Exhibit 10.1

 

Execution Copy

 

 

ASSET PURCHASE AGREEMENT

 

 

dated as of

 

 

March 10, 2006

 

 

between

 

 

DATAWATCH CORPORATION

 

 

and

 

 

CLEARSTORY SYSTEMS, INC.

 

 

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TABLE OF CONTENTS

 

 

 

PAGE

ARTICLE I

DEFINITIONS

1

 

 

 

 

1.01

Definitions

1

 

 

 

 

ARTICLE II

PURCHASE AND SALE

5

 

 

 

 

2.01

Purchase and Sale

5

 

2.02

Excluded Assets

6

 

2.03

Assumption of Liabilities

6

 

2.04

Excluded Liabilities

7

 

2.05

Assignment of Contracts and Rights

7

 

2.06

Purchase Price; Closing

8

 

2.07

Earnout Payments

9

 

2.08

Allocation of Purchase Price

12

 

 

 

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF SELLER

12

 

 

 

 

 

3.01

Corporate Existence and Power

12

 

3.02

Corporate Authorization

13

 

3.03

Governmental Authorization; Consents

13

 

3.04

Non-Contravention

13

 

3.05

Financial Statements

13

 

3.06

Absence of Certain Changes

14

 

3.07

Personal Property

15

 

3.08

Sufficiency of Purchased Assets

16

 

3.09

Title to Purchased Assets

16

 

3.10

Litigation

16

 

3.11

Material Contracts

16

 

3.12

Technology and Intellectual Property

17

 

3.13

Insurance Coverage

19

 

3.14

Compliance with Laws

20

 

3.15

Employees

20

 

3.16

Environmental Compliance

22

 

3.17

Customers and Suppliers

22

 

3.18

Transactions with Affiliates; Intercompany Arrangements

22

 

3.19

Finders’ Fees

22

 

3.20

Other Information

23

 

 

 

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF BUYER

23

 

 

 

 

 

4.01

Organization and Existence

23

 

4.02

Corporate Authorization

23

 

4.03

Governmental Authorization

23

 

4.04

Non-Contravention

23

 

4.05

Litigation

23

 

4.06

Finders’ Fees

23

 

4.07

Financing

24

 

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ARTICLE V

COVENANTS OF SELLER

24

 

 

 

 

 

5.01

Conduct of the Business

24

 

5.02

Access to Information

24

 

5.03

Notices of Certain Events; Continuing Disclosure

25

 

5.04

Noncompetition

25

 

5.05

Trademarks; Tradenames

26

 

5.06

Information Statement

26

 

5.07

Shareholder Approval

27

 

5.08

No-Shop Provision

27

 

5.09

Delivery of Financial Statements

28

 

5.10

Billing

28

 

 

 

 

ARTICLE VI

COVENANTS OF BUYER

29

 

 

 

 

 

6.01

Certain Obligations With Respect to the Operation of the Business

29

 

6.02

Post-Closing Transition

29

 

6.03

Seller License Agreement

29

 

6.04

Audit Fees

29

 

6.05

Application of Cash Receipts

30

 

 

 

 

ARTICLE VII

COVENANTS OF BOTH PARTIES

30

 

 

 

 

 

7.01

Confidentiality

30

 

7.02

Further Assurances

31

 

7.03

Certain Filings

31

 

7.04

Public Announcements

31

 

7.05

Information Requests

32

 

 

 

 

ARTICLE VIII

TAX MATTERS

32

 

 

 

 

 

8.01

Tax Definitions

32

 

8.02

Tax Matters

32

 

8.03

Tax Cooperation; Allocation of Taxes

34

 

 

 

 

ARTICLE IX

EMPLOYEE BENEFITS

35

 

 

 

 

 

9.01

Employee Benefits Definitions

35

 

9.02

ERISA Representations

36

 

9.03

Employees and Offers of Employment

37

 

9.04

Seller’s Employee Benefit Plans

38

 

9.05

No Third Party Beneficiaries

38

 

 

 

 

ARTICLE X

CONDITIONS TO CLOSING

39

 

 

 

 

 

10.01

Conditions to the Obligations of Each Party

39

 

10.02

Conditions to Obligation of Buyer

39

 

10.03

Conditions to Obligations of Seller

40

 

 

 

 

ARTICLE XI

SURVIVAL; INDEMNIFICATION

40

 

 

 

 

 

11.01

Survival

40

 

ii

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11.02

Indemnification

41

 

11.03

Limitation of Indemnification

42

 

11.04

Procedures

42

 

11.05

Exclusive Remedy

43

 

 

 

 

ARTICLE XII

TERMINATION

43

 

 

 

 

 

12.01

Grounds for Termination

43

 

12.02

Effect of Termination

43

 

 

 

 

ARTICLE XIII

MISCELLANEOUS

44

 

 

 

 

 

13.01

Notices

44

 

13.02

Amendments; No Waivers

44

 

13.03

Expenses

45

 

13.04

Successors and Assigns

45

 

13.05

Governing Law

45

 

13.06

Counterparts; Effectiveness

45

 

13.07

Entire Agreement

45

 

13.08

Bulk Sales Laws

45

 

13.09

Captions

45

 

13.10

Jurisdiction

45

 

iii

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Exhibits

 

 

 

 

 

 

Exhibit A

— Form of Assignment and Assumption Agreement

 

Exhibit B

— Trademark License Agreement

 

Exhibit C

— Shareholder Consent

 

Exhibit D

— Seller License Agreement

 

Exhibit E

— Press Release

 

Exhibit E-1

— Press Release

 

Exhibit F

— Legal Opinion

 

 

Schedules

 

 

 

 

 

 

Schedule 1.01

Infrastructure Software

 

Schedule 2.01(d)

Prepaid Expenses and Deposits

 

Schedule 2.03

Assumed Liabilities

 

Schedule 2.03(a)

Deferred Revenue

 

Schedule 2.03(e)

Accrued Vacation

 

Schedule 2.07(b)

List Prices- ClearStory Products

 

Schedule 3.03

Required Consents

 

Schedule 3.05

Financial Statements of the Business

 

Schedule 3.06

Ordinary Course

 

Schedule 3.07

Personal Property

 

Schedule 3.08

Sufficiency of Assets

 

Schedule 3.09

Title to Purchased Assts

 

Schedule 3.11

Material Contracts

 

 

•     Third Party Agreements

 

 

•      Vendor Contracts

 

 

•      VAR Agreements

 

 

•      Customer License Agreements

 

Schedule 3.11(a)(iii)

Maintenance Contracts

 

 

•      Maintenance Contracts Provided

 

Schedule 3.11(a)(v)

Indebtedness for Borrowed Money

 

Schedule 3.11(a)(vii)

Source Code Escrow

 

Schedule 3.12(a)(i)

Intellectual Property - Trademarks

 

Schedule 3.12(a)(ii)

Intellectual Property – Product and Services

 

Schedule 3.12(a)(iii)

Intellectual Property - Product and Services - Licensed

 

Schedule 3.12 (b)(i)

Intellectual Property – Licensed Technology Owned

 

Schedule 3.12 (b)(i)

Intellectual Property – Licensed Technology Licensed

 

Schedule 3.12(c)

Intellectual Property – Licensed Technology with 3rd Party Obligation

 

Schedule 3.12(e)

Intellectual Property – Third Parties with Rights to Owned Intellectual Property

 

Schedule 3.12(h)

Intellectual Property – Publicly Available Software

 

Schedule 3.13

Insurance

 

Schedule 3.14(b)

Permits

 

iv

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Schedule 3.15

Employees

 

Schedule 3.15(b)

Consultants & Independent Contractors

 

Schedule 3.15(d)

Employee Agreements

 

Schedule 3.15(e)

Employee Terminations

 

Schedule 3.15(f)

Severance Policy

 

Schedule 5.11

Customer Overpayments

 

Schedule 8.02(a)

Taxes Being Contested

 

Schedule 8.02(c)

Taxes – Grounds for Assessment Against Buyer

 

Schedule 8.02(f)

Tax Jurisdictions

 

Schedule 9.02

Employee Benefit Plans

 

Schedule 9.03

Employees

 

v

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ASSET PURCHASE AGREEMENT

 

AGREEMENT dated as of March 10, 2006 between DATAWATCH CORPORATION a Delaware
corporation (“Buyer”), and CLEARSTORY SYSTEMS, INC., a Delaware corporation
(“Seller”).

 

RECITALS:

 

WHEREAS, Seller conducts a business (the “Business”) known as ClearStory
Systems, Inc., Document Solutions, a business unit of the Seller that designs,
manufactures and markets products which include Radiant Business Document Server
and Radiant MailManager; and

 

WHEREAS, Buyer desires to purchase substantially all of the assets and to assume
certain of the liabilities 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;

 

NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements herein contained, the parties hereto agree
as follows:

 

ARTICLE I

 

DEFINITIONS

 

1.01        DEFINITIONS.

 

(A)           THE FOLLOWING TERMS, AS USED HEREIN, HAVE THE FOLLOWING MEANINGS:

 

“Accounting Convention” means the accounting policies and procedures of Seller
used to prepare the Financial Statements and described in Seller’s Annual Report
on Form 10-KSB for the fiscal year ended March 31, 2005.

 

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

 

“Ancillary Agreements” means the Assignment and Assumption Agreement, Bill of
Sale, Trademark License Agreement, Seller License Agreement, each in the form
attached hereto.

 

“Balance Sheet” means the unaudited balance sheet of the Business as of
December 31, 2005 found in Schedule 3.05.

 

“Balance Sheet Date” means December 31, 2005.

 

“Business Intellectual Property” means all Intellectual Property that is owned
or held by or on behalf of Seller for use, or that is being, and/or has been,
used, or is currently under development for use, in the Business as it has been,
is currently or is currently planned to be conducted.

 

--------------------------------------------------------------------------------

 

“Closing Date” means the date of the Closing.

 

“Deferred Revenue” means (i) contracts for maintenance services that, as of the
date of determination, are invoiced, but not yet recognized as revenue and
(ii) amounts under contracts for consulting services that, as of the date of
determination, have been billed but not yet recognized as revenue as a result of
an ongoing obligation to perform services and, in all events, shall be
calculated in accordance with the methodologies set forth on Schedule 1.01(a)
hereto. For greater clarity, Deferred Revenue does not include customer
overpayments that have been retained by the Seller.

 

“Infrastructure Software” means the Seller’s time tracking software, call
logging software, and internally used third party financial, network related and
desktop software products, as listed on Schedule 1.01(b).

 

“Intellectual Property” means all tangible or intangible proprietary information
and materials, including without limitation:

 

(B)           (I) ALL INVENTIONS (WHETHER PATENTABLE OR UNPATENTABLE AND WHETHER
OR NOT REDUCED TO PRACTICE), ALL IMPROVEMENTS THEREON, AND ALL PATENTS, PATENT
APPLICATIONS AND PATENT DISCLOSURES, TOGETHER WITH ALL REISSUANCES,
CONTINUATIONS, CONTINUATIONS-IN-PART, DIVISIONS, REVISIONS, EXTENSIONS AND
RE-EXAMINATIONS THEREOF, (II) ALL TRADEMARKS, SERVICES MARKS, TRADE DRESS,
LOGOS, TRADE NAMES, DOMAIN NAMES, AND CORPORATE NAMES, TOGETHER WITH ALL
TRANSLATIONS, ADAPTATIONS, DERIVATIONS AND COMBINATIONS THEREOF AND INCLUDING
ALL GOODWILL ASSOCIATED THEREWITH, AND ALL APPLICATIONS, REGISTRATIONS AND
RENEWALS IN CONNECTION THEREWITH, (III) ALL COPYRIGHTS AND ALL APPLICATIONS,
REGISTRATIONS AND RENEWALS IN CONNECTION THEREWITH, (IV) ALL MASK WORKS AND ALL
APPLICATIONS, REGISTRATIONS AND RENEWALS IN CONNECTION THEREWITH, (V) ALL TRADE
SECRETS AND CONFIDENTIAL BUSINESS INFORMATION (INCLUDING IDEAS, RESEARCH AND
DEVELOPMENT, KNOW-HOW, FORMULAS, COMPOSITIONS, MANUFACTURING AND PRODUCTION
PROCESS AND TECHNIQUES, METHODS, SCHEMATICS, TECHNOLOGY, TECHNICAL DATA,
DESIGNS, DRAWINGS, FLOWCHARTS, BLOCK DIAGRAMS, SPECIFICATIONS, CUSTOMER AND
SUPPLIER LISTS, PRICING AND COST INFORMATION AND BUSINESS AND MARKETING PLANS
AND PROPOSALS), AND (VI) ALL SOFTWARE AND FIRMWARE (INCLUDING DATA, DATABASES
AND RELATED DOCUMENTATION);

 

(C)           ALL DOCUMENTS, RECORDS AND FILES RELATING TO DESIGN, END USER
DOCUMENTATION, MANUFACTURING, QUALITY CONTROL, SALES, MARKETING OR CUSTOMER
SUPPORT FOR, AND TANGIBLE EMBODIMENTS OF, ALL INTELLECTUAL PROPERTY DESCRIBED
HEREIN; AND

 

(D)           ALL LICENSES, AGREEMENTS AND OTHER RIGHTS IN ANY THIRD PARTY
PRODUCT OR ANY THIRD PARTY INTELLECTUAL PROPERTY DESCRIBED IN (A) AND (B) ABOVE
OTHER THAN ANY “OFF-THE-SHELF” THIRD PARTY SOFTWARE OR RELATED INTELLECTUAL
PROPERTY.

 

“Lien” means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest, restriction or encumbrance of any kind in respect of such
asset.

 

“Material Adverse Change” means a material adverse change in the business,
assets, financial condition, or results of operations of Seller or the Business
taken as a whole;

 

2

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provided, however, that none of the following shall be deemed by itself or by
themselves, either alone or in combination, to constitute a Material Adverse
Change:  (a) any change in the market price or trading volume of Seller’s common
stock; (b) any adverse effect on the bookings, revenues, gross margins or
earnings of the Seller, or any delay in or reduction or cancellation of orders
of the Seller’s products, following execution of this Agreement which is
primarily attributable to the announcement of the execution of this Agreement
and the transactions contemplated hereby; (c) any change arising out of
conditions affecting the economy or industry of the Seller in general which does
not affect the Seller in a materially disproportionate manner relative to other
participants in the economy or such industry, respectively; (d) employee
attrition which is primarily attributable to the announcement of the execution
of this Agreement and the transactions contemplated hereby or (e) any short-term
adverse change in the Seller’s revenues, gross margins or earnings (including
any short-term delay in, or reduction or cancellation of, orders of the Seller’s
products), except for such changes as in the aggregate would be reasonably
expected to have (in light of all relevant facts and circumstances) a material
adverse impact on the Seller’s earnings power over a commercially reasonable
period of time (which period of time shall not be less than one year).

 

“Material Adverse Effect” means a material adverse effect on the business,
assets, financial condition, or results of operations of Seller or the Business
taken as a whole; provided, however, that none of the following shall be deemed
by itself or by themselves, either alone or in combination, to constitute a
Material Adverse Effect:  (a) any change in the market price or trading volume
of Seller’s common stock; (b) any adverse effect on the bookings, revenues,
gross margins or earnings of the Seller, or any delay in or reduction or
cancellation of orders of the Seller’s products, following execution of this
Agreement which is primarily attributable to the announcement of the execution
of this Agreement and the transactions contemplated hereby; (c) any change
arising out of conditions affecting the economy or industry of the Seller in
general which does not affect the Seller in a materially disproportionate manner
relative to other participants in the economy or such industry, respectively;
(d) employee attrition which is primarily attributable to the announcement of
the execution of this Agreement and the transactions contemplated hereby or
(e) any short-term adverse change in the Seller’s revenues, gross margins or
earnings (including any short-term delay in, or reduction or cancellation of,
orders of the Seller’s products), except for such changes as in the aggregate
would be reasonably expected to have (in light of all relevant facts and
circumstances) a material adverse impact on the Seller’s earnings power over a
commercially reasonable period of time (which period of time shall not be less
than one year).

 

“Permitted Lien” means (i) mechanic’s and other similar statutory liens that are
not material in nature or amount, and (ii) liens for Taxes or other governmental
charges not yet due and payable or due but not delinquent or that are being
contested in good faith.

 

“Person” means an individual, corporation, partnership, association, trust or
other entity or organization, including a government or political subdivision or
an agency or instrumentality thereof.

 

3

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“to Seller’s Knowledge”, “Known to Seller” and words of similar import means the
knowledge of Seller and the knowledge of each of Seller’s officers or directors.

 

(E)           EACH OF THE FOLLOWING TERMS IS DEFINED IN THE SECTION SET FORTH
OPPOSITE SUCH TERM: 

 

Term

 

Section

 

 

 

Accounting Referee

 

2.07

Acquiror

 

5.04

Acquisition Proposal

 

5.08

Allocation Statement

 

2.08

Apportioned Obligation

 

8.03

Assumed Liabilities

 

2.03

Benefit Arrangement

 

9.01

Business

 

Recitals

Business Sale Event

 

2.07

Business Third Party Claim

 

11.02

Buyer Benefit Plans

 

9.03

Buyer Sale Event

 

2.07

Closing

 

2.06

Code

 

8.01

Commission

 

5.06

Contracts

 

2.01

Conveyance Documents

 

2.06

COBRA

 

9.03

COBRA Coverage

 

9.04

Damage

 

11.02

Earnout Payment

 

2.07

Earnout Payment Value

 

2.07

Earnout Period

 

2.07

Employee

 

9.01

Employee Plan

 

9.01

Environmental Laws

 

3.16

ERISA

 

9.01

Excluded Assets

 

2.02

Excluded Contracts

 

2.01

Excluded Liabilities

 

2.04

Financial Statements

 

3.05(a)

Hazardous Materials

 

3.16

Hired Employees

 

9.03

Holdback

 

2.06

Indemnified Party

 

11.04

Indemnifying Party

 

11.04

Information Statement

 

5.06

Initial Cash Payment

 

2.06

Initial Earnout Due Date

 

2.07

Initial Earnout Payment

 

2.07

Interested Person

 

3.18

Maintenance Agreements

 

3.11

Objection Notice

 

2.07

Owned Intellectual

 

3.12

Permit

 

3.14

Personal Property

 

3.07

Post-Closing Tax Period

 

8.01

Pre-Closing Tax Period

 

8.01

Purchased Assets

 

2.01

Purchase Price

 

2.06

Required Consent

 

3.03

Seller License Agreement

 

6.03

Tax

 

8.01

Tax Return

 

8.01

Transferred Employee

 

9.01

WARN Act

 

9.03

 

4

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ARTICLE II

 

PURCHASE AND SALE

 

2.01        PURCHASE AND SALE. UPON THE TERMS AND SUBJECT TO THE CONDITIONS OF
THIS AGREEMENT, BUYER AGREES TO PURCHASE FROM SELLER AND SELLER AGREES TO SELL,
TRANSFER, ASSIGN AND DELIVER, OR CAUSE TO BE SOLD, TRANSFERRED, ASSIGNED AND
DELIVERED, TO BUYER AT CLOSING ALL OF SELLER’S RIGHT, TITLE AND INTEREST IN THE
FOLLOWING ASSETS OF THE BUSINESS, AS LISTED BELOW (THE “PURCHASED ASSETS”):

 

(A)           THE PERSONAL PROPERTY AND INTERESTS THEREIN USED BY SELLER OR HELD
BY SELLER FOR USE IN CONNECTION WITH THE BUSINESS, INCLUDING EQUIPMENT,
FURNITURE, OFFICE EQUIPMENT, AND COMMUNICATIONS EQUIPMENT, AS LISTED ON
SCHEDULE 3.07;

 

(B)           ALL RAW MATERIALS, WORK-IN-PROCESS, FINISHED GOODS, SUPPLIES AND
OTHER INVENTORIES, WHEREVER SITUATED USED BY SELLER OR HELD BY SELLER FOR USE IN
CONNECTION WITH THE BUSINESS;

 

(C)           ALL RIGHTS UNDER ALL CONTRACTS, AGREEMENTS, LICENSES, COMMITMENTS,
SALES AND PURCHASE ORDERS AND OTHER INSTRUMENTS USED BY SELLER OR HELD BY SELLER
FOR USE IN CONNECTION WITH THE BUSINESS, AS LISTED ON SCHEDULE 3.11 OTHER THAN
CONTRACTS AND SUCH OTHER DOCUMENTS INDICATED THEREON AS “EXCLUDED CONTRACTS”
(THE “EXCLUDED CONTRACTS”) BUT INCLUDING ANY CONTRACT OR OTHER DOCUMENT WHICH
WOULD BE LISTED ON SCHEDULE 3.11 BUT FOR ANY DOLLAR LIMITATION CONTAINED IN
SECTION 3.11 (COLLECTIVELY, THE “CONTRACTS”);

 

(D)           ALL PREPAID EXPENSES AND DEPOSITS USED BY SELLER OR HELD BY SELLER
FOR USE IN CONNECTION WITH THE BUSINESS, INCLUDING WITHOUT LIMITATION THE ITEMS
SET FORTH ON SCHEDULE 2.01(D);

 

(E)           ALL OF SELLER’S RIGHTS, CLAIMS, CREDITS, CAUSES OF ACTION OR
RIGHTS OF SET-OFF AGAINST THIRD PARTIES RELATING TO THE BUSINESS, INCLUDING,
WITHOUT LIMITATION, UNLIQUIDATED RIGHTS UNDER MANUFACTURERS’ AND VENDORS’
WARRANTIES;

 

(F)            ALL OF THE BUSINESS INTELLECTUAL PROPERTY, EXCEPT FOR THE
INFRASTRUCTURE SOFTWARE AND ANY OTHER BUSINESS INTELLECTUAL PROPERTY EXPRESSLY
IDENTIFIED AS AN EXCLUDED ASSET UNDER SECTION 2.02 BELOW, INCLUDING WITHOUT
LIMITATION THE ITEMS LISTED ON SCHEDULE 3.12;

 

(G)           ALL TRANSFERABLE LICENSES, PERMITS OR OTHER GOVERNMENTAL
AUTHORIZATIONS AFFECTING, OR RELATING IN ANY WAY TO, THE BUSINESS, INCLUDING
WITHOUT LIMITATION THE ITEMS LISTED ON SCHEDULE 3.03;

 

(H)           ALL BOOKS, RECORDS, FILES AND PAPERS, WHETHER IN HARD COPY OR
COMPUTER FORMAT USED BY SELLER OR HELD BY SELLER FOR USE IN CONNECTION WITH THE
BUSINESS, INCLUDING, WITHOUT LIMITATION, ENGINEERING INFORMATION, SALES AND
PROMOTIONAL LITERATURE, MANUALS AND DATA, SALES AND PURCHASE CORRESPONDENCE,
LISTS OF PRESENT AND FORMER SUPPLIERS, LISTS OF PRESENT AND FORMER CUSTOMERS,
ALL CALL-IN, TRACKING, WARRANTY AND OTHER INFORMATION RELATING TO THE
RELATIONSHIP

 

5

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BETWEEN THE SELLER AND ITS CUSTOMERS, PERSONNEL AND EMPLOYMENT RECORDS (TO THE
EXTENT THE SAME MAY BE TRANSFERRED OR ASSIGNED UNDER APPLICABLE LAW), AND ALL
INFORMATION RELATING TO TAXES IMPOSED ON OR WITH RESPECT TO THE BUSINESS; AND

 

(I)            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.

 

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;

 

(B)           ANY PURCHASED ASSETS SOLD OR OTHERWISE DISPOSED OF IN THE ORDINARY
COURSE OF OPERATION OF THE BUSINESS AND NOT IN VIOLATION OF ANY PROVISIONS OF
THIS AGREEMENT DURING THE PERIOD FROM THE DATE HEREOF UNTIL THE CLOSING DATE;

 

(C)           ALL INFRASTRUCTURE SOFTWARE;

 

(D)           ALL ACCOUNTS, NOTES AND OTHER RECEIVABLES USED BY SELLER OR HELD
BY SELLER FOR USE IN CONNECTION WITH THE BUSINESS;

 

(E)           EXCEPT AS SET FORTH ON SCHEDULE 5.05, ANY AND ALL INTELLECTUAL
PROPERTY RIGHTS IN AND TO THE NAME “CLEARSTORY”; AND

 

(F)            ALL ASSETS OF SELLER THAT ARE NOT PURCHASED ASSETS.

