TABLE OF CONTENTS

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ARTICLE I
THE ASSET PURCHASE				1
1.1		Purchase and Sale of Assets		1
1.2		Assumption of Liabilities		1
1.3		Purchase Price		1
1.4		Contingent Milestone Payments		2
1.5		The Closing		3
1.6		Allocation		3
1.7		Further Assurances		4
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE PRIMARY MEMBER				4
2.1		Organization, Qualification and Corporate Power		4
2.2		Authorization of Transaction		4
2.3		Noncontravention		5
2.4		Subsidiaries		5
2.5		Financial Statements		5
2.6		Undisclosed Liabilities		5
2.7		Tax Matters.		5
2.8		Ownership and Condition of Assets		6
2.9		Intellectual Property		6
2.10		Contracts		9
2.11		Litigation		10
2.12		Employees and Employee Benefits		10
2.13		Environmental Matters		10
2.14		Legal Compliance		10
2.15		Permits		11
2.16		Certain Business Relationships With Affiliates		11
2.17		Brokers’ Fees		11
2.18		Disclosure		11
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BUYER				11
3.1		Organization and Corporate Power		11
3.2		Authorization of the Transaction		11
3.3		Noncontravention		11
3.4		Litigation		12
3.5		Brokers’ Fees		12

 

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ARTICLE IV
CONDITIONS TO CLOSING				12
4.1		Conditions to Obligations of the Buyer		12
4.2		Conditions to Obligations of the Seller		12
ARTICLE V
POST-CLOSING COVENANTS				13
5.1		Proprietary Information		13
5.2		Non-Competition		13
5.3		Tax Matters		13
5.4		Sharing of Data		14
ARTICLE VI
INDEMNIFICATION				14
6.1		Indemnification by the Seller and the Primary Member		14
6.2		Indemnification by the Buyer		14
6.3		Indemnification Claims		15
6.4		Survival of Representations and Warranties		16
6.5		Limitations		17
6.6		Treatment of Indemnity Payments		17
ARTICLE VII
REGISTRATION RIGHTS				17
7.1		Registration of Shares		17
7.2		Limitations on Registration Rights		18
7.3		Registration Procedures		18
7.4		Requirements of the Seller		19
7.5		Indemnification		19
7.6		Assignment of Rights		20
ARTICLE VIII
DEFINITIONS				20
ARTICLE IX
MISCELLANEOUS				29
9.1		Press Releases and Announcements		29
9.2		No Third Party Beneficiaries		29
9.3		Entire Agreement		29
9.4		Succession and Assignment		29
9.5		Counterparts and Facsimile Signature		29
9.6		Headings		29
9.7		Notices		30
9.8		Governing Law		30

 

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9.9		Amendments and Waivers		30
9.10		Severability		31
9.11		Expenses		31
9.12		Submission to Jurisdiction		31
9.13		Specific Performance		31
9.14		Construction		31

 

Exhibits

Exhibit A -	Bill of Sale
Exhibit B -	Patent Assignment
Exhibit C-	Instrument of Assumption

 

Schedules

Disclosure Schedule

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CONFIDENTIAL

ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement (the “Agreement”) is entered into as of April 20, 2007 by and among MOMENTA PHARMACEUTICALS, INC., a Delaware corporation (the “Buyer”), PARIVID, LLC, a Massachusetts limited liability company (the “Seller”) and S. RAGURAM, an individual residing at [**] (“Primary Member”).

This Agreement contemplates a transaction in which the Buyer will purchase certain of the assets and assume certain of the liabilities of the Seller.

The Primary Member is the owner of substantially all of the membership interests of the Seller.

Capitalized terms used in this Agreement shall have the meanings ascribed to them in Article VIII.

In consideration of the representations, warranties and covenants herein contained, the Parties agree as follows.

ARTICLE I

THE ASSET PURCHASE

1.1                                  Purchase and Sale of Assets .

(a)                                   Upon and subject to the terms and conditions of this Agreement, the Buyer shall purchase from the Seller, and the Seller shall sell, transfer, convey, assign and deliver to the Buyer, at the Closing, for the consideration specified below in this Article I, all right, title and interest in, to and under the Acquired Assets.

(b)                                  Notwithstanding the provisions of Section 1.1(a) or any other provision of this Agreement to the contrary, the Acquired Assets shall not include the Excluded Assets.

1.2                                  Assumption of Liabilities .

(a)                                   Upon and subject to the terms and conditions of this Agreement, the Buyer shall assume and become responsible for, from and after the Closing, the Assumed Liabilities.

(b)                                  Notwithstanding the terms of Section 1.2(a) or any other provision of this Agreement to the contrary, the Buyer shall not assume or become responsible for, and the Seller shall remain liable for, the Retained Liabilities.

1.3                                  Purchase Price .  The Purchase Price to be paid by the Buyer for the Acquired Assets shall be as follows:

(a)                                   On the Closing Date, the Buyer shall pay the Seller, by wire transfer of immediately available funds to an account designated by the Seller, $2,500,000 (the “Closing Date Payment”).

(b)                                  The Seller shall also be entitled to receive contingent milestone payments in the manner and on the terms and conditions set forth in Section 1.4.

