Asset Purchase Agreement

Exhibit 10.25

ASSET PURCHASE AGREEMENT

This ASSET PURCHASE AGREEMENT ("Agreement") is made as of June 18, 2003 ("Effective Date"), by and between Netergy Microelectronics, Inc., a California corporation, with its principal place of business at 2445 Mission College Blvd., Santa Clara, CA 95054, telephone +14087271212 ("Netergy") and Leadtek Research, Inc., a Taiwanese corporation, with its principal place of business at 18F, No. 166, Chien-Yi Rd., Chung Ho, Taipei Hsien, Taiwan, R.O.C., telephone +886282265800 ("Leadtek").

WHEREAS, Netergy is engaged, among other things, in the design, manufacturing, marketing, sale and distribution of the VIP-1 video and voice over Internet protocol communications semiconductor and specific firmware (such business of Netergy conducted as of the Effective Date and as contemplated to be conducted, with such additions or changes thereto as shall occur after the Effective Date and prior to the Closing Date in accordance with this Agreement, is referred herein collectively as the "Business");

WHEREAS, the Business is composed of certain assets and liabilities that are currently part of, owned by or licensed to Netergy;

WHEREAS, Netergy desires to sell, transfer and assign to Leadtek and Leadtek desires to purchase from Netergy, the Purchased Assets, and Leadtek is willing to assume the Assumed Liabilities, in each case as more fully described and upon the terms and subject to the conditions set forth herein;

WHEREAS, Netergy and Leadtek desire to enter into the Bill of Sale and General Assignment, the Assumption Agreement, the VCP & T2U Manufacturing License Agreement, the First Amendment to the VCPex License Agreement, the T3 and Veracity License Agreement and the Patent License (each such agreement and any other agreement or instrument entered into on or prior to the Closing Date pursuant to the provisions of this Agreement are hereinafter referred to collectively as the "Collateral Agreements");

WHEREAS , the Parties had previously entered into the Development and License Agreement dated April 5th, 2002 ("VIP Agreement")

NOW, THEREFORE, in consideration of and based on these premises, the mutual agreements, covenants, representations and warranties contained herein and in the Collateral Agreements, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and subject to the terms and conditions hereinafter set forth, and intending to be legally bound hereby, the parties hereto hereby agree as follows: DEFINITIONS.

1.1. DEFINED TERMS. For the purposes of this Agreement, in addition to the words and phrases that are described throughout the body of this Agreement, the following terms shall have the following meanings:

1.1.1. ""Affiliate" of any Person means any Person that controls, is controlled by, or is under common control with such Person. As used herein, the term "control" (including the terms "controlling", "controlled by" and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities or other interests, by contract or otherwise.

1.1.2. "Assumption Agreement", "Bill of Sale and General Assignment", "VCP & T2U Manufacturing Agreement", "First Amendment to the VCPex License Agreement", "T3 and Veracity License Agreement" and "Patent License" means the agreement with those respective titles executed by Leadtek and Netergy prior to Closing.

1.1.3. "Benefit Plan" means each bonus, profit sharing, stock ownership, stock option, stock purchase, savings, stock bonus, paid time off, fringe benefit, vacation, sick leave, severance, disability, death benefit, hospitalization, medical, dental, life insurance, welfare benefit or other plan, program or arrangement (whether written or unwritten), in each case maintained or contributed to, or required to be maintained or contributed to, by Netergy or its Affiliates for the benefit of any directors, officers or employees of Netergy or its Affiliates.

1.1.4. "Business Employees" means the employees of Netergy employed in the Business. Specifically, the Business Employees are: Paul Ning, Raja Gobi, Mike Roper and Clifton Burnett.