 

2.03        ASSUMPTION OF LIABILITIES. UPON THE TERMS AND SUBJECT TO THE
CONDITIONS OF THIS AGREEMENT, BUYER AGREES, EFFECTIVE AT THE CLOSING, TO ASSUME
THE FOLLOWING LIABILITIES (THE “ASSUMED LIABILITIES”):

 

(A)           ALL LIABILITIES AND OBLIGATIONS OF SELLER ARISING UNDER THE
CONTRACTS (OTHER THAN LIABILITIES OR OBLIGATIONS ATTRIBUTABLE TO ANY FAILURE BY
SELLER TO COMPLY WITH THE TERMS THEREOF EXCEPT (I) TO THE EXTENT RESERVED FOR IN
THE SELLER’S FINANCIAL STATEMENTS AND SPECIFICALLY DISCLOSED TO BUYER, (II) FOR
OBLIGATIONS OF SELLER UNDER WARRANTY CLAIMS OR EXPENSES ASSUMED UNDER
SECTION 2.03(B) OR (III) AS SPECIFICALLY IDENTIFIED ON SCHEDULE 2.03(A))
INCLUDING, WITHOUT LIMITATION OBLIGATIONS ASSOCIATED WITH DEFERRED REVENUE;

 

(B)           ALL WARRANTY CLAIMS OR EXPENSES OF SELLER IN RESPECT OF PRODUCTS
SOLD OR SERVICES RENDERED BY THE BUSINESS THROUGH THE CLOSING DATE, BUT ONLY TO
THE EXTENT OF THE RESERVE THEREFOR SHOWN ON THE BALANCE SHEET AND ANY AMOUNTS
PROPERLY ACCRUED SINCE THE BALANCE SHEET DATE;

 

(C)           SELLER’S OBLIGATION TO PROVIDE VACATION TIME AND VACATION PAY TO
THE TRANSFERRED EMPLOYEES AS LISTED ON SCHEDULE 2.03(C), AND FOR LIABILITIES FOR
VACATION TIME AND VACATION PAY PROPERLY ACCRUED THROUGH THE CLOSING DATE.

 

6

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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 AFFILIATE OF SELLER (OR ANY PREDECESSOR OWNER OF ALL OR PART OF
ITS BUSINESS AND ASSETS) OF WHATEVER NATURE WHETHER PRESENTLY IN EXISTENCE OR
ARISING OR ASSERTED HEREAFTER. ALL SUCH OTHER LIABILITIES AND OBLIGATIONS SHALL
BE RETAINED BY AND REMAIN OBLIGATIONS AND LIABILITIES OF SELLER OR ITS
AFFILIATES (ALL SUCH LIABILITIES AND OBLIGATIONS NOT BEING ASSUMED BEING HEREIN
REFERRED TO AS THE “EXCLUDED LIABILITIES”). WITHOUT LIMITING THE FOREGOING, NONE
OF THE FOLLOWING SHALL BE ASSUMED LIABILITIES FOR THE PURPOSES OF THIS
AGREEMENT:

 

(A)           ANY AND ALL LIABILITIES AND OBLIGATIONS OF SELLER FOR TAXES,
(INCLUDING ANY TAXES THAT ARISE AS A RESULT OF THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT), EXCEPT AS PROVIDED FOR BY SECTION 8.03(C);

 

(B)           EXCEPT TO THE EXTENT PROVIDED IN ARTICLE VIII AND SECTION 2.03(C),
ANY LIABILITIES OR OBLIGATIONS RELATING TO EMPLOYEE BENEFITS OR COMPENSATION
ARRANGEMENTS EXISTING AS OF THE END OF THE DAY ON THE DAY IMMEDIATELY PRECEDING
THE CLOSING DATE, INCLUDING, WITHOUT LIMITATION, ANY LIABILITIES OR OBLIGATIONS
UNDER ANY OF SELLER’S EMPLOYEE BENEFIT AGREEMENTS, PLANS OR OTHER ARRANGEMENTS
LISTED ON SCHEDULE 9.02;

 

(C)           ANY CLAIMS FOR REFUNDS BASED ON ANY WARRANTY, EXPRESS OR IMPLIED,
FOR PRODUCTS OR SERVICES PROVIDED TO THE EXTENT NOT RESERVED THEREFOR ON THE
BALANCE SHEET OR NOT PROPERLY ACCRUED SINCE THE BALANCE SHEET DATE;

 

(D)           ANY ENVIRONMENTAL LIABILITIES;

 

(E)           ANY AMOUNTS OWING TO BENEFACTOR FUNDING CORP.;

 

(F)            ANY LIABILITY OR OBLIGATION RELATING TO AN EXCLUDED ASSET; AND

 

(G)           ANY LIABILITY OR OBLIGATION RELATING TO OR ARISING UNDER ANY
EXCLUDED CONTRACT.

 

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 AN ATTEMPTED ASSIGNMENT THEREOF, WITHOUT
CONSENT OF A THIRD PARTY THERETO, WOULD CONSTITUTE A BREACH OR OTHER
CONTRAVENTION THEREOF OR IN ANY WAY ADVERSELY AFFECT THE RIGHTS OF BUYER OR
SELLER THEREUNDER. SELLER AND BUYER WILL USE THEIR BEST 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 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 OR BUYER 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
SUBCONTRACTING, SUB-LICENSING, OR SUBLEASING TO BUYER, OR UNDER WHICH SELLER
WOULD ENFORCE FOR THE BENEFIT OF BUYER, WITH BUYER ASSUMING SELLER’S

 

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OBLIGATIONS, ANY AND ALL RIGHTS OF SELLER AGAINST A THIRD PARTY THERETO. SELLER
WILL 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
SECTION 2.06(B).

 

2.06        PURCHASE PRICE; CLOSING.

 

(A)           THE PURCHASE PRICE FOR THE PURCHASED ASSETS (THE “PURCHASE PRICE”)
IS (I) $4,340,000 IN CASH, SUBJECT TO ADJUSTMENT AS PROVIDED IN SECTION 2.06(C)
(AS ADJUSTED, THE “INITIAL CASH PAYMENT”), (II) THE EARNOUT PAYMENTS AND
(III) THE ASSUMPTION OF THE ASSUMED LIABILITIES.

 

(B)           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 CHOATE, HALL & STEWART LLP, BOSTON, MASSACHUSETTS
AS SOON AS POSSIBLE, BUT IN NO EVENT LATER THAN TWO BUSINESS DAYS AFTER
SATISFACTION OF THE CONDITIONS SET FORTH IN ARTICLE X, OR AT SUCH OTHER TIME OR
PLACE AS BUYER AND SELLER MAY AGREE. AT THE CLOSING,

 

(I)            BUYER SHALL PAY TO SELLER THE INITIAL CASH PAYMENT BY WIRE
TRANSFER IN IMMEDIATELY AVAILABLE FUNDS TO AN ACCOUNT MAINTAINED BY SELLER, SUCH
ACCOUNT TO BE DESIGNATED BY SELLER BY WRITTEN NOTICE TO BUYER NOT LATER THAN TWO
BUSINESS DAYS PRIOR TO THE CLOSING DATE.

 

(II)           SELLER AND BUYER SHALL ENTER INTO AN ASSIGNMENT AND ASSUMPTION
AGREEMENT SUBSTANTIALLY IN THE FORM ATTACHED HERETO AS EXHIBIT A, AND SELLER
SHALL DELIVER TO BUYER SUCH DEEDS, BILLS OF SALE, ENDORSEMENTS, CONSENTS,
ASSIGNMENTS AND OTHER GOOD AND SUFFICIENT INSTRUMENTS OF CONVEYANCE AND
ASSIGNMENT (THE “CONVEYANCE DOCUMENTS”) 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.

 

(III)          EACH OF SELLER AND BUYER SHALL EXECUTE AND DELIVER EACH OF THE
ANCILLARY AGREEMENTS TO BE ENTERED INTO BY IT AT THE CLOSING, IN EACH CASE
SUBSTANTIALLY IN THE FORM ATTACHED AS AN EXHIBIT TO THIS AGREEMENT.

 

(IV)          SELLER SHALL HAVE ARRANGED WITH BUYER FOR THE PHYSICAL DELIVERY OF
THE PERSONAL PROPERTY AND ALL COPIES OF THE BUSINESS INTELLECTUAL PROPERTY, AND
THE PHYSICAL EMBODIMENT THEREOF, INCLUDING, WITHOUT LIMITATION, SOURCE CODE AND
ALL COPIES OF ALL VERSIONS OF THE SOURCE CODE FOR THE CLEARSTORY PRODUCTS.

 

(V)           WITHOUT PREJUDICE TO BUYER’S RIGHTS UNDER SECTION 11.02 AND
ARTICLES X AND XI, SELLER SHALL DELIVER TO BUYER REVISED SCHEDULES TO THIS
AGREEMENT UPDATING THE INFORMATION SHOWN THEREON TO THE CLOSING DATE.

 

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(VI)          SELLER AND BUYER SHALL EXECUTE AND DELIVER ALL SUCH INSTRUMENTS,
DOCUMENTS AND CERTIFICATES AS MAY BE REASONABLY REQUESTED BY THE OTHER PARTY
THAT ARE NECESSARY, APPROPRIATE OR DESIRABLE FOR THE CONSUMMATION AT THE CLOSING
OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

 

(C)           AN AMOUNT EQUAL TO $100,000 OF THE CASH PURCHASE PRICE WILL BE
HELD BY THE BUYER AT CLOSING (THE “HOLDBACK”). THE HOLDBACK SHALL BE RELEASED TO
THE SELLER WITHIN 10 DAYS AFTER THE DELIVERY OF THE AUDITED FINANCIAL STATEMENTS
AS REQUIRED UNDER SECTION 5.09. TO THE EXTENT THAT THE SELLER DOES NOT DELIVER
THE AUDITED FINANCIAL STATEMENTS AS REQUIRED UNDER SECTION 5.09, THE BUYER SHALL
BE ENTITLED TO RETAIN THE HOLDBACK. THE BUYER IS NOT LIMITED TO SET-OFF AGAINST
THE HOLDBACK AS AN EXCLUSIVE REMEDY FOR DAMAGES RELATING TO THE BREACH OF
SECTION 5.09.

 

2.07        EARNOUT PAYMENTS.

 

(A)           FOR THE PERIOD BEGINNING ON THE CLOSING DATE AND LASTING UNTIL THE
EIGHTEEN MONTH ANNIVERSARY OF THE CLOSING DATE (THE “EARNOUT PERIOD”), BUYER
SHALL PAY TO THE SELLER, AT THE END OF EACH FISCAL QUARTER, IN ACCORDANCE WITH
THIS SECTION 2.07, AN AMOUNT (EACH AN “EARNOUT PAYMENT” AND TOGETHER THE
“EARNOUT PAYMENTS”) CALCULATED BY MULTIPLYING THE TOTAL CLEARSTORY REVENUES FOR
SUCH PERIOD BY 30%. NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, AS RELATES
TO THE FIRST $750,000 IN ACCRUED EARNOUT PAYMENTS (“INITIAL EARNOUT PAYMENT”),
SUCH INITIAL EARNOUT PAYMENT SHALL BE HELD-BACK BY BUYER AND SHALL NOT BE PAID
UNTIL TWELVE MONTHS AFTER THE CLOSING DATE (“INITIAL EARNOUT DUE DATE”);
PROVIDED, HOWEVER, THAT BUYER SHALL HAVE THE RIGHT TO OFFSET AGAINST SUCH
INITIAL EARNOUT PAYMENT ANY DAMAGES OWED BY SELLER TO THE BUYER AS AND TO THE
EXTENT SET FORTH IN ARTICLE XI. AFTER PAYMENT OF ANY SUCH DAMAGES AND RESOLUTION
OF ANY SUCH UNRESOLVED CLAIM, ANY AMOUNT OF THE INITIAL EARNOUT PAYMENTS
REMAINING OWED TO THE SELLER WITH RESPECT TO SUCH CLAIM SHALL BE PROMPTLY PAID
TO SELLER BY THE BUYER. FOR AVOIDANCE OF DOUBT, THE PARTIES ACKNOWLEDGE AND
AGREE THAT ONLY THE INITIAL EARNOUT PAYMENT SHALL BE SUBJECT TO BUYER’S RIGHT OF
OFFSET AS AFORESAID AND NOTHING IN THE IMMEDIATELY PRECEDING SENTENCE SHALL
AFFECT THE TIMING OF, OR SELLER’S RIGHT TO RECEIVE, ANY EARNOUT PAYMENT OTHER
THAN THE INITIAL EARNOUT PAYMENT.

 

(B)           “TOTAL CLEARSTORY REVENUES” SHALL MEAN THE TOTAL NET REVENUES OF
THE BUSINESS (WHETHER UNDERTAKEN BY BUYER DIRECTLY OR WHETHER OPERATION BY BUYER
SEPARATELY AS A DISTINCT SUBSIDIARY OF BUYER OR OTHERWISE DIRECTLY OR INDIRECTLY
BY BUYER), FOR THE APPLICABLE QUARTER OR OTHER PERIOD DURING THE EARNOUT PERIOD,
DETERMINED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND AS
PROVIDED HEREIN, FROM THE SALE OR LICENSE, INCLUDING SUBSCRIPTIONS, OF THE
CLEARSTORY PRODUCTS, PRODUCT MAINTENANCE CONTRACTS FOR CLEARSTORY PRODUCTS, OR
THE SALE OF BUSINESS CONSULTING AND PRODUCT IMPLEMENTATION SERVICES RELATED TO
THE CLEARSTORY PRODUCTS.

 

“ClearStory Products” means the software products developed by the Seller known
as Radiant Business Document Server and Radiant MailManager, and all Business
Intellectual Property, as currently constituted, including without limitation
any future enhancements and derivatives thereof, new products developed with
respect thereto, and including without limitation any future support,
maintenance or other development services

 

9

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performed. “Net Revenues” shall be calculated in accordance with generally
accepted accounting principles as gross revenues less actual returns and a
reasonable reserve for bad debts (as calculated in a manner consistent with the
historical operations of the Business). To the extent the ClearStory Products
form part of another product or product suite or services of Buyer, the net
revenues for the ClearStory Products will be calculated by comparing the total
price for the products sold or licensed with the sum of the Buyer’s listed
retail price for the products sold or licensed, and applying any discount
pro-rata (and not disproportionately) across the combined products based on the
listed retail price for ClearStory Products or services sold or licensed and the
listed retail price of such other product or product suite. To the extent that
business consulting and product implementation services for ClearStory Products
are sold in conjunction with similar services for the Buyer’s products, the
revenues allocated to the services related to the ClearStory Products will be
calculated in the same proportion as the revenues for the licensed ClearStory
Products and Buyer’s products that are being installed, implemented or serviced.
Notwithstanding the foregoing, in no event shall the discount applied to a
ClearStory Product (exclusive of any discounts granted to VARs, OEMs or
distributors) exceed one-third of the listed retail price for the ClearStory
Products as of the date hereof and as indicated on Schedule 2.07(b), unless
Buyer and Seller agree to such greater discount. As relates to discounts granted
to VARs, OEM and distributors, any such discounts shall be reasonable in light
of all relevant facts and circumstances and shall not have a disproportionate,
adverse impact on the pricing of the ClearStory Products as compared to Buyer’s
other products.

 

(C)           THE RIGHT TO RECEIVE THE EARNOUT PAYMENTS IS A CONTRACT RIGHT ONLY
AND NO CERTIFICATE EVIDENCING SUCH RIGHT SHALL BE ISSUED. THE RIGHT TO RECEIVE
THE EARNOUT PAYMENTS SHALL NOT BE TRANSFERRED OR ASSIGNED, EXCEPT TO A SUCCESSOR
TO THE SELLER IN CONNECTION WITH A SALE OF SUBSTANTIALLY ALL THE SELLER’S ASSETS
OR IN CONNECTION WITH A MERGER OR REORGANIZATION IN WHICH A MAJORITY OF THE
BENEFICIAL HOLDERS OF THE SELLER’S VOTING SECURITIES DO NOT, DIRECTLY OR
INDIRECTLY, HOLD A MAJORITY OF THE SELLER’S VOTING SECURITIES AFTER SUCH
TRANSACTION, PROVIDED, HOWEVER, THAT THE SELLER NOTIFIES BUYER OF SUCH TRANSFER
IN WRITING, PROVIDES BUYER WITH THE TRANSFEREE’S NAME AND ADDRESS AND THE EXACT
RIGHTS TRANSFERRED AND SUCH TRANSFEREE AGREES IN WRITING (IN FORM AND SUBSTANCE
SATISFACTORY TO BUYER) TO BE BOUND BY THE TERMS AND CONDITIONS OF THIS
AGREEMENT.

 

(D)           NOT LATER THAN 30 DAYS AFTER THE END OF EACH FISCAL QUARTER (OR
THE ENDING PERIOD, WHICH MAY BE SHORTER THAN A FISCAL QUARTER) IN THE EARNOUT
PERIOD (OTHER THAN A FISCAL QUARTER WHICH IS THE END OF THE BUYER’S FISCAL
YEAR), BUYER SHALL PREPARE A WRITTEN CALCULATION OF THE EARNOUT PAYMENT BASED ON
BUYER’S UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR SUCH PERIOD AND SHALL
DELIVER THE SELLER A COPY OF SUCH CALCULATION AND SUCH UNAUDITED FINANCIALS
TOGETHER WITH PAYMENT OF THE FULL AMOUNT OF THE EARNOUT PAYMENT (LESS ANY
APPLICABLE WITHHOLDING) FOR SUCH PERIOD (EXCEPT AS IT RELATES TO THE INITIAL
EARNOUT PAYMENT ONLY, AS PROVIDED IN SECTION 2.07(A)). INTEREST ON ANY EARNOUT
PAYMENT THAT IS NOT PAID WITHIN 30 DAYS AFTER THE END OF EACH FISCAL QUARTER (OR
THE ENDING PERIOD) SHALL ACCRUE INTEREST AT AN ANNUAL INTEREST RATE OF 12%
STARTING 30 DAYS AFTER THE END OF THE CORRESPONDING FISCAL QUARTER (OR ENDING
PERIOD) THROUGH THE DATE SUCH EARNOUT PAYMENT IS PAID IN FULL.

 

(E)           NOT LATER THAN 60 DAYS AFTER THE END OF EACH FISCAL YEAR OF BUYER
IN THE EARNOUT PERIOD, BUYER SHALL PREPARE A PRELIMINARY WRITTEN CALCULATION OF
THE EARNOUT PAYMENT FOR

 

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THE PRECEDING FOURTH QUARTER AND SHALL DELIVER TO THE SELLER A COPY OF SUCH
PRELIMINARY CALCULATION ALONG WITH PAYMENT OF THE FULL AMOUNT OF THE EARNOUT
PAYMENT (LESS ANY APPLICABLE WITHHOLDING). WITHIN FOURTEEN DAYS OF THE RELEASE
OF BUYER’S AUDITED FINANCIAL STATEMENT FOR EACH SUCH FISCAL YEAR, BUYER SHALL
PREPARE A FINAL WRITTEN CALCULATION OF THE EARNOUT PAYMENT FOR SUCH FOURTH
QUARTER BASED ON SUCH FINANCIAL RESULTS (REFLECTING ANY CHANGES FROM THE
PRELIMINARY CALCULATION AND CORRECTIONS, IF ANY, FOR PRIOR QUARTERS RESULTING
FROM THE AUDIT OF BUYER’S FINANCIAL STATEMENTS) AND SHALL DELIVER TO THE SELLER
A COPY OF SUCH CALCULATION FOR SUCH PERIOD ADJUSTED FOR ANY SUCH CORRECTIONS
(EXCEPT AS PROVIDED IN SECTION 2.07(A)). INTEREST ON ANY EARNOUT PAYMENT THAT IS
NOT PAID WITHIN 60 DAYS AFTER THE END OF EACH FISCAL YEAR OF BUYER SHALL ACCRUE
INTEREST AT AN ANNUAL INTEREST RATE OF 12% STARTING 60 DAYS AFTER THE END OF
EACH APPLICABLE FISCAL YEAR THROUGH THE DATE SUCH EARNOUT PAYMENT IS PAID IN
FULL.

 

(F)            SELLER WILL HAVE THIRTY (30) DAYS FROM RECEIPT OF THE FINAL
CALCULATION UNDER SECTION 2.07(D) OR 2.07(E) IN THE 18 MONTH PERIOD TO CONTEST
IN WRITING TO BUYER (THE “OBJECTION NOTICE”), WHICH NOTICE MUST BE SIGNED BY THE
SELLER, A CALCULATION OF AN EARNOUT PAYMENT THAT IT BELIEVES IN GOOD FAITH TO BE
INACCURATE. FOR THE SAKE OF CLARITY, SELLER’S OBJECTION NOTICE MAY CONTEST ANY
AND ALL CALCULATIONS AND PAYMENTS PROVIDED AND MADE UNDER SECTIONS 2.07(D) AND
2.07(E). IF THE SELLER ISSUES AN OBJECTION NOTICE, BUYER SHALL PROVIDE THE
SELLER WITH REASONABLE ACCESS TO THE SUPPORTING INFORMATION FOR SUCH
CALCULATIONS. BUYER AND SELLER SHALL USE THEIR BEST EFFORTS TO REACH AGREEMENT
ON THE DISPUTED AMOUNT. IF BUYER AND SELLER ARE UNABLE TO REACH SUCH AGREEMENT
WITHIN TWENTY (20) DAYS OF RECEIPT OF THE OBJECTION NOTICE BY BUYER, THE PARTIES
AGREE TO CAUSE INDEPENDENT ACCOUNTANTS OF RECOGNIZED STANDING REASONABLY
SATISFACTORY TO SELLER AND BUYER (WHO SHALL NOT HAVE A MATERIAL RELATIONSHIP
WITH BUYER OR THE SELLER) (THE “ACCOUNTING REFEREE”) PROMPTLY TO REVIEW THIS
AGREEMENT AND THE DISPUTED AMOUNTS. THE ACCOUNTING REFEREE SHALL DELIVER TO
SELLER AND BUYER, AS PROMPTLY AS PRACTICABLE, A REPORT SETTING FORTH THE
CALCULATION OF THE DISPUTED AMOUNT. THE REPORT OF THE ACCOUNTING REFEREE SHALL
BE FINAL AND BINDING UPON THE PARTIES HERETO. THE COST OF EACH SUCH REVIEW AND
REPORT SHALL BE BORNE BY THE SELLER; PROVIDED HOWEVER, THAT BUYER SHALL BEAR ALL
THE EXPENSES ASSOCIATED WITH ANY SUCH REVIEW IF THE APPLICABLE EARNOUT PAYMENT
EXCEEDS BUYER’S ORIGINAL CALCULATION OF SUCH AMOUNT BY MORE THAN FIVE PERCENT
(5%) OF SUCH ORIGINAL CALCULATION. THE SELLER AGREES TO KEEP ANY INFORMATION
PROVIDED PURSUANT TO THIS SECTION 2.07 CONFIDENTIAL; PROVIDED HOWEVER; THAT
NOTHING IN THIS SENTENCE SHALL PREVENT THE SELLER FROM USING SUCH INFORMATION TO
EXERCISE THE SELLER’S RIGHT TO DISPUTE THE CALCULATION AS SET FORTH ABOVE OR TO
FILE ANY REQUIRED TAX RETURNS.

 

(G)           AS BUYER’S SOLE AND EXCLUSIVE REMEDY, AND SELLER’S SOLE AND
EXCLUSIVE OBLIGATION IN RESPECT OF INDEMNITY CLAIMS UNDER SECTIONS 11.02(A)(I)
AND 11.02(A)(II), BUYER SHALL HAVE THE RIGHT TO OFFSET THE INITIAL EARNOUT
PAYMENT PAYABLE TO THE SELLER PURSUANT TO THIS SECTION 2.07, AGAINST ANY AMOUNT
OWED BY THE SELLER TO THE BUYER PURSUANT TO SECTION 11.02(A)(I) AND
11.02(A)(II).

 

(H)           IN THE EVENT THAT BUYER CONSUMMATES A BUYER SALE EVENT OR BUSINESS
SALE EVENT, AS DEFINED BELOW, PRIOR TO THE END OF THE EARNOUT PERIOD, BUYER
SHALL PROMPTLY NOTIFY SELLER. WITHIN TWENTY (20) DAYS AFTER THE SALE EVENT, THE
BUYER SHALL PAY TO SELLER A LUMP SUM AMOUNT EQUAL TO THE EARNOUT PAYMENT VALUE
(AS DEFINED BELOW). AS USED HEREIN, “EARNOUT PAYMENT VALUE” MEANS (A) IN THE
EVENT OF A BUYER SALE EVENT, THE NET PRESENT VALUE OF (X) THE

 

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AVERAGE QUARTERLY EARNOUT PAYMENTS FROM THE CLOSING DATE TO THE QUARTER
IMMEDIATELY PRECEDING THE QUARTER IN WHICH THE BUYER SALE EVENT OCCURS
MULTIPLIED BY (Y) THE REMAINING TIME PERIOD (EXPRESSED IN FISCAL QUARTERS, OR
PORTIONS OF A QUARTER) OF THE EARNOUT PERIOD; AND (B) IN THE EVENT OF A BUSINESS
SALE EVENT, THE NET PRESENT VALUE OF THE DIFFERENCE BETWEEN (U) $2,250,000 AND
(W) THE AGGREGATE AMOUNT PAID TO SELLER PURSUANT TO THIS SECTION 2.07 AS OF AND
THROUGH THE DATE OF THE BUSINESS SALE EVENT (TO THE EXTENT THE AMOUNT PAID IS
LESS THAN $2,250,000). UPON PAYMENT BY BUYER OF THE EARNOUT PAYMENT VALUE TO
SELLER, THIS SECTION 2.07 SHALL IMMEDIATELY TERMINATE, WITHOUT ANY FURTHER
LIABILITY OF BUYER TO SELLER FOR EARNOUT PAYMENTS, EXCEPT AS SET FORTH IN THIS
PARAGRAPH. AS USED HEREIN, (C) THE TERM “BUYER SALE EVENT” SHALL MEAN (I) A
MERGER OR CONSOLIDATION OF BUYER WITH OR INTO ANY OTHER PERSON IF IMMEDIATELY
AFTER SUCH TRANSACTION PERSONS WHO WERE STOCKHOLDERS OF BUYER IMMEDIATELY BEFORE
SUCH TRANSACTION OWN LESS THAN 50% IN VOTING POWER OF THE ISSUED AND OUTSTANDING
STOCK OF THE RESULTING OR SURVIVING ENTITY; OR (II) A SALE BY BUYER OF ALL OR
SUBSTANTIALLY ALL OF ITS ASSETS, AND (D) THE TERM “BUSINESS SALE EVENT” SHALL
MEAN A SALE BY BUYER OF ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF THE BUSINESS
TO A THIRD PARTY UNAFFILIATED WITH THE BUYER.