 

1.4                                  Contingent Milestone Payments .  The Seller shall be entitled to receive additional consideration from the Buyer if any of the following conditions are satisfied:

(a)                                   The Buyer shall pay the Seller, by wire transfer of immediately available funds to an account designated by the Seller, $2,000,000 within 10 days following the completion and satisfaction of the Capabilities Build Milestone.  Notwithstanding the foregoing, in the event the entire Capabilities Build Milestone has not been satisfied on or before the second (2 nd ) anniversary of the Closing Date, the Buyer shall pay the Seller, by wire transfer of immediately available funds to an account designated by the Seller within 10 days following the second (2 nd ) anniversary of the Closing Date, (i) $[**] in the event Submilestone A of the Capabilities Build Milestone has been satisfied on or before such date or (ii) $[**] if both Submilestone A and Submilestone B of the Capabilities Build Milestone have been satisfied on or before such date; provided, however, that no such payment shall be due under clauses (i) or (ii) in the event the Primary Member’s employment with the Buyer has been terminated by the Buyer for Cause or has been terminated by the Primary Member without Good Reason (as each of  such terms is defined in the Employment Agreement of even date herewith by and between the Buyer and the Primary Member) on or before the second (2nd) anniversary of the Closing Date.

(b)                                  Provided that the M-Enoxaparin Milestone is reached within 15 years after the date of this Agreement, the Buyer shall issue to the Seller, within 90 days following the completion and satisfaction of the M-Enoxaparin Milestone, that number of shares of Buyer Common Stock (rounded to the nearest whole share) equal to $[**] divided by the Closing Value (the “Preliminary M-Enoxaparin Shares”); provided however that in the event the Issuance Value multiplied by the number of such Preliminary M-Enoxaparin Shares shall exceed $[**], then the number of shares of Buyer Common Stock to be issued to the Seller upon achievement of the M-Enoxaparin Milestone shall be reduced to such number of shares of Buyer Common Stock (rounded to the nearest whole share) equal to $[**] divided by the Issuance Value.

(c)                                   Provided that the Second Generic Product Milestone is reached within 15 years after the date of this Agreement, the Buyer shall issue to the Seller, within 90 days following the completion and satisfaction of the Second Generic Product Milestone, that number of shares of Buyer Common Stock (rounded to the nearest whole share) equal to $[**] divided by the Closing Value (the “Preliminary Second Generic Shares”); provided however that in the event the Issuance Value multiplied by the number of such Preliminary Second Generic Shares shall exceed $[**], then the number of shares of Buyer Common Stock to be issued to the Seller upon achievement of the Second Generic Product Milestone shall be reduced to such number of shares of Buyer Common Stock (rounded to the nearest whole share) equal to $[**] divided by the Issuance Value.

(d)                                  The Seller and the Primary Member agree and acknowledge that the Buyer may make from time to time such business decisions as it deems appropriate in the conduct of its business, including actions that may have an impact on the achievement of any Milestone, and the Seller and the Primary Member will have no right to claim any lost milestone consideration or other damages as a result of such decisions so long as the actions were not taken by the Buyer in bad faith or for the principal purpose of frustrating the provisions of this Section.  For the avoidance of doubt, the termination of the employment of the Primary Member with the Buyer for any reason (with or without Cause) shall not affect the achievement of the M-Enoxaparin Milestone or the Second Generic Product Milestone; viz. , to the extent either of the Milestones are achieved then the Seller will receive the consideration set forth in this Section 1.4(b) and/or 1.4(c), respectively, regardless of whether the Primary Member is an employee of the Buyer at the time such Milestone is achieved.

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1.5                                  The Closing .

(a)                                   The Closing shall take place at the offices of WilmerHale in Boston, Massachusetts commencing at 9:00 a.m. local time on the date of this Agreement (the “Closing Date”).  All transactions at the Closing shall be deemed to take place simultaneously, and no transaction shall be deemed to have been completed and no documents or certificates shall be deemed to have been delivered until all other transactions are completed and all other documents and certificates are delivered.

(b)                                  At the Closing:

(i)                                      the Seller shall deliver to the Buyer the various certificates, instruments and documents referred to in Section 4.1;

(ii)                                   the Buyer shall deliver to the Seller the various certificates, instruments and documents referred to in Section 4.2;

(iii)                                the Seller shall execute and deliver to the Buyer a bill of sale in substantially the form attached hereto as Exhibit A , one or more patent assignments in substantially the form attached hereto as Exhibit B , and such other instruments of conveyance as the Buyer may reasonably request in order to effect the sale, transfer, conveyance and assignment to the Buyer of valid ownership of the Acquired Assets;

(iv)                               the Buyer shall execute and deliver to the Seller an instrument of assumption in substantially the form attached hereto as Exhibit C and such other instruments as the Seller may reasonably request in order to effect the assumption by the Buyer of the Assumed Liabilities;

(v)                                  the Buyer and the Seller shall execute and deliver a termination of the Collaboration Agreements effective as of the Closing;

(vi)                               the Buyer and the Seller shall execute a joint instruction mutually agreeable to the parties to Iron Mountain Intellectual Property Management, Inc. to terminate the Preferred Escrow Agreement dated as of April 20, 2004, as amended, by and among the Seller, the Buyer and Iron Mountain Intellectual Property Management, Inc. and directing the deposit materials held in escrow be delivered to the Buyer;

(vii)                            the Buyer shall pay to the Seller the Closing Date Payment;

(viii)                         the Seller shall deliver to the Buyer, or otherwise put the Buyer in possession and control of, all of the Acquired Assets of a tangible nature; and

(ix)                                 the Buyer and the Seller shall execute and deliver to each other a cross-receipt evidencing the transactions referred to above.