1.1.5. "Business Records" means all books, records (including software records), ledgers and files or other similar information (in any form or medium) Related to the Business, including vendor lists, correspondence, sales promotion literature, invoices, brochures, records of operation, standard forms of documents, manuals of operations or business procedures, photographs, production data, purchasing materials and records, research and development files and materials relating to the Intellectual Property, data and laboratory books, accounting records, but excluding any such items to the extent (i) they are included in, or primarily related to, the Excluded Assets or Excluded Liabilities, (ii) any applicable Law prohibits their transfer or (iii) they are confidential personnel records.

1.1.6. "Closing" means the closing of the transactions described in Section 7.

1.1.7. "Code" means the U.S. Internal Revenue Code of 1986, as amended.

1.1.8. "Confidential Information" has the same meaning as that term is defined in the Confidentiality Agreement.

1.1.9. "Confidentiality Agreement" means the agreement between Netergy and Leadtek dated April 22, 2003.

1.1.10. "Contracts" means the agreements Related to the Business included in Schedule 2.1.3.

1.1.11. "Excluded Contracts" means (i) those contracts, agreements, arrangements, commitments, understandings and other instruments that are not specifically identified in Schedule 2.1.3 and (ii) those contracts, agreements, arrangements, commitments, understandings and other instruments that primarily relate to Excluded Assets or Excluded Liabilities.

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

1.1.13. "Governmental Body" means any nation or government, any state or other political subdivision thereof, any legislative, executive or judicial unit or instrumentality of any governmental entity (foreign, U.S. federal, state or local) or any department, commission, board, agency, bureau, official or other regulatory, administrative or judicial authority thereof, or any entity (including a court or self-regulatory organization) exercising executive, legislative, judicial, Tax, regulatory or administrative functions of or pertaining to government.

1.1.14. "IP Agreements" means the VCP & T2U Manufacturing License Agreement, the First Amendment to the VCPex License Agreement, the T3 and Veracity License Agreement and the Patent License.

1.1.15. "Law" means any law, statute, ordinance, rule, regulation, code, order, judgment, Tax ruling, injunction or decree of any Governmental Body.

1.1.16. "Licenses" means all licenses, agreements and other arrangements identified on Schedule 2.1.4 under which Netergy has the right to use any Proprietary Information of a Third Party to the extent Related to the Business.

1.1.17. "Material Adverse Change" or "Material Adverse Effect" means any change, effect, event, occurrence or state of facts that is, or is reasonably expected to be, materially adverse to the business, operations, assets, liabilities, condition (financial or other) or results of operations of the Business, taken as a whole, other than any change, effect, occurrence or state of facts (i) resulting from conditions in the United States or foreign economies or securities markets in general, (ii) resulting from conditions in the voice and video over Internet protocol communications system components industry in general and not specifically relating to the Business, (iii) directly resulting from the public announcement of the transactions contemplated by this Agreement or (iv) resulting from Leadtek's failure to consent to Netergy's request to take an action prohibited or omit to take any action required by Section 5.2.

1.1.18. "Nonassigned Licenses" means those licenses, agreements or other arrangements of Netergy or any of its Affiliates with respect to patents or any other Proprietary Information of any Third Party that are not specifically identified on Schedule 2.1.4.

1.1.19. "Person" means any individual, corporation, partnership, firm, association, joint venture, joint stock company, trust, unincorporated organization or other entity, or any Governmental Body.

1.1.20. "Principal Equipment" means computer hardware and (subject to Section 2.2.3(iii)) software, servers, machinery, equipment, tools, parts and other similar items Related to the Business (including any of the foregoing purchased subject to any conditional sales or title retention agreement in favor of any other Person) that are included in Schedule 2.1.1, but excluding any such items constituting Excluded Assets or Excluded Liabilities. Principal Equipment includes rights to the warranties received from the manufacturers, sellers and distributors of said items and to any related claims, credits, rights of recovery and setoff with respect to said items to the extent such rights are transferable.