 

2.08        ALLOCATION OF PURCHASE PRICE.

 

(A)           AS SOON AS PRACTICABLE AFTER THE CLOSING, BUYER SHALL DELIVER TO
SELLER A STATEMENT (THE “ALLOCATION STATEMENT”), SETTING FORTH THE VALUE OF THE
PURCHASED ASSETS AND OF THE COVENANT NOT TO COMPETE DESCRIBED IN SECTION 5.04
HEREOF, WHICH SHALL BE USED FOR THE ALLOCATION OF THE PURCHASE PRICE AND THE
ASSUMED LIABILITIES AMONG THE PURCHASED ASSETS AND THE COVENANT NOT TO COMPETE
(THE ALLOCATION SHALL BE MADE IN ACCORDANCE WITH ALL APPLICABLE PROVISIONS OF
THE CODE AND ANY APPLICABLE STATE OR LOCAL LAW).

 

(B)           EXCEPT AS REQUIRED BY LAW, SELLER AND BUYER AGREE TO REPORT AN
ALLOCATION OF SUCH PURCHASE PRICE AMONG THE PURCHASED ASSETS AND THE COVENANT
NOT TO COMPETE IN A MANNER ENTIRELY CONSISTENT WITH THE ALLOCATION, AND AGREE TO
ACT IN ACCORDANCE WITH SUCH ALLOCATION STATEMENT IN THE PREPARATION OF FINANCIAL
STATEMENTS AND FILING OF ALL TAX RETURNS. EACH PARTY SHALL NOTIFY THE OTHER
PARTY IF IT RECEIVES NOTICE THAT THE IRS OR OTHER GOVERNMENTAL AGENCY PROPOSES
ANY ALLOCATION DIFFERENT THAN THAT SET FORTH IN THE ALLOCATION STATEMENT.

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES OF SELLER

 

Except as set forth in the disclosure schedules dated as of the date hereof and
delivered herewith to Buyer, (which disclosure schedules identify the section
and subsection to which each disclosure therein relates), Seller hereby
represents and warrants to Buyer as of the date hereof that:

 

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 GOVERNMENTAL
LICENSES, AUTHORIZATIONS, CONSENTS AND APPROVALS REQUIRED TO CARRY ON THE
BUSINESS AS NOW CONDUCTED. SELLER IS DULY QUALIFIED TO DO BUSINESS AS A FOREIGN
CORPORATION AND IS IN GOOD STANDING IN EACH JURISDICTION WHERE THE CHARACTER OF
THE

 

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PROPERTY OWNED OR LEASED BY IT OR THE NATURE OF ITS ACTIVITIES MAKES SUCH
QUALIFICATION NECESSARY, EXCEPT FOR THOSE JURISDICTIONS WHERE THE 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 CORPORATE CHARTER AND BYLAWS OF SELLER AS CURRENTLY IN EFFECT.

 

3.02        CORPORATE AUTHORIZATION. THE EXECUTION, DELIVERY AND PERFORMANCE BY
SELLER OF THIS AGREEMENT AND EACH OF THE ANCILLARY AGREEMENTS, AND THE
CONSUMMATION BY SELLER OF THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY ARE
WITHIN SELLER’S CORPORATE POWERS AND HAVE BEEN DULY AUTHORIZED BY ALL NECESSARY
CORPORATE ACTION ON THE PART OF SELLER. EACH OF THIS AGREEMENT AND EACH
ANCILLARY AGREEMENT TO WHICH SELLER IS A PARTY HAS BEEN DULY EXECUTED AND
DELIVERED BY SELLER AND CONSTITUTES A VALID AND BINDING AGREEMENT OF SELLER,
ENFORCEABLE IN ACCORDANCE WITH ITS TERMS.

 

3.03        GOVERNMENTAL AUTHORIZATION; CONSENTS.

 

(A)           THE EXECUTION, DELIVERY AND PERFORMANCE BY SELLER OF THIS
AGREEMENT AND EACH OF THE ANCILLARY AGREEMENTS TO WHICH SELLER IS A PARTY
REQUIRE NO ACTION BY OR IN RESPECT OF, OR FILING WITH, ANY GOVERNMENTAL BODY,
AGENCY, OR OFFICIAL.

 

(B)           EXCEPT AS SET FORTH IN SCHEDULE 3.03, NO CONSENT, APPROVAL, WAIVER
OR OTHER ACTION (A “REQUIRED CONSENT”) BY ANY PERSON (OTHER THAN ANY
GOVERNMENTAL BODY, AGENCY, OFFICIAL OR AUTHORITY REFERRED TO IN (A) ABOVE) UNDER
ANY CONTRACT LISTED ON SCHEDULE 3.11 OR ANY OTHER MATERIAL CONTRACT, AGREEMENT,
INDENTURE, LEASE, INSTRUMENT, OR OTHER DOCUMENT BINDING UPON OR TO WHICH THE
SELLER IS A PARTY IS REQUIRED OR NECESSARY FOR THE EXECUTION, DELIVERY AND
PERFORMANCE BY SELLER OF THIS AGREEMENT AND EACH ANCILLARY AGREEMENT TO WHICH
SELLER IS A PARTY, OR FOR THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY.

 

3.04        NON-CONTRAVENTION. THE EXECUTION, DELIVERY AND PERFORMANCE BY SELLER
OF THIS AGREEMENT AND EACH ANCILLARY AGREEMENT TO WHICH SELLER IS A PARTY, AND
THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY, DO NOT AND
WILL NOT (I) CONTRAVENE OR CONFLICT WITH THE CORPORATE CHARTER OR BYLAWS OF
SELLER, (II) ASSUMING COMPLIANCE WITH THE MATTERS REFERRED TO IN
SECTION 3.03(A), CONTRAVENE OR CONFLICT WITH ANY PROVISION OF ANY LAW,
REGULATION, JUDGMENT, INJUNCTION, ORDER, PERMIT OR DECREE BINDING UPON OR
APPLICABLE TO SELLER OR THE BUSINESS; (III) ASSUMING THE RECEIPT OF ALL REQUIRED
CONSENTS, CONSTITUTE A DEFAULT (WITH OR WITHOUT NOTICE OR LAPSE OF TIME, OR
BOTH) UNDER OR GIVE RISE TO ANY RIGHT OF TERMINATION, CANCELLATION OR
ACCELERATION OF ANY RIGHT OR OBLIGATION OF SELLER, OR TO A LOSS OF ANY BENEFIT,
RELATING TO THE BUSINESS TO WHICH SELLER IS ENTITLED UNDER ANY PROVISION OF ANY
AGREEMENT, CONTRACT OR OTHER INSTRUMENT BINDING UPON SELLER OR (IV) RESULT IN
THE CREATION OR IMPOSITION OF ANY LIEN (OTHER THAN A PERMITTED LIEN) ON ANY
PURCHASED ASSET.

 

3.05        FINANCIAL STATEMENTS.

 

(A)           THE “FINANCIAL STATEMENTS” INCLUDE:

 

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(I)            THE UNAUDITED BALANCE SHEET OF THE BUSINESS AS OF MARCH 31, 2005
AND THE RELATED UNAUDITED STATEMENTS OF OPERATIONS AND CASH FLOWS FOR THE
BUSINESS FOR THE 12 MONTHS ENDED MARCH 31, 2005; AND

 

(II)           THE UNAUDITED BALANCE SHEET OF THE BUSINESS AS OF DECEMBER 31,
2005 AND THE RELATED UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND CASH FLOWS
FOR THE BUSINESS FOR THE FISCAL NINE MONTHS ENDED DECEMBER 31, 2005.

 

(B)           EACH OF THE BALANCE SHEETS INCLUDED IN THE FINANCIAL STATEMENTS
FAIRLY PRESENTS IN ALL MATERIAL RESPECTS THE FINANCIAL POSITION OF THE BUSINESS
AS OF ITS DATE, AND THE OTHER STATEMENTS INCLUDED IN THE FINANCIAL STATEMENTS
FAIRLY PRESENT IN ALL MATERIAL RESPECTS THE RESULTS OF OPERATIONS AND CASH
FLOWS, AS THE CASE MAY BE, OF THE BUSINESS FOR THE PERIODS THEREIN SET FORTH, IN
EACH CASE IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
CONSISTENTLY APPLIED DURING THE PERIODS INVOLVED (EXCEPT FOR THE CALCULATION OF
DEFERRED REVENUE WHICH ON THE UNAUDITED FINANCIAL STATEMENTS IS CALCULATED IN
ACCORDANCE WITH THE METHODOLOGIES SET FORTH ON SCHEDULE 2.03(A)) AND, WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, HAVE BEEN PREPARED IN ACCORDANCE WITH
THE SPECIFIC ACCOUNTING POLICIES AND PROCEDURES DESCRIBED IN THE ACCOUNTING
CONVENTION EXCEPT AS OTHERWISE STATED THEREIN AND, WITH RESPECT TO THE UNAUDITED
FINANCIAL STATEMENTS, FOR THE OMISSION OF FOOTNOTE DISCLOSURES AND, WITH RESPECT
TO THE UNAUDITED INTERIM FINANCIAL STATEMENTS, TO THE EXTENT CONSISTENT WITH
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, NORMALLY RECURRING YEAR-END AUDIT
ADJUSTMENTS.

 

3.06        ABSENCE OF CERTAIN CHANGES. SINCE THE BALANCE SHEET DATE THROUGH THE
DATE OF THIS AGREEMENT, EXCEPT AS REFLECTED IN SCHEDULE 3.06, SELLER HAS
CONDUCTED THE BUSINESS IN THE ORDINARY COURSE CONSISTENT WITH PAST PRACTICES,
AND THERE HAS NOT BEEN ANY OF THE FOLLOWING WITH RESPECT TO THE BUSINESS:

 

(A)           MATERIAL ADVERSE CHANGE OR ANY EVENT, OCCURRENCE, DEVELOPMENT OR
STATE OF CIRCUMSTANCES OR FACTS WHICH COULD REASONABLY BE EXPECTED TO RESULT IN
A MATERIAL ADVERSE CHANGE, OR ANY CONDITION, EVENT OR OCCURRENCE WHICH,
INDIVIDUALLY OR IN THE AGGREGATE, COULD REASONABLY BE EXPECTED TO PREVENT OR
MATERIALLY DELAY SELLER’S ABILITY TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT OR PERFORM ITS OBLIGATIONS HEREUNDER OR UNDER THE ANCILLARY
AGREEMENTS;

 

(B)           PAYMENT OR GRANT OF ANY RIGHT RELATING TO THE BUSINESS BY SELLER
TO ANY INTERESTED PERSON, OR ANY CHARGE BY ANY INTERESTED PERSON TO SELLER
RELATING TO THE BUSINESS, OR OTHER TRANSACTION BETWEEN SELLER RELATING TO THE
BUSINESS AND ANY INTERESTED PERSON, EXCEPT IN ANY SUCH CASE FOR EMPLOYEE
COMPENSATION PAYMENTS IN THE ORDINARY COURSE OF BUSINESS OF SELLER CONSISTENT
WITH PAST PRACTICE.

 

(C)           INCURRENCE, ASSUMPTION OR GUARANTEE BY SELLER OF ANY INDEBTEDNESS
FOR BORROWED MONEY WITH RESPECT TO THE BUSINESS;

 

(D)           CREATION OR ASSUMPTION BY SELLER OF ANY LIEN (OTHER THAN A
PERMITTED LIEN) ON ANY PURCHASED ASSET;

 

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(E)           DAMAGE, DESTRUCTION OR OTHER CASUALTY LOSS (WHETHER OR NOT COVERED
BY INSURANCE) AFFECTING THE BUSINESS OR ANY PURCHASED ASSET IN AN AMOUNT GREATER
THAN $10,000;

 

(F)            TRANSACTION OR COMMITMENT MADE, OR ANY CONTRACT OR AGREEMENT
ENTERED INTO, BY SELLER RELATING TO THE BUSINESS OR ANY PURCHASED ASSET
(INCLUDING THE ACQUISITION OR DISPOSITION OF ANY ASSETS) OR ANY RELINQUISHMENT
BY SELLER OF ANY CONTRACT OR OTHER RIGHT, IN EITHER CASE, MATERIAL TO THE
BUSINESS, OTHER THAN TRANSACTIONS AND COMMITMENTS IN THE ORDINARY COURSE OF
BUSINESS CONSISTENT WITH PAST PRACTICES AND THOSE CONTEMPLATED BY THIS
AGREEMENT;

 

(G)           CHANGE IN ANY MATERIAL METHOD OF TAX OR FINANCIAL ACCOUNTING OR
ACCOUNTING PRACTICE OR ANY MAKING OF A MATERIAL TAX ELECTION OR CHANGE OF AN
EXISTING ELECTION BY SELLER WITH RESPECT TO THE BUSINESS;

 

(H)           (I) GRANT OF ANY SEVERANCE OR TERMINATION PAY TO ANY EMPLOYEE OF
THE BUSINESS, (II) ENTERING INTO OF ANY EMPLOYMENT, DEFERRED COMPENSATION OR
OTHER SIMILAR AGREEMENT (OR ANY AMENDMENT TO ANY SUCH EXISTING AGREEMENT) WITH
ANY EMPLOYEE OF THE BUSINESS, (III) CHANGE IN BENEFITS PAYABLE UNDER EXISTING
SEVERANCE OR TERMINATION PAY POLICIES OF SELLER RELATING TO THE BUSINESS OR
EMPLOYMENT AGREEMENTS TO WHICH ANY EMPLOYEE OF THE BUSINESS IS A PARTY OR
(IV) CHANGE IN COMPENSATION, BONUS OR OTHER BENEFITS PAYABLE TO EMPLOYEES OF THE
BUSINESS;

 

(I)            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, OR ANY LOCKOUTS, STRIKES, SLOWDOWNS, WORK
STOPPAGES OR THREATS THEREOF BY OR WITH RESPECT TO SUCH EMPLOYEES;

 

(J)            EMPLOYEE TERMINATIONS (OTHER THAN FOR POOR PERFORMANCE OR FOR
CAUSE) AND/OR LAYOFFS, AND SELLER HAS PRESERVED INTACT AND KEPT AVAILABLE THE
SERVICES OF PRESENT EMPLOYEES, IN EACH CASE IN ACCORDANCE WITH PAST PRACTICE,

 

(K)           CAPITAL EXPENDITURE, OR COMMITMENT FOR A CAPITAL EXPENDITURE, FOR
ADDITIONS OR IMPROVEMENTS TO PROPERTY, PLANT AND EQUIPMENT IN AN AMOUNT GREATER
THAN $10,000;

 

(L)            ACTION WHICH, IF IT HAD BEEN TAKEN OR OCCURRED AFTER THE
EXECUTION OF THIS AGREEMENT, WOULD HAVE REQUIRED THE CONSENT OF BUYER PURSUANT
TO THIS AGREEMENT; OR

 

(M)          AGREEMENT, UNDERTAKING OR COMMITMENT TO DO ANY OF THE FOREGOING.

 

3.07        PERSONAL PROPERTY.

 

(A)           SELLER HAS GOOD AND MARKETABLE TITLE TO, OR IN THE CASE OF LEASED
PERSONAL PROPERTY HAS VALID LEASEHOLD INTERESTS IN, ALL PERSONAL PROPERTY
(INCLUDING MACHINERY AND EQUIPMENT, INVENTORY, AND FURNITURE) (WHETHER TANGIBLE
OR INTANGIBLE) USED IN THE BUSINESS (THE “PERSONAL PROPERTY”). ALL OF SUCH
PERSONAL PROPERTY IS LISTED ON SCHEDULE 3.07. NONE OF SUCH PERSONAL PROPERTY IS
SUBJECT TO ANY LIENS, OTHER THAN:

 

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(I)            LIENS DISCLOSED ON THE BALANCE SHEET;

 

(II)           PERMITTED LIENS; OR

 

(III)          LIENS THAT DO NOT MATERIALLY DETRACT FROM THE VALUE OF THE
PERSONAL PROPERTY AS NOW USED, OR MATERIALLY INTERFERE WITH ANY PRESENT OR
INTENDED USE OF THE PERSONAL PROPERTY.

 

(B)           THE PERSONAL PROPERTY HAS NO MATERIAL DEFECTS, IS IN GOOD
OPERATING CONDITION AND REPAIR (ORDINARY WEAR AND TEAR EXCEPTED), AND IS
GENERALLY ADEQUATE FOR THE USES TO WHICH IT IS BEING PUT.

 

3.08        SUFFICIENCY OF PURCHASED ASSETS. AS OF THE DATE OF THIS AGREEMENT,
THE PURCHASED ASSETS CONSTITUTE, AND ON THE CLOSING DATE WILL CONSTITUTE, ALL OF
THE ASSETS OR PROPERTY USED OR HELD FOR USE IN THE BUSINESS AS OF EACH SUCH DATE
EXCEPT AS SET FORTH ON SCHEDULE 3.08. ON THE CLOSING DATE, THE PURCHASED ASSETS
WILL BE GENERALLY ADEQUATE TO CONDUCT THE BUSINESS AS CURRENTLY CONDUCTED EXCEPT
AS SET FORTH ON SCHEDULE 3.08.

 

3.09        TITLE TO PURCHASED ASSETS. UPON CONSUMMATION OF THE TRANSACTIONS
CONTEMPLATED HEREBY, BUYER WILL HAVE ACQUIRED GOOD AND MARKETABLE TITLE IN AND
TO, OR A VALID LEASEHOLD INTEREST IN, EACH OF THE PURCHASED ASSETS, FREE AND
CLEAR OF ALL LIENS, EXCEPT FOR:

 

(A)           PERMITTED LIENS; OR

 

(B)           LIENS THAT DO NOT MATERIALLY DETRACT FROM THE VALUE OF SUCH
PURCHASED ASSET AS NOW USED, OR MATERIALLY INTERFERE WITH ANY PRESENT OR
INTENDED USE OF SUCH PURCHASED ASSET.

 

3.10        LITIGATION. THERE IS NO CLAIM, ACTION, SUIT, INVESTIGATION OR
PROCEEDING PENDING AGAINST, OR TO THE SELLER’S KNOWLEDGE, THREATENED AGAINST OR
AFFECTING, THE BUSINESS OR ANY PURCHASED ASSET, OR THE TRANSACTIONS CONTEMPLATED
HEREBY BEFORE ANY COURT OR ARBITRATOR OR ANY GOVERNMENTAL BODY, AGENCY, OFFICIAL
OR AUTHORITY.

 

3.11        MATERIAL CONTRACTS.

 

(A)           EXCEPT FOR THE CONTRACTS DISCLOSED IN SCHEDULE 3.11 (AND
REFERENCED TO THE APPLICABLE SUBSECTION BELOW), AS OF THE DATE OF THIS
AGREEMENT, AND, IN EACH CASE, WITH RESPECT TO, OR RELATION TO THE BUSINESS,
SELLER IS NOT A PARTY TO OR SUBJECT TO ANY:

 

(I)            CONTRACT FOR THE PURCHASE OF MATERIALS, SUPPLIES, GOODS,
SERVICES, EQUIPMENT OR OTHER ASSETS PROVIDING FOR ANNUAL PAYMENTS BY SELLER OF,
OR PURSUANT TO WHICH IN THE LAST YEAR SELLER PAID, IN THE AGGREGATE $10,000 OR
MORE;

 

(II)           SALES, DISTRIBUTION OR OTHER SIMILAR AGREEMENT PROVIDING FOR THE
SALE OR LICENSE BY SELLER OF MATERIALS, SUPPLIES, GOODS, SERVICES, EQUIPMENT OR
OTHER ASSETS THAT PROVIDE FOR ANNUAL PAYMENTS TO SELLER OF, OR PURSUANT TO WHICH
IN THE LAST YEAR SELLER RECEIVED, IN THE AGGREGATE $10,000 OR MORE;

 

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(III)          MAINTENANCE AGREEMENTS (“MAINTENANCE AGREEMENTS”), EXCEPT AS SET
FORTH ON SCHEDULE 3.11(A)(III), WHICH SCHEDULE LISTS ALL CUSTOMER NAMES, INVOICE
DATES, RENEWAL DATES, VALUE OF MAINTENANCE CONTRACTS, AND ANY NON-STANDARD
TERMS;

 

(IV)          PARTNERSHIP, JOINT VENTURE OR OTHER SIMILAR CONTRACT ARRANGEMENT
OR AGREEMENT;

 

(V)           CONTRACT RELATING TO INDEBTEDNESS FOR BORROWED MONEY OR THE
DEFERRED PURCHASE PRICE OF PROPERTY (WHETHER INCURRED, ASSUMED, GUARANTEED OR
SECURED BY ANY ASSET), EXCEPT CONTRACTS RELATING TO INDEBTEDNESS INCURRED IN THE
ORDINARY COURSE OF BUSINESS IN AN AMOUNT NOT EXCEEDING $10,000;

 

(VI)          EMPLOYMENT OR CONSULTING AGREEMENT;

 

(VII)         LICENSE, TECHNOLOGY TRANSFER, FRANCHISE, SOURCE CODE ESCROW OR
OTHER AGREEMENT IN RESPECT OF ANY BUSINESS INTELLECTUAL PROPERTY OR OTHER
PROPERTY OWNED OR USED BY SELLER;

 

(VIII)        AGENCY, DEALER, SALES REPRESENTATIVE OR OTHER SIMILAR AGREEMENT;

 

(IX)           CONTRACT OR OTHER DOCUMENT THAT LIMITS THE FREEDOM OF SELLER TO
COMPETE IN ANY LINE OF BUSINESS OR WITH ANY PERSON OR IN ANY AREA TO OWN,
OPERATE, SELL, TRANSFER, PLEDGE OR OTHERWISE DISPOSE OF OR ENCUMBER ANY
PURCHASED ASSET AND THAT WOULD SO LIMIT THE FREEDOM OF BUYER AFTER THE CLOSING
DATE;

 

(X)            CONTRACT OR COMMITMENT WITH OR FOR THE BENEFIT OF ANY INTERESTED
PERSON; OR

 

(XI)           OTHER CONTRACT OR COMMITMENT NOT MADE IN THE ORDINARY COURSE OF
BUSINESS THAT IS MATERIAL TO THE BUSINESS TAKEN AS A WHOLE.

 

(B)           EACH CONTRACT DISCLOSED IN ANY SCHEDULE TO THIS AGREEMENT OR
REQUIRED TO BE DISCLOSED PURSUANT TO SECTION 3.11(A) IS A VALID AND BINDING
AGREEMENT OF SELLER AND IS IN FULL FORCE AND EFFECT, AND NEITHER SELLER NOR, TO
SELLER’S KNOWLEDGE, ANY OTHER PARTY THERETO IS IN DEFAULT IN ANY MATERIAL
RESPECT UNDER THE TERMS OF ANY SUCH CONTRACT, NOR, TO SELLER’S KNOWLEDGE, HAS
ANY EVENT OR CIRCUMSTANCE OCCURRED THAT, WITH NOTICE OR LAPSE OF TIME OR BOTH,
WOULD CONSTITUTE AN EVENT OF DEFAULT THEREUNDER.

 

(C)           EACH CONTRACT DISCLOSED IN ANY SCHEDULE TO THIS AGREEMENT IS NOT
SUBJECT TO ANY AMENDMENTS, SIDE LETTERS, MODIFICATIONS OR OTHER AGREEMENTS
RELATING THERETO, EXCEPT FOR WRITTEN AMENDMENTS, MODIFICATIONS OR OTHER
AGREEMENTS AS SO DISCLOSED IN ANY SCHEDULE.

 

3.12        TECHNOLOGY AND INTELLECTUAL PROPERTY.

 

(A)           SCHEDULE 3.12(A) LISTS:  (I) ALL PATENTS AND ALL REGISTERED
TRADEMARKS, SERVICE MARKS, COPYRIGHTS AND MASK WORKS, AND ANY APPLICATIONS AND
RENEWALS FOR ANY OF THE FOREGOING OWNED BY OR ON BEHALF OF SELLER OR ITS
AFFILIATES FOR THE BENEFIT OF THE BUSINESS; (II) ALL HARDWARE

 

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PRODUCTS AND TOOLS, SOFTWARE AND FIRMWARE PRODUCTS AND TOOLS AND SERVICES THAT
ARE CURRENTLY SOLD, PUBLISHED, OFFERED, OR UNDER DEVELOPMENT BY SELLER OR ITS
AFFILIATES FOR THE BENEFIT OF THE BUSINESS; AND (III) ALL LICENSES (IN AND OUT),
SUBLICENSES AND OTHER AGREEMENTS TO WHICH SELLER OR ITS AFFILIATES IS A PARTY
AND PURSUANT TO WHICH SELLER OR ANY OTHER PERSON IS AUTHORIZED TO USE ANY OF THE
BUSINESS INTELLECTUAL PROPERTY OR EXERCISE ANY OTHER RIGHT WITH REGARD THERETO.