1.6                                  Allocation .  The Buyer shall prepare a schedule with an allocation of the Purchase Price (and all other capitalizable costs) among the Acquired Assets and the non-competition covenant set forth in Section 5.2 (the “ Allocation Schedule ”) within ninety (90) days after the Closing Date.  After preparation of the Allocation Schedule, it shall be submitted to the Seller for review and approval, which review shall be completed within thirty (30) days.  The Buyer and the Seller shall attempt in good faith to resolve any differences between them as to the allocation.  If the Buyer and the Seller are unable to resolve any differences as to allocation, the disputed parts of the Allocation Schedule shall be submitted to a mutually-agreeable, neutral, nationally recognized accounting firm

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for resolution.  Any determination by the accounting firm will be final and the Buyer and the Seller shall be deemed to have approved of the Allocation Schedule as modified by any such determination.  After approval, the Allocation Schedule shall be conclusive and binding upon the parties hereto and shall be used by them for all purposes, including financial accounting purposes and in the preparation of all Tax Returns, unless otherwise required as a result of an audit by a Taxing authority or a court order.

1.7                                  Further Assurances .  At any time and from time to time after the Closing, at the request of the Buyer and without further consideration, the Seller shall execute and deliver such other instruments of sale, transfer, conveyance and assignment and take such actions as the Buyer may reasonably request to more effectively transfer, convey and assign to the Buyer, and to confirm the Buyer’s rights to, title in and ownership of, the Acquired Assets and to place the Buyer in actual possession and operating control thereof.  Without limitation of the foregoing, in the event of any breach of the representations and warranties of the Seller and the Primary Member set forth in Section 2.8(b), the Seller shall convey to the Buyer such additional assets of the Seller as shall be required to cure the breach of such representations and warranties and such additional assets, when so conveyed to the Buyer, shall constitute Acquired Assets for all purposes of this Agreement.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE

SELLER AND THE PRIMARY MEMBER

The Seller and the Primary Member jointly and severally represent and warrant to the Buyer that, except as set forth in the Disclosure Schedule, the statements contained in this Article II are true and correct as of the date of this Agreement, except to the extent such representations and warranties are specifically made as of a particular date (in which case such representations and warranties are true and correct as of such date).  The Disclosure Schedule shall be arranged in sections and subsections corresponding to the numbered and lettered sections and subsections contained in this Article II.  The disclosures in any section or subsection of the Disclosure Schedule shall qualify other sections and subsections in this Article II only to the extent it is clear from a reading of the disclosure that such disclosure is applicable to such other sections and subsections.  For purposes of this Article II, the phrase “to the knowledge of the Seller” or any phrase of similar import shall be deemed to refer to the actual knowledge of the Primary Member, as well as any other knowledge which the Primary Member would have possessed had he made reasonable inquiry of appropriate employees and agents of the Seller with respect to the matter in question.

2.1                                  Organization, Qualification and Corporate Power .  The Seller is a limited liability company duly organized, validly existing and in good standing under the laws of the Commonwealth of Massachusetts.  The Seller is duly qualified to conduct business and is in good standing under the laws of each jurisdiction listed in Section 2.1 of the Disclosure Schedule, which jurisdictions constitute the only jurisdictions in which the nature of the Seller’s businesses or the ownership or leasing of its properties requires such qualification.  The Seller has all requisite limited liability company power and authority to carry on the Acquired Business and to own and use the properties owned and used by it in connection therewith (including the Acquired Assets).  The Seller has furnished to the Buyer complete and accurate copies of its Certificate of Organization and its Operating Agreement as presently in effect.  The Seller is not in default under or in violation of any provision of its Certificate of Organization or its Operating Agreement as presently in effect.

2.2                                  Authorization of Transaction .  The Seller has all requisite power and authority to execute and deliver this Agreement and the Ancillary Agreements and to perform its obligations hereunder and thereunder.  The execution and delivery by the Seller of this Agreement and the performance by the Seller of this Agreement and the Ancillary Agreements and the consummation by the Seller of the transactions contemplated hereby and thereby

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have been duly and validly authorized by all necessary limited liability company action on the part of the Seller.  This Agreement has been duly and validly executed and delivered by the Seller and constitutes, and each of the Ancillary Agreements, upon its execution and delivery by the Seller, will constitute, a valid and binding obligation of the Seller, enforceable against the Seller in accordance with its terms.