1.1.21. "Proprietary Information" means works of authorship, inventions, discoveries, patentable subject matter, patents, patent applications, industrial models, industrial designs, trade secrets, trade secret rights, software, works, copyrightable subject matters, copyright rights and registrations, mask works, know-how and show-how, trademarks, trade names, service marks, emblems, logos, insignia and related marks and registrations, specifications, technical manuals and data, libraries, blueprints, drawings, proprietary processes, product information and development work-in-process.

1.1.22. "Related to the Business" means used, held for use as of the Effective Date or contemplated to be used by Netergy exclusively in the operation or conduct of the Business. Any item or matter that primarily relates to the Excluded Assets or Excluded Liabilities shall not be "Related to the Business" for purposes of this Agreement.

1.1.23. "Taxes" means all taxes of any kind, and all charges, fees, customs, levies, duties, imposts, required deposits or other assessments, including all net income, capital gains, gross income, gross receipt, property, franchise, sales, use, excise, withholding, payroll, employment, social security, worker's compensation, unemployment, occupation, capital stock, ad valorem, value added, transfer, gains, profits, net worth, asset, transaction, and other taxes, and any interest, penalties or additions to tax with respect thereto, imposed upon any Person by any taxing authority or other Governmental Body under applicable Law.

1.1.24. "Third Party" means any Person not an Affiliate of the other referenced Person or Persons.PURCHASE AND SALE OF THE BUSINESS

2.1. PURCHASED ASSETS. Subject to the terms and conditions of this Agreement and in reliance on the premises, mutual agreements, covenants and representations and warranties contained herein and in the Collateral Agreements, on the Closing Date, Netergy shall sell and transfer to Leadtek, and Leadtek shall purchase from Netergy for the Purchase Price all of the rights, title and interest in the properties and assets (other than the Excluded Assets) Related to the Business, as the same exists on the Effective Date and, without limiting the foregoing, on the Closing Date (collectively, the "Purchased Assets"), including all of the items in the following categories.

2.1.1. The Principal Equipment;

2.1.2. The Proprietary Information owned by Netergy that is being assigned to Leadtek hereunder as described in Exhibit 1 ("Intellectual Property");

2.1.3. The Contracts;

2.1.4. The Licenses;

2.1.5. Any rights licensed to Leadtek under the IP Agreements;

2.1.6. The Business Records;

2.2. EXCLUDED ASSETS. Notwithstanding the provisions of Section 2.1, it is hereby expressly acknowledged and agreed that the Purchased Assets shall not include, and Netergy is not selling to Leadtek, and Leadtek is not purchasing from Netergy the following (collectively, the "Excluded Assets"):

2.2.1. Any receivables, cash, cash equivalents, bank deposits or similar cash items or employee receivables of Netergy;

2.2.2. Any Proprietary Information of Netergy or any Affiliate of Netergy, other than the Intellectual Property and the rights licensed to Leadtek under the IP Agreements;

2.2.3. Any (i) confidential personnel and medical records pertaining to any Business Employee; (ii) books and records that Netergy or any Affiliate of Netergy is required by Law to retain; provided, however, that Netergy shall, and shall cause such Affiliate to, provide Leadtek with copies of any portions of such retained books and records that relate to the Business or that relate to any of the Purchased Assets; and (iii) information management system of Netergy or any of its Affiliates;

2.2.4. All "Netergy Microelectronics" marked sales and marketing or packaging materials, marked samples, prototypes and other similar Netergy identified sales and marketing or packaging materials;

2.2.5. The Excluded Contracts and the Nonassigned Licenses;

2.2.6. Leased equipment included in Schedule 2.2.7;

2.2.7. Any of Netergy's or its Affiliates' rights, claims or causes of action against Third Parties relating to the assets, properties, business or operations of Netergy arising out of transactions occurring prior to the Closing Date; and

2.2.8. All other assets, properties, interests and rights of Netergy or any Affiliate of Netergy not Related to the Business.