 

(B)           EACH ITEM OF THE BUSINESS INTELLECTUAL PROPERTY IS EITHER: 
(I) OWNED SOLELY BY SELLER OR ITS AFFILIATES FREE AND CLEAR OF ANY LIENS (THE
“OWNED INTELLECTUAL PROPERTY”), AS LISTED ON SCHEDULE 3.12(B)(I); OR
(II) RIGHTFULLY USED AND AUTHORIZED FOR USE BY SELLER AND ITS SUCCESSORS
PURSUANT TO A VALID AND ENFORCEABLE WRITTEN LICENSE AS LISTED ON
SCHEDULE 3.12(B)(II). ALL OF THE BUSINESS INTELLECTUAL PROPERTY THAT IS USED BY
SELLER PURSUANT TO A LICENSE OR OTHER GRANT OF A RIGHT BY A THIRD PARTY TO USE
ITS PROPRIETARY INFORMATION IS SEPARATELY IDENTIFIED AS SUCH UNDER
SCHEDULE 3.12(B). SELLER HAS ALL RIGHTS IN THE BUSINESS INTELLECTUAL PROPERTY
NECESSARY TO CARRY OUT THE BUSINESS FORMER, CURRENT AND CURRENTLY PLANNED FUTURE
ACTIVITIES, INCLUDING WITHOUT LIMITATION (EXCEPT AS NOTED ON SCHEDULE 3.12(B))
RIGHTS TO MAKE, USE, EXCLUDE OTHERS FROM USING, REPRODUCE, MODIFY, ADAPT, CREATE
DERIVATIVE WORKS BASED ON, TRANSLATE, DISTRIBUTE (DIRECTLY AND INDIRECTLY),
TRANSMIT, DISPLAY AND PERFORM PUBLICLY, LICENSE, RENT, LEASE, ASSIGN AND SELL
THE BUSINESS INTELLECTUAL PROPERTY IN ALL GEOGRAPHIC LOCATIONS AND FIELDS OF
USE, AND TO SUBLICENSE ANY OR ALL SUCH RIGHTS TO THIRD PARTIES, INCLUDING THE
RIGHT TO GRANT FURTHER SUBLICENSES.

 

(C)           SELLER IS NOT IN MATERIAL VIOLATION OF ANY LICENSE, SUBLICENSE OR
OTHER AGREEMENT LISTED ON SCHEDULE 3.11 TO WHICH SELLER IS A PARTY OR OTHERWISE
BOUND RELATING TO ANY OF THE BUSINESS INTELLECTUAL PROPERTY. EXCEPT AS NOTED IN
SCHEDULE 3.12(C), NEITHER SELLER NOR ANY OF ITS AFFILIATES IS OBLIGATED TO
PROVIDE ANY CONSIDERATION (WHETHER FINANCIAL OR OTHERWISE) TO ANY THIRD PARTY,
NOR IS ANY THIRD PARTY OTHERWISE ENTITLED TO ANY CONSIDERATION, WITH RESPECT TO
ANY EXERCISE OF RIGHTS BY SELLER OR BUYER, AS SUCCESSOR TO SELLER, IN BUSINESS
INTELLECTUAL PROPERTY.

 

(D)           TO THE SELLER’S KNOWLEDGE, THE USE OF THE OWNED INTELLECTUAL
PROPERTY AND TO THE SELLER’S ACTUAL KNOWLEDGE, THE USE OF THE INTELLECTUAL
PROPERTY LISTED ON SCHEDULE 3.12(B)(II) BY SELLER AS CURRENTLY USED AND AS
CURRENTLY PROPOSED TO BE USED DOES NOT INFRINGE ANY OTHER PERSON’S COPYRIGHT,
TRADE SECRET RIGHTS, RIGHT OF PRIVACY, MORAL RIGHT, PATENT, TRADEMARK, SERVICE
MARK, TRADE NAME, FIRM NAME, LOGO, TRADE DRESS OR MASK WORK OR ANY OTHER
INTELLECTUAL PROPERTY RIGHT. NO CLAIMS (I) CHALLENGING THE VALIDITY,
ENFORCEABILITY, EFFECTIVENESS OR OWNERSHIP BY SELLER OF ANY OF THE OWNED
INTELLECTUAL PROPERTY OR (II) TO THE EFFECT THAT THE USE, REPRODUCTION,
MODIFICATION, MANUFACTURE, DISTRIBUTION, LICENSING, SUBLICENSING, SALE, OR ANY
OTHER EXERCISE OF RIGHTS IN ANY OF THE OWNED INTELLECTUAL PROPERTY BY SELLER,
INFRINGES OR WILL INFRINGE ON ANY INTELLECTUAL PROPERTY OR OTHER PROPRIETARY OR
PERSONAL RIGHT OF ANY PERSON HAVE BEEN ASSERTED AGAINST SELLER OR, TO SELLER’S
KNOWLEDGE, ARE THREATENED BY ANY PERSON. THERE ARE NO LEGAL OR GOVERNMENTAL
PROCEEDINGS, INCLUDING INTERFERENCE, RE-EXAMINATION, REISSUE, OPPOSITION,
NULLITY, OR CANCELLATION PROCEEDINGS PENDING THAT RELATE TO ANY OF THE OWNED
INTELLECTUAL PROPERTY, OTHER THAN REVIEW OF PENDING PATENT APPLICATIONS, AND
SELLER IS NOT AWARE OF ANY INFORMATION INDICATING THAT SUCH PROCEEDINGS ARE
THREATENED OR CONTEMPLATED BY ANY GOVERNMENTAL ENTITY OR ANY OTHER PERSON. TO
THE SELLER’S KNOWLEDGE, THERE IS NO UNAUTHORIZED USE, INFRINGEMENT, OR
MISAPPROPRIATION OF ANY OF THE OWNED INTELLECTUAL PROPERTY, BY ANY THIRD PARTY,
EMPLOYEE OR FORMER EMPLOYEE.

 

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(E)           SCHEDULE 3.12(E) SEPARATELY LISTS ALL PARTIES (OTHER THAN
EMPLOYEES) WHO HAVE CREATED ANY PORTION OF, OR OTHERWISE HAVE ANY RIGHTS IN OR
TO, THE OWNED INTELLECTUAL PROPERTY. SELLER HAS SECURED FROM ALL PARTIES
(INCLUDING EMPLOYEES) WHO HAVE CREATED ANY PORTION OF, OR OTHERWISE HAVE ANY
RIGHTS IN OR TO, THE OWNED INTELLECTUAL PROPERTY VALID AND ENFORCEABLE WRITTEN
ASSIGNMENTS OF ANY SUCH WORK, INVENTION, IMPROVEMENT OR OTHER RIGHTS TO SELLER
AND HAS PROVIDED TRUE AND COMPLETE COPIES OF SUCH ASSIGNMENTS TO BUYER.

 

(F)            THE TRANSACTIONS CONTEMPLATED UNDER THIS AGREEMENT SHALL NOT
ALTER, IMPAIR OR OTHERWISE AFFECT ANY RIGHTS OF SELLER OR ANY AFFILIATE IN ANY
OF THE BUSINESS INTELLECTUAL PROPERTY.

 

(G)           SELLER HAS TAKEN COMMERCIALLY REASONABLE MEASURES TO PROTECT THE
PROPRIETARY NATURE OF THE BUSINESS INTELLECTUAL PROPERTY AND TO MAINTAIN IN
CONFIDENCE ALL TRADE SECRETS AND CONFIDENTIAL INFORMATION OWNED OR USED BY
SELLER IN THE BUSINESS.

 

(H)           EXCEPT AS DISCLOSED ON SCHEDULE 3.12(H), THE OWNED INTELLECTUAL
PROPERTY AND THE BUSINESS INTELLECTUAL PROPERTY THAT IS DISTRIBUTED WITH, OR AS
A PART OF, SELLER’S PRODUCTS AND SERVICES DO NOT INCLUDE ANY PUBLICLY AVAILABLE
SOFTWARE AND SELLER HAS NOT USED PUBLICLY AVAILABLE SOFTWARE IN WHOLE OR IN PART
IN THE DEVELOPMENT OF ANY PART OF THE OWNED INTELLECTUAL PROPERTY IN A MANNER
THAT MAY SUBJECT THE OWNED INTELLECTUAL PROPERTY IN WHOLE OR IN PART, TO ALL OR
PART OF THE LICENSE OBLIGATIONS OF ANY PUBLICLY AVAILABLE SOFTWARE. “PUBLICLY
AVAILABLE SOFTWARE” MEANS EACH OF (I) ANY SOFTWARE THAT CONTAINS, OR IS DERIVED
IN ANY MANNER (IN WHOLE OR IN PART) FROM, ANY SOFTWARE THAT IS DISTRIBUTED AS
FREE SOFTWARE, OPEN SOURCE SOFTWARE (E.G. LINUX), OR SIMILAR LICENSING AND
DISTRIBUTION MODELS; AND (II) ANY SOFTWARE THAT REQUIRES AS A CONDITION OF USE,
MODIFICATION, AND/OR DISTRIBUTION OF SUCH SOFTWARE THAT SUCH SOFTWARE OR OTHER
SOFTWARE INCORPORATED INTO, DERIVED FROM, OR DISTRIBUTED WITH SUCH SOFTWARE
(A) BE DISCLOSED OR DISTRIBUTED IN SOURCE CODE FORM; (B) BE LICENSED FOR THE
PURPOSE OF MAKING DERIVATIVE WORKS; OR (C) BE REDISTRIBUTABLE AT NO OR MINIMAL
CHARGE. PUBLICLY AVAILABLE SOFTWARE INCLUDES, WITHOUT LIMITATION, SOFTWARE
LICENSED OR DISTRIBUTED UNDER ANY OF THE FOLLOWING LICENSES OR DISTRIBUTION
MODELS SIMILAR TO ANY OF THE FOLLOWING:  (A) GNU GENERAL PUBLIC LICENSE (GPL) OR
LESSER/LIBRARY GPL (LGPL), (B) THE ARTISTIC LICENSE (E.G. PERL), (C) THE MOZILLA
PUBLIC LICENSE, (D) THE NETSCAPE PUBLIC LICENSE, (E) THE SUN COMMUNITY SOURCE
LICENSE (SCSL), THE SUN INDUSTRY SOURCE LICENSE (SISL), AND THE APACHE SERVER
LICENSE.

 

3.13        INSURANCE COVERAGE. SCHEDULE 3.13 LISTS ALL OF THE INSURANCE
POLICIES AND FIDELITY BONDS COVERING THE PURCHASED ASSETS, THE BUSINESS AND
OPERATIONS OF THE BUSINESS AND ITS EMPLOYEES. SELLER HAS FURNISHED TO BUYER TRUE
AND COMPLETE COPIES OF ALL INSURANCE POLICIES AND FIDELITY BONDS LISTED IN
SCHEDULE 3.13. 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. ALL PREMIUMS PAYABLE UNDER ALL SUCH
POLICIES AND BONDS HAVE BEEN PAID AND SELLER IS OTHERWISE IN FULL COMPLIANCE
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 EFFECT SINCE JANUARY 1, 2005 AND REMAIN IN FULL
FORCE AND EFFECT. SUCH POLICIES OF INSURANCE AND BONDS ARE OF THE TYPE AND IN
AMOUNTS CUSTOMARILY CARRIED BY PERSONS CONDUCTING BUSINESSES SIMILAR TO THE
BUSINESS. SELLER

 

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DOES NOT KNOW OF ANY THREATENED TERMINATION OF, OR PREMIUM INCREASE WITH RESPECT
TO, ANY OF SUCH POLICIES OR BONDS.

 

3.14        COMPLIANCE WITH LAWS.

 

(A)           SELLER IS NOT AND HAS NOT BEEN IN VIOLATION OF ANY APPLICABLE
PROVISIONS OF ANY LAWS, STATUTES, ORDINANCES OR REGULATIONS AND TO SELLER’S
KNOWLEDGE IS NOT UNDER INVESTIGATION WITH RESPECT TO AND HAS NOT BEEN THREATENED
TO BE CHARGED WITH OR GIVEN NOTICE OF ANY VIOLATION OF, ANY LAW, RULE, ORDINANCE
OR REGULATION APPLICABLE TO THE PURCHASED ASSETS OR THE CONDUCT OF THE BUSINESS.

 

(B)           SCHEDULE 3.14(B) CORRECTLY DESCRIBES EACH GOVERNMENTAL LICENSE,
PERMIT, CONCESSION OR FRANCHISE (A “PERMIT”) MATERIAL TO THE BUSINESS, TOGETHER
WITH THE NAME OF THE GOVERNMENTAL AGENCY OR ENTITY ISSUING SUCH PERMIT. EXCEPT
AS SET FORTH ON SCHEDULE 3.14(B), SUCH PERMITS ARE VALID AND IN FULL FORCE AND
EFFECT AND, ASSUMING THE RELATED REQUIRED CONSENTS HAVE BEEN OBTAINED PRIOR TO
THE CLOSING DATE, ARE TRANSFERABLE BY SELLER AND WILL NOT BE TERMINATED OR
IMPAIRED OR BECOME TERMINABLE AS A RESULT OF THE TRANSACTIONS CONTEMPLATED
HEREBY. UPON CONSUMMATION OF SUCH TRANSACTIONS, BUYER WILL, ASSUMING THE RELATED
REQUIRED CONSENTS HAVE BEEN OBTAINED PRIOR TO THE CLOSING DATE, HAVE ALL OF THE
RIGHT, TITLE AND INTEREST IN ALL THE PERMITS.

 

(C)           SELLER IS NOT IN DEFAULT UNDER, AND NO CONDITION EXISTS THAT WITH
NOTICE OR LAPSE OF TIME OR BOTH WOULD CONSTITUTE A DEFAULT UNDER, ANY JUDGMENT,
ORDER OR INJUNCTION OF ANY COURT, ARBITRATOR OR GOVERNMENTAL BODY, AGENCY,
OFFICIAL OR AUTHORITY.

 

3.15        EMPLOYEES.

 

(A)           SCHEDULE 3.15 SETS FORTH, WITH RESPECT TO EACH EMPLOYEE OF SELLER
WHO IS EMPLOYED IN THE BUSINESS (INCLUDING ANY SUCH EMPLOYEE OF SELLER WHO IS ON
A LEAVE OF ABSENCE) (I) THE NAME OF SUCH EMPLOYEE AND THE DATE AS OF WHICH SUCH
EMPLOYEE WAS ORIGINALLY HIRED BY SELLER, AND WHETHER THE EMPLOYEE IS ON AN
ACTIVE OR INACTIVE STATUS; (II) SUCH EMPLOYEE’S TITLE; (III) SUCH EMPLOYEE’S
ANNUALIZED COMPENSATION AS OF THE DATE OF THIS AGREEMENT, INCLUDING BASE SALARY,
VACATION AND/OR PAID TIME OFF ACCRUAL AMOUNTS, BONUS AND/OR COMMISSION
POTENTIAL, EQUITY VESTING SCHEDULE, SEVERANCE PAY POTENTIAL, AND ANY OTHER
COMPENSATION FORMS; (IV) EACH CURRENT BENEFIT PLAN IN WHICH SUCH EMPLOYEE
PARTICIPATES OR IS ELIGIBLE TO PARTICIPATE; AND (V) ANY GOVERNMENTAL
AUTHORIZATION THAT IS HELD BY SUCH EMPLOYEE AND THAT IS USED IN CONNECTION WITH
THE BUSINESS. EXCEPT AS DISCLOSED IN SCHEDULE 3.15(A), THE EMPLOYMENT OF EACH OF
THE EMPLOYEES OF THE BUSINESS IS TERMINABLE BY SELLER AT WILL.

 

(B)           SCHEDULE 3.15(B) LISTS ALL PERSONS WHO ARE CURRENTLY PERFORMING
SERVICES FOR THE BUSINESS WHO ARE CLASSIFIED AS “CONSULTANTS” OR “INDEPENDENT
CONTRACTORS,” THE COMPENSATION OF EACH SUCH PERSON AND WHETHER SELLER IS PARTY
TO AN AGREEMENT WITH SUCH PERSON (WHETHER OR NOT IN WRITING). ANY SUCH
AGREEMENTS ARE LISTED ON SCHEDULE 3.11 AND HAVE BEEN MADE AVAILABLE (OR, IN THE
CASE OF AGREEMENTS THAT ARE NOT IN WRITING, A SUMMARY THEREOF HAS BEEN
DELIVERED) TO BUYER. ALL PERSONS ENGAGED BY SELLER FOR THE BENEFIT OF THE
BUSINESS AS INDEPENDENT CONTRACTORS, RATHER THAN EMPLOYEES, HAVE BEEN PROPERLY
CLASSIFIED AS SUCH AND HAVE BEEN ENGAGED IN ACCORDANCE WITH ALL APPLICABLE
FOREIGN, FEDERAL, STATE AND/OR LOCAL LAWS.

 

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(C)           SELLER IS NOT AND HAS NEVER BEEN A PARTY TO OR BOUND BY ANY UNION
CONTRACT, COLLECTIVE BARGAINING AGREEMENT OR SIMILAR CONTRACT. THERE HAS NEVER
BEEN ANY SLOWDOWN, WORK STOPPAGE, LABOR DISPUTE OR UNION ORGANIZING ACTIVITY, OR
ANY SIMILAR ACTIVITY OR DISPUTE, AFFECTING SELLER OR ANY OF THEIR EMPLOYEES.

 

(D)           SCHEDULE 3.15(D) LISTS ALL CURRENT EMPLOYEE MANUALS AND HANDBOOKS,
EMPLOYMENT POLICY STATEMENTS, EMPLOYMENT AGREEMENTS, AND OTHER MATERIALS
RELATING TO THE EMPLOYMENT OF THE CURRENT EMPLOYEES OF THE BUSINESS. SELLER HAS
MADE AVAILABLE TO BUYER COMPLETE COPIES OF ALL SUCH DOCUMENTS.

 

(E)           EXCEPT AS DISCLOSED IN SCHEDULE 3.15(E), (I) NONE OF THE EMPLOYEES
OF THE BUSINESS HAS NOTIFIED OR OTHERWISE INDICATED TO SELLER THAT HE OR SHE
INTENDS TO TERMINATE HIS OR HER EMPLOYMENT WITH SELLER, OR NOT TO ACCEPT
EMPLOYMENT WITH BUYER; (II) SELLER DOES NOT HAVE A PRESENT INTENTION TO
TERMINATE THE EMPLOYMENT OF ANY EMPLOYEE OF THE BUSINESS; (III) TO SELLER’S
KNOWLEDGE, NO EMPLOYEE OF THE BUSINESS HAS SINCE JANUARY 1, 2006 RECEIVED AN
OFFER OF AN EMPLOYMENT FROM ANY OTHER PERSON; (IV) ALL EMPLOYEES OF THE BUSINESS
HAVE EXECUTED SELLER’S FORM NONCOMPETITION, NONDISCLOSURE AND DEVELOPMENTS
AGREEMENT; (V) NO EMPLOYEE OF THE BUSINESS IS A PARTY TO OR IS BOUND BY ANY
EMPLOYMENT CONTRACT, PATENT DISCLOSURE AGREEMENT, NONCOMPETITION AGREEMENT OR
OTHER RESTRICTIVE COVENANT OR OTHER CONTRACT WITH ANY THIRD PARTY THAT WOULD BE
LIKELY TO AFFECT IN ANY WAY (A) THE PERFORMANCE BY SUCH EMPLOYEE OF ANY OF HIS
OR HER DUTIES OR RESPONSIBILITIES AS A EMPLOYEE, OR (B) THE BUSINESS OR
OPERATIONS OF THE BUSINESS; (VI) TO THE KNOWLEDGE OF SELLER, NO EMPLOYEE OF THE
BUSINESS IS IN VIOLATION OF ANY TERM OF ANY EMPLOYMENT CONTRACT, PATENT
DISCLOSURE AGREEMENT, NONCOMPETITION AGREEMENT, OR ANY OTHER RESTRICTIVE
COVENANT WITH ANY THIRD PARTY RELATING TO THE RIGHT OF ANY SUCH EMPLOYEE TO BE
EMPLOYED BY SELLER; AND (VII) SELLER IS NOT AND NEVER HAS BEEN ENGAGED IN ANY
DISPUTE OR LITIGATION WITH AN EMPLOYEE OF THE BUSINESS OR FORMER EMPLOYEE OF THE
BUSINESS REGARDING INTELLECTUAL PROPERTY MATTERS.

 

(F)            EXCEPT AS DISCLOSED IN SCHEDULE 3.15(F), (I) SELLER DOES NOT HAVE
AN ESTABLISHED SEVERANCE PAY PRACTICE OR POLICY; (II) NO EMPLOYEE OF THE
BUSINESS IS ENTITLED TO ANY SEVERANCE PAY, BONUS COMPENSATION, ACCELERATION OF
PAYMENT OR VESTING OF ANY EQUITY INTEREST, OR OTHER PAYMENT FROM SELLER OR BUYER
(OTHER THAN ACCRUED SALARY, VACATION, OR OTHER PAID TIME OFF IN ACCORDANCE WITH
THE POLICIES OF SELLER) AS A RESULT OF OR IN CONNECTION WITH THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT OR ANY ANCILLARY AGREEMENT OR AS A RESULT OF ANY
TERMINATION BY THE BUSINESS ON OR AFTER THE CLOSING OF ANY PERSON EMPLOYED BY
SELLER ON OR PRIOR TO THE CLOSING DATE.

 

(G)           SELLER IS IN COMPLIANCE WITH ALL CURRENTLY APPLICABLE LAWS
RESPECTING EMPLOYMENT AND EMPLOYMENT PRACTICES, TERMS AND CONDITIONS OF
EMPLOYMENT AND WAGES AND HOURS. SELLER IS NOT ENGAGED, AND TO SELLER’S KNOWLEDGE
HAS NEVER ENGAGED, IN ANY UNFAIR LABOR PRACTICE OF ANY NATURE. THE EMPLOYEES OF
THE BUSINESS HAVE BEEN, AND CURRENTLY ARE, PROPERLY CLASSIFIED UNDER THE FAIR
LABOR STANDARDS ACT OF 1938, AS AMENDED, AND UNDER ANY APPLICABLE STATE LAW.
SELLER HAS NOT FAILED TO PAY, ANY OF ITS EMPLOYEES, CONSULTANTS OR CONTRACTORS
FOR ANY WAGES (INCLUDING OVERTIME), SALARIES, COMMISSIONS, BONUSES, BENEFITS OR
OTHER DIRECT

 

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COMPENSATION FOR ANY SERVICES PERFORMED BY THEM TO THE DATE HEREOF OR AMOUNTS
REQUIRED TO BE REIMBURSED TO SUCH INDIVIDUALS.

 

(H)           SELLER, AND EACH EMPLOYEE OF THE BUSINESS, IS IN COMPLIANCE WITH
ALL APPLICABLE VISA AND WORK PERMIT REQUIREMENTS, AND NO VISA OR WORK PERMIT
HELD BY AN EMPLOYEE OF THE BUSINESS WILL EXPIRE DURING THE SIX MONTH PERIOD
FOLLOWING THE DATE OF THIS AGREEMENT.

 

3.16        ENVIRONMENTAL COMPLIANCE.

 

(A)           THE SELLER HAS COMPLIED IN ALL MATERIAL RESPECTS WITH ALL FEDERAL,
STATE AND LOCAL LAWS (INCLUDING, WITHOUT LIMITATION, CASE LAW, RULES,
REGULATIONS, ORDERS, JUDGMENTS, DECREES, PERMITS, LICENSES AND GOVERNMENTAL
APPROVALS) WHICH ARE INTENDED TO PROTECT THE ENVIRONMENT AND/OR HUMAN HEALTH OR
SAFETY (COLLECTIVELY, “ENVIRONMENTAL LAWS”); AND

 

(B)           THE SELLER HAS NOT HANDLED, GENERATED, USED, STORED, TRANSPORTED
OR DISPOSED OF ANY MATERIAL, SUBSTANCE OR WASTE WHICH IS REGULATED BY
ENVIRONMENTAL LAWS (“HAZARDOUS MATERIALS”), EXCEPT WHERE SUCH HANDLING,
GENERATION, USE, STORAGE, TRANSPORTATION OR DISPOSAL HAS NOT HAD, AND COULD NOT
REASONABLY BE EXPECTED TO HAVE, A MATERIAL ADVERSE EFFECT. THE FOREGOING DOES
NOT CONSTITUTE A REPRESENTATION OR WARRANTY THAT NO VIOLATION OF ENVIRONMENTAL
LAWS HAS OCCURRED WITH RESPECT TO PREMISES OCCUPIED BY THE SELLER, ALTHOUGH
SELLER HAS NO KNOWLEDGE OF ANY SUCH VIOLATION.