2.3                                  Noncontravention .  Neither the execution and delivery by the Seller of this Agreement or the Ancillary Agreements, nor the consummation by the Seller of the transactions contemplated hereby or thereby, will (a) conflict with or violate any provision of the Certificate of Organization or the Operating Agreement of the Seller, (b) require on the part of the Seller any notice to or filing with, or any permit, authorization, consent or approval of, any Governmental Entity, (c) conflict with, result in a breach of, constitute (with or without due notice or lapse of time or both) a default under, result in the acceleration of obligations under, create in any party the right to terminate, modify or cancel, or require any notice, consent or waiver under, any contract or instrument to which the Seller is a party or by which the Seller is bound or to which any of its assets are subject, (d) result in the imposition of any Security Interest upon any assets of the Seller or (e) violate any order, writ, injunction, decree, statute, rule or regulation applicable to the Seller or any of its properties or assets.

2.4                                  Subsidiaries .  The Seller does not control directly or indirectly or have any direct or indirect equity participation or similar interest in any corporation, partnership, limited liability company, joint venture, trust or other business association or entity.

2.5                                  Financial Statements .  The Seller has provided to the Buyer the Financial Statements.  The Financial Statements fairly present the financial position of the Seller as of the dates thereof, consistent with the books and records of the Seller.  Since the Most Recent Balance Sheet Date, there has occurred no event or development which, individually or in the aggregate, has had, or could reasonably be expected to have in the future, a Seller Material Adverse Effect.

2.6                                  Undisclosed Liabilities .  The Seller has no liability (whether known or unknown, whether absolute or contingent, whether liquidated or unliquidated and whether due or to become due), except for (a) liabilities shown on the Most Recent Balance Sheet, (b) liabilities which have arisen since the Most Recent Balance Sheet Date in the Ordinary Course of Business and (c) contractual and other liabilities incurred in the Ordinary Course of Business which are not required by GAAP to be reflected on a balance sheet.

2.7                                  Tax Matters .

(a)                                   The Seller has properly filed on a timely basis all Tax Returns that it was required to file, and all such Tax Returns were true, correct and complete.  The Seller has paid on a timely basis all Taxes that were due and payable. The Seller has at all times since its formation been treated as a partnership for income Tax purposes.  The Seller does not have any actual or potential liability as a transferee or successor, pursuant to any contractual obligation, or otherwise for any Taxes of any person other than the Seller. The Seller is not a party to or bound by any Tax indemnity, Tax sharing, Tax allocation or similar agreement.    All Taxes that the Seller was required by law to withhold or collect have been duly withheld or collected and, to the extent required, have been properly paid to the appropriate Governmental Entity.

(b)                                  There are no liens or other encumbrances with respect to Taxes upon any of the assets or properties of the Seller, other than with respect to Taxes not yet due and payable.

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2.8                                  Ownership and Condition of Assets .

(a)                                   The Seller is the true and lawful owner, and has good title to, all of the Acquired Assets, free and clear of all Security Interests, except as set forth in Section 2.8(a)(i) of the Disclosure Schedule.  Upon execution and delivery by the Seller to the Buyer of the instruments of conveyance referred to in Section 1.5(b)(iii), the Buyer will become the true and lawful owner of, and will receive good title to, the Acquired Assets, free and clear of all Security Interests other than those set forth in Section 2.8(a)(ii) of the Disclosure Schedule.

(b)                                  The Acquired Assets are sufficient for the conduct of the Acquired Business as presently conducted and constitute all assets used by the Seller in such business.  Each tangible Acquired Asset is free from material defects, has been maintained in accordance with normal industry practice, is in good operating condition and repair (subject to normal wear and tear) and is suitable for the purposes for which it presently is used.

2.9                                  Intellectual Property .

(a)                                   Seller Registrations .  Section 2.9(a) of the Disclosure Schedule lists all Seller Registrations, in each case enumerating specifically the applicable filing or registration number, title, jurisdiction in which filing was made or from which registration issued, date of filing or issuance, names of all current applicant(s) and registered owners(s), as applicable.  All assignments of Seller Registrations to the Seller have been properly executed and recorded.  To the knowledge of the Seller, all Seller Registrations are valid and enforceable and all issuance, renewal, maintenance and other payments that are or have become due with respect thereto have been timely paid by or on behalf of the Seller.

(b)                                  Prosecution Matters .  There are no inventorship challenges, opposition or nullity proceedings or interferences declared, commenced or provoked, or to the knowledge of the Seller threatened, with respect to any Patent Rights included in the Seller Registrations.   The Seller has complied with its duty of candor and disclosure to the United States Patent and Trademark Office and any relevant foreign patent office with respect to all patent and trademark applications filed by or on behalf of the Seller and has made no material misrepresentation in such applications.   The Seller has no knowledge of any information that would preclude the Seller from having clear title to the Seller Registrations or affecting the patentability or enforceability of any Seller Registrations.

(c)                                   Ownership; Sufficiency .  Each item of Seller Intellectual Property will be owned or available for use by the Buyer immediately following the Closing on substantially identical terms and conditions as it was immediately prior to the Closing.  The Seller is the sole and exclusive owner of all Seller Owned Intellectual Property, free and clear of any Security Interests and all joint owners of the Seller Owned Intellectual Property are listed in Section 2.9(c) of the Disclosure Schedule.  The Seller Intellectual Property constitutes all Intellectual Property necessary (i) to Exploit the Acquired Assets in the manner so done currently, (ii) to Exploit the Internal Systems as they are currently used, and (iii) otherwise to conduct the Acquired Business in all material respects in the manner currently conducted.

