entered into any new license, agreement or arrangement relating to any Intellectual Property of Seller sold or licensed by Seller or any of its subsidiaries; and

(n) there has not been any agreement to do any of the foregoing.

A-18

Section 3.08. No Undisclosed Material Liabilities . There are no liabilities of Seller or the Business of any kind whatsoever, whether accrued, contingent, absolute, determined, determinable or otherwise, and there is no existing condition, situation or set of circumstances which could reasonably be expected to result in such a liability, other than:

(a) liabilities provided for in the Pro Forma Balance Sheet, as applicable, or disclosed in the notes thereto;

(b) liabilities disclosed on Schedule 3.08; and

(c) other undisclosed liabilities which, individually or in the aggregate, are not material to Seller or the Business, as applicable.

Section 3.09 . Material Contracts. (a) Except as specifically identified in Schedule 3.09, with respect to the Business, Seller is not a party to or bound by:

(i) any lease of personal property providing for annual rentals of $50,000 or more or $100,000 or more over the term of such lease;

(ii) any agreement for the purchase of materials, supplies, goods, services, equipment or other assets providing for either (A) annual payments by Seller of $50,000 or more or (B) aggregate payments by Seller of $100,000 or more, and is either not terminable by the Seller on notice of 90 days or less or has a term of more than one year;

(iii) any partnership, joint venture, collaboration or other similar agreement or arrangement;

(iv) any agreement relating to the acquisition or disposition of any business (whether by merger, sale of stock, sale of assets or otherwise);

(v) any agreement relating to indebtedness for borrowed money or the deferred purchase price of property (in either case, whether incurred, assumed, guaranteed or secured by any asset), except any such agreement (A) with an aggregate outstanding principal amount not exceeding $100,000 and which may be prepaid on not more than 30 days notice without the payment of any penalty and (B) entered into subsequent to the date of this Agreement as permitted by Section 3.07(b);

(vi) any option (other than employee options), franchise or similar agreement;

A-19

(vii) any agreement that limits the freedom of Seller to compete in any line of business or with any Person or in any area or to own, operate, sell, transfer, pledge or otherwise dispose of or encumber any Purchased Asset, that contains any "most favored action" provisions granted by Seller or any of its subsidiaries that would restrict in any material respect the development, manufacture, marketing or distribution of products or services or which would so limit the freedom of Buyer after the Closing Date;

(viii) any material "single source" supply or development contract;

(ix) any contract granting a third party any license to any material Intellectual Property of Seller that is not limited to the material use of such third party, other than in the ordinary course of business;

(x) (A) any contract or series of related contracts with a customer, that, taken in the aggregate, could reasonably be expected to account for revenues in excess of $100,000 in the 12‑month period ending December 31, 2006, and (B) each contract or series of related contracts with a supplier, that, taken in the aggregate, could reasonably be expected to account for payments in excess of $50,000 in the 12‑month period ended December 31, 2006;

(xi) except as disclosed on Schedule 3.09(xi), any contract for any marketing, resale, distribution, sales representative or similar arrangement relating to any product or service that could reasonably be expected to account for revenues in excess of $100,000 in the 12‑month period ended December 31, 2006;

(xii) any contract pursuant to which Seller or any of its subsidiaries has been granted by a third party any license to any Intellectual Property that is material to Seller;

(xiii) any contract (A) providing for any license or franchise granted by Seller or any of its subsidiaries pursuant to which Seller or any of its subsidiaries has agreed or is required to provide any third party with access to source code or to provide for such source code to be put into escrow or (B) containing a provision having the effect of providing that the consummation of any of the transactions contemplated hereby or the execution, delivery or effectiveness of this Agreement will require that a third party be provided with access to source code or that any such source code be released from escrow and provided to any third party;

(xiv) any contract pursuant to which Seller or any of its subsidiaries receives consulting or maintenance services that involves payments by Seller or any of its subsidiaries in excess of $50,000 per year or $100,000 over the term of such contract and is either not terminable by Seller or such subsidiary on notice of 90 days or less or has a term of more than one year;

(xv) any agreement with or for the benefit of any director, officer, 5% stockholder or controlling person of Seller; or

A-20

(xvi) any other agreement, commitment, arrangement or plan not made in the ordinary course of business that is material to the Business (collectively, with each other Contract in clauses (i) through (xv) a " Material Contract ").

(b) Each Contract disclosed in any Schedule to this Agreement or required to be disclosed pursuant to this Section is a valid and binding agreement of Seller and is in full force and effect, and none of Seller or, to the knowledge of Seller, any other party thereto is in default or breach in any material respect under the terms of any such Contract, and, to the knowledge of Seller, no event or circumstance has occurred that, with notice or lapse of time or both, would constitute an event of default thereunder. True and complete copies of each such Contract have been delivered to Buyer on or prior to the date hereof with the exception of certain Contracts listed on Schedule[s], 3.09(a)(x)[and 3.15(j)], true and complete copies of which shall have been delivered within 30 days of the date hereof.

Section 3.10. Litigation . Except as set forth on Schedule 3.10, there is no action, suit, investigation or proceeding (or any basis therefor) pending against, or to the knowledge of Seller, threatened against or affecting, Seller, the Business or any Purchased Asset before any court or arbitrator or any Governmental Authority which, individually or in the aggregate, if determined or resolved adversely in accordance with the plaintiff's demands, could reasonably be expected to have a Material Adverse Effect or which in any manner challenges or seeks to prevent, enjoin, alter or materially delay the transactions contemplated by this Agreement.