2.3. PURCHASE PRICE. In consideration of the sale and transfer by Netergy of the Purchased Assets to Leadtek, and in addition to assuming the Assumed Liabilities, Leadtek shall pay to Netergy, Two Million Three Hundred Seventy Five Thousand U.S. Dollars ($2,375,000.00) (the "Purchase Price") in cash by wire transfer of immediately available funds to an account designated by Netergy's written instructions to Leadtek according to the following schedule:

2.3.1. Fifty percent (50%) of the Purchase Price is due on the Closing Date;

2.3.2. Forty six percent (46%) of the Purchase Price is due at the earlier of August 31, 2003 or the date when the VIP-1 is taped out by ST for prototype manufacturing; and

2.3.3. Four percent (4%) of the Purchase Price is due upon receipt by Leadtek of the documentation described in Section 11.3.

2.4. ASSUMED LIABILITIES.

2.4.1. On the Closing Date, Leadtek shall execute and deliver to Netergy one or more Assumption Agreements or other Collateral Agreements pursuant to which Leadtek shall accept, assume and agree to pay, perform or otherwise discharge, in accordance with the respective terms and conditions thereof, the liabilities and obligations of Netergy pursuant to and under the Assumed Liabilities. "Assumed Liabilities" shall mean only the following liabilities and obligations with respect to the operations of the Business prior to the Closing Date (provided, however, that in no event shall the Assumed Liabilities include any Excluded Liabilities):

2.4.1.1. All liabilities expressly assumed by Leadtek pursuant to Section 5.2;

2.4.1.2. The liabilities and obligations (other than liabilities and obligations on account of breaches and violations that may continue beyond the Closing Date, including such liabilities and obligations necessary to cure, resolve or satisfy any actions relating to such breaches or violations) arising after the Closing Date under the Contracts, and the Licenses, except, in each case, for any and all liabilities or obligations accrued, or that should be or should have been accrued for in accordance with GAAP, applicable to the period prior to the Closing Date;

2.4.1.3. Any product warranty liabilities relating to, resulting from or arising out of products sold or consigned after the Closing Date; and

2.4.1.4. The obligations and liabilities incurred by Leadtek or any of its Affiliates or Subsidiaries with respect to the Transferred Employees, the Business or the Purchased Assets, known or unknown, absolute or contingent, arising after the Closing Date other than (i) as a result of events or circumstances occurring or existing on or prior to the Closing Date and (ii) obligations and liabilities expressly retained by Netergy pursuant to Sections 2.5 and 5.2.

2.5. EXCLUDED LIABILITIES. Notwithstanding the provisions of Sections 2.4 and 5.1 or any other provision hereof or any Schedule or Exhibit hereto, and regardless of any disclosure to Leadtek, Leadtek shall not assume or be obligated to pay, perform or otherwise discharge (and Netergy shall retain, pay and perform without recourse whatsoever to Leadtek) any liabilities, obligations or commitments of Netergy or any Affiliate of Netergy, whether direct or indirect, known or unknown, absolute or contingent other than the Assumed Liabilities (all of such liabilities, obligations and commitments not so assumed by Leadtek being referred to herein as the "Excluded Liabilities").

2.6. FURTHER ASSURANCES; FURTHER CONVEYANCES AND ASSUMPTIONS; CONSENT OF THIRD PARTIES

2.6.1. From time to time before on or after the Closing Date, Netergy and Leadtek shall, and shall cause their respective Affiliates to, take such further actions to assure Leadtek that all of the properties, rights, titles, interests, estates, remedies, powers and privileges intended to be conveyed to Leadtek under this Agreement and the Collateral Agreements are so provided and to assure fully to Netergy and its Affiliates, and their respective successors and assigns, the assumption of the liabilities and obligations intended to be assumed by Leadtek under this Agreement and the Collateral Agreements including (i) transferring back to Netergy any asset or liability not contemplated by this Agreement to be a Purchased Asset or an Assumed Liability, respectively, which asset or liability was transferred to Leadtek at the Closing and (ii) transferring to Leadtek any asset or liability contemplated by this Agreement to be a Purchased Asset or an Assumed Liability, respectively, which asset or liability was not transferred to Leadtek at the Closing).