(d)                                  Protection Measures .  The Seller has taken reasonable measures to protect the proprietary nature of each item of Seller Owned Intellectual Property, and to maintain in confidence all trade secrets and confidential information comprising a part thereof.   The Seller has complied with all applicable contractual and legal requirements pertaining to information privacy and security as they relate to Seller Intellectual Property.  No complaint relating to an improper use or disclosure of, or a breach in the security of, any Seller Intellectual Property has been made or, to the knowledge of the Seller, threatened against the Seller.  To the knowledge of the Seller, there has been no (i) unauthorized disclosure of any third party proprietary or confidential information relating to

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the Acquired Business or the Acquired Assets in the possession, custody or control of the Seller or (ii) breach of the Seller’s security procedures wherein confidential information has been disclosed to a third person.

(e)                                   Infringement by Seller .  To the knowledge of the Seller, neither the Patent Rights included in the Acquired Assets nor the Exploitation thereof by the Seller or by any reseller, distributor, customer or user thereof, or any other activity of the Seller related thereto, infringes or violates, or constitutes a misappropriation of, any Intellectual Property rights of any third party.  Subject to the foregoing sentence, none of the Acquired Assets, or the Exploitation thereof by the Seller or by any reseller, distributor, customer or user thereof, or any other activity of the Seller related thereto, infringes or violates, or constitutes a misappropriation of, any Intellectual Property rights of any third party.  Section 2.9(e) of the Disclosure Schedule lists any complaint, claim or notice, or threat of any of the foregoing (including any notification that a license under any patent is or may be required), received by the Seller alleging any such infringement, violation or misappropriation and any request or demand for indemnification or defense received by the Seller from any reseller, distributor, customer, user or any other third party; and the Seller has provided to the Buyer copies of all such complaints, claims, notices, requests, demands or threats, as well as any legal opinions, studies, market surveys and analyses relating to any alleged or potential infringement, violation or misappropriation.

(f)                                     Infringement of Rights . To the knowledge of the Seller, no person (including, without limitation, any current or former employee or consultant of Seller) is infringing, violating or misappropriating any of the Seller Owned Intellectual Property or any Seller Licensed Intellectual Property which is exclusively licensed to the Seller.  The Seller has provided to the Buyer copies of all correspondence, analyses, legal opinions, complaints, claims, notices or threats concerning the infringement, violation or misappropriation of any Seller Owned Intellectual Property.

(g)                                  Outbound IP Agreements .  Section 2.9(g) of the Disclosure Schedule identifies each license, covenant or other agreement pursuant to which the Seller has assigned, transferred, licensed, distributed or otherwise granted any right or access to any person, or covenanted not to assert any right, with respect to any past, existing or future Seller Intellectual Property.  The Seller has not agreed to indemnify any person other than the Buyer against any infringement, violation or misappropriation of any Intellectual Property rights with respect to any Acquired Assets or any third party Intellectual Property rights.  The Seller is not a member of or party to any patent pool, industry standards body, trade association or other organization pursuant to the rules of which it is obligated to license any existing or future Seller Intellectual Property to any person.

(h)                                  Inbound IP Agreements .  Section 2.9(h) of the Disclosure Schedule identifies (i) each item of Seller Licensed Intellectual Property and the license or agreement pursuant to which the Seller Exploits it (excluding currently-available, off the shelf software programs that are part of the Internal Systems and are licensed by the Seller pursuant to “shrink wrap” licenses, the total fees associated with which are less than $2,500) and (ii) each agreement, contract, assignment or other instrument pursuant to which the Seller has obtained any joint or sole ownership interest in or to each item of Seller Owned Intellectual Property.  No third party inventions, methods, services, materials, processes or Software are included in or required to Exploit the Acquired Assets.  None of the Acquired Assets includes “shareware,” “freeware” or other Software or other material that was obtained by the Seller from third parties other than pursuant to the license agreements listed in Section 2.9(h) of the Disclosure Schedule.

(i)                                      Source Code .  The Seller has not licensed, distributed or disclosed, and knows of no distribution or disclosure by others (including its employees and contractors) of, the Seller Source Code to any person, other than Buyer, except pursuant to the agreements listed in Section 2.9(i) of the Disclosure Schedule, and the Seller has taken all reasonable physical and electronic security measures to prevent disclosure of such Seller

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Source Code. To the knowledge of the Seller, no event has occurred, and no circumstance or condition exists, that (with or without notice or lapse of time, or both) will, or would reasonably be expected to, nor will the consummation of the transactions contemplated hereby, result in the disclosure or release of such Seller Source Code by the Seller, its escrow agent(s) or any other person to any third party.

(j)                                      Authorship .  All of the Software and Documentation comprising, incorporated in or bundled with the Acquired Assets or Internal Systems have been designed, authored, tested and debugged by regular employees of the Seller within the scope of their employment or by independent contractors of the Seller who have executed valid and binding agreements expressly assigning all right, title and interest in such copyrightable materials to the Seller, waiving their non-assignable rights (including moral rights) in favor of the Seller and its permitted assigns and licensees, and have no residual claim to such materials.