Section 3.11. Compliance with Laws and Court Orders . Seller is not in violation of, has not since January 1, 2003 violated, and to the knowledge of Seller is not under investigation with respect to and has not been threatened to be charged with or given notice of any violation of, any Applicable Law relating to the Purchased Assets or the conduct of the Business, except for violations that have not had and could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

Section 3.12. Properties . (a) Schedule 3.12(a) correctly describes all real property (the " Real Property "), which Seller owns, leases, operates or subleases for use in the Business. All such Real Property constitutes an Excluded Asset pursuant to Section 2.02(c) hereof.

(b) Schedule 3.12(b) correctly describes all personal property used or held for use in the Business included in the Purchased Assets, including machinery, equipment, furniture, vehicles, storage tanks, spare and replacement parts, fuel and other trade fixtures and fixed assets, which Seller owns, leases or subleases, and any Liens thereon, specifying in the case of leases or subleases, the name of the lessor or sublessor, the lease term and basic annual rent.

A-21

(c) Seller has good title in and to or valid leasehold interests in all Purchased Assets (whether personal, tangible or intangible) reflected on the Pro Forma Balance Sheet or acquired after the Balance Sheet Date, except for properties and assets sold since the Balance Sheet Date in the ordinary course of business consistent with past practices. No Purchased Asset is subject to any Lien, except:

(i) Liens disclosed on the Pro Forma Balance Sheet;

(ii) Liens for taxes not yet due or being contested in good faith (and for which adequate accruals or reserves have been established on the Pro Forma Balance Sheet); or

(iii) Liens which do not materially detract from the value of such Purchased Asset, or materially interfere with any present or intended use of such Purchased Asset (clauses (i) - (iii) of this Section 3.12(c) are, collectively, the " Permitted Liens ").

(d) There are no developments affecting any of the Purchased Assets pending or, to the knowledge of Seller threatened, which might materially detract from the value, materially interfere with any present or intended use or materially adversely affect the marketability of such Purchased Assets.

(e) All leases of personal property related to the Business are in good standing and are valid, binding and enforceable in accordance with their respective terms and there does not exist under any such lease any default or any event which with notice or lapse of time or both would constitute a default.

(f) The equipment included in the Purchased Assets have no material defects, are in good operating condition and repair and have been reasonably maintained consistent with standards generally followed in the industry (giving due account to the age and length of use of same, ordinary wear and tear excepted), are adequate and suitable for their present and intended uses.

(g) None of the Purchased Assets is an equity interest in an entity.

Section 3.13. Sufficiency of and Title to the Purchased Assets . (a) The Purchased Assets constitute all of the property and assets used or held for use in the Business and are adequate to conduct the Business as currently conducted.

(b) Upon consummation of the transactions contemplated hereby, Buyer will have acquired good title in and to, or a valid leasehold interest in, each of the Purchased Assets, free and clear of all Liens, except for Permitted Liens or Liens resulted from actions of the Buyer.

A-22

Section 3.14. Products . Each of the products produced or sold by Seller in connection with the Business is, and at all times up to and including the sale thereof has been, (i) in compliance in all material respects with all Applicable Laws and (ii) 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 or documentation made on the container or label for or included with such product or in connection with its sale. 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.

Section 3.15. Intellectual Property. (a) Schedule 3.15(a) contains a true and complete list of all of the United States and foreign: (i) patents and patent applications; (ii) registered trademarks and trademark applications and material unregistered trademarks; (iii) registered copyrights and applications for copyright registration; and (iv) registered domain names; included in the Intellectual Property of Seller. Except as otherwise noted on Schedule 3.15(a), to the knowledge of Seller, the registrations of the Intellectual Property of Seller listed on Schedule 3.15(a) are valid and subsisting. All necessary registration and renewal fees in connection with such registrations have been paid, all necessary documents and certificates in connection with such registrations have been filed with the relevant patent, copyright and trademark authorities for the purposes of maintaining such registrations. To the knowledge of Seller, Seller has taken all other actions necessary to maintain and protect such registrations, including but not limited to timely response to office actions and disclosure of any required information.

(b) Schedule 3.15(b) lists all third-party software incorporated in Seller's products. No Intellectual Property of Seller or product of Seller is subject to any outstanding decree, order, judgment, or stipulation restricting in any material manner the use or licensing thereof by Seller.

(c) Except pursuant to those agreements listed on Schedule 3.15(c), Seller has not granted to any Person any exclusive rights in the Intellectual Property of Seller.

(d) Except as otherwise set forth on Schedule 3.15(d), there are no Material Contracts, licenses and agreements between Seller and any other Person relating primarily to the Intellectual Property of Seller as to which there is any dispute regarding the scope of such agreement, or performance under such agreement including with respect to any payments to be made or received by Seller thereunder.

A-23

(e) Except as otherwise set forth on Schedule 3.15(e), to the knowledge of Seller, the operation of the Business as it currently is conducted, including the manufacture and sale of its products, and provision of services, does not infringe, misappropriate or otherwise violate the Intellectual Property of any other Person. Seller has not received notice from any Person that the operation of its business, including its design, development, manufacture and sale of its products (including with respect to products currently under development) and provision of services, infringes, misappropriates or otherwise violates the Intellectual Property of any Person. Seller has not obtained written opinions or memoranda of counsel relating to actual or potential third party claims relating to third party Intellectual Property.

(f) To the knowledge of Seller and except as expressly set forth on Schedule 3.15(f), no Person or entity is materially infringing or misappropriating any of the Intellectual Property of Seller.

(g) Except as otherwise set forth on Schedule 3.15(g), there are no claims asserted or, to the knowledge of Seller, threatened against Seller, and to the knowledge of Seller there are no claims asserted or threatened against any customer of Seller, related to any product or service of Seller.