 

3.17        CUSTOMERS AND SUPPLIERS. SELLER HAS NOT RECEIVED NOTICE FROM AND IS
NOT OTHERWISE AWARE THAT (A) ANY CUSTOMER (OR GROUP OF CUSTOMERS UNDER COMMON
OWNERSHIP OR CONTROL) THAT ACCOUNTED FOR A MATERIAL PERCENTAGE OF THE AGGREGATE
PRODUCTS AND SERVICES FURNISHED BY THE BUSINESS DURING THE PAST 18 MONTHS HAS
STOPPED OR INTENDS TO STOP PURCHASING THE PRODUCTS OR SERVICES OF THE BUSINESS
OR (B) ANY SUPPLIER (OR GROUP OF SUPPLIERS UNDER COMMON OWNERSHIP OR CONTROL)
THAT ACCOUNTED FOR A MATERIAL PERCENTAGE OF THE AGGREGATE SUPPLIES PURCHASED BY
THE BUSINESS DURING THE PAST 18 MONTHS HAS STOPPED OR INTENDS TO STOP SUPPLYING
PRODUCTS OR SERVICES TO THE BUSINESS.

 

3.18        TRANSACTIONS WITH AFFILIATES; INTERCOMPANY ARRANGEMENTS. THERE ARE
NO AGREEMENTS, LOANS, LEASES, ROYALTY AGREEMENTS OR OTHER CONTINUING
TRANSACTIONS, IN EACH CASES RELATING TO THE BUSINESS OR THE PURCHASED ASSETS
BETWEEN SELLER AND (I) ANY OFFICER, DIRECTOR OR STOCKHOLDER OF SELLER OR ANY OF
THEIR AFFILIATES OR (II) ANY MEMBER OF ANY OFFICER, DIRECTOR OR STOCKHOLDER OF
SELLER’S FAMILY OR ANY OF THEIR AFFILIATES (“INTERESTED PERSON”). TO THE
KNOWLEDGE OF SELLER, NO INTERESTED PERSON (X) HAS ANY MATERIAL DIRECT OR
INDIRECT INTEREST IN ANY ENTITY THAT DOES BUSINESS WITH SELLER WITH RESPECT TO
THE BUSINESS OR (Y) HAS ANY DIRECT OR INDIRECT INTEREST IN ANY PROPERTY, ASSET
OR RIGHT THAT IS USED BY SELLER IN THE CONDUCT OF THE BUSINESS. NO INTERESTED
PERSON HAS ANY CONTRACTUAL RELATIONSHIP (INCLUDING THAT OF CREDITOR OR DEBTOR)
WITH SELLER OTHER THAN SUCH RELATIONSHIPS AS RESULT SOLELY FROM BEING AN
OFFICER, DIRECTOR OR STOCKHOLDER OF SELLER.

 

3.19        FINDERS’ FEES. EXCEPT FOR BERKERY, NOYES & CO., LLC, WHOSE FEES WILL
BE PAID BY SELLER, THERE IS NO INVESTMENT BANKER, BROKER, FINDER OR OTHER
INTERMEDIARY THAT HAS BEEN RETAINED BY OR IS AUTHORIZED TO ACT ON BEHALF OF
SELLER WHO MIGHT BE ENTITLED TO ANY FEE OR

 

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COMMISSION FROM BUYER, SELLER OR ANY OF THEIR RESPECTIVE AFFILIATES UPON
CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

 

3.20        OTHER INFORMATION. NONE OF THIS AGREEMENT, THE ANCILLARY AGREEMENTS
AND THE SCHEDULES, EXHIBITS AND OTHER DOCUMENTS DELIVERED IN CONNECTION HEREWITH
AND THEREWITH, WHEN READ TOGETHER AS A WHOLE, CONTAINS ANY UNTRUE STATEMENT OF A
MATERIAL FACT OR OMITS TO STATE A MATERIAL FACT NECESSARY IN ORDER TO MAKE THE
STATEMENTS CONTAINED THEREIN NOT MISLEADING.

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES OF BUYER

 

Buyer hereby represents and warrants to Seller that:

 

4.01        ORGANIZATION AND EXISTENCE. BUYER IS A CORPORATION DULY
INCORPORATED, VALIDLY EXISTING AND IN GOOD STANDING UNDER THE LAWS OF THE STATE
OF DELAWARE AND HAS ALL CORPORATE POWERS AND ALL MATERIAL GOVERNMENTAL LICENSES,
AUTHORIZATIONS, CONSENTS AND APPROVALS REQUIRED TO CARRY ON ITS BUSINESS AS NOW
CONDUCTED.

 

4.02        CORPORATE AUTHORIZATION. THE EXECUTION, DELIVERY AND PERFORMANCE BY
BUYER OF THIS AGREEMENT, EACH OF THE ANCILLARY AGREEMENTS AND THE CONSUMMATION
BY BUYER OF THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY ARE WITHIN THE
CORPORATE POWERS OF BUYER AND HAVE BEEN DULY AUTHORIZED BY ALL NECESSARY
CORPORATE ACTION ON THE PART OF BUYER. THIS AGREEMENT AND EACH OF THE ANCILLARY
AGREEMENTS TO WHICH SELLER IS A PARTY HAVE BEEN DULY EXECUTED AND DELIVERED BY
BUYER AND CONSTITUTE VALID AND BINDING AGREEMENTS OF BUYER.

 

4.03        GOVERNMENTAL AUTHORIZATION. THE EXECUTION, DELIVERY AND PERFORMANCE
BY BUYER OF THIS AGREEMENT AND EACH OF THE ANCILLARY AGREEMENTS REQUIRE NO
ACTION BY OR IN RESPECT OF, OR FILING WITH, ANY GOVERNMENTAL BODY, AGENCY,
OFFICIAL OR AUTHORITY.

 

4.04        NON-CONTRAVENTION. THE EXECUTION, DELIVERY AND PERFORMANCE BY BUYER
OF THIS AGREEMENT AND EACH OF THE ANCILLARY AGREEMENTS AND THE CONSUMMATION BY
BUYER OF THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY DO NOT AND WILL NOT
(I) CONTRAVENE OR CONFLICT WITH THE CORPORATE CHARTER OR BYLAWS OF BUYER OR
(II) ASSUMING COMPLIANCE WITH THE MATTERS REFERRED TO IN SECTION 4.03,
CONTRAVENE OR CONFLICT WITH ANY PROVISION OF ANY LAW, REGULATION, JUDGMENT,
INJUNCTION, ORDER OR DECREE BINDING UPON OR APPLICABLE TO BUYER.

 

4.05        LITIGATION. THERE IS NO ACTION, SUIT, INVESTIGATION OR PROCEEDING
PENDING AGAINST, OR TO THE KNOWLEDGE OF BUYER THREATENED AGAINST OR AFFECTING,
BUYER BEFORE ANY COURT OR ARBITRATOR OR ANY GOVERNMENTAL BODY, AGENCY OR
OFFICIAL WHICH IN ANY MANNER CHALLENGES OR SEEKS TO PREVENT, ENJOIN, ALTER OR
MATERIALLY DELAY THE TRANSACTIONS CONTEMPLATED HEREBY.

 

4.06        FINDERS’ FEES. THERE IS NO INVESTMENT BANKER, BROKER, FINDER OR
OTHER INTERMEDIARY THAT HAS BEEN RETAINED BY OR IS AUTHORIZED TO ACT ON BEHALF
OF BUYER WHO MIGHT BE ENTITLED TO ANY FEE OR COMMISSION FROM SELLER OR ANY OF
ITS AFFILIATES UPON CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT.

 

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4.07        FINANCING. PRIOR TO AND ON THE CLOSING DATE, BUYER WILL HAVE
SUFFICIENT AND AVAILABLE FUNDS TO ENABLE BUYER TO PAY THE INITIAL CASH PAYOUT
AND TO PAY ALL FEES AND EXPENSES RELATED TO THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT PAYABLE BY BUYER ON THE CLOSING DATE.

 

ARTICLE V

 

COVENANTS OF SELLER

 

Seller agrees that:

 

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 PRACTICES AND SHALL USE ITS REASONABLE BEST EFFORTS TO PRESERVE INTACT THE
BUSINESS ORGANIZATION AND RELATIONSHIPS WITH THIRD PARTIES AND TO KEEP AVAILABLE
THE SERVICES OF THE PRESENT EMPLOYEES OF THE BUSINESS. WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING, FROM THE DATE HEREOF UNTIL THE CLOSING DATE, SELLER
WILL NOT:

 

(A)           ACQUIRE A MATERIAL AMOUNT OF ASSETS RELATED TO THE BUSINESS FROM
ANY OTHER PERSON;

 

(B)           SELL, LEASE, LICENSE OR OTHERWISE DISPOSE OF ANY PURCHASED ASSETS
EXCEPT (I) PURSUANT TO EXISTING CONTRACTS OR COMMITMENTS, (II) IN THE ORDINARY
COURSE CONSISTENT WITH PAST PRACTICES AND (III) WITHOUT THE CONSENT OF BUYER,
WHICH SHALL NOT BE UNREASONABLY WITHHELD;

 

(C)           RENEW OR ENTER INTO ANY MAINTENANCE AGREEMENT EXCEPT IN THE
ORDINARY COURSE OF BUSINESS AND ON THE SELLER’S STANDARD TERMS AND CONDITIONS
WITHOUT THE CONSENT OF BUYER, WHICH SHALL NOT BE UNREASONABLY WITHHELD; OR

 

(D)           TERMINATE OR OTHERWISE LAYOFF ANY EMPLOYEES OF THE BUSINESS, AND
WILL PRESERVE INTACT AND KEEP AVAILABLE THE SERVICES OF ALL EMPLOYEES OF THE
BUSINESS, IN EACH CASE IN ACCORDANCE WITH PAST PRACTICES.

 

Seller will not take or agree or commit to take any action that would make any
representation and warranty made by Seller under this Agreement on the date of
its execution and delivery inaccurate in any respect at, or as of any time prior
to, the Closing Date.

 

5.02        ACCESS TO INFORMATION. FROM THE DATE HEREOF UNTIL THE CLOSING DATE,
SELLER SHALL (A) GIVE BUYER, ITS COUNSEL, FINANCIAL ADVISORS, FINANCING SOURCES,
AUDITORS AND OTHER AUTHORIZED REPRESENTATIVES FULL REASONABLE ACCESS TO THE
OFFICES, PROPERTIES, BOOKS AND RECORDS OF SELLER RELATED TO THE BUSINESS,
(B) 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
(C) INSTRUCT THE EMPLOYEES, COUNSEL AND FINANCIAL ADVISORS OF SELLER TO
REASONABLY COOPERATE WITH BUYER IN ITS INVESTIGATION OF THE BUSINESS. NO
INVESTIGATION BY BUYER PURSUANT TO THIS SECTION SHALL AFFECT ANY REPRESENTATION
OR

 

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WARRANTY GIVEN BY SELLER HEREUNDER OR ANY OF BUYER’S RIGHTS UNDER THIS
AGREEMENT, INCLUDING WITHOUT LIMITATION UNDER ARTICLES X AND XI.

 

5.03        NOTICES OF CERTAIN EVENTS; CONTINUING DISCLOSURE.

 

(A)           SELLER SHALL PROMPTLY NOTIFY BUYER OF:

 

(I)            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;

 

(II)           ANY NOTICE OR OTHER COMMUNICATION FROM ANY GOVERNMENTAL OR
REGULATORY AGENCY OR AUTHORITY IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT; AND

 

(III)          ANY ACTIONS, SUITS, CLAIMS, INVESTIGATIONS OR PROCEEDINGS
COMMENCED OR, TO SELLER’S KNOWLEDGE THREATENED AGAINST, OR RELATING TO OR
INVOLVING OR OTHERWISE AFFECTING SELLER OR THE BUSINESS OR THAT RELATE TO THE
CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, OR ANY MATERIAL
DEVELOPMENTS RELATING TO ANY ACTIONS, SUITS, CLAIMS, INVESTIGATIONS OR
PROCEEDINGS DISCLOSED PURSUANT TO SECTION 3.10.

 

(B)           UNTIL THE CLOSING DATE, SELLERS SHALL HAVE THE CONTINUING
OBLIGATION PROMPTLY TO ADVISE BUYER WITH RESPECT TO ANY MATTER HEREAFTER ARISING
OR DISCOVERED THAT, IF EXISTING OR KNOWN AT THE DATE OF THIS AGREEMENT, WOULD
HAVE BEEN REQUIRED TO BE SET FORTH OR DESCRIBED IN A SCHEDULE TO THIS AGREEMENT,
OR THAT CONSTITUTES A BREACH OR PROSPECTIVE BREACH OF THIS AGREEMENT BY SELLER.

 

(C)           NO NOTICE PURSUANT TO THIS SECTION SHALL AFFECT ANY REPRESENTATION
OR WARRANTY GIVEN BY SELLER HEREUNDER OR ANY OF BUYER’S RIGHTS UNDER THIS
AGREEMENT, INCLUDING WITHOUT LIMITATION UNDER ARTICLES X AND XI.

 

5.04        NONCOMPETITION.

 

(A)           SELLER AGREES THAT FOR A PERIOD OF THREE FULL YEARS FROM THE
CLOSING DATE, NEITHER IT NOR ANY PERSON THAT, AS OF THE DATE OF THIS AGREEMENT
OR THE CLOSING DATE, IS AN AFFILIATE OF SELLER SHALL:

 

(I)            ENGAGE, EITHER DIRECTLY OR INDIRECTLY, AS A PRINCIPAL OR FOR ITS
OWN ACCOUNT, OR SOLELY OR JOINTLY WITH OTHERS, OR AS A STOCKHOLDER IN ANY
CORPORATION OR JOINT STOCK ASSOCIATION, IN ANY BUSINESS THAT COMPETES WITH THE
BUSINESS AS IT EXISTS ON THE CLOSING DATE; PROVIDED THAT NOTHING HEREIN SHALL
PROHIBIT THE PURCHASE OR OWNERSHIP OF UP TO 5% OF THE OUTSTANDING STOCK OF A
PUBLICLY-TRADED COMPANY THAT COMPETES WITH THE BUSINESS; OR

 

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(II)           EMPLOY OR SOLICIT, OR RECEIVE OR ACCEPT THE PERFORMANCE OF
SERVICES BY, ANY TRANSFERRED EMPLOYEE; OR

 

(III)          ADVISE ANY CUSTOMER OR SUPPLIER OF THE BUSINESS WITH RESPECT TO
ITS BUSINESS RELATIONSHIP WITH THE BUSINESS.

 

(B)           FOR THE SAKE OF CLARITY, IN THE EVENT SELLER IS ACQUIRED AFTER THE
CLOSING DATE BY A PERSON (THE “ACQUIROR”) THE BUSINESS ACTIVITIES OF ACQUIROR ON
THE DATE ACQUIROR ACQUIRES SELLER (INCLUDING ANY ACTIVITIES THAT COMPETE WITH
THE BUSINESS AS IT EXISTS ON THE CLOSING DATE) SHALL NOT BE DEEMED A VIOLATION
OF THE PROVISIONS OF THIS SECTION 5.04 NOTWITHSTANDING THE FACT THAT THE
COMBINED ENTITY OF ACQUIROR AND SELLER WILL CONTINUE TO ENGAGE IN SUCH BUSINESS
ACTIVITIES.

 

(C)           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.

 

5.05        TRADEMARKS; TRADENAMES. AS SOON AS PRACTICABLE AFTER THE CLOSING
DATE, SELLER SHALL ELIMINATE THE USE OF ALL OF THE TRADEMARKS, TRADENAMES,
SERVICE MARKS AND SERVICE NAMES USED IN THE BUSINESS, IN ANY OF THEIR FORMS OR
SPELLINGS, ON ALL ADVERTISING, STATIONERY, BUSINESS CARDS, CHECKS, PURCHASE
ORDERS AND ACKNOWLEDGMENTS, CUSTOMER AGREEMENTS AND OTHER CONTRACTS AND BUSINESS
DOCUMENTS. SELLER SHALL GRANT BUYER THE RIGHT TO USE THE CLEARSTORY NAME, AS
DESCRIBED IN THE TRADEMARK LICENSE AGREEMENT AT EXHIBIT B.

 

5.06        INFORMATION STATEMENT.

 

(A)           THE SELLER HAS PREPARED AN INFORMATION STATEMENT (THE “INFORMATION
STATEMENT”) IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY IN A FORM
REASONABLY ACCEPTABLE TO BUYER. THE SELLER SHALL FILE THE INFORMATION STATEMENT
WITH THE SECURITIES AND EXCHANGE COMMISSION (THE “COMMISSION”) AS A PRELIMINARY
INFORMATION STATEMENT WITHIN ONE BUSINESS DAY AFTER THE DATE HEREOF IN
ACCORDANCE WITH RULE 14C-2 OF THE SECURITIES EXCHANGE ACT OF 1934. THE
INFORMATION STATEMENT SHALL INCLUDE THE RECOMMENDATION OF THE SELLER’S BOARD OF
DIRECTORS IN FAVOR OF APPROVAL AND ADOPTION OF THIS ASSET PURCHASE AGREEMENT.

 

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(B)           SELLER SHALL NOTIFY BUYER PROMPTLY AFTER THE RECEIPT OF ANY
COMMENTS OF THE COMMISSION ON, OR OF ANY REQUEST BY THE COMMISSION FOR
AMENDMENTS OR SUPPLEMENTS TO, THE INFORMATION STATEMENT AND SHALL SUPPLY BUYER
WITH COPIES OF ALL CORRESPONDENCE BETWEEN SELLER OR ANY OF ITS REPRESENTATIVES
AND THE COMMISSION WITH RESPECT TO THE INFORMATION STATEMENT. SELLER SHALL USE
ITS REASONABLE BEST EFFORTS TO RESPOND TO ANY COMMENTS FROM THE COMMISSION WITH
RESPECT TO THE PRELIMINARY INFORMATION STATEMENT AND TO MAKE ANY FURTHER FILINGS
(INCLUDING AMENDMENTS OR SUPPLEMENTS THERETO OR, IF NECESSARY OR APPROPRIATE,
AMENDMENTS TO ANY PERIODIC REPORT FILED BY SELLER WITH THE COMMISSION) IN
CONNECTION THEREWITH THAT SELLER SHALL DEEM NECESSARY, PROPER OR DESIRABLE AND
SHALL CAUSE THE DEFINITIVE INFORMATION STATEMENT TO BE MAILED TO SELLER’S
STOCKHOLDERS AT THE EARLIEST PRACTICABLE TIME. IF AT ANY TIME PRIOR TO THE
CLOSING DATE, ANY EVENT SHALL OCCUR RELATING TO BUYER, SELLER OR ANY OF THEIR
RESPECTIVE OFFICERS, DIRECTORS, PARTNERS OR AFFILIATES WHICH SHOULD BE DESCRIBED
IN AN AMENDMENT OR SUPPLEMENT TO THE INFORMATION STATEMENT, SUCH PARTY SHALL
INFORM THE OTHER PROMPTLY AFTER BECOMING AWARE OF SUCH EVENT. WHENEVER BUYER OR
SELLER LEARN OF THE OCCURRENCE OF ANY EVENT WHICH SHOULD BE DESCRIBED IN AN
AMENDMENT OF, OR A SUPPLEMENT TO, THE INFORMATION STATEMENT, THE PARTIES SHALL
COOPERATE TO PROMPTLY CAUSE SUCH AMENDMENT OR SUPPLEMENT TO BE PREPARED, FILED
WITH AND CLEARED BY THE COMMISSION AND, IF REQUIRED BY APPLICABLE LAW,
DISSEMINATED TO THE PERSONS AND IN THE MANNER REQUIRED.

 

5.07        SHAREHOLDER APPROVAL. SELLER SHALL DELIVER TO BUYER IMMEDIATELY UPON
THE EXECUTION OF THIS AGREEMENT, AN IRREVOCABLE WRITTEN CONSENT OF STOCKHOLDERS
ON THE FORM SET FORTH AS EXHIBIT C, EXECUTED BY CIP CAPITAL LP, SELWAY PARTNERS,
LLC, CSSMK, LLC, SELWAY MANAGEMENT, INC., SCP PRIVATE EQUITY PARTNERS II, LLC
AND MITCHELL KLEIN (INCLUDING AFFILIATES), WHO TOGETHER SHALL HOLD NO LESS THAN
18,336,295 SHARES, OR APPROXIMATELY 80% OF THE VOTES ENTITLED TO BE CAST.

 

5.08        NO-SHOP PROVISION. FROM THE DATE HEREOF UNTIL THE CLOSING DATE, THE
SELLER SHALL NOT:

 

(A)           ENTER INTO ANY AGREEMENT, UNDERSTANDING OR ARRANGEMENT RELATING TO
ANY PROPOSAL, PLAN, AGREEMENT, UNDERSTANDING OR ARRANGEMENT CONTEMPLATING
(DIRECTLY OR INDIRECTLY):

 

(I)            ANY MERGER, CONSOLIDATION, REORGANIZATION, RECAPITALIZATION OR
SIMILAR TRANSACTION INVOLVING THE SELLER, ANY OF SELLER’S SUBSIDIARIES OR ANY
OTHER ENTITY CONTROLLED BY SELLER OR ANY OF SELLER’S SUBSIDIARIES;

 

(II)           ANY TRANSFER OR ISSUANCE OF ANY CAPITAL STOCK OR OTHER SECURITIES
OF SELLER, ANY OF SELLER’S SUBSIDIARIES OR ANY OTHER ENTITY CONTROLLED BY SELLER
OR ANY OF SELLER’S SUBSIDIARIES FOR THE PURPOSE OF EFFECTING A CHANGE OF CONTROL
OF SELLER, OR

 

(III)          ANY TRANSFER OF ANY MATERIAL ASSET OF THE BUSINESS (COLLECTIVELY,
AN “ACQUISITION PROPOSAL”).

 

(B)           ENGAGE IN ANY DISCUSSIONS OR NEGOTIATIONS RELATING TO, ANY
ACQUISITION PROPOSAL;

 

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(C)           PROVIDE ANY INFORMATION REGARDING BUYER OR ITS BUSINESS OR
OPERATIONS TO ANY PARTY (OTHER THAN TO BUYER) IN CONNECTION WITH ANY POSSIBLE
ACQUISITION PROPOSAL; OR

 

(D)           SOLICIT OR ENCOURAGE THE SUBMISSION OF ANY ACQUISITION PROPOSAL;

 

(E)           PROVIDED HOWEVER, THAT FROM THE DATE HEREOF UNTIL THE CLOSING
DATE, THE SELLER MAY ENGAGE IN DISCUSSIONS WITH OTHER PARTIES REGARDING THE
PURCHASE OF SOLELY THE ASSETS OF THE SELLER NOT UTILIZED IN THE BUSINESS.

 

(F)            IN ADDITION, SELLER SHALL USE ITS COMMERCIALLY REASONABLE EFFORTS
TO PREVENT ANY ASSOCIATE OF SELLER FROM DOING ANY OF THE FOREGOING. “ASSOCIATE”
MEANS, WITH RESPECT TO SELLER:  (I) SELLER’S SUBSIDIARIES AND OTHER ENTITIES
UNDER THE CONTROL OF THE SELLER, (II) SELLER’S DIRECTORS, OFFICERS, EMPLOYEES,
AGENTS, REPRESENTATIVES, ACCOUNTANTS, ATTORNEYS AND ADVISORS, AND (III) THE
DIRECTORS, OFFICERS, EMPLOYEES, PARTNERS, AGENTS, REPRESENTATIVES, ACCOUNTANTS,
ATTORNEYS AND ADVISORS OF THE SELLER’S SUBSIDIARIES AND OTHER AFFILIATES.

 

(G)           IN THE EVENT THAT SELLER RECEIVES A WRITTEN OR ORAL INQUIRY
EXPRESSING INTEREST IN AN ACQUISITION PROPOSAL FROM ANY THIRD PARTY, SELLER
SHALL IMMEDIATELY BY ELECTRONIC MAIL, NOTIFY BUYER IN WRITING OF SUCH INQUIRY.
IF THE SELLER ENGAGES IN ANY DISCUSSIONS UNDER 5.08(E), AND THE THIRD PARTY
INITIATES OR ATTEMPTS TO PURSUE ANY DISCUSSIONS OF THE PURCHASE OF THE BUSINESS,
THE PURCHASED ASSETS, WHETHER AS A STAND ALONE PURCHASE OR AS PART OF THE
PURCHASE OF THE SELLER, ITS SECURITIES OR ALL OR SUBSTANTIALLY ALL OF ITS
ASSETS, THE SELLER SHALL IMMEDIATELY (I) CEASE ALL DISCUSSIONS; (II) INFORM THE
THIRD PARTY THAT NEITHER THE BUSINESS NOR THE PURCHASED ASSETS ARE FOR SALE; AND
(III) IMMEDIATELY INFORM BUYER BY ELECTRONIC MAIL OF SUCH DISCUSSIONS.