(k)                                   Open Source Code .  Section 2.9(k) of the Disclosure Schedule lists all Open Source Materials that the Seller has utilized in any way in the Exploitation of the Software or Documentation included in the Internal Systems and describes the manner in which such Open Source Materials have been utilized, including, without limitation, whether and how the Open Source Materials have been modified and/or distributed by the Seller.  The Seller has not (i) incorporated Open Source Materials into, or combined Open Source Materials with, the Acquired Assets; (ii) distributed Open Source Materials in conjunction with any other software developed or distributed by the Seller; or (iii) used Open Source Materials that create, or purport to create, obligations for the Seller with respect to the Acquired Assets or grant, or purport to grant, to any third party, any rights or immunities under Intellectual Property rights (including, but not limited to, using any Open Source Materials that require, as a condition of Exploitation of such Open Source Materials, that other Software incorporated into, derived from or distributed with such Open Source Materials be (x) disclosed or distributed in source code form, (y) licensed for the purpose of making derivative works, or (z) redistributable at no charge or minimal charge).

(l)                                      Employee and Contractor Assignments .  Each employee of the Seller and each independent contractor of the Seller who has created any portion of the Acquired Assets has executed a valid and binding written agreement expressly assigning to the Seller all right, title and interest in any inventions and works of authorship, whether or not patentable, invented, created, developed, conceived and/or reduced to practice during the term of such employee’s employment or such independent contractor’s work for the Seller, and all Intellectual Property rights therein, and has waived all moral rights therein to the extent legally permissible.

(m)                                Quality .  The Acquired Assets are free from significant defects (defined, in the case of the Software, as defects that would prevent the Software substantially from fulfilling its fundamental purpose) in design, workmanship and materials. The Acquired Assets and the Internal Systems do not contain any disabling device, virus, worm, back door, Trojan horse or other disruptive or malicious code that may or are intended to impair their intended performance or otherwise permit unauthorized access to, hamper, delete or damage any computer system, software, network or data.

(n)                                  Support and Funding .  Except as set forth in Section 2.9(n) of the Disclosure Schedule, the Seller has neither sought, applied for nor received any support, funding, resources or assistance from any federal, state, local or foreign governmental or quasi-governmental agency or funding source in connection with the Exploitation of the Acquired Assets, the Internal Systems or any facilities or equipment used in connection therewith.

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2.10                            Contracts .

(a)                                   Section 2.10 of the Disclosure Schedule lists all contracts or agreements (written or oral) to which the Seller is a party as of the date of this Agreement including, without limitation:

(i)                                      any agreement (or group of related agreements) for the lease of personal property;

(ii)                                   any agreement (A) which calls for performance over a period of more than one year, (B) which involves more than the sum of $10,000, or (C) in which the Seller has granted “most favored nation” pricing provisions or marketing or distribution rights;

(iii)                                any agreement under which the Seller has granted to a third party any license, assignment or other transfer of rights or interests (including any covenants not to assert rights) in or to Seller Intellectual Property;

(iv)                               any agreement for the disposition of any significant portion of the assets or business of the Seller;

(v)                                  any agreement concerning exclusivity or confidentiality;

(vi)                               any employment or consulting agreement relating to individuals who have created any portion of the Acquired Assets;

(vii)                            any agreement involving any current or former officer, director or member of the Seller or an Affiliate thereof;

(viii)                         any agreement under which the consequences of a default or termination would reasonably be expected to have a Seller Material Adverse Effect;

(ix)                                 any agreement which contains any provisions requiring the Seller to indemnify any other party (excluding indemnities contained in agreements for the purchase, sale or license of products entered into in the Ordinary Course of Business);

(x)                                    any agreement that could reasonably be expected to have the effect of prohibiting or impairing the conduct of the Acquired Business of the Seller or the Buyer or any of its subsidiaries;

(xi)                                 any agreement under which the Seller or any of its Affiliates is restricted from selling, licensing or otherwise distributing any of its technology or products, or providing services to, customers or potential customers or any class of customers, in any geographic area, during any period of time or any segment of the market or line of business;

(xii)                              any agreement which would entitle any third party to receive a license or any other right to intellectual property of the Buyer or any of the Buyer’s Affiliates following the Closing; and

(xiii)                           any other agreement of Seller which is not otherwise described in subclauses (i) through (xii) above.

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(b)                                  The Seller has delivered to the Buyer a complete and accurate copy of each agreement listed in Section 2.9 or Section 2.10 of the Disclosure Schedule.  With respect to each agreement so listed, (i) the agreement is legal, valid, binding and enforceable and in full force and effect; (ii) the agreement is assignable by the Seller to the Buyer without the consent or approval of any party (except as set forth in Section 2.3 of the Disclosure Schedule) and will continue to be legal, valid, binding and enforceable and in full force and effect immediately following the Closing in accordance with the terms thereof as in effect immediately prior to the Closing; and (iii) neither the Seller nor, to the knowledge of the Seller, any other party, is in breach or violation of, or default under, any such agreement, and no event has occurred, is pending or, to the knowledge of the Seller, is threatened, which, after the giving of notice, with lapse of time, or otherwise, would constitute a breach or default by the Seller or, to the knowledge of the Seller, any other party under such agreement.