(h) Seller has a policy requiring each employee, consultant and contractor to execute proprietary information and confidentiality agreements substantially in Seller's standard forms attached hereto in Schedule 3.15(h), and to the knowledge of Seller, all employees, consultants and contractors have executed and are in compliance with such agreements.

(i) Except as otherwise set forth on Schedule 3.15(i), Seller holds all right, title and interest in and to all Intellectual Property of Seller free and clear of any Lien. Seller owns or is licensed to use sufficient rights to practice all Intellectual Property used in or material to the conduct of the Business as currently conducted. All assignments of Intellectual Property of Seller have been duly recorded with the appropriate governmental authority.

(j) Seller has not given to any Person an indemnity in connection with any Intellectual Property, other than indemnities either (i) that individually or in the aggregate, could not result in liability to Seller in excess of $100,000, or (ii) that arise under a standard form license contract or a standard form services contract used in Seller's business, a copy of each of which is attached in Schedule 3.15(j); or otherwise required by law.

A-24

(k) Except as set forth on Schedule 3.15(k)(i), no Person other than Seller possesses any current or contingent right to any source code that is part of the software owned or exclusively licensed by Seller. Except as set forth on Schedule 3.15(k)(ii), Seller's products do not contain 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 open licenses or distribution models or similar licenses or distribution models: the GNU General Public License (GPL), GNU Lesser General Public License or GNU Library General Public License (LGPL). None of the software code described or referenced in Schedule 3.15(k)(ii) and Exhibit 3.15(k) thereto includes any software code that the Seller regards as having material proprietary value to Seller's Business.

(l) To the knowledge of Seller, Seller's products do not contain (and Seller has taken commercially reasonable steps to protect Seller's products from becoming infected by) any computer code designed to disrupt, disable, harm, distort or otherwise impede in any manner the legitimate operation of such software by or for Seller or its authorized users, or any other associated software, firmware, hardware, computer system or network (including without limitation what are sometimes referred to as "viruses", "worms", "time bombs," and/or "back doors").

Section 3.16. Insurance Coverage . Seller has furnished to Buyer a list of, and true and complete copies of, all insurance policies and fidelity bonds relating to the Purchased Assets, the business and operations of the Business and its officers and employees. 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 or bonds or in respect of which such underwriters have reserved their rights. All premiums payable under all such policies and bonds have been timely paid and Seller has otherwise complied fully with the terms and conditions of all such policies and bonds. Such policies of insurance and bonds (or other policies and bonds providing substantially similar insurance coverage) have been in effect since January 1, 2000 and remain in full force and effect. Such policies and bonds are of the type and in amounts customarily carried by Persons conducting businesses similar to the Business. Seller does not know of any threatened termination of, premium increase with respect to, or material alteration of coverage under, any of such policies or bonds. After the Closing Seller shall continue to have coverage under such policies and bonds with respect to events occurring prior to the Closing.

Section 3.17. Licenses and Permits . Schedule 3.17 correctly describes each license, franchise, permit, certificate, approval or other similar authorization affecting, or relating in any way to, the Business (the " Permits ") together with the name of the Government Authority issuing such Permit. The Permits are valid and in full force and effect. Seller is not in default, and no condition exists that with notice or lapse of time or both would constitute a default, under the Permits. None of the Permits will, assuming the related Required Consents and Other Consents have been obtained prior to the Closing Date, be terminated or impaired or become terminable, in whole or in part, as a result of the transactions contemplated hereby. Upon consummation of such transactions, Buyer will, assuming the related Required Consents and Other Consents have been obtained prior to the Closing Date, have all of the right, title and interest in all the Permits.

Section 3.18. Inventories . The Business does not have any inventories.

A-25

Section 3.19. Receivables . All accounts, notes receivable and other receivables arising out of or related to the Business (other than receivables collected since the Balance Sheet Date) reflected on the Pro Forma Balance Sheet are, and all accounts and notes receivable arising from or otherwise relating to the Business at the Closing Date will be, valid, genuine and fully collectible in the aggregate amount thereof, subject to normal and customary trade discounts, less any reserves for doubtful accounts recorded on the Pro Forma Balance Sheet. All accounts, notes receivable and other receivables arising out of or relating to the Business at the Balance Sheet Date have been included in the Pro Forma Balance Sheet, and all accounts, notes receivable and other receivables arising out of or relating to the Business as of the Closing Date will be included in the Closing Pro Forma Balance Sheet, in accordance with GAAP applied on a consistent basis.

Section 3.20. Seller SEC Reports . (a) Seller has filed all forms, reports, statements and other documents required to be filed with the Securities and Exchange Commission (the " SEC ") since January 1, 2005, and has heretofore made available to Buyer, in the form filed with the SEC since such date, together with any amendments thereto, (i) all Annual Reports on Form 10‑K, (ii) all Quarterly Reports on Form 10‑Q, (iii) all proxy statements relating to meetings of stockholders (whether annual or special), (iv) all reports on Form 8‑K, and (v) all other reports or registration statements filed by Seller (collectively, the " Seller SEC Reports "). As of their respective filing dates, the Seller SEC Reports (i) complied as to form in all material respects with the requirements of the 1934 Act and the Securities Act of 1933, as amended (the " 1933 Act ") as applicable and (ii) (A) in the case of Seller SEC Reports filed pursuant to the 1934 Act, did not at the time they were filed contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and (B) in the case of Seller SEC Reports filed pursuant to the 1933 Act, did not at the time they were declared effective contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading.

(b) The Seller Proxy Statement and any amendments or supplements thereto will, when filed, comply as to form in all material respects with the applicable requirements of the 1934 Act. At the time the Seller Proxy Statement or any amendment or supplement thereto is first mailed to stockholders of Seller, and at the time such stockholders vote on adoption of this Agreement, the Seller Proxy Statement, as supplemented or amended, if applicable, will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. The representations and warranties contained in this Section 3.20(b) will not apply to statements or omissions included in the Seller Proxy Statement based upon information furnished to Seller in writing by Buyer specifically for use therein.