2.6.2. Nothing in this Agreement or the Collateral Agreements nor the consummation of the transactions contemplated hereby or thereby shall be construed as an attempt or agreement to assign any Purchased Asset, including any Contract, License, Business Record, certificate, approval, authorization or other right, that by its terms or by Law is not capable of being sold, assigned, licensed, sublicensed, transferred, delivered or subleased without the consent or waiver of a Third Party or a Governmental Body or is cancelable, in whole or material part, by such Person in the event of any such sale, assignment, license, sublicense, transfer or delivery ("Nonassignable Assets") unless and until such consent or waiver shall be given.

2.6.3. Leadtek shall use its reasonable best efforts to assist and cooperate with Netergy to seek to obtain any consent, substitution, approval or amendment required to novate or assign all obligations under any and all Contracts or other obligations or liabilities that constitute Assumed Liabilities or to seek to obtain in writing the unconditional release of Netergy and its Affiliates so that, in any such case where a novation or assignment is obtained, Leadtek and its Affiliates shall be solely responsible for such liabilities and obligations after the Closing Date.

2.7. NO LICENSES. Unless expressly set forth in the Collateral Agreements, no title, right or license of any kind is granted to Leadtek pursuant to this Agreement with respect to Netergy's or any of its Affiliate's Proprietary Information, either directly or indirectly, by implication, by estoppel or otherwise.Representations and Warranties of Netergy . Netergy represents and warrants to Leadtek as follows:

3.1. Organization and Qualification. As of the Closing Date, Netergy is a corporation duly organized, validly existing and in good standing under the Laws of its jurisdiction of incorporation and has all requisite corporate power and authority to carry on the Business as currently conducted and to own or lease and operate the Purchased Assets.

3.2. AUTHORIZATION; BINDING EFFECT

3.2.1. Netergy has all requisite corporate power and authority to execute and deliver this Agreement and the Collateral Agreements to which it will be a party and to affect the transactions contemplated hereby and thereby, and the execution, delivery and performance of this Agreement and the Collateral Agreements to which it will be a party have been duly authorized by all requisite corporate action.

3.2.2. This Agreement has been duly executed and delivered by Netergy and this Agreement is, and the Collateral Agreements to which Netergy will be a party, when duly executed and delivered by Netergy, will be, valid and legally binding obligations of Netergy, enforceable against Netergy in accordance with their respective terms.

3.3. NON-CONTRAVENTION; CONSENTS

3.3.1. Assuming that all Netergy Required Consents have been obtained or made, the execution, delivery and performance of this Agreement by Netergy, and the Collateral Agreements by Netergy, and the consummation of the transactions contemplated hereby and thereby, do not and will not: (i) result in a breach or violation of any provision of the charter, by-laws or similar organizational document of Netergy; (ii) violate in any material respect or result in a material breach of or constitute an occurrence of a material default under any provision of, result in the acceleration or cancellation of any material obligation under, or give rise to a right by any party to terminate or amend in any material respect its material obligations under any lease, agreement, instrument, order, judgment, decree or other arrangement or commitment to which Netergy is a party or by which it is bound or which is Related to the Business or relates to the Purchased Assets; or (iii) violate in any material respect any material Law of any Governmental Body having jurisdiction over Netergy or the Purchased Assets.

3.3.2. No consent, approval, order or authorization of, or registration, declaration or filing with, any Person or any Governmental Body is required to be obtained by Netergy or any Affiliate of Netergy in connection with the execution and delivery of this Agreement and the Collateral Agreements to which Netergy will be a party or for the sale of the Purchased Assets and the consummation by Netergy of the transactions contemplated hereby or thereby, except for (i) consents or approvals of Third Parties that are required to transfer or assign to Leadtek any material Purchased Asset or assign the benefits of or delegate performance with regard thereto, as set forth in Schedule 3.3.2 ...