2.11                            Litigation .  There is no Legal Proceeding which is pending or has been threatened in writing against the Seller that relates in any way to the Acquired Business, the Acquired Assets or the transactions contemplated by this Agreement.  There are no judgments, orders or decrees outstanding against the Seller.

2.12                            Employees and Employee Benefits .

(a)                                   Section 2.12 of the Disclosure Schedule contains a list of all employees of the Seller, along with the position and the annual rate of compensation of each such person.  Section 2.12 of the Disclosure Schedule contains a list of all employees of the Seller who are a party to a non-competition agreement with the Seller; copies of such agreements have previously been delivered to the Buyer. Section 2.12 of the Disclosure Schedule contains a list of all employees of the Seller who are not citizens of the United States.

 (b)                               The Seller has complied with all federal, state and local laws relating to the hiring and classification of employees and the employment of labor, including provisions thereof relating to wages, hours, equal opportunity, collective bargaining and the payment of social security and other Taxes.  The Seller is not delinquent in payments to any of its employees for any wages, salaries, commissions, bonuses or other direct compensation for any services performed by them or amounts required to be reimbursed to such employees and upon any termination of the employment of any such employees.

(c)                                   Except as set forth in Section 2.12 of the Disclosure Schedule, the Seller does not maintain or contribute to, or have any obligation to contribute to, any Employee Benefit Plan or any other material perquisite or benefit to officers, employees or consultants of the Seller.

2.13                            Environmental Matters .  The Seller has complied with all applicable Environmental Laws.  There is no pending or, to the knowledge of the Seller, threatened civil or criminal litigation, written notice of violation, formal administrative proceeding, or investigation, inquiry or information request by any Governmental Entity, relating to any Environmental Law involving the Seller.  The Seller has no liabilities or obligations arising from the release of any Materials of Environmental Concern into the environment.

2.14                            Legal Compliance .  The Seller is currently conducting, and has at all times since its formation conducted, the Acquired Business in compliance with each applicable law (including rules and regulations thereunder) of any federal, state, local or foreign government, or any Governmental Entity.  The Seller has not received any notice or communication from any Governmental Entity alleging noncompliance with any applicable law, rule or regulation related to the Acquired Business or Acquired Assets.  The Seller has not received any proceeds under the Small Business Technology Transfer grant listed in Section 2.10(xiii) of the Disclosure Schedule (the “Grant”). Until the Seller draws funding under the Grant, the Seller is not deemed to have accepted the Grant award and therefore has no obligations under the Grant terms and conditions.

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2.15                            Permits .   Section 2.15 of the Disclosure Schedule sets forth a list of all Permits issued to or held by the Seller relating to the Acquired Business or Acquired Assets.  Such listed Permits are the only Permits that are required for the Seller to conduct the Acquired Business and Acquired Assets as presently conducted.  Each such Permit is in full force and effect; the Seller is in compliance with the terms of each such Permit; and, to the knowledge of the Seller, no suspension or cancellation of such Permit is threatened and there is no basis for believing that such Permit will not be renewable upon expiration.  Each such Permit is assignable by the Seller to the Buyer without the consent or approval of any party (other than consents or approvals listed in Section 2.15 of the Disclosure Schedule) and will continue in full force and effect immediately following the Closing.

2.16                            Certain Business Relationships With Affiliates .  Except as set forth in Section 2.16 of the Disclosure Schedule, no Affiliate of the Seller (a) owns any property or right, tangible or intangible, which is used in the Acquired Business or with the Acquired Assets, (b) has any claim or cause of action against the Seller with respect to the Acquired Business or Acquired Assets, or (c) owes any money to, or is owed any money by, the Seller with respect to the Acquired Business.  Section 2.16 of the Disclosure Schedule describes any transactions or relationships between the Seller and any Affiliate thereof which occurred or have existed since the beginning of the time period covered by the Financial Statements.

2.17                            Brokers’ Fees .  The Seller has no liability or obligation to pay any fees or commissions to any broker, finder or agent with respect to the transactions contemplated by this Agreement.

2.18                            Disclosure .  No representation or warranty by the Seller and the Primary Member contained in this Agreement, and no statement contained in the Disclosure Schedule or any other document, certificate or other instrument delivered or to be delivered by or on behalf of the Seller pursuant to this Agreement, contains or will contain any untrue statement of a material fact or omits or will omit to state any material fact necessary, in light of the circumstances under which it was or will be made, in order to make the statements herein or therein not misleading.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE BUYER

The Buyer represents and warrants to the Seller and the Primary Member that the statements contained in this Article III are true and correct as of the date of this Agreement.

3.1                                  Organization and Corporate Power .  The Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware.  The Buyer has all requisite corporate power and authority to carry on the businesses in which it is engaged and to own and use the properties owned and used by it.

3.2                                  Authorization of the Transaction .  The Buyer has all requisite power and authority to execute and deliver this Agreement and the Ancillary Agreements and to perform its obligations hereunder and thereunder.  The execution and delivery by the Buyer of this Agreement and the Ancillary Agreements and the consummation by the Buyer of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary corporate action on the part of the Buyer.  This Agreement has been duly and validly executed and delivered by the Buyer and constitutes a valid and binding obligation of the Buyer, enforceable against it in accordance with its terms.