A-26

Section 3.21. Finders' Fees . Except for Seven Hills Partners LLC, whose fees and expenses will be paid by Seller, there is no investment banker, broker, finder or other intermediary which has been retained by or is authorized to act on behalf of Seller who might be entitled to any fee or commission in connection with the transactions contemplated by this Agreement.

Section 3.22. Employees . Schedule 3.22 sets forth a true and complete list of the names, titles, annual salaries and other compensation of all employees of the Business whose annual base salary exceeds $100,000. None of such employees and no other key employee of the Business has indicated to Seller that he intends to resign or retire as a result of the transactions contemplated by this Agreement or otherwise within one year after the Closing Date.

Section 3.23. Environmental Compliance . (a)(i) In connection with or relating to Seller, the Purchased Assets, Business or Real Property, no notice, notification, demand, request for information, citation, summons or order has been received, no complaint has been filed, no penalty has been assessed and no investigation, action, claim, suite, proceeding or review is pending or, to Seller's knowledge, threatened by any Governmental Authority or other Person with respect to any matters relating to Seller, the Purchased Assets, Business or Real Property and relating to or arising out of any Environmental Law.

(ii) There are no liabilities arising in connection with or in any way relating to Seller, the Purchased Assets, Business or Real Property of any kind whatsoever, whether accrued, contingent, absolute, determined, determinable or otherwise, arising under or relating to any Environmental Law, and there are no facts, events, conditions, situations or set of circumstances which could reasonably be expected to result in or be the basis for any such liability.

(iii) No polychlorinated biphenyls, radioactive material, lead, asbestos-containing material, incinerator, sump, surface impoundment, lagoon, landfill, septic, wastewater treatment or other disposal system or underground storage tank (active or inactive) is or has been present at, on or under any Real Property or in any Purchased Asset or any other property now or previously owned, leased or operated by Seller.

(iv) No Hazardous Substance has been discharged, disposed of, dumped, injected, pumped, deposited, spilled, leaked, emitted or released at, on or under any Real Property or any other property now or previously owned, leased or operated by Seller.

A-27

(v) No Real Property, no property now or previously owned, leased or operated by Seller nor any property to which Hazardous Substances located on or resulting from the use of any Purchased Asset or Real Property have been transported nor any property to which Seller has, directly or indirectly, transported or arranged for the transportation of any Hazardous Substances is listed or, to Seller's knowledge, proposed for listing on the National Priorities List promulgated pursuant to CERCLA, on CERCLIS (as defined in CERCLA) or on any similar federal, state, local or foreign list of sites requiring investigation or cleanup.

(vi) Seller is in compliance with all Environmental Laws and has and is in compliance with all Environmental Permits; such Environmental Permits are valid and in full force and effect and assuming the related Required Consents and Other Consents have been obtained prior to the Closing Date, are transferable and will not be terminated or impaired or become terminable as a result of the transactions contemplated hereby.

(b) There has been no environmental investigation, study, audit, test, review or other analysis conducted of which Seller has knowledge in relation to any Purchased Asset or Real Property any other property or facility now or previously owned or leased by Seller which has not been delivered to Buyer at least 10 days prior to the date hereof.

(d) For purposes of this Section, the term "Seller" shall include any entity which is, in whole or in part, a predecessor of Seller.

Section 3.24 . Solvency. As of the Closing Date and after giving effect to receipt of the Purchase Price of and the application of the proceeds thereof, Seller (i) will not have unreasonably small assets for the conduct of its business, (ii) will not have incurred debts beyond its ability to pay as they become due and (iii) will not be insolvent (either because its financial condition is such that the sum of its debts is greater than the fair market value of its assets or because the fair saleable value of its assets is less than the amount required to pay its probable liability on its existing debts as they mature).

Section 3.25 . Vote Required. The affirmative vote of more than fifty percent (50%) of all the votes entitled to be cast by the holders of the Company's outstanding shares common stock, par value $0.01 per share, and series C preferred stock, par value $0.01 per share (the " Series C Preferred Stock "), voting together as a voting group, is the only vote of any class, series or voting group of capital stock of Seller necessary to approve the transactions contemplated under this Agreement.

A-28

Section 3.26 . Opinion of Financial Advisor. The Board of Directors of Seller has received the opinion of Seven Hills Partners LLC that, as of the date of this Agreement, the consideration to be received by Seller is fair to Seller from a financial point of view, subject to the qualifications and assumptions contained therein, and such opinion has not been withdrawn or modified in any material respect.

Section 3.27. Representations . The representations and warranties of Seller contained in this Agreement, disregarding all qualifications and exceptions contained therein relating to materiality or Material Adverse Effect, are true and correct with only such exceptions as would not in the aggregate reasonably be expected to have a Material Adverse Effect.

Article 4
Representations and Warranties of Buyer

Subject to Section 13.04, except as disclosed in the Buyer Disclosure Schedule, Buyer represents and warrants to Seller as of the date hereof and as of the Closing Date that:

Section 4.01. Corporate Existence and Power . Buyer is a Cayman Island exempted limited partnership duly established, validly existing and in good standing under the laws of the Cayman Islands and has all powers and all material governmental licenses, authorizations, permits, consents and approvals required to carry on its business as now conducted.

Section 4.02. Corporate Authorization . The execution, delivery and performance by Buyer of this Agreement acting by its general partner and the consummation of the transactions contemplated hereby are within the powers of Buyer and have been duly authorized by all necessary action on the part of Buyer and its general partner. This Agreement constitutes a valid and binding agreement of Buyer.

