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Asset Transfer Agreement

Entities:

Wilson Sonsini Goodrich & Rosati; Corio, Inc.; U.S. Bank, NA

Date:

2003

Size:

263K

ID:

#1139657

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ASSET TRANSFER AGREEMENT

AND PLAN OF REORGANIZATION

by and among

CORIO, INC.,

DEAN ADAMOPOULOS,

JOHN S. ZIS,

ENTERPRISE TRUST I

(BY JOHN S. ZIS AS TRUSTEE AND REGISTERED SHAREHOLDER),

ENTERPRISE TRUST II

(BY JOHN S. ZIS AS TRUSTEE AND REGISTERED SHAREHOLDER),

JEFF DEVINE,

SABIR KAPASI,

JOHN S. ZIS, AS STOCKHOLDER REPRESENTATIVE,

U.S. BANK, NATIONAL ASSOCIATION AS ESCROW AGENT,

and

NEXUS TECHNOLOGY, INC.

October 22, 2003

TABLE OF CONTENTS

			Page
INDEX OF SCHEDULES			vi

ARTICLE I DEFINITIONS			1

	1.1	Capitalized Terms	1
	1.2	Construction	11

ARTICLE II TRANSFER OF ASSETS			12

	2.1	Transfer of Assets Generally	12
	2.2	Delivery of Acquired Assets.	13
	2.3	Assignments	13
	2.4	Transfer of Product Software Copyrights	14
	2.5	Transfer of Patents	14
	2.6	Transfer of Trademarks	14
	2.7	Transferred Contracts	14
	2.8	Assumed Liabilities	14
	2.9	Excluded Liabilities	16

ARTICLE III CLOSING AND CONSIDERATION			17

	3.1	Closing	17
	3.2	Consideration	17

ARTICLE IV LICENSE TO TRANSFEREE			18

	4.1	Trade Secret License	18
	4.2	Bankruptcy	18

ARTICLE V REPRESENTATIONS AND WARRANTIES OF INDEMNIFYING STOCKHOLDERS AND TRANSFEROR			19

	5.1	Organization	19
	5.2	Authority	19
	5.3	Capital Stock	20
	5.4	Conflict	20
	5.5	Transferor Financial Statements	20
	5.6	Indebtedness; Guaranties	21
	5.7	Absence of Changes	21
	5.8	Legal and Other Compliance	22
	5.9	Transferred Contracts	22
	5.10	Support and Service Contracts	23
	5.11	No Liquidation, Insolvency, Winding-Up	24
	5.12	Restrictions on Business Activities	24
	5.13	Title to Properties, Absence of Liens, Condition of Equipment	25
	5.14	Customers and Sales	26
	5.15	Intellectual Property	26
	5.16	Litigation	29

-i-

TABLE OF CONTENTS

(continued)

			Page
	5.17	Insurance	30
	5.18	Tax Matters	30
	5.19	Powers of Attorney	31
	5.20	Environmental Matters	31
	5.21	Brokers’ and Finders’ Fees	31
	5.22	Employee Matters	32
	5.23	Consents	35
	5.24	Warranties; Defects; Liabilities	35
	5.25	Books and Records	35
	5.26	Notice to Creditors	36
	5.27	Complete Copies of Materials	36
	5.28	Acquired or Licensed Assets	36
	5.29	Affiliate Transactions	36
	5.30	Accounts Receivable	36
	5.31	Compliance with Certain Laws	37

ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE INDEMNIFYING STOCKHOLDERS			37

	6.1	Ownership of Company Capital Stock	37
	6.2	Absence of Claims by the Indemnifying Stockholders	37
	6.3	No Conflict	37
	6.4	Authority	37

ARTICLE VII REPRESENTATIONS AND WARRANTIES OF TRANSFEREE			38

	7.1	Organization and Standing	38
	7.2	Authority	38
	7.3	Stock Consideration	38
	7.4	No Conflict	38
	7.5	SEC Documents; Transferee Financial Statements	39

ARTICLE VIII SECURITIES ACT COMPLIANCE; REGISTRATION			39

	8.1	Securities Act Exemption	39
	8.2	Stock Restrictions	39
	8.3	Representations, Warranties and Covenants Regarding Securities Law Matters	40
	8.4	Registration Rights	41

ARTICLE IX ADDITIONAL AGREEMENTS			41

	9.1	Confidentiality	41
	9.2	Public Disclosure	42
	9.3	Consents	42
	9.4	Legal Requirements	42
	9.5	Additional Documents and Further Assurances	42
	9.6	Covenants Regarding Designated Employees	43

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TABLE OF CONTENTS

(continued)