3.3                                  Noncontravention .  Neither the execution and delivery by the Buyer of this Agreement or the Ancillary Agreements, nor the consummation by the Buyer of the transactions contemplated hereby or thereby, will (a) conflict with or violate any provision of the Certificate of Incorporation or by-laws of the Buyer, (b) require on

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the part of the Buyer any filing with, or permit, authorization, consent or approval of, any Governmental Entity, except for such filings with the SEC as the Buyer may deem necessary and required, (c) conflict with, result in breach of, constitute (with or without due notice or lapse of time or both) a default under, result in the acceleration of obligations under, create in any party any right to terminate, modify or cancel, or require any notice, consent or waiver under, any contract or instrument to which the Buyer is a party or by which it is bound or to which any of its assets is subject, except for (i) any conflict, breach, default, acceleration, termination, modification or cancellation which would not adversely affect the consummation of the transactions contemplated hereby or (ii) any notice, consent or waiver the absence of which would not adversely affect the consummation of the transactions contemplated hereby, or (d) violate any order, writ, injunction, decree, statute, rule or regulation applicable to the Buyer or any of its properties or assets.

3.4                                  Litigation .  There is no Legal Proceeding which is pending or has been threatened in writing against the Buyer that relates in any way to the transactions contemplated by this Agreement.

3.5                                  Brokers’ Fees .  The Buyer has no liability or obligation to pay any fees or commissions to any broker, finder or agent with respect to the transactions contemplated by this Agreement.

ARTICLE IV

CONDITIONS TO CLOSING

4.1                                  Conditions to Obligations of the Buyer .  The obligation of the Buyer to consummate the transactions contemplated by this Agreement to be consummated at the Closing is subject to the satisfaction of the following additional conditions:

(a)                                   the Seller shall have delivered to the Buyer documents evidencing the release or termination of all Security Interests on the Acquired Assets, and copies of filed UCC termination statements with respect to all UCC financing statements evidencing Security Interests, other than Security Interests which are listed in Section 2.8(a)(ii) of the Disclosure Schedule under the heading “Permitted Security Interests”;

(b)                                  the Buyer shall have received such certificates and instruments (including certificates of good standing of the Seller in its jurisdiction of organization and the various foreign jurisdictions in which it is qualified, certified charter documents, certificates as to the incumbency of officers and the adoption of authorizing resolutions) as it shall reasonably request in connection with the Closing; and

(c)                                   the Primary Member shall have executed an employment agreement (the “Employment Agreement”) with the Buyer.

4.2                                  Conditions to Obligations of the Seller .  The obligation of the Seller to consummate the transactions contemplated by this Agreement to be consummated at the Closing is subject to the Seller’s receipt of such certificates and instruments (including certificates of good standing of the Buyer in its jurisdiction of organization, certificates as to the incumbency of officers and the adoption of authorizing resolutions) as it shall reasonably request in connection with the Closing, as well as to the Buyer’s executing the Employment Agreement with the Primary Member.

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ARTICLE V

POST-CLOSING COVENANTS

5.1                                  Proprietary Information .  Except in the course of bona fide employment with the Buyer, from and after the Closing, the Seller and the Primary Member shall not disclose or make use of (except to pursue their rights under this Agreement or the Ancillary Agreements), and shall use their best efforts to cause all of their respective Affiliates, employees and consultants not to disclose or make use of, any knowledge, information or documents of a confidential nature or not generally known to the public with respect to Acquired Assets, the Acquired Business or the Buyer or its business, except to the extent that such knowledge, information or documents shall have become public knowledge other than through improper disclosure by the Seller, the Primary Member or any of their respective Affiliates.  The Seller shall enforce, for the benefit of the Buyer, and at Buyer’s request and expense, all confidentiality, non-disclosure, invention assignments and similar agreements between the Seller and any other party relating to the Acquired Assets or the Acquired Business of the Seller, which are not Assigned Contracts.

5.2                                  Non-Competition .

(a)                                   During the Non-Competition Period, neither the Seller nor the Primary Member shall, either directly or indirectly as a stockholder, investor, partner, consultant or otherwise, (A) design, develop, manufacture, market, sell or license any product or provide any service anywhere in the world which is competitive with any product designed, developed (or under development), manufactured, sold or licensed or any service provided by the Seller prior to the Closing Date (other than the Retained Business), or (B) engage anywhere in the world in any business competitive with the business of the Seller prior to the Closing Date (other than the Retained Business).  The Seller shall enforce, for the benefit of the Buyer, all non-competition and similar agreements between the Seller and any other party which are not Assigned Contracts.

(b)                                  The Seller and the Primary Member agree that the duration and geographic scope of the non-competition provision set forth in this Section 5.2 are reasonable.  In the event that any court determines that the duration or the geographic scope, or both, are unreasonable and that such provision is to that extent unenforceable, the Parties agree that the provision shall remain in full force and effect for the greatest time period and in the greatest area that would not render it unenforceable.  The Parties intend that this non-competition provision shall be deemed to be a series of separate covenants, one for each and every county of each and every state of the United States of America and each and every political subdivision of each and every country outside the United States of America where this provision is intended to be effective.