Section 4.03. Governmental Authorization . The execution, delivery and performance by Buyer of this Agreement and the consummation of the transactions contemplated hereby require no material action by or in respect of, or material filing with, any Governmental Authority other than (i) compliance with any applicable requirements of the HSR Act and (ii) compliance with any applicable requirements of the 1934 Act.

Section 4.04. Noncontravention . The execution, delivery and performance by Buyer of this Agreement and the consummation of the transactions contemplated hereby do not and will not (i) violate the certificate of incorporation or bylaws of Buyer or (ii) assuming compliance with the matters referred to in Section 4.03, violate any material Applicable Law.

A-29

Section 4.05. Financing . Buyer, at the Closing, will have sufficient funds to satisfy all of its obligations set forth in this Agreement, including payment of the Purchase Price or the Adjusted Purchase Price, as the case may be, and payment of all related fees and expenses.

Section 4.06. Litigation . There is no action, suit, investigation or proceeding pending against, or to the knowledge of Buyer threatened against or affecting, Buyer before any arbitrator or Governmental Authority which in any manner challenges or seeks to prevent, enjoin, alter or materially delay the transactions contemplated by this Agreement.

Section 4.07 . Disclosure Documents. None of the information provided by Buyer for inclusion in the Seller Proxy Statement or any amendment or supplement thereto, at the time the Seller Proxy Statement or any amendment or supplement thereto is first mailed to stockholders of Seller and at the time the stockholders vote on adoption of this Agreement, will contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading.

Article 5
Covenants of Seller

Seller agrees that:

Section 5.01 . Conduct of the Business . From the date hereof until the Closing Date, Seller shall conduct the Business in the ordinary course consistent with past practice and use its commercially reasonable efforts to (i) preserve intact the present business organization of the Business, (ii) maintain in effect all foreign, federal, state and local licenses, permits, consents, franchises, approvals and authorizations of the Business, (iii) keep available the services of the officers and key employees of the Business and (iv) maintain satisfactory relationships with the customers, lenders, suppliers and others having material business relationships of the Business. Without limiting the generality of the foregoing, except as expressly contemplated by this Agreement or as set forth on Schedule 5.01 hereto, Seller shall not:

(a) incur any capital expenditures or any obligations or liabilities with respect to the Business other than in the ordinary course of business consistent with past practice;

(b) acquire (by merger, consolidation, acquisition of stock or assets or otherwise), directly or indirectly, any assets, securities, properties, interests or businesses for the conduct of the Business, other than supplies in the ordinary course of business in a manner that is consistent with past practice;

A-30

(c) sell, lease or otherwise transfer, or create or incur any Lien on, any Purchased Assets, other than sales of inventory or product licenses in the ordinary course of business consistent with past practice;

(d) make any loans, advances or capital contributions to, or investments in, any other Person with respect to the Business, other than in the ordinary course of business consistent with past practice;

(e) create, incur, assume, suffer to exist or otherwise be liable with respect to any indebtedness for borrowed money with respect to the Business or guarantees thereof;

(f) (i) enter into any agreement or arrangement that limits or otherwise restricts in any material respect the conduct of the Business or that could, after the Closing Date, limit or restrict in any material respect the Business from engaging or competing in any line of business, in any location or with any Person or (ii) enter into, amend or modify in any material respect or terminate any Material Contract of the Business or otherwise waive, release or assign any material rights, claims or benefits of the Business;

(g) (i) grant or increase any severance or termination pay to (or amend any existing arrangement with) any Transferred Employee (as defined in Section 9.03), (ii) increase benefits payable under any existing severance or termination pay policies or employment agreements with Transferred Employees, (iii) enter into any employment, deferred compensation or other similar agreement (or amend any such existing agreement) with any Transferred Employee, (iv) establish, adopt or amend (except as required by Applicable Law) any collective bargaining, bonus, profit-sharing, thrift, pension, retirement, deferred compensation, compensation, stock option, restricted stock or other benefit plan or arrangement covering any Transferred Employee or (v) increase compensation, bonus or other benefits payable to any Transferred Employee.

(h) change the methods of accounting or accounting practice by Seller with respect to the Business, except as required by concurrent changes in GAAP as agreed to by its independent public accountants;

(i) except as set forth on Schedule 5.01(i), (i) settle, or offer or propose to settle, (ii) any material litigation, investigation, arbitration, proceeding or other claim involving or against Seller or the Business or (iii) any litigation, arbitration, proceeding or dispute that relates to the transactions contemplated hereby;

(j) take any action that would make any representation or warranty of Seller hereunder, or omit to take any action necessary to prevent any representation or warranty of Seller hereunder from being, inaccurate in any respect at, or as of any time before, the Closing Date;

A-31

(k) except for customer and distribution contracts entered into in the ordinary course of business, renegotiate or enter into, or cause any of its subsidiaries to renegotiate or enter into any new license, agreement or arrangement relating to any Intellectual Property of Seller sold or licensed by Seller or any of its subsidiaries;

(l) terminate any employee of the Business without notice to, and consultation with, Buyer;

(m) agree, resolve or commit to do any of the foregoing.

Section 5.02. Access to Information; Confidentiality . (a) From the date hereof until the Closing Date, Seller will (i) give Buyer, its counsel, financial advisors, auditors and other authorized representatives full access to the offices, properties, books and records of Seller relating to the Business, (ii) furnish to Buyer, its counsel, financial advisors, auditors and other authorized representatives such financial and operating data and other information relating to the Business as such Persons may reasonably request and (iii) instruct the employees, counsel and financial advisors of Seller to cooperate with Buyer in its investigation of the Business. Any investigation pursuant to this Section shall be conducted in such manner as not to interfere unreasonably with the conduct of the business of Seller. No investigation by Buyer or other information received by Buyer shall operate as a waiver or otherwise affect any representation, warranty or agreement given or made by Seller hereunder.