 

5.09        DELIVERY OF FINANCIAL STATEMENTS. THE SELLER SHALL DELIVER TO THE
BUYER THE AUDITED BALANCE SHEET AND THE RELATED STATEMENTS OF OPERATIONS AND
CASH FLOWS AS OF MARCH 31, 2006, ALONG WITH THE UNQUALIFIED AUDIT OPINION,
(WHICH MAY INCLUDE EXPLANATORY LANGUAGE REGARDING THE GOING CONCERN OF THE
BUSINESS OR THE SELLER) OF THE INDEPENDENT REGISTERED ACCOUNTING FIRM OF MILLER
ELLIN & COMPANY, LLP, BY MAY 15, 2006.

 

5.10        BILLING. THE SELLER AGREES THAT IT SHALL NOT INVOICE ANY CUSTOMERS
FOR, OR RECEIVE ANY CUSTOMER PAYMENT OR DEPOSITS WITH RESPECT TO, MAINTENANCE
SERVICE CONTRACTS THAT CONTAIN SERVICE PERIODS THAT COMMENCE ON OR AFTER JULY 1,
2006, PROVIDED THAT THE SELLER MAY INVOICE CUSTOMERS FOR AND RECEIVE PAYMENTS
WITH RESPECT TO SERVICE PERIODS THAT COMMENCE DURING JULY 2006 IF THE CLOSING
DOES NOT OCCUR ON OR PRIOR TO APRIL 18, 2006; PROVIDED THAT THE SELLER IS IN
COMPLIANCE WITH THE PROVISIONS OF SECTION 7.02 HEREOF WITH RESPECT TO COMPLETING
THE CLOSING ON OR PRIOR TO APRIL 18, 2006. THE PARTIES FURTHER AGREE, PROVIDED
THAT THE SELLER IS IN COMPLIANCE WITH THE PROVISIONS OF SECTION 7.02, IF THE
CLOSING DOES NOT OCCUR BY THE 15TH OF ANY MONTH BEGINNING WITH MAY 2006, THE
SELLER MAY INVOICE CUSTOMERS FOR AND RECEIVE PAYMENTS WITH RESPECT TO SERVICE
PERIODS THAT COMMENCE DURING THE MONTH THAT BEGINS APPROXIMATELY 75 DAYS AFTER
THE 15TH OF SUCH MONTH (FOR EXAMPLE IF THE CLOSING DOES NOT OCCUR BY MAY 15TH,
AMOUNTS MAY BE BILLED FOR AUGUST 2006 AND IF THE CLOSING DOES NOT OCCUR BY JULY
15TH, AMOUNTS MAY BE BILLED FOR SEPTEMBER 2006).

 

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5.11        CUSTOMER OVERPAYMENTS   THE SELLER AGREES THAT WITHIN THIRTY (30)
DAYS AFTER THE CLOSING, IT SHALL SEND CASH REFUNDS TO ANY CUSTOMERS OF THE
BUSINESS IN THE AMOUNTS LISTED ON SCHEDULE 5.11 FOR WHICH CUSTOMER OVERPAYMENTS
THAT HAVE BEEN RETAINED BY THE SELLER.

 

ARTICLE VI

 

COVENANTS OF BUYER

 

6.01        CERTAIN OBLIGATIONS WITH RESPECT TO THE OPERATION OF THE BUSINESS.

 

(A)           AT ALL TIMES DURING THE EARNOUT PERIOD, THE BUYER SHALL KEEP BOOKS
AND RECORDS WITH RESPECT TO THE OPERATIONS OF THE BUSINESS AND SHALL MAINTAIN
FINANCIAL RECORDS WITH RESPECT THERETO, IN ALL EVENTS SUFFICIENT TO DETERMINE
THE EARNOUT PAYMENT. THE BUYER, FOR SO LONG AS THE EARNOUT PAYMENT IS PAYABLE OR
ARE IN DISPUTE, SHALL PROVIDE ACCESS (DURING NORMAL BUSINESS HOURS AND UPON
REASONABLE PRIOR WRITTEN NOTICE) TO A SELLER REPRESENTATIVE FROM A NATIONALLY
RECOGNIZED ACCOUNTING FIRM, WHO IS NOT REASONABLY OBJECTIONABLE TO THE BUYER, TO
SUCH BOOKS AND RECORDS FOR PURPOSES OF VERIFYING THE EARNOUT PAYMENT. SUCH BOOKS
AND RECORDS SHALL BE KEPT IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES, CONSISTENT WITH THE HISTORICAL PRACTICES OF BUYER, TO THE EXTENT
PRACTICABLE.

 

(B)           UNTIL THE DATE THAT IS SIX MONTHS FROM THE CLOSING DATE, WITHOUT
PRIOR CONSULTATION WITH AND APPROVAL BY SELLER, BUYER SHALL NOT PROVIDE CUSTOMER
MAINTENANCE OR SOFTWARE UPGRADES UNDER ANY CONTRACT OR ADDITIONAL LICENSES TO
ANY CUSTOMER OF THE BUSINESS THAT IS MORE THAN 120 DAYS PAST DUE IN PAYING
AMOUNTS OWED TO SELLER UNDER ACCOUNTS RECEIVABLE OUTSTANDING AS OF THE CLOSING
DATE.

 

6.02        POST-CLOSING TRANSITION. TO THE EXTENT BUYER’S EMPLOYEES TEMPORARILY
RESIDE AT SELLER’S OFFICE IN WESTBOROUGH, MA AFTER THE CLOSING TO FACILITATE
TRANSITION ISSUES, BUYER AGREES THAT SUCH EMPLOYEES (AND ANY EQUIPMENT OR OTHER
ASSETS OF BUYER) SHALL BE REMOVED FROM SELLER’S PREMISES BY JUNE 1, 2006.

 

6.03        SELLER LICENSE AGREEMENT. AT THE CLOSING, THE BUYER SHALL ENTER INTO
A NON-EXCLUSIVE, END-USER LICENSE AGREEMENT IN FAVOR OF SELLER FOR 15 NAMED
USERS, CONTAINING THE TERMS AND CONDITIONS SET FORTH IN THE SELLER LICENSE
AGREEMENT ATTACHED HERETO AS EXHIBIT D, WHICH ARE THE SAME TERMS AND CONDITIONS
AS ARE SET FORTH IN SELLER’S STANDARD END-USER AGREEMENT (THE “SELLER LICENSE
AGREEMENT”). PURSUANT TO THE SELLER LICENSE AGREEMENT, BUYER WILL GRANT SELLER A
NON-EXCLUSIVE RIGHT AND LICENSE TO USE RADIANT BUSINESS DOCUMENT SERVER AND
RADIANT MAILMANAGER FOR SELLER’S OWN INTERNAL BUSINESS PURPOSES. IN ADDITION,
THE BUYER SHALL PROVIDE THE SELLER STANDARD SUPPORT AND MAINTENANCE FOR SUCH
SOFTWARE PRODUCTS FOR A PERIOD OF NOT LESS THAN 5 YEARS, AT THE ANNUAL RATE OF
$5,000 PER YEAR.

 

6.04        AUDIT FEES. WITHIN 10 DAYS AFTER THE LATER OF (I) RECEIPT OF THE
AUDITED FINANCIAL STATEMENTS REQUIRED PURSUANT TO SECTION 5.09 HEREOF, OR
(II) RECEIPT OF AN INVOICE FOR THE AUDITS OF SUCH FINANCIAL STATEMENTS OF THE
BUSINESS AND THE FINANCIAL STATEMENTS OF THE BUSINESS REQUIRED PURSUANT TO
SECTION 10.02(E) HEREOF, BUYER SHALL PAY TO MILLER ELLIN & COMPANY, LLP ITS FEES
FOR SUCH AUDITS, IN AN AGGREGATE AMOUNT NOT TO EXCEED $60,000.

 

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6.05        APPLICATION OF CASH RECEIPTS. IF, AT ANY TIME AFTER THE CLOSING, THE
BUYER RECEIVES ANY PAYMENTS IN RESPECT OF INVOICES BILLED BY THE SELLER PRIOR TO
THE CLOSING, THEN THE BUYER SHALL PROMPTLY REMIT SUCH PAYMENTS TO THE SELLER. IN
ADDITION, AND IN FURTHERANCE THEREOF, THE BUYER ACKNOWLEDGES AND AGREES THAT IT
SHALL APPLY ANY SUCH PAYMENTS SO RECEIVED, FIRST, AGAINST THE INVOICES BILLED BY
THE SELLER PRIOR TO THE CLOSING, BEFORE IT APPLIES ANY SUCH PAYMENTS AGAINST
INVOICES BILLED BY THE BUYER AFTER THE CLOSING.

 

ARTICLE VII

 

COVENANTS OF BOTH PARTIES

 

The parties hereto agree that:

 

7.01        CONFIDENTIALITY. THE SELLER AND ITS AFFILIATES WILL HOLD, AND WILL
USE THEIR BEST EFFORTS TO CAUSE THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES,
ACCOUNTANTS, COUNSEL, CONSULTANTS, ADVISORS AND AGENTS TO HOLD, IN CONFIDENCE,
UNLESS COMPELLED TO DISCLOSE BY JUDICIAL OR ADMINISTRATIVE PROCESS OR BY OTHER
REQUIREMENTS OF LAW, ALL CONFIDENTIAL DOCUMENTS AND INFORMATION CONCERNING BUYER
FURNISHED TO SELLER AND ITS AFFILIATES IN CONNECTION WITH THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT, AND, AFTER THE CLOSING DATE, 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 (OTHER THAN WITH REGARD TO ALL DOCUMENTS AND
INFORMATION CONCERNING THE BUSINESS), (II) IN THE PUBLIC DOMAIN THROUGH NO FAULT
OF SELLER OR (III) LATER LAWFULLY ACQUIRED BY SELLER FROM SOURCES OTHER THAN
BUYER; PROVIDED THAT SELLER MAY DISCLOSE SUCH INFORMATION TO ITS OFFICERS,
DIRECTORS, EMPLOYEES, ACCOUNTANTS, COUNSEL, CONSULTANTS, ADVISORS AND AGENTS IN
CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT SO LONG AS SUCH
PERSONS ARE INFORMED BY SELLER OF THE CONFIDENTIAL NATURE OF SUCH INFORMATION
AND ARE DIRECTED BY SELLER TO TREAT SUCH INFORMATION CONFIDENTIALLY IN
ACCORDANCE WITH THIS AGREEMENT. THE BUYER AND ITS AFFILIATES WILL HOLD, AND WILL
USE THEIR BEST EFFORTS TO CAUSE THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES,
ACCOUNTANTS, COUNSEL, CONSULTANTS, ADVISORS AND AGENTS TO HOLD, IN CONFIDENCE,
UNLESS COMPELLED TO DISCLOSE BY JUDICIAL OR ADMINISTRATIVE PROCESS OR BY OTHER
REQUIREMENTS OF LAW, ALL CONFIDENTIAL DOCUMENTS AND INFORMATION CONCERNING BOTH
THE SELLER AND THE BUSINESS FURNISHED TO BUYER AND ITS AFFILIATES IN CONNECTION
WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, BUT AFTER THE CLOSING
DATE, ONLY THE CONFIDENTIAL DOCUMENTS AND INFORMATION CONCERNING THE SELLER NOT
RELATED TO THE BUSINESS EXCEPT TO THE EXTENT THAT SUCH INFORMATION CAN BE SHOWN
TO HAVE BEEN (I) PREVIOUSLY KNOWN ON A NONCONFIDENTIAL BASIS BY BUYER, (II) IN
THE PUBLIC DOMAIN THROUGH NO FAULT OF BUYER OR (III) LATER LAWFULLY ACQUIRED BY
BUYER FROM SOURCES OTHER THAN SELLER; PROVIDED THAT BUYER MAY DISCLOSE SUCH
INFORMATION TO ITS OFFICERS, DIRECTORS, EMPLOYEES, ACCOUNTANTS, COUNSEL,
CONSULTANTS, ADVISORS AND AGENTS IN CONNECTION WITH THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT SO LONG AS SUCH PERSONS ARE INFORMED BY BUYER OF
THE CONFIDENTIAL NATURE OF SUCH INFORMATION AND ARE DIRECTED BY BUYER TO TREAT
SUCH INFORMATION CONFIDENTIALLY IN ACCORDANCE WITH THIS AGREEMENT. THE
OBLIGATION OF THE DISCLOSING PARTY TO HOLD ANY SUCH INFORMATION IN CONFIDENCE
SHALL BE SATISFIED IF THEY EXERCISE THE SAME CARE WITH RESPECT TO SUCH
INFORMATION AS THEY WOULD TAKE TO PRESERVE THE CONFIDENTIALITY OF THEIR OWN
SIMILAR INFORMATION. IF THIS AGREEMENT IS TERMINATED, (A) SELLER WILL, AND WILL
USE ITS BEST EFFORTS TO CAUSE ITS OFFICERS, DIRECTORS, EMPLOYEES, ACCOUNTANTS,
COUNSEL,

 

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CONSULTANTS, ADVISORS AND AGENTS TO, DESTROY OR DELIVER TO BUYER, UPON REQUEST,
ALL DOCUMENTS AND OTHER MATERIALS, AND ALL COPIES THEREOF, OBTAINED BY SELLER OR
ON ITS BEHALF CONCERNING BUYER IN CONNECTION WITH THIS AGREEMENT THAT ARE
SUBJECT TO SUCH CONFIDENCE, AND (B) BUYER WILL, AND WILL USE ITS BEST EFFORTS TO
CAUSE ITS OFFICERS, DIRECTORS, EMPLOYEES, ACCOUNTANTS, COUNSEL, CONSULTANTS,
ADVISORS, AND AGENTS TO, DESTROY OR DELIVER TO SELLER, UPON REQUEST, ALL
DOCUMENTS AND OTHER MATERIALS, AND ALL COPIES THEREOF, OBTAINED BY BUYER OR ON
ITS BEHALF CONCERNING SELLER IN CONNECTION WITH THIS AGREEMENT THAT ARE SUBJECT
TO SUCH CONFIDENCE. UPON THE CLOSING, SELLER SHALL NOT RETAIN ANY COPIES OF THE
SOURCE CODE FOR THE CLEARSTORY PRODUCTS OR ANY OTHER BUSINESS INTELLECTUAL
PROPERTY.

 

7.02        FURTHER ASSURANCES.

 

(A)           SUBJECT TO THE TERMS AND CONDITIONS OF THIS AGREEMENT, EACH PARTY
WILL USE ITS BEST 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 AND
REGULATIONS TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT AND
THE ANCILLARY AGREEMENTS. SELLER AND BUYER EACH 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
ACCOUNT ANY AMOUNTS COLLECTED PURSUANT TO THE FOREGOING POWERS, INCLUDING ANY
AMOUNTS PAYABLE AS INTEREST IN RESPECT THEREOF.

 

7.03        CERTAIN FILINGS. SELLER AND BUYER SHALL COOPERATE WITH EACH OTHER
(A) IN DETERMINING WHETHER ANY ACTION BY OR IN RESPECT OF, OR FILING WITH, ANY
GOVERNMENTAL BODY, AGENCY, OFFICIAL OR AUTHORITY IS REQUIRED, OR ANY ACTIONS,
CONSENTS, APPROVALS OR WAIVERS ARE REQUIRED TO BE OBTAINED FROM PARTIES TO ANY
MATERIAL CONTRACTS, IN CONNECTION WITH THE CONSUMMATION OF THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT AND THE ANCILLARY AGREEMENTS AND (B) 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.

 

7.04        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 AS MAY BE
REQUIRED BY APPLICABLE LAW OR STOCK EXCHANGE REGULATION, WILL NOT ISSUE ANY SUCH
PRESS RELEASE OR MAKE ANY SUCH PUBLIC STATEMENT PRIOR TO SUCH CONSULTATION.
NOTWITHSTANDING THE FOREGOING, THE PARTIES AGREE TO ISSUE THE PRESS RELEASES
ATTACHED HERETO AS EXHIBIT E AND EXHIBIT E-1 AT THE SIGNING OF THIS AGREEMENT.
EACH PARTY

 

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ALSO ACKNOWLEDGES THAT BOTH THE BUYER AND SELLER WILL NEED TO FILE A FORM 8-K
WITH THE COMMISSION (IN ACCORDANCE WITH THE RULES OF THE COMMISSION) RELATING TO
THE SIGNING OF THIS AGREEMENT AND THE CLOSING.

 

7.05        INFORMATION REQUESTS. AFTER THE CLOSING, FOR A PERIOD OF SIX MONTHS,
BOTH THE BUYER AND THE SELLER WILL AFFORD TO THE OTHER PARTY’S OFFICERS,
EMPLOYEES, COUNSEL, ACCOUNTANTS AND OTHER AUTHORIZED REPRESENTATIVES REASONABLE
ACCESS DURING NORMAL BUSINESS HOURS TO ALL PERSONNEL, BOOKS AND RECORDS RELATING
TO THE PURCHASED ASSETS, AND SHALL FURNISH TO SUCH PERSONS SUCH FINANCIAL AND
OPERATING DATA AND OTHER INFORMATION CONCERNING THE PURCHASED ASSETS AS SUCH
PERSONS FROM TIME TO TIME REASONABLE REQUESTS. PRIOR TO THE CLOSING, SELLER
SHALL PROVIDE BUYER WITH THE RECORDS AND DATA FROM THEIR CALL LOGGING AND BUG
TRACKING SOFTWARE IN AN ELECTRONIC OR PRINTED FORMAT THAT IS REASONABLY
ACCEPTABLE TO BOTH PARTIES.

 

ARTICLE VIII

 

TAX MATTERS

 

8.01        TAX DEFINITIONS. THE FOLLOWING TERMS, AS USED HEREIN, HAVE THE
FOLLOWING MEANINGS:

 

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

 

“Post-Closing Tax Period” means any Tax period (or portion thereof) beginning
after the Closing Date.

 

“Pre-Closing Tax Period” means any Tax period (or portion thereof) ending on or
before the Closing Date.

 

“Tax” means any federal, state, local or foreign net income, alternative or
add-on minimum, gross income, gross receipts, sales, use, value-added, ad
valorem, franchise, capital, paid-up capital, profits, lease, service, transfer,
greenmail, license, withholding, estimated, payroll, employment, excise,
severance, stamp, occupation, premium, property, environmental or windfall
profit tax, customs duty or other tax, governmental fee or other like assessment
or charge of any kind whatsoever (including liability for Taxes imposed on
another Person, whether incurred or borne as a transferee or successor or by
contract or otherwise), together with any interest or any penalty, addition to
tax or additional amount imposed by any governmental authority (domestic or
foreign) responsible for the imposition of any such tax.

 

“Tax Return” means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.

 

8.02        TAX MATTERS. SELLER HEREBY REPRESENTS AND WARRANTS TO BUYER AS OF
THE DATE HEREOF AND AS OF THE CLOSING DATE THAT:

 

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(A)           SELLER HAS TIMELY FILED ALL TAX RETURNS REQUIRED TO BE FILED AND
HAS TIMELY PAID ALL TAXES OWED (WHETHER OR NOT SHOWN OR REQUIRED TO BE SHOWN ON
SUCH TAX RETURNS), IN EACH CASE TO THE EXTENT SUCH TAXES AND TAX RETURNS RELATED
TO THE PURCHASED ASSETS OR THE OPERATION OF THE BUSINESS. ALL SUCH TAX RETURNS
WERE COMPLETE AND CORRECT IN ALL RESPECTS. NO PORTION OF ANY TAX RETURN THAT
RELATES TO THE PURCHASED ASSETS OR THE OPERATION OF THE BUSINESS HAS BEEN THE
SUBJECT OF ANY AUDIT, ACTION, SUIT, PROCEEDING, CLAIM OR EXAMINATION BY ANY
GOVERNMENTAL AUTHORITY, AND NO SUCH AUDIT, ACTION, SUIT, PROCEEDING, CLAIM,
DEFICIENCY OR ASSESSMENT IS PENDING OR, TO THE KNOWLEDGE OF SELLER, THREATENED.
SELLER IS NOT CURRENTLY THE BENEFICIARY OF ANY EXTENSION OF TIME WITHIN WHICH TO
FILE ANY SUCH TAX RETURN, AND SELLER HAS NOT WAIVED ANY STATUTE OF LIMITATION
WITH RESPECT TO ANY SUCH TAX OR AGREED TO ANY EXTENSION OF TIME WITH RESPECT TO
A TAX ASSESSMENT OR DEFICIENCY. NO CLAIM HAS EVER BEEN MADE BY A TAX AUTHORITY
IN A JURISDICTION WHERE SELLER DOES NOT FILE TAX RETURNS THAT IT IS OR MAY BE
SUBJECT TO TAXATION BY THAT JURISDICTION IN CONNECTION WITH THE BUSINESS OR THE
PURCHASED ASSETS. THERE ARE NO LIENS FOR TAXES UPON THE PURCHASED ASSETS OTHER
THAN PERMITTED LIENS, (AND SCHEDULE 8.02(A) CONTAINS A LIST OF ALL TAXES BEING
CONTESTED IN GOOD FAITH). SELLER DOES NOT HAVE, AND HAS NOT HAD, A PERMANENT
ESTABLISHMENT OR OTHER TAXABLE PRESENCE IN ANY FOREIGN COUNTRY IN CONNECTION
WITH THE OPERATION OF THE BUSINESS OR THE ACQUISITION, USE, OR HOLDING OF THE
PURCHASED ASSETS, AS DETERMINED UNDER THE LAWS OF SUCH COUNTRY OR ANY APPLICABLE
TAX TREATY OR CONVENTION BETWEEN THE UNITED STATES AND SUCH FOREIGN COUNTRY.
SELLER DOES NOT HAVE ANY LIABILITY FOR THE TAXES OF ANY PERSON (OTHER THAN
SELLER) UNDER TREASURY REGULATION SECTION 1.1502-6 (OR ANY CORRESPONDING
PROVISION OF STATE, LOCAL OR FOREIGN TAX LAW), OR AS A TRANSFEREE OR SUCCESSOR,
OR BY CONTRACT, OR OTHERWISE THAT COULD HAVE ANY ADVERSE EFFECT UPON THE BUYER
(OR ANY AFFILIATE).

 

(B)           SELLER HAS WITHHELD AND PAID ALL TAXES REQUIRED TO HAVE BEEN
WITHHELD AND PAID IN CONNECTION WITH AMOUNTS PAID OR OWING TO ANY EMPLOYEE,
STOCKHOLDER, INDEPENDENT CONTRACTOR, CREDITOR, OR OTHER THIRD PARTY AND RELATING
TO THE BUSINESS OR THE PURCHASED ASSETS. NONE OF THE ASSUMED LIABILITIES IS AN
OBLIGATION TO MAKE A PAYMENT THAT WILL NOT BE DEDUCTIBLE UNDER SECTION 280G OF
THE CODE.

 

(C)           EXCEPT AS SET FORTH ON SCHEDULE 8.02(C), NO STATE OF FACTS EXISTS
OR HAS EXISTED THAT WOULD CONSTITUTE GROUNDS FOR THE ASSESSMENT AGAINST BUYER,
WHETHER BY REASON OF TRANSFEREE LIABILITY OR OTHERWISE, OF ANY LIABILITY FOR ANY
TAX OF ANYONE OTHER THAN BUYER. THE PURCHASED ASSETS DO NOT INCLUDE ANY STOCK OR
OTHER OWNERSHIP INTERESTS IN ANY FOREIGN OR DOMESTIC CORPORATIONS, PARTNERSHIPS,
JOINT VENTURES, LIMITED LIABILITY COMPANIES, BUSINESS TRUSTS, OR OTHER ENTITIES.

 

(D)           SELLER HAS TIMELY PAID ALL TAXES, AND ALL INTEREST AND PENALTIES
DUE THEREON AND PAYABLE BY IT, FOR THE PRE-CLOSING TAX PERIOD WHICH WILL HAVE
BEEN REQUIRED TO BE PAID ON OR PRIOR TO THE CLOSING DATE, THE NON-PAYMENT OF
WHICH WOULD RESULT IN A LIEN ON ANY PURCHASED ASSET, WOULD OTHERWISE ADVERSELY
AFFECT THE BUSINESS OR WOULD RESULT IN BUYER BECOMING LIABLE OR RESPONSIBLE
THEREFOR.

 

(E)           SELLER HAS ESTABLISHED, IN ACCORDANCE WITH GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES APPLIED ON A BASIS CONSISTENT WITH THAT OF PRECEDING
PERIODS, ADEQUATE RESERVES FOR THE PAYMENT OF, AND WILL TIMELY PAY, ALL TAXES
WHICH ARISE FROM OR WITH RESPECT TO THE PURCHASED

 

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ASSETS OR THE OPERATION OF THE BUSINESS AND ARE INCURRED IN OR ATTRIBUTABLE TO A
PRE-CLOSING TAX PERIOD, THE NON-PAYMENT OF WHICH WOULD RESULT IN A LIEN ON ANY
PURCHASED ASSET, WOULD OTHERWISE ADVERSELY AFFECT THE BUSINESS OR WOULD RESULT
IN BUYER BECOMING LIABLE THEREFOR.

 

(F)            SCHEDULE 8.02(F) CONTAINS A LIST OF ALL JURISDICTIONS (WHETHER
FOREIGN OR DOMESTIC) TO WHICH ANY TAX IS PROPERLY PAYABLE BY SELLER IN
CONNECTION WITH THE BUSINESS OR THE PURCHASED ASSETS.