			Page
	9.7	401(k) Plan	44
	9.8	Non-transferability of Rights to Earn-Out Shares	44
	9.9	Attorney-in-Fact	44
	9.10	Tax Matters	44
	9.11	Change of Transferor’s Name	46
	9.12	Release of Liens	46
	9.13	Termination/Modification of Agreements	46
	9.14	Financial Statements	47
	9.15	Payment of Debts	47

ARTICLE X CLOSING DELIVERABLES			47

	10.1	Deliverables of Transferor	47
	10.2	Deliverables of Transferee	49

ARTICLE XI ESCROW			49

	11.1	Escrow Fund	49
	11.2	Escrow Period	50
	11.3	Distributions of Escrow Fund	50
	11.4	Protection of the Escrow Fund	50
	11.5	Escrow Agent’s Duties	51
	11.6	Fees	52
	11.7	Consequential Damages	53

ARTICLE XII SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION			53

	12.1	Survival of Representations and Warranties	53
	12.2	Indemnification	53
	12.3	Order of Claims for Losses by Transferee	54
	12.4	Indemnification Procedure	54
	12.5	Resolution of Conflicts; Arbitration	54
	12.6	Third-Party Claims	56
	12.7	Stockholder Representative	56

ARTICLE XIII EARN-OUT ARRANGEMENTS			57

	13.1	Earn-Out Payments; Obligation to Pay Additional Consideration	57
	13.2	Definitions	58
	13.3	Earn-Out Achievement	59
	13.4	Operations of Transferee	59
	13.5	Disputes Relating to Earn-Out Payments	60

ARTICLE XIV AMENDMENT AND WAIVER			60

	14.1	Amendment	60
	14.2	Extension; Waiver	60

-iii-

TABLE OF CONTENTS

(continued)

			Page
ARTICLE XV GENERAL PROVISIONS			60

	15.1	Notices	60
	15.2	Expenses	62
	15.3	Entire Agreement; Assignment	62
	15.4	Warranties	62
	15.5	Severability	62
	15.6	Other Remedies	62
	15.7	Governing Law	62
	15.8	Specific Performance	63
	15.9	Waiver of Jury Trial	63
	15.10	Counterparts	63
	15.11	Representation by Counsel	63

-iv-

INDEX OF EXHIBITS

Exhibit		Description

A		General Assignment and Bill of Transfer

B		Forms of Offer Letter

C		Form of Legal Opinion

D-1		First Form of Noncompetition Agreement

D-2		Second Form of Noncompetition Agreement

E		Form of Registration Rights Agreement

-v-

INDEX OF SCHEDULES

Schedule		Description
Schedule 1.1(ee)		Designated Employees
Schedule 1.1(ff)		Development Tools
Schedule 1.1(xx)		Excluded Assets
Schedule 1.1(aaaa)		Products
Schedule 1.1(ssss)		Tangible Assets
Schedule 1.1(wwww)		Third Party Technology
Schedule 1.1(xxxx)		Third Party Technology Contracts
Schedule 1.1(yyyy)		Transferred Contracts and Summary of Material Terms
Schedule 1.1(zzzz)		Transferred Intellectual Property Rights
Schedule 1.1(aaaaa)		Transferred Technology
Schedule 1.1(bbbbb)		Transferred Trademarks
Schedule 1.1(nnnnn)		Unassumed Customer Contracts
Schedule 1.1(ooooo)		Unassumed Vendor Contracts
Schedule 2.1(n)		Other Assets
Schedule 2.5		Form of Patent Assignment Agreement
Schedule 2.6		Form of Trademark Assignment Agreement
Schedule 5.3		Transferor Capitalization
Schedule 5.4		Consents
Schedule 5.5		Transferor Financial Statements
Schedule 5.5(c)		Transferor Liabilities
Schedule 5.7(g)		Transferor Rights and Claims Relating to Business
Schedule 5.9(b)		Excluded Contracts
Schedule 5.9(d)		Transferor Customers
Schedule 5.10		Support and Service Contracts
Schedule 5.13(a)		Leases
Schedule 5.14		Current Customers
Schedule 5.15(b)		Registered Intellectual Property Rights
Schedule 5.15(u)		Forms of Transferor Proprietary Rights and Confidentiality Agreements
Schedule 5.15(w)		Royalties
Schedule 5.16		Litigation
Schedule 5.22(a)		Designated Employees
Schedule 5.22(b)		Employee Plans
Schedule 5.24		Standard Terms of Licenses
Schedule 5.29		Affiliate Transactions
Schedule 5.30		Aging Report for Transferor Accounts Receivable
Schedule 9.6(a)		Option Grants

-vi-

Schedule		Description
Schedule 10.1(a)(i)		Agreements to be Terminated Prior to Closing
Schedule 10.1(a)(ii)		Agreements to be Modified Prior to Closing
Schedule 10.1(b)		Liens on Acquired Assets
Schedule 12.2(a)		Certain Indemnifiable Matters
Schedule 13.2(d)		Designated Customers and Prospects
Schedule 15.1(c)		Stockholder Representative
Schedule 15.1(d)		Indemnifying Stockholders