(b) After the Closing, Seller will hold, and will use its commercially reasonable efforts to cause its Affiliates, officers, directors, employees, accountants, counsel, consultants, advisors and agents to hold, in confidence, unless compelled to disclose by Applicable Law, all confidential documents and information concerning the Business, except to the extent that such information can be shown to have been (i) previously known on a nonconfidential basis by Seller, (ii) in the public domain through no fault of Seller or its Affiliates or (iii) later lawfully acquired by Seller from sources other than those related to its prior ownership of the Business. The obligation to hold any such information in confidence shall be satisfied if the obligated party exercises the same care with respect to such information as it would take to preserve the confidentiality of the Seller's own similar information.

(c) On and after the Closing Date, Seller will afford promptly to Buyer and its agents reasonable access to its books of account, financial and other records (including accountant's work papers), information, employees and auditors to the extent necessary or useful for Buyer in connection with any audit, investigation, dispute or litigation or any other reasonable business purpose relating to the Business; provided that any such access by Buyer shall not unreasonably interfere with the conduct of the business of Seller.

A-32

Section 5.03. Notices of Certain Events . Seller shall promptly notify Buyer of:

(a) any notice or other communication from any Person alleging that the consent of such Person is or may be required in connection with the transactions contemplated by this Agreement;

(b) any notice or other communication from any Governmental Authority in connection with the transactions contemplated by this Agreement;

(c) any actions, suits, claims, investigations or proceedings commenced or, to its knowledge threatened against, relating to or involving or otherwise affecting Seller or the Business that, if pending on the date of this Agreement, would have been required to have been disclosed pursuant to Section 3.10 or that relate to the consummation of the transactions contemplated by this Agreement;

(d) the damage or destruction by fire or other casualty of any Purchased Asset or part thereof or in the event that any Purchased Asset or part thereof becomes the subject of any proceeding or, to the knowledge of Seller, threatened proceeding for the taking thereof or any part thereof or of any right relating thereto by condemnation, eminent domain or other similar governmental action;

(e) any inaccuracy of any representation or warranty contained in this Agreement at any time during the term hereof that could reasonably be expected to cause the conditions set forth in 10.02(a) not to be satisfied; and

(f) any failure of Seller to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder;

provided, however, that the delivery of any notice pursuant to this 5.03 shall not limit or otherwise affect the remedies available hereunder to the party receiving that notice.

Section 5.04. Noncompetition . (a) Seller agrees that for a period of three full years after the Closing Date, it shall not:

(i) engage, either directly or indirectly, as a principal or for its own account or solely or jointly with others, or as stockholders in any corporation or joint stock association, in any business that competes with the Business as it exists on the Closing Date; or

A-33

(ii) employ or solicit, or receive or accept the performance of services by, any Transferred Employee, except in response to a general solicitation not directed at the employees of the Business or in response to contact initiated by or on behalf of a Transferred Employee whose employment with Buyer was terminated at least six months prior to such employment, solicitation or receipt of services.

(b) If any provision contained in this Section shall for any reason be held invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Section, but this Section shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein. It is the intention of the parties that if any of the restrictions or covenants contained herein is held to cover a geographic area or to be for a length of time which is not permitted by Applicable Law, or in any way construed to be too broad or to any extent invalid, such provision shall not be construed to be null, void and of no effect, but to the extent such provision would be valid or enforceable under Applicable Law, a court of competent jurisdiction shall construe and interpret or reform this Section to provide for a covenant having the maximum enforceable geographic area, time period and other provisions (not greater than those contained herein) as shall be valid and enforceable under such Applicable Law. Seller acknowledges that Buyer would be irreparably harmed by any breach of this Section and that there would be no adequate remedy at law or in damages to compensate Buyer for any such breach. Seller agrees that Buyer shall be entitled to injunctive relief requiring specific performance by Seller of this Section, and Seller consents to the entry thereof.

Section 5.05 . Liquidating Distributions. Seller agrees that it will not make any distributions of assets to its stockholders prior to the six-month anniversary of the Closing Date, except that Seller may make dividend and redemption payments and other distributions required to be made on its outstanding Series C Preferred Stock. Seller further agrees that it shall provide all notices of dissolution as are provided for under Utah law, use the proceeds of the transaction contemplated hereby and liquidation of any of its other assets to satisfy in full all of its liabilities to third parties and not make any distributions of assets to its stockholders prior to such time as it has satisfied, or set aside funds sufficient to satisfy, all of its liabilities in full. Seller will use its commercially reasonable efforts to ensure that from the Closing Date until the completion of the dissolution of Seller, it will (i) remain solvent, (ii) maintain sufficient assets for the conduct of its affairs and (iii) not incur liabilities in excess of its ability to pay as they become due. Seller shall adopt a plan of liquidation whereby all of the net proceeds of the transactions contemplated hereby, after satisfaction of all known claims against Seller, will be distributed to Seller's stockholders within 12 months of the Closing Date.