 

8.03        TAX COOPERATION; ALLOCATION OF TAXES.

 

(A)           BUYER AND SELLER AGREE TO FURNISH OR CAUSE TO BE FURNISHED TO EACH
OTHER, UPON REQUEST, AS PROMPTLY AS PRACTICABLE, SUCH INFORMATION AND ASSISTANCE
RELATING TO THE PURCHASED ASSETS AND THE BUSINESS AS IS REASONABLY NECESSARY FOR
THE FILING OF ALL TAX RETURNS AND MAKING OF ANY ELECTION RELATED TO TAXES, THE
PREPARATION FOR ANY AUDIT BY ANY GOVERNMENTAL AUTHORITY, AND THE PROSECUTION OR
DEFENSE OF ANY CLAIM, SUIT OR PROCEEDING RELATING TO ANY TAX RETURN. SELLER AND
BUYER SHALL COOPERATE WITH EACH OTHER IN THE CONDUCT OF ANY AUDIT OR OTHER
PROCEEDING RELATED TO TAXES INVOLVING THE BUSINESS OR THE PURCHASED ASSETS AND
EACH SHALL EXECUTE AND DELIVER SUCH POWERS OF ATTORNEY AND OTHER DOCUMENTS AS
ARE NECESSARY TO CARRY OUT THE INTENT OF THIS PARAGRAPH (A) OF SECTION 8.03. IN
ADDITION, BUYER AND SELLER AGREE TO MAINTAIN OR ARRANGE FOR THE MAINTENANCE OF
ALL RECORDS NECESSARY TO COMPLY WITH THIS SECTION 8.03 FOR A PERIOD OF SEVEN (7)
YEARS FROM THE CLOSING DATE (OR SUCH LONGER PERIOD AS MAY BE REASONABLY
REQUESTED IN WRITING BY BUYER OR SELLER) AND EACH PARTY AGREES TO AFFORD THE
OTHER REASONABLE ACCESS TO SUCH RECORDS DURING NORMAL BUSINESS HOURS.

 

(B)           ALL REAL PROPERTY TAXES, PERSONAL PROPERTY TAXES AND SIMILAR AD
VALOREM OBLIGATIONS LEVIED WITH RESPECT TO THE PURCHASED ASSETS FOR A TAXABLE
PERIOD WHICH INCLUDES (BUT DOES NOT END ON) THE CLOSING DATE (COLLECTIVELY, THE
“APPORTIONED OBLIGATIONS”) SHALL BE APPORTIONED BETWEEN SELLER AND BUYER AS OF
THE CLOSING DATE BASED ON THE NUMBER OF DAYS OF SUCH TAXABLE PERIOD INCLUDED IN
THE PRE-CLOSING TAX PERIOD AND THE NUMBER OF DAYS OF SUCH TAXABLE PERIOD
INCLUDED IN THE POST-CLOSING TAX PERIOD, EQUITABLY ADJUSTED IF NECESSARY TO
REFLECT CHANGES IN TAXABLE ASSETS AS BETWEEN THE PRE-CLOSING PERIOD AND
POST-CLOSING PERIOD OR PORTIONS THEREOF. SELLER SHALL BE LIABLE FOR THE
PROPORTIONATE AMOUNT OF SUCH TAXES THAT IS ATTRIBUTABLE TO THE PRE-CLOSING TAX
PERIOD. AT CLOSING, SELLER AND BUYER SHALL PRESENT A STATEMENT TO THE OTHER
SETTING FORTH THE AMOUNT OF REIMBURSEMENT TO WHICH EACH IS ENTITLED UNDER THIS
SECTION 8.03(B) TOGETHER WITH SUCH SUPPORTING EVIDENCE AS IS REASONABLY
NECESSARY TO CALCULATE SUCH AMOUNT TO BE REIMBURSED. SUCH AMOUNT SHALL BE PAID
BY THE PARTY OWING IT TO THE OTHER AT THE CLOSING. THEREAFTER, SELLER SHALL
NOTIFY BUYER UPON RECEIPT OF ANY BILL FOR REAL OR PERSONAL PROPERTY TAXES
RELATING TO THE PURCHASED ASSETS, PART OR ALL OF WHICH ARE ATTRIBUTABLE TO THE
POST-CLOSING TAX PERIOD, AND SHALL PROMPTLY DELIVER SUCH BILL TO BUYER WHO SHALL
PAY THE SAME TO THE APPROPRIATE GOVERNMENTAL AUTHORITY; PROVIDED THAT IF SUCH
BILL COVERS THE PRE-CLOSING TAX PERIOD, SELLER SHALL ALSO REMIT PRIOR TO THE DUE
DATE OF ASSESSMENT TO BUYER PAYMENT FOR THE PROPORTIONATE AMOUNT OF SUCH BILL
THAT IS ATTRIBUTABLE TO THE PRE-CLOSING TAX PERIOD. IF EITHER SELLER OR BUYER
SHALL THEREAFTER MAKE A PAYMENT FOR WHICH IT IS ENTITLED TO REIMBURSEMENT UNDER
THIS SECTION 8.03(B), THE OTHER PARTY SHALL MAKE SUCH REIMBURSEMENT PROMPTLY BUT
IN NO EVENT LATER THAN 30 DAYS AFTER THE PRESENTATION OF A STATEMENT SETTING
FORTH THE AMOUNT OF REIMBURSEMENT TO WHICH THE PRESENTING

 

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PARTY IS ENTITLED ALONG WITH SUCH SUPPORTING EVIDENCE AS IS REASONABLY NECESSARY
TO CALCULATE THE AMOUNT OF REIMBURSEMENT. ANY PAYMENT REQUIRED UNDER THIS
SECTION AND NOT MADE WITHIN 10 DAYS OF DELIVERY OF THE STATEMENT SHALL BEAR
INTEREST AT THE RATE PER ANNUM DETERMINED, FROM TIME TO TIME, UNDER THE
PROVISIONS OF SECTION 6621(A)(2) OF THE CODE FOR EACH DAY UNTIL PAID.

 

(C)           ANY TRANSFER, DOCUMENTARY, SALES, USE, STAMP, OR OTHER TAXES
ASSESSED UPON OR WITH RESPECT TO THE TRANSFER OF THE PURCHASED ASSETS TO BUYER
AND ANY RECORDING OR FILING FEES WITH RESPECT THERETO SHALL BE BORNE AND PAID BY
BUYER, AND BUYER SHALL PROMPTLY REIMBURSE SELLER FOR ANY SUCH AMOUNTS PAID BY
SELLER. BUYER AND SELLER SHALL COOPERATE TO MINIMIZE THE AMOUNT OF ALL THE
FOREGOING TAXES AND SHALL PROVIDE EACH OTHER WITH ANY APPROPRIATE RESALE
EXEMPTION CERTIFICATIONS, TAX CLEARANCE CERTIFICATES AND OTHER SIMILAR
DOCUMENTATION. THE PARTY THAT IS REQUIRED BY APPLICABLE LAW TO MAKE THE FILINGS,
REPORTS, OR RETURNS AND TO HANDLE ANY AUDITS OR CONTROVERSIES WITH RESPECT TO
ANY OF THE FOREGOING TAXES SHALL DO SO, AND THE OTHER PARTY SHALL COOPERATE (AND
MAKE REIMBURSEMENT) WITH RESPECT THERETO AS NECESSARY.

 

ARTICLE IX

 

EMPLOYEE BENEFITS

 

9.01        EMPLOYEE BENEFITS DEFINITIONS. THE FOLLOWING TERMS, AS USED HEREIN,
HAVING THE FOLLOWING MEANING:

 

“Benefit Arrangement” means an employment, severance or similar contract,
arrangement or policy (written or oral) and each plan or arrangement providing
for severance, insurance coverage (including any self-insured arrangements),
workers’ compensation, disability benefits, supplemental unemployment benefits,
vacation benefits, pension or retirement benefits or for deferred compensation,
profit-sharing, bonuses, phantom stock, stock options, stock appreciation rights
or other forms of incentive compensation or post-retirement insurance,
compensation or benefits or any Co-employment agreement that (i) is not an
Employee Plan, (ii) is entered into, maintained or contributed to, as the case
may be, by Seller and (iii) covers any Employee or former Employee of Seller.

 

“Employee” for purposes of this Section IX means any employee of Seller.

 

“Employee Plan” means each “employee benefit plan,” as such term is defined in
Section 3(3) of ERISA, that (i) is subject to any provision of ERISA and (ii) is
maintained or contributed to by Seller or any of its ERISA Affiliates or any
Co-Employer, as the case may be.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

“Transferred Employees” means those Employees listed on Schedule 9.03 who are
being offered employment by Buyer and who commence employment with Buyer as of
the Closing Date.

 

“Business Employees” means any Employee of the Seller who is primarily engaged
in activities on behalf of the Business.

 

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9.02        ERISA REPRESENTATIONS. SELLER HEREBY REPRESENTS AND WARRANTS TO
BUYER THAT:

 

(A)           SCHEDULE 9.02 LISTS EACH EMPLOYEE PLAN THAT COVERS ANY EMPLOYEE,
COPIES OF ALL OF WHICH, AND A SUMMARY PLAN DESCRIPTION OF EACH, HAVE PREVIOUSLY
BEEN FURNISHED TO BUYER. WITH RESPECT TO EACH EMPLOYEE PLAN, ALL ANNUAL REPORTS
(FORM 5500) REQUIRED TO BE FILED WITH THE INTERNAL REVENUE SERVICE OR DEPARTMENT
OF LABOR HAVE BEEN PROPERLY FILED ON A TIMELY BASIS AND SELLER HAS PROVIDED THE
MOST RECENTLY FILED FORM 5500.

 

(B)           SCHEDULE 9.02 ALSO INCLUDES A LIST OF EACH BENEFIT ARRANGEMENT OF
SELLER, COPIES OR DESCRIPTIONS OF WHICH HAVE BEEN MADE AVAILABLE OR FURNISHED
PREVIOUSLY TO BUYER.

 

(C)           NONE OF THE EMPLOYEE PLANS OR BENEFIT ARRANGEMENTS LISTED ON
SCHEDULE 9.02 IS SUBJECT TO THE LAWS OF ANY JURISDICTION OUTSIDE THE UNITED
STATES.

 

(D)           NO NON-EXEMPT “PROHIBITED TRANSACTION,” AS DEFINED IN SECTION 406
OF ERISA OR SECTION 4975 OF THE CODE, HAS OCCURRED WITH RESPECT TO ANY EMPLOYEE
PLAN.

 

(E)           NEITHER SELLER NOR ANY ERISA AFFILIATE MAINTAINS OR HAS EVER
MAINTAINED OR CONTRIBUTED TO OR EXPECTS TO INCUR LIABILITY WITH RESPECT TO ANY
EMPLOYEE PLAN SUBJECT TO TITLE IV OF ERISA. SELLER HAS NOT INCURRED NOR DOES IT
REASONABLY EXPECT TO INCUR ANY LIABILITY WITH RESPECT TO ANY TRANSACTION
DESCRIBED IN SECTION 4069 OF ERISA.

 

(F)            EACH EMPLOYEE PLAN WHICH IS INTENDED TO BE QUALIFIED UNDER
SECTION 401(A) OF THE CODE IS SO QUALIFIED AND HAS BEEN SO QUALIFIED DURING THE
PERIOD FROM ITS ADOPTION TO DATE, AND EACH TRUST FORMING A PART THEREOF IS
EXEMPT FROM TAX PURSUANT TO SECTION 501(A) OF THE CODE. SELLER HAS FURNISHED TO
BUYER COPIES OF THE MOST RECENT INTERNAL REVENUE SERVICE DETERMINATION OR
OPINION LETTER WITH RESPECT TO EACH SUCH EMPLOYEE PLAN. EACH EMPLOYEE PLAN AND
BENEFIT ARRANGEMENT HAS BEEN MAINTAINED IN COMPLIANCE WITH ITS TERMS AND WITH
THE APPLICABLE REQUIREMENTS PRESCRIBED BY ANY AND ALL STATUTES, ORDERS, RULES
AND REGULATIONS.

 

(G)           WITH RESPECT TO THE BUSINESS EMPLOYEES AND FORMER BUSINESS
EMPLOYEES, THERE ARE NO EMPLOYEE POST-RETIREMENT HEALTH OR WELFARE PLANS IN
EFFECT, EXCEPT AS REQUIRED BY SECTION 4980B OF THE CODE OR APPLICABLE STATE LAW.
NO TAX UNDER SECTION 4980B OR 4980D OF THE CODE HAS BEEN INCURRED IN RESPECT OF
ANY EMPLOYEE PLAN THAT IS A GROUP HEALTH PLAN, AS DEFINED IN SECTION 5000(B)(1)
OF THE CODE.

 

(H)           ALL CONTRIBUTIONS, RESERVES OR PREMIUM PAYMENTS ACCRUED UNDER EACH
EMPLOYEE PLAN AND BENEFIT ARRANGEMENT HAVE BEEN MADE AS OF THE CLOSING DATE OR
ARE REFLECTED ON THE BALANCE SHEET.

 

(I)            NO EMPLOYEE WILL BECOME ENTITLED TO ANY BONUS, RETIREMENT,
SEVERANCE OR SIMILAR BENEFIT OR ENHANCED BENEFIT SOLELY AS A RESULT OF THE
TRANSACTIONS CONTEMPLATED HEREBY.

 

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9.03        EMPLOYEES AND OFFERS OF EMPLOYMENT.

 

(A)           ON OR PRIOR TO THE CLOSING DATE, BUYER MAY, AT ITS SOLE
DISCRETION, OFFER EMPLOYMENT ON AN AT-WILL BASIS TO ALL OF THE BUSINESS
EMPLOYEES. BUYER SHALL PROVIDE TO SELLER A COMPLETE AND ACCURATE LIST OF THE
TRANSFERRED EMPLOYEES AT LEAST TWO (2) BUSINESS DAYS PRIOR TO CLOSING.

 

(B)           SELLER AGREES TO (I) USE REASONABLE EFFORTS TO COOPERATE WITH
BUYER IN BUYER’S RECRUITMENT OF THE BUSINESS EMPLOYEES, (II) TERMINATE THE
EMPLOYMENT OF THE TRANSFERRED EMPLOYEES WITH SELLER (OR, ALTERNATIVELY, AT THE
DISCRETION OF SELLER, CAUSE THE TRANSFERRED EMPLOYEE TO VOLUNTARILY TERMINATE
HIS EMPLOYMENT AND, IN CONNECTION THEREWITH, SELLER WILL ACCEPT THE RESIGNATION
OF THE TRANSFERRED EMPLOYEES) ON OR IMMEDIATELY PRIOR TO THE CLOSING DATE.
SELLER AGREES TO PAY ANY AND ALL LIABILITIES WITH RESPECT TO EACH BUSINESS
EMPLOYEE, INCLUDING, BUT NOT LIMITED TO, ALL SUCH LIABILITIES RELATING TO SUCH
TERMINATION, INCLUDING, WITHOUT LIMITATION ANY PAYMENTS AND BENEFITS DUE SUCH
BUSINESS EMPLOYEES PURSUANT TO ACCRUED SALARY AND WAGES, BONUSES, COMMISSIONS,
PENSION, RETIREMENT, SAVINGS, HEALTH, WELFARE AND OTHER BENEFITS AND SEVERANCE,
PAYMENTS OR SIMILAR PAYMENTS OF THE TRANSFERRED EMPLOYEES, EXCLUDING VACATION
ACCRUALS ASSUMED BY THE BUYER IN ACCORDANCE WITH SECTION 2.03(E) , AND
(III) PROVIDE TO EACH TRANSFERRED EMPLOYEE ANY NOTICE (WHICH NOTICE SHALL BE
REASONABLY ACCEPTABLE TO BUYER) REQUIRED UNDER ANY LAW OR REGULATIONS IN RESPECT
OF SUCH TERMINATION INCLUDING, WITHOUT LIMITATION, THE CONSOLIDATED OMNIBUS
BUDGET RECONCILIATION ACT OF 1985, AS AMENDED (“COBRA”), AND THE FEDERAL WORKERS
ADJUSTMENT AND RETRAINING NOTIFICATION ACT (“WARN ACT”).

 

(C)           BUYER AGREES THAT IT WILL MAKE OFFERS OF EMPLOYMENT TO THE
BUSINESS EMPLOYEES IN GOOD FAITH, WITH TERMS AND CONDITIONS, INCLUDING, BUT NOT
LIMITED TO, SALARY AND BENEFITS, TO BE DETERMINED AT THE BUYER’S SOLE
DISCRETION. NOTHING HEREIN SHALL BE CONSTRUED AS AN OFFER OF EMPLOYMENT ON OTHER
THAN AN EMPLOYEE-AT-WILL BASIS. SELLER WILL MAKE ALL REASONABLE EFFORTS TO
ASSIST BUYER IN HIRING ALL SUCH BUSINESS EMPLOYEES, AND SELLER WILL NOT TAKE ANY
ACTION THAT WOULD IMPEDE, HINDER, INTERFERE OR OTHERWISE COMPETE WITH BUYER’S
EFFORT TO HIRE ANY TRANSFERRED EMPLOYEE OR ANY OTHER BUSINESS EMPLOYEE. BUYER
SHALL NOT ASSUME RESPONSIBILITY FOR ANY BUSINESS EMPLOYEE UNTIL SUCH EMPLOYEE
COMMENCES EMPLOYMENT WITH BUYER, BUT IN NO EVENT SHALL BUYER ASSUME ANY
RESPONSIBILITY FOR ANY COMMITMENT, OBLIGATION, DUTY OR LIABILITY (I) OF SELLER
TO ANY BUSINESS EMPLOYEE, OR (II) TO ANY BUSINESS EMPLOYEE THAT AROSE PRIOR TO
THE CLOSING DATE, EXCEPT AS EXPRESSLY SET FORTH HEREIN. BUYER SHALL NOT ASSUME
RESPONSIBILITY FOR ANY EMPLOYEE OF SELLER WHO IS NOT A TRANSFERRED EMPLOYEE AND
SELLER AGREES TO CONTINUE TO ASSUME ALL RESPONSIBILITIES, COMMITMENTS AND/OR
LIABILITIES FOR ANY EMPLOYEE OF SELLER WHO IS NOT A TRANSFERRED EMPLOYEE.

 

(D)           SELLER SHALL USE ITS COMMERCIALLY REASONABLE EFFORTS (WITHOUT,
HOWEVER, ANY REQUIREMENT TO PAY MONIES OR ANY OTHER FORM OF CONSIDERATION) TO
ASSIST BUYER IN BUYER’S HIRING OF CERTAIN OF SELLER’S KEY BUSINESS EMPLOYEES AND
IN ITS ENTERING INTO EMPLOYMENT OR CONSULTING ARRANGEMENTS WITH THEM.

 

(E)           BUYER SHALL EMPLOY THE TRANSFERRED EMPLOYEES FOLLOWING THE CLOSING
DATE IN ACCORDANCE WITH THE TERMS AND CONDITIONS SET FORTH IN THE EMPLOYMENT
OFFER LETTERS TO BE

 

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DELIVERED TO THE TRANSFERRED EMPLOYEES BY THE BUYER. NOTHING HEREIN SHALL
PREVENT BUYER FROM TERMINATING THE EMPLOYMENT OF ANY SUCH TRANSFERRED EMPLOYEE.

 

(F)            AS SOON AS REASONABLY PRACTICABLE AFTER THE CLOSING DATE, BUYER
SHALL TAKE ALL REASONABLE ACTION SO THAT ALL TRANSFERRED EMPLOYEES WHO ACCEPT
EMPLOYMENT WITH THE BUYER AFTER THE CLOSING DATE (“HIRED EMPLOYEES”) SHALL BE
ENTITLED TO PARTICIPATE IN EACH EMPLOYEE BENEFIT PLAN, PROGRAM OR ARRANGEMENT OF
BUYER OF GENERAL APPLICABILITY (THE “BUYER BENEFIT PLANS”) TO THE SAME EXTENT AS
SIMILARLY-SITUATED EMPLOYEES OF BUYER AND ITS SUBSIDIARIES (IT BEING UNDERSTOOD
THAT INCLUSION OF THE HIRED EMPLOYEES IN THE BUYER BENEFIT PLANS MAY OCCUR AT
DIFFERENT TIMES WITH RESPECT TO DIFFERENT PLANS). BUYER SHALL, SUBJECT TO ANY
THIRD PARTY INSURERS CONSENT, USE ITS COMMERCIALLY REASONABLE EFFORTS TO CAUSE
EACH BUYER BENEFIT PLAN IN WHICH THE HIRED EMPLOYEES ARE ELIGIBLE TO PARTICIPATE
TO TAKE INTO ACCOUNT FOR PURPOSES OF ELIGIBILITY AND VESTING THEREUNDER
INCLUDING, BUT NOT LIMITED TO, APPLICABILITY OF MINIMUM WAITING PERIODS FOR
PARTICIPATION, THE SERVICE OF SUCH EMPLOYEES WITH THE SELLER.

 

(G)           WARN. ANY NOTICE REQUIRED UNDER THE WARN ACT THAT IS, HAS BEEN OR
WILL BE REQUIRED OF SELLER TO ITS EMPLOYEES OR FORMER EMPLOYEES BY REASON OF ITS
ACTS ON OR PRIOR TO THE CLOSING DATE, OR BY REASON OF THE TRANSACTION
CONSUMMATION HEREBY, WILL BE GIVEN BY SELLER.

 

9.04        SELLER’S EMPLOYEE BENEFIT PLANS.

 

(A)           SELLER SHALL RETAIN ALL OBLIGATIONS AND LIABILITIES UNDER THE
EMPLOYEE PLANS AND BENEFIT ARRANGEMENTS IN RESPECT OF EACH EMPLOYEE OR FORMER
EMPLOYEE (INCLUDING ANY BENEFICIARY THEREOF). NO ASSETS OF ANY EMPLOYEE PLAN OR
BENEFIT ARRANGEMENT SHALL BE TRANSFERRED TO BUYER OR ANY OF ITS AFFILIATES OR TO
ANY PLAN OF BUYER OR ANY OF ITS AFFILIATES. ACCRUED BENEFITS OR ACCOUNT BALANCES
OF TRANSFERRED EMPLOYEES UNDER THE 401(K) PLAN SHALL BE FULLY VESTED AS OF THE
CLOSING DATE. SELLER SHALL COOPERATE AND ASSIST ANY TRANSFERRED EMPLOYEE WHO SO
REQUESTS, IN MAKING A DIRECT ROLLOVER OF THE TRANSFERRED EMPLOYEE’S VESTED
ACCOUNT BALANCE TO BUYER’S 401(K) PLAN AS SOON AS PRACTICABLE AFTER THE CLOSING
DATE. BUYER SHALL COOPERATE WITH SELLER AND ANY TRANSFERRED EMPLOYEE WITH
RESPECT TO SUCH DIRECT ROLLOVER, PROVIDED THAT BUYER DETERMINES THAT THE DIRECT
ROLLOVER IS PERMITTED UNDER THE CODE AND REGULATIONS THEREUNDER. EACH OF THE
PARTIES HERETO SHALL PAY ITS OWN EXPENSES IN CONNECTION WITH SUCH DIRECT
ROLLOVER.

 

(B)           WITH RESPECT TO ANY EMPLOYEE PLANS THAT ARE GROUP HEALTH PLANS AS
DEFINED IN SECTION 5000(B)(1) OF THE CODE, SELLER SHALL SATISFY THE NOTICE
REQUIREMENTS OF SECTION 4980B AND 9801 OF THE CODE. SELLER SHALL TREAT ALL
EMPLOYEES (AND THEIR BENEFICIARIES) WHO TERMINATE EMPLOYMENT WITH SELLER AS A
RESULT OF THIS TRANSACTION AS “QUALIFIED BENEFICIARIES” ENTITLED TO CONTINUATION
HEALTH COVERAGE AS DESCRIBED IN SECTION 4980B OF THE CODE (“COBRA COVERAGE”),
REGARDLESS OF WHETHER THE EMPLOYEE BECOMES A TRANSFERRED EMPLOYEE, AND SELLER
SHALL CONTINUE TO PROVIDE COBRA COVERAGE FOR THE MAXIMUM PERIOD REQUIRED BY LAW
TO ANY FORMER EMPLOYEE (OR BENEFICIARY) WHO IS ELIGIBLE FOR COBRA COVERAGE AS OF
THE CLOSING DATE. SELLER SHALL PROMPTLY NOTIFY BUYER IF IT CEASES TO PROVIDE ANY
GROUP COVERAGE TO ANY OF ITS EMPLOYEES.