-vii-

ASSET TRANSFER AGREEMENT

AND PLAN OF REORGANIZATION

This ASSET TRANSFER AGREEMENT AND PLAN OF REORGANIZATION (the “Agreement”) is made and entered into as of October 22, 2003 between Corio, Inc., a Delaware corporation (“Transferee”), Nexus Technology, Inc., a corporation organized under the laws of Illinois (“Transferor”), Dean Adamopoulos, John S. Zis, Enterprise Trust I (by John S. Zis as trustee and registered shareholder), Enterprise Trust II (by John S. Zis as trustee and registered shareholder), Jeff Devine, Sabir Kapasi (collectively, the “Indemnifying Stockholders”), and (solely with respect to Article XI hereof) U.S. Bank, National Association (“Escrow Agent”), and John S. Zis, as Stockholder Representative (as defined below).

RECITALS

A. Transferee desires to acquire from Transferor, and Transferor desires to transfer to Transferee, substantially all of the assets relating to, required for, used in or otherwise constituting the Business (as defined below), in exchange for cash, shares of the common stock of Transferee and the assumption of the Assumed Liabilities as set forth below.

B. Concurrent with the execution and delivery of this Agreement, and as a material inducement to Transferee to enter into this Agreement, each of Dean Adamopoulos and John S. Zis shall execute and deliver to Transferee a Noncompetition Agreement, substantially in the form attached hereto as Exhibit D-1, and Jeff Devine and Sabir Kapasi shall execute and deliver to Transferee a Noncompetition Agreement substantially in the form attached hereto as Exhibit D-2 (collectively referred to as the “Noncompetition Agreements”), which shall be conditioned on and effective upon the Closing.

NOW, THEREFORE, in consideration of the covenants, promises and representations set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

ARTICLE I

DEFINITIONS

1.1 Capitalized Terms. The following capitalized terms shall have the meanings set forth below:

(a) “$2.0 Million Revenue Earn-Out Milestone” shall have the meaning set forth in Section 13.2(e).

(b) “$2.7 Million Revenue Earn-Out Milestone” shall have the meaning set forth in Section 13.2(f).

(d) “401(K) Termination” shall have the meaning set forth in Section 9.7.

(e) “Acquired Assets” shall have the meaning set forth in Section 2.1.

(f) “Actions or Proceedings” shall have the meaning set forth in Section 9.9.

(g) “Agreement” shall have the meaning set forth in the preamble above, together with all exhibits and schedules hereto.

(h) “Assumed Liabilities” shall have the meaning set forth in Section 2.8.

(i) “Average Closing Price” means the average of the closing prices for one share of Transferee Common Stock in trading as reported by Nasdaq for the fifteen (15) trading days ending on and including the second trading day prior to the Earn-Out Payment Date.

(j) “Books and Records” shall mean all papers and records (in paper or electronic format) in the care, custody or control of Transferor relating to the Business including, without limitation, all purchasing and sales records, customer and vendor lists, accounting and financial records, Product documentation, Product specifications, marketing requirement documents and software release orders; provided that “Books and Records” shall only constitute papers and records created within three (3) years prior to the date of this Agreement except for papers and records relevant to the Acquired Assets which shall have no such limitation and all of which shall be included in “Books and Records”; and provided further that, with respect to any original documents that Transferor is required by law to retain originals, such as Transferor’s minute book and tax returns, these documents shall be included in “Books and Records” but Transferor shall only be required to provide copies, not originals, of these documents to Transferee.

(k) “Business” shall mean all of the operations, activities, services and Products of Transferor as conducted and as proposed to be conducted.

(l) “Transferee” shall have the meaning set forth in the preamble above.

(m) “Transferee Common Stock” shall mean shares of common stock of Transferee, par value $0.001 per share.

(n) “Transferee Financial Statements” shall have the meaning set forth in Section 7.5.

(o) “Cause” shall have the meaning set forth in Section 13.2(b).

(p) “Chemical Substance” shall mean any chemical substance which is identified or regulated under any Environmental Law or Safety Law, including, but not limited to, any: (i) pollutant, contaminant, irritant, chemical, raw material, intermediate, product, by-product, slag or construction debris; (ii) industrial, solid, liquid or gaseous toxic or hazardous substance, material or

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waste; (iii) petroleum or any fraction thereof; (iv) asbestos or asbestos-containing material; (v) polychlorinated biphenyl; (vi) chlorofluorocarbons; and (vii) any other similarly regulated substance, material or waste.

(q) “Closing” shall have the meaning set forth in Section 3.1.

(r) “Closing Balance Sheet” shall have the meaning set forth in Section 5.5(a).

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