A-34

Section 5.06 . Stockholder Meeting; Proxy Materials. Seller shall cause a meeting of its stockholders to be duly called and held as soon as reasonably practicable for the purpose of adopting a resolution of the stockholders of Seller authorizing the transactions contemplated by this Agreement (the " Resolution of Sale "). The Board of Directors of Seller shall, subject to their fiduciary duties under applicable law as advised by counsel, recommend adoption of the Resolution of Sale by Seller's stockholders. In connection with such meeting Seller (i) will promptly prepare and file with the SEC, will use its commercially reasonable efforts to have cleared by the SEC and will thereafter mail to its stockholders as promptly as practicable a proxy statement and all other proxy materials for such meeting (the " Seller Proxy Statement ") as may be required under applicable law, (ii) will use its commercially reasonable efforts to obtain the necessary approvals by its stockholders of the Resolution of Sale and (iii) will otherwise comply with all legal requirements applicable to such meeting.

Section 5.07 . Pro Forma Financial Statements. (a) Within 30 days of the date hereof, Seller shall prepare and deliver to Buyer a pro forma balance sheet of the Business as of September 30, 2006 in substantially the form of the Pro Forma Balance Sheet which shall set forth the financial information reflected in each line item set forth in Exhibit B.

(b) Prior to March 31, 2007, Seller shall prepare and deliver to Buyer unaudited carve-out balance sheets of the Business as of December 31, 2005 and 2006 and the related unaudited carve-out statements of operations of the Business for the twelve months ended December 31, 2005 and 2006, in each case which will present, in conformity with GAAP applied on a consistent basis (except as may be indicated in the notes thereto), the financial position and results of operations of the Business as of the date thereof and for the period then ended.

A-35

Section 5.08. Acquisition Proposals. From the date hereof until the termination of this Agreement and except as expressly permitted by the following provisions of this 5.08, Seller shall not, and Seller shall not authorize or permit any officer, director or employee of, or any financial advisor, attorney, accountant or other advisor or representative retained by, Seller to, solicit, initiate, encourage (including by way of furnishing information or affording access to Seller or its business, assets, books or records), endorse or enter into any negotiations or agreement with respect to, or take any other action to knowingly facilitate, any inquiries or the making of any proposal that constitutes, or may reasonably be expected to lead to, any "Acquisition Proposal". Subject to the exceptions provided in this Section 5.08, neither the Board of Directors of Seller nor any committee thereof shall (a) fail to make or withdraw or modify, or propose to withdraw or modify, in a manner adverse to Buyer the approval or recommendation by the Board of Directors of Seller of this Agreement, (b) approve or recommend, or propose to approve or recommend, any Acquisition Proposal other than pursuant to this Agreement (any of the foregoing in clause (a) or (b), an " Adverse Recommendation Change ") or (c) grant any waiver or release under any standstill or similar agreement with respect to Seller's capital stock. Notwithstanding the foregoing, nothing contained in this Agreement shall prevent the Board of Directors of Seller from, in response to a bona fide Acquisition Proposal that was in no way solicited in violation of this 0 and that constitutes, or that the Board of Directors of Seller reasonably believes will lead to, a Superior Proposal, (i) furnishing information pursuant to a confidentiality agreement with terms no less favorable to Seller than those contained in the Confidentiality Agreement (a copy of which shall be provided for informational purposes only to Buyer) or entering into discussions or negotiations with any Person or entity, (ii) participating in discussions and negotiations with such person, (iii) making any disclosure to Seller's stockholders or (iv) withdrawing or modifying its approval or recommendation of this Agreement or approving or recommending any Acquisition Proposal other than pursuant to this Agreement, if and only to the extent that, in the case of clauses (i) through (iv), above, the Board of Directors of Seller shall have determined in good faith (after consulting with outside counsel) that the failure to take such action would be inconsistent with the Board of Directors' duties to Seller under Utah law, and provided , in each case, that Seller provide Buyer at least 24 hours advance written notice that it is going to take any of the foregoing actions; and provided further , that Seller may not enter into any definitive agreement with respect to any Acquisition Proposal unless it simultaneously terminates this Agreement in accordance with Section 12.01(d)(ii) and pays or causes to be paid the fee required by Section 12.02(b). Nothing herein shall prevent the Board of Directors from complying with Rule 14d‑9 and 14e‑2 under the Exchange Act with regard to an Acquisition Proposal, so long as any action taken or statement made is in accordance with this Section 5.08. Seller shall notify Buyer if any such Acquisition Proposal is received by, any such information is requested from, or any such negotiations or discussions are sought to be initiated or continued with Seller, as soon as reasonably possible and in any case within 24 hours of such occurrence. Seller shall provide such notice orally and in writing and shall identify the Person making, and the terms and conditions of, any such Acquisition Proposal, indication or request. Seller shall thereafter promptly keep Buyer reasonably informed of all material developments affecting the status and terms of any such Acquisition Proposal. Seller shall, and shall cause its subsidiaries and the advisors, employees and other agents of Seller and any of its subsidiaries to, cease immediately and cause to be terminated any and all existing activities, discussions and negotiations, if any, with any Person (other than Buyer and representatives of Buyer) conducted prior to the date hereof with respect to any Acquisition Proposal.

A-36

" Acquisition Proposal " means, other than the transactions contemplated by this Agreement, any offer, proposal or inquiry relating to, or any third party indication of interest in, (A) any acquisition or purchase, direct or indirect, of the Business or any substantial portion of the Purchased Assets, whether by direct purchase or through any merger, consolidation or other acquisition of Seller or its subsidiaries as a whole or in any substantial part or (B) any other transaction the consummation of which could reasonably be expected to impede, interfere with, prevent or materially delay or dilute materially the benefits to Buyer of the transactions contemplated hereby. For the avoidance of doubt, nothing in this Agreement shall restrict in any manner efforts by Seller to dispose of its discovery research business or any other assets that are not Purchased Assets, or raise additional investment capital, whether by sale of shares of its capital stock or other securities or incurrence of debt.

" Superior Proposal " means any bona fide, unsolicited written Acquisition Proposal for at least (i) a majority of the outstanding shares of the common stock of Seller or (ii) substantially all of the Purchased Assets on terms that the Board of Directors of Seller determines in good faith by a majority vote, after considering the advice of a financial advisor of nationally recognized reputation and taking into account all the terms and conditions of the Acquisition Proposal, including any break-up fees, expense reimbursement provisions and conditions to consummation, are more favorable and provide greater value to Seller's common stockholders than as provided hereunder and for which financing, if a cash transaction (whether in whole or in part), is then fully committed or reasonably determined to be available by the Board of Directors of Seller.

Section 5.09 . Financing. Seller shall use its commercially reasonable efforts to provide Buyer with such cooperation in connection with the arrangement of any financing as may be requested by Buyer, including (i) participation in meetings, due diligence sessions and management presentation sessions and similar presentations, (ii) preparing business projections and financial statements (including pro forma financial statements) and other information for offering memoranda, private placement memoranda and similar documents and (iii) facilitating the grant and perfection of Liens on any of its assets or properties. Seller shall allow Buyer's representatives the opportunity to review and comment upon any such financial statements (including pro forma financial statements) in draft form and shall allow such representatives access to Seller and supporting documentation with respect to the preparation of such financial statements and the independent auditors' work papers relating to such financial statements. Notwithstanding the foregoing, neither Seller nor any of its subsidiaries shall be required to pay any commitment or other similar fee or incur any other liability in connection with any financing or incur any expense to effect compliance with the foregoing.

Section 5.10 . Seller Disclosure Schedule. Seller shall provide Buyer within 30 days of the date hereof completed Schedule[s] 3.09(a)(x) [and 3.15(j)].

A-37

Section 5.11 . Liens; Security Interests. Prior to the Closing, Seller shall make proper arrangements, including entering into payoff agreements or similar arrangements, to ensure that at the Closing all of the Purchased Assets shall be conveyed to Buyer free and clear of all Liens, including without limitation the withdrawal of any financing statements related to any of the Purchased Assets, except to the extent that Buyer has agreed to take certain Purchased Assets subject to pre-existing Liens and liabilities as set forth in Article 2.

Section 5.12 . Contracts. At the Closing, Seller shall provide Buyer with the Contracts and all databases related to the Contracts as they exist on the date hereof, except as such databases have been updated to reflect the entry by Seller into Contracts subsequent to the date hereof.

Article 6
Covenant of Buyer

Buyer agrees that on and after the Closing Date, Buyer will afford promptly to Seller and its agents reasonable access to its properties, books, records, employees and auditors to the extent necessary to permit Seller to determine any matter relating to its rights and obligations hereunder or to any period ending on or before the Closing Date; provided that any such access by Seller shall not unreasonably interfere with the conduct of the business of Buyer.

Article 7
Covenants of Buyer and Seller

Buyer and Seller agree that:

A-38

Section 7.01 . Commercially Reasonable Efforts; Further Assurances. (a) Subject to the terms and conditions of this Agreement, Buyer and Seller will use their commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary or desirable under Applicable Laws to consummate the transactions contemplated by this Agreement, including (i) preparing and filing as promptly as practicable with any Governmental Authority or other third party all documentation to effect all necessary filings, notices, petitions, statements, registrations, submissions of information, applications and other documents and (ii) obtaining and maintaining all approvals, consents, registrations, permits, authorizations and other confirmations required to be obtained from any Governmental Authority or other third party that are necessary, proper or advisable to consummate the transactions contemplated by this Agreement; provided that the parties hereto understand and agree that the commercially reasonable efforts of any party hereto shall not be deemed to include (i) entering into any settlement, undertaking, consent decree, stipulation or agreement with any Governmental Authority in connection with the transactions contemplated hereby or (ii) divesting or otherwise holding separate (including by establishing a trust or otherwise), or taking any other action (or otherwise agreeing to do any of the foregoing) with respect to the Business or the Purchased Assets. Seller and Buyer agree to execute and deliver such other documents, certificates, agreements and other writings and to take such other actions as may be necessary or desirable in order to consummate or implement expeditiously the transactions contemplated by this Agreement and to vest in Buyer good and marketable title to the Purchased Assets.

(b) Seller hereby constitutes and appoints, effective as of the Closing Date, Buyer and its successors and assigns as the true and lawful attorney of Seller with full power of substitution in the name of Buyer, or in the name of Seller but for the benefit of Buyer, (i) to collect for the account of Buyer any items of Purchased Assets and (ii) to institute and prosecute all proceedings which Buyer may in its sole discretion deem proper in order to assert or enforce any right, title or interest in, to or under the Purchased Assets, and to defend or compromise any and all actions, suits or proceedings in respect of the Purchased Assets. Buyer shall be entitled to retain for its own account any amounts collected pursuant to the foregoing powers, including any amounts payable as interest in respect thereof.

Section 7.02 . Certain Filings. Seller and Buyer shall cooperate with one another (i) in determining whether any action by or in respect of, or filing with, any Governmental Authority is required, or any actions, consents, approvals or waivers are required to be obtained from parties to any Contracts, in connection with the consummation of the transactions contemplated by this Agreement and (ii) in taking such actions or making any such filings, furnishing information required in connection therewith and seeking timely to obtain any such actions, consents, approvals or waivers.

Section 7.03 . Public Announcements. The parties agree to consult with each other before issuing any press release or making any public statement with respect to this Agreement or the transactions contemplated hereby and, except for any press releases and public statements the making of which may be required by Applicable Law or any listing agreement with the principal market on which

SITE SEARCH

AGREEMENTS / CONTRACTS

CLAUSES

Search Contract Clauses >>

Browse Contract Clause Library>>

Get Email Updates