 

9.05        NO THIRD PARTY BENEFICIARIES. NO PROVISION OF THIS ARTICLE IX OR ANY
OTHER PROVISION IN THIS AGREEMENT SHALL CREATE ANY THIRD PARTY BENEFICIARY OR
OTHER RIGHTS IN ANY

 

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EMPLOYEE OR FORMER EMPLOYEE (INCLUDING ANY BENEFICIARY OR DEPENDENT THEREOF) OF
SELLER OR OF ANY OF ITS SUBSIDIARIES IN RESPECT OF CONTINUED EMPLOYMENT (OR
RESUMED EMPLOYMENT) WITH EITHER BUYER OR THE BUSINESS OR ANY OF THEIR AFFILIATES
AND NO PROVISION OF THIS ARTICLE IX SHALL CREATE ANY SUCH RIGHTS IN ANY SUCH
PERSONS IN RESPECT OF ANY BENEFITS THAT MAY BE PROVIDED, DIRECTLY OR INDIRECTLY,
UNDER ANY EMPLOYEE PLAN OR BENEFIT ARRANGEMENT OR ANY PLAN OR ARRANGEMENT THAT
MAY BE ESTABLISHED BY BUYER OR ANY OF ITS AFFILIATES. NO PROVISION OF THIS
AGREEMENT SHALL CONSTITUTE A LIMITATION ON RIGHTS TO AMEND, MODIFY OR TERMINATE
AFTER THE CLOSING DATE ANY SUCH PLANS OR ARRANGEMENTS OF BUYER OR ANY OF ITS
AFFILIATES.

 

ARTICLE X

 

CONDITIONS TO CLOSING

 

10.01      CONDITIONS TO THE OBLIGATIONS OF EACH PARTY. THE OBLIGATIONS OF BUYER
AND SELLER TO CONSUMMATE THE CLOSING ARE SUBJECT TO THE SATISFACTION OF THE
FOLLOWING CONDITIONS:

 

(A)           NO PROVISION OF ANY APPLICABLE LAW OR REGULATION AND NO JUDGMENT,
INJUNCTION, ORDER OR DECREE SHALL PROHIBIT THE CONSUMMATION OF THE CLOSING.

 

(B)           EACH OTHER PARTY TO THIS AGREEMENT SHALL HAVE EXECUTED AND
DELIVERED EACH OF THE ANCILLARY AGREEMENTS TO BE ENTERED INTO BY IT, IN EACH
CASE SUBSTANTIALLY IN THE FORM ATTACHED AS AN EXHIBIT TO THIS AGREEMENT, AND ANY
OTHER DOCUMENTS OR ITEMS REQUIRED TO BE DELIVERED BY IT PURSUANT TO
SECTION 2.06.

 

10.02      CONDITIONS TO OBLIGATION OF BUYER. THE OBLIGATION OF BUYER TO
CONSUMMATE THE CLOSING IS SUBJECT TO THE SATISFACTION OF THE FOLLOWING FURTHER
CONDITIONS:

 

(A)           (I) SELLER SHALL HAVE PERFORMED IN ALL MATERIAL RESPECTS ALL OF
ITS OBLIGATIONS HEREUNDER REQUIRED TO BE PERFORMED BY IT ON OR PRIOR TO THE
CLOSING DATE, (II) THE REPRESENTATIONS AND WARRANTIES OF SELLER CONTAINED IN
THIS AGREEMENT AT THE TIME OF ITS EXECUTION AND DELIVERY AND IN ANY CERTIFICATE
OR OTHER WRITING DELIVERED BY SELLER PURSUANT HERETO SHALL BE TRUE AND CORRECT
AT AND AS OF THE CLOSING DATE, AS IF MADE AT AND AS OF SUCH DATE EXCEPT FOR SUCH
UNTRUTHS OR INACCURACIES THAT, INDIVIDUALLY OR IN THE AGGREGATE, ARE NOT
REASONABLY LIKELY TO HAVE A MATERIAL ADVERSE EFFECT ON THE BUSINESS AND
(III) BUYER SHALL HAVE RECEIVED A CERTIFICATE SIGNED BY THE OF SELLER TO THE
FOREGOING EFFECT.

 

(B)           THERE HAS NOT BEEN ANY MATERIAL ADVERSE CHANGE OR ANY EVENT,
OCCURRENCE, DEVELOPMENT OR STATE OF CIRCUMSTANCES OR FACTS WHICH COULD
REASONABLY BE EXPECTED TO RESULT IN A MATERIAL ADVERSE CHANGE, OR ANY CONDITION,
EVENT OR OCCURRENCE WHICH, INDIVIDUALLY OR IN THE AGGREGATE, COULD REASONABLY BE
EXPECTED TO PREVENT OR MATERIALLY DELAY SELLER’S ABILITY TO CONSUMMATE THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR PERFORM ITS MATERIAL OBLIGATIONS
HEREUNDER.

 

(C)           NO COURT, ARBITRATOR OR GOVERNMENTAL BODY, AGENCY OR OFFICIAL
SHALL HAVE ISSUED ANY ORDER, AND THERE SHALL NOT BE ANY STATUTE, RULE OR
REGULATION, RESTRAINING THE EFFECTIVE OPERATION BY BUYER OF ALL OR ANY MATERIAL
PORTION OF THE PURCHASED ASSETS AFTER THE CLOSING DATE

 

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AND NO PROCEEDING CHALLENGING THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR SEEKING TO PROHIBIT, ALTER, PREVENT OR MATERIALLY DELAY THE CLOSING
(I) SHALL HAVE BEEN INSTITUTED BY ANY GOVERNMENTAL AUTHORITY BEFORE ANY COURT,
ARBITRATOR OR GOVERNMENTAL BODY, AGENCY OR OFFICIAL AND BE PENDING OR (II) SHALL
HAVE BEEN INSTITUTED BY ANY PERSON (OTHER THAN A GOVERNMENTAL AUTHORITY) BEFORE
ANY COURT, ARBITRATOR OR GOVERNMENTAL BODY, AGENCY OR OFFICIAL AND BE PENDING,
WHERE SUCH PROCEEDING WOULD IN THE REASONABLE JUDGMENT OF THE BUYER REASONABLY
BE EXPECTED TO RESULT IN A RULING THAT WOULD PROHIBIT, ALTER, PREVENT OR
MATERIALLY DELAY THE CLOSING.

 

(D)           BUYER SHALL HAVE RECEIVED AN OPINION OF SULLIVAN & WORCESTER LLP,
DATED THE CLOSING DATE, IN SUBSTANTIALLY THE FORM ATTACHED HERETO AS EXHIBIT F.

 

(E)           BUYER SHALL HAVE RECEIVED THE AUDITED BALANCE SHEET OF THE
BUSINESS AS OF MARCH 31, 2005 AND THE RELATED STATEMENTS OF THE BUSINESS OF
OPERATIONS AND CASH FLOWS OF THE BUSINESS FOR THE ONE YEAR PERIOD ENDING
MARCH 31, 2005 TOGETHER WITH AN UNQUALIFIED AUDIT OPINION (WHICH MAY INCLUDE
EXPLANATORY LANGUAGE REGARDING THE GOING CONCERN OF THE BUSINESS OR THE SELLER)
OF THE INDEPENDENT REGISTERED ACCOUNTING FIRM OF MILLER ELLIN & COMPANY, LLP.

 

(F)            SELLER SHALL HAVE RECEIVED ALL OF THE REQUIRED CONSENTS AS SET
FORTH ON SCHEDULE 3.03.

 

(G)           NO LATER THAN TWO (2) DAYS PRIOR TO CLOSING, SELLER SHALL DELIVER
TO BUYER A DRAFT BALANCE SHEET OF THE BUSINESS AS OF MARCH 31, 2006.

 

10.03      CONDITIONS TO OBLIGATIONS OF SELLER. THE OBLIGATION OF SELLER TO
CONSUMMATE THE CLOSING IS SUBJECT TO THE SATISFACTION OF THE FOLLOWING FURTHER
CONDITIONS:  (I) BUYER SHALL HAVE PERFORMED IN ALL MATERIAL RESPECTS ALL OF ITS
OBLIGATIONS HEREUNDER REQUIRED TO BE PERFORMED BY IT AT OR PRIOR TO THE CLOSING
DATE, (II) THE REPRESENTATIONS AND WARRANTIES OF BUYER CONTAINED IN THIS
AGREEMENT AT THE TIME OF ITS EXECUTION AND DELIVERY AND IN ANY CERTIFICATE OR
OTHER WRITING DELIVERED BY BUYER PURSUANT HERETO SHALL BE TRUE AND CORRECT AT
AND AS OF THE CLOSING DATE, AS IF MADE AT AND AS OF SUCH DATE EXCEPT FOR SUCH
UNTRUTHS OR INACCURACIES THAT, INDIVIDUALLY OR IN THE AGGREGATE, ARE NOT
REASONABLY LIKELY TO HAVE A MATERIAL ADVERSE EFFECT (AS SUCH TERM WOULD BE
APPLIED TO THE BUSINESS OF BUYER)AND (III) SELLER SHALL HAVE RECEIVED A
CERTIFICATE SIGNED BY THE CHIEF EXECUTIVE OFFICER OF BUYER TO THE FOREGOING
EFFECT.

 

ARTICLE XI
SURVIVAL; INDEMNIFICATION

 

11.01      SURVIVAL.

 

(A)           THE COVENANTS, AGREEMENTS, REPRESENTATIONS AND WARRANTIES OF THE
PARTIES HERETO CONTAINED IN THIS AGREEMENT OR THE ANCILLARY AGREEMENTS OR IN ANY
CERTIFICATE OR OTHER WRITING DELIVERED PURSUANT HERETO OR THERETO OR IN
CONNECTION HEREWITH OR THEREWITH SHALL SURVIVE THE CLOSING UNTIL THE FIRST
ANNIVERSARY OF THE CLOSING DATE, EXCEPT AS TO MATTERS AS TO WHICH A PERSON HAS
MADE A CLAIM FOR INDEMNITY OR GIVEN NOTICE OF CLAIM ON OR PRIOR TO THE FIRST

 

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ANNIVERSARY OF THE CLOSING DATE, WHICH MATTERS SHALL SURVIVE THE EXPIRATION OF
SUCH PERIOD UNTIL SUCH CLAIM IS FINALLY RESOLVED AND ANY OBLIGATIONS WITH
RESPECT THERETO ARE FULLY SATISFIED, OR

 

(I)            IN THE CASE OF SECTION 7.01 (CONFIDENTIALITY);

 

(II)           IN THE CASE OF SECTION 5.04 (NONCOMPETITION), FOR THE PERIOD SET
FORTH THEREIN; AND

 

(III)          IN THE CASE OF SECTION 11.02(A)(IV), UNTIL THE EXPIRATION OF THE
APPLICABLE STATUTE OF LIMITATIONS GIVING EFFECT TO ANY WAIVERS, EXTENSIONS OR
MITIGATION THEREOF.

 

Notwithstanding the preceding sentence, any covenant, agreement, representation
or warranty in respect of which indemnity may be sought under Section 10.02
shall survive the time at which it would otherwise terminate pursuant to the
preceding sentence, if notice of the inaccuracy or breach thereof giving rise to
such right to indemnity shall have been given to the party against whom such
indemnity may be sought prior to such time.

 

(B)           ALL INDEMNIFICATION PAYMENTS MADE UNDER THIS AGREEMENT SHALL BE
TREATED AS ADJUSTMENTS TO THE PURCHASE PRICE.

 

11.02      INDEMNIFICATION. SELLER HEREBY INDEMNIFIES BUYER AGAINST AND AGREES
TO HOLD IT HARMLESS FROM ANY AND ALL DAMAGE, LOSS, LIABILITY AND EXPENSE
(INCLUDING WITHOUT LIMITATION REASONABLE EXPENSES OF INVESTIGATION AND
REASONABLE ATTORNEYS’ FEES AND EXPENSES IN CONNECTION WITH ANY ACTION, SUIT OR
PROCEEDING) (“DAMAGE”) INCURRED OR SUFFERED BY BUYER ARISING OUT OF:

 

(A)           (I) ANY MISREPRESENTATION OR BREACH OF WARRANTY (DETERMINED
WITHOUT REGARD TO ANY MATERIALITY QUALIFICATION CONTAINED IN ANY REPRESENTATION
OR WARRANTY GIVING RISE TO CLAIM FOR INDEMNITY HEREUNDER) MADE OR TO BE
PERFORMED BY SELLER PURSUANT TO THE PROVISIONS OF THIS AGREEMENT THE ANCILLARY
AGREEMENTS AND ANY CERTIFICATE OR OTHER WRITING DELIVERED PURSUANT HERETO OR
THERETO; AND

 

(II)           ANY CLAIM, ACTION, SUIT OR PROCEEDING BY ANY THIRD PARTY (A
“BUSINESS THIRD PARTY CLAIM”) ALLEGING FACTS THAT IF PROVEN TRUE WOULD
CONSTITUTE A MISREPRESENTATION OR BREACH OF WARRANTY BY SELLER;

 

(III)          ANY BREACH OF ANY COVENANT MADE BY SELLER PURSUANT TO ARTICLE V,
ARTICLE VII, SECTION 8.03 AND SECTION 9.03 OF THIS AGREEMENT; AND

 

(IV)          ANY TAX OBLIGATIONS OF SELLER (OTHER THAN ANY TAX OBLIGATIONS
UNDER SECTION 8.03(C) HEREOF), WHETHER AS A RESULT OF A PERMITTED LIEN OR
OTHERWISE, NOTWITHSTANDING ANY DISCLOSURE ON ANY DISCLOSURE SCHEDULE HERETO OR
OTHERWISE OF THE POSSIBILITY OF ANY SUCH TAXES OR THE EXISTENCE OF ANY RESERVES
THEREFOR.

 

(B)           BUYER HEREBY INDEMNIFIES SELLER AGAINST AND AGREES TO HOLD IT
HARMLESS FROM ANY AND ALL DAMAGES INCURRED OR SUFFERED BY SELLER ARISING OUT OF:

 

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(I)            ANY MISREPRESENTATION OR BREACH OF WARRANTY (DETERMINED WITHOUT
REGARD TO ANY MATERIALITY QUALIFICATION CONTAINED IN ANY REPRESENTATION OR
WARRANTY GIVING RISE TO CLAIM FOR INDEMNITY HEREUNDER) MADE OR TO BE PERFORMED
BY BUYER PURSUANT TO THE PROVISIONS OF THIS AGREEMENT THE ANCILLARY AGREEMENTS
AND ANY CERTIFICATE OR OTHER WRITING DELIVERED PURSUANT HERETO OR THERETO; AND

 

(II)           ANY BUSINESS THIRD PARTY CLAIM ALLEGING FACTS THAT IF PROVEN TRUE
WOULD CONSTITUTE A MISREPRESENTATION OR BREACH OF WARRANTY BY BUYER; AND

 

(III)          ANY BREACH OF ANY COVENANT OR AGREEMENT MADE BY BUYER PURSUANT TO
ARTICLE VI, ARTICLE VII, SECTION 8.03 AND SECTION 9.03 OF THIS AGREEMENT.

 

11.03      LIMITATION OF INDEMNIFICATION. NOTWITHSTANDING THE PROVISIONS OF
SECTION 11.02, (I) NEITHER SELLER NOR BUYER SHALL BE LIABLE FOR DAMAGES UNDER
SECTION 11.02(A)(I) AND 11.02(B)(I), RESPECTIVELY UNLESS THE AGGREGATE AMOUNT OF
DAMAGES WITH RESPECT TO ALL SUCH MISREPRESENTATIONS OR BREACHES OF WARRANTY
(DETERMINED WITHOUT REGARD TO ANY MATERIALITY QUALIFICATION CONTAINED IN ANY
REPRESENTATIONS, WARRANTY OR COVENANT GIVING RISE TO CLAIM FOR INDEMNITY
HEREUNDER) EXCEEDS $50,000, (II) SELLER’S MAXIMUM LIABILITY UNDER
SECTION 11.02(A)(I) AND 11.02(A)(II) SHALL NOT EXCEED THE INITIAL EARNOUT
PAYMENT AND (III) SELLER’S MAXIMUM LIABILITY UNDER 11.02(A)(IV) SHALL NOT EXCEED
THE AGGREGATE AMOUNT OF THE INITIAL CASH PAYMENT AND THE EARNOUT PAYMENTS.
PURSUANT TO SECTION 2.07, THE BUYER SHALL HOLDBACK THE INITIAL EARNOUT PAYMENT
TO PAY DAMAGES AND BUYER’S SOLE AND EXCLUSIVE REMEDY WITH RESPECT TO CLAIMS FOR
INDEMNIFICATION UNDER SECTIONS 11.02(A)(I) AND 11.02(A)(II) SHALL BE THE
HOLDBACK OF THE INITIAL EARNOUT PAYMENT.

 

11.04      PROCEDURES. ANY PARTY SEEKING INDEMNIFICATION UNDER SECTIONS 8.02,
9.02, AND 11.02 (THE “INDEMNIFIED PARTY”) SHALL GIVE PROMPT NOTICE TO THE PARTY
AGAINST WHOM INDEMNITY IS SOUGHT (THE “INDEMNIFYING PARTY”) OF THE ASSERTION OF
ANY THIRD PARTY CLAIM; PROVIDED THAT NO DELAY ON THE PART OF THE INDEMNIFIED
PARTY IN NOTIFYING THE INDEMNIFYING PARTY SHALL RELIEVE THE INDEMNIFYING PARTY
OF ANY LIABILITY OR OBLIGATION HEREUNDER, EXCEPT TO THE EXTENT THAT THE
INDEMNIFYING PARTY HAS BEEN PREJUDICED THEREBY. THE INDEMNIFYING PARTY MAY, AND
AT THE REQUEST OF THE INDEMNIFIED SHALL, PARTICIPATE IN AND CONTROL THE DEFENSE
OF ANY THIRD PARTY CLAIM AT ITS OWN EXPENSE. IF THE INDEMNIFYING PARTY ASSUMES
CONTROL OF THE DEFENSE OF ANY THIRD PARTY CLAIM, THE INDEMNIFYING PARTY SHALL
NOT BE LIABLE UNDER SECTIONS 8.02, 9.02 AND 11.02 FOR ANY SETTLEMENT EFFECTED BY
THE INDEMNIFIED PARTY WITHOUT ITS CONSENT OF ANY THIRD PARTY CLAIM.
NOTWITHSTANDING THE FOREGOING, IF THE INDEMNIFYING PARTY ASSUMES THE DEFENSE OF
A THIRD PARTY CLAIM AND IF THE INDEMNIFIED PARTY LATER DETERMINES IN GOOD FAITH
THAT A THIRD PARTY CLAIM IS LIKELY TO MATERIALLY ADVERSELY AFFECT IT OR ITS
BUSINESS IN A MANNER THAT MAY NOT BE ADEQUATELY COMPENSATED BY THE MONEY
DAMAGES, THEN THE INDEMNIFIED PARTY MAY, BY WRITTEN NOTICE TO THE INDEMNIFYING
PARTY, ASSUME THE EXCLUSIVE RIGHT TO DEFEND, COMPROMISE, OR SETTLE SUCH CLAIM.
IF THE INDEMNIFIED PARTY SHALL SO ASSUME THE EXCLUSIVE RIGHT TO DEFEND,
COMPROMISE, OR SETTLE SUCH CLAIM, ALL ATTORNEYS’ FEES AND OTHER EXPENSES
INCURRED BY THE INDEMNIFIED PARTY IN THE DEFENSE, COMPROMISE OR SETTLEMENT OF
SUCH CLAIM SHALL BE AT THE INDEMNIFIED PARTY’S EXPENSE AND SHALL NOT BE ELIGIBLE
FOR INDEMNIFICATION FROM THE INDEMNIFYING PARTY, BUT THE INDEMNIFYING PARTY
SHALL BE ENTITLED TO BE INDEMNIFIED BY THE INDEMNIFYING PARTY FOR THE FULL
AMOUNT OF ANY OTHER DAMAGES SUFFERED BY THE

 

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INDEMNIFIED PARTY AS A RESULT OF OR ARISING OUT OF THE THIRD PARTY CLAIM. THE
PARTY CONTROLLING THE DEFENSE OF ANY THIRD PARTY SUIT, ACTION OR PROCEEDING
SHALL KEEP THE OTHER PARTY ADVISED OF THE STATUS OF SUCH ACTION, SUIT OR
PROCEEDING AND THE DEFENSE THEREOF AND SHALL CONSIDER IN GOOD FAITH
RECOMMENDATIONS MADE BY THE OTHER PARTY WITH RESPECT THERETO.

 

11.05      EXCLUSIVE REMEDY. AFTER THE CLOSING, SECTIONS 8.02, 9.02 AND 11.02
SHALL PROVIDE THE EXCLUSIVE REMEDY FOR ANY MISREPRESENTATION OR BREACH OF
WARRANTY, COVENANT OR OTHER AGREEMENT OR OTHER CLAIM ARISING OUT OF THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, OTHER THAN THE COVENANTS
CONTAINED IN SECTIONS 5.04 (NONCOMPETITION) AND 7.01 (CONFIDENTIALITY), OR WITH
RESPECT TO CLAIMS FOR FRAUD, WILLFUL MISREPRESENTATION OR WILLFUL BREACH.

 

ARTICLE XII

 

TERMINATION

 

12.01      GROUNDS FOR TERMINATION. THIS AGREEMENT MAY BE TERMINATED AT ANY TIME
PRIOR TO THE CLOSING:

 

(A)           BY WRITTEN AGREEMENT OF BUYER AND SELLER;

 

(B)           BY EITHER BUYER OR SELLER IF THE CLOSING SHALL NOT HAVE BEEN
CONSUMMATED ON OR BEFORE JUNE 30, 2006; PROVIDED THAT SUCH TERMINATION RIGHT
SHALL NOT BE AVAILABLE TO A PARTY THAT HAS FAILED TO FULFILL ITS OBLIGATIONS
UNDER THIS AGREEMENT OR WHOSE ACTS OR OMISSIONS HAVE BEEN A SIGNIFICANT CAUSE OF
THE CLOSING NOT OCCURRING ON OR BEFORE SUCH DATE; AND

 

(C)           BY EITHER SELLER OR BUYER IF CONSUMMATION OF THE TRANSACTIONS
CONTEMPLATED HEREBY WOULD VIOLATE ANY NONAPPEALABLE FINAL ORDER, DECREE OR
JUDGMENT OF ANY COURT OR GOVERNMENTAL BODY HAVING COMPETENT JURISDICTION.

 

The party desiring to terminate this Agreement pursuant to clauses (b) or (c)
shall give notice of such termination to the other party.

 

12.02      EFFECT OF TERMINATION. IF THIS AGREEMENT IS TERMINATED AS PERMITTED
BY SECTION 12.01, SUCH TERMINATION SHALL BE WITHOUT LIABILITY OF EITHER PARTY
(OR ANY SHAREHOLDER, DIRECTOR, OFFICER, EMPLOYEE, AGENT, CONSULTANT OR
REPRESENTATIVE OF SUCH PARTY) TO THE OTHER PARTY TO THIS AGREEMENT; PROVIDED
THAT IF SUCH TERMINATION SHALL RESULT FROM THE WILLFUL FAILURE OF ANY PARTY TO
FULFILL A CONDITION TO THE PERFORMANCE OF THE OBLIGATIONS OF ANOTHER PARTY OR TO
PERFORM A COVENANT OF THIS AGREEMENT OR FROM A WILLFUL BREACH OF ANY
REPRESENTATION OR WARRANTY BY ANY PARTY TO THIS AGREEMENT, SUCH PARTY SHALL BE
FULLY LIABLE FOR ANY AND ALL DAMAGES INCURRED OR SUFFERED BY THE OTHER PARTIES
AS A RESULT OF SUCH FAILURE OR BREACH. THE PROVISIONS OF SECTIONS 7.01
(CONFIDENTIALITY), 13.03 (EXPENSES) AND 13.10 (JURISDICTION) SHALL SURVIVE ANY
TERMINATION HEREOF PURSUANT TO SECTION 12.01.

 

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ARTICLE XIII

 

MISCELLANEOUS

 

13.01      NOTICES. ALL NOTICES, REQUESTS, DEMANDS OR OTHER COMMUNICATIONS THAT
ARE REQUIRED OR MAY BE GIVEN PURSUANT TO THE TERMS OF THIS AGREEMENT SHALL BE IN
WRITING AND SHALL BE DEEMED TO HAVE BEEN DULY GIVEN:  (I) ON THE DATE OF
DELIVERY, IF PERSONALLY DELIVERED BY HAND, (II) UPON THE THIRD DAY AFTER SUCH
NOTICE IS DEPOSITED IN THE UNITED STATES MAIL, IF MAILED BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, RETURN RECEIPT REQUESTED, (III) UPON THE DATE
SCHEDULED FOR DELIVERY AFTER SUCH NOTICE IS SENT BY A NATIONALLY RECOGNIZED
OVERNIGHT EXPRESS COURIER OR (IV) BY FAX UPON WRITTEN CONFIRMATION (INCLUDING
THE AUTOMATIC CONFIRMATION THAT IS RECEIVED FROM THE RECIPIENT’S FAX MACHINE) OF
RECEIPT BY THE RECIPIENT OF SUCH NOTICE:

 

if to Buyer, to:

 

with a copy to:

 

 

 

 

Datawatch Corporation
Quorum Office Park
271 Mill Road
Chelmsford, MA 01824
Attn: Chief Financial Officer
Phone: 978-441-2200
Facsimile: 978-453-4443

 

 

William B. Simmons, Jr.
Choate, Hall & Stewart LLP
Two International Place
Boston, MA 02110
Telephone: (617) 248-5095
Facsimile: (617) 248-4000

 

 

 

if to Seller, to:

 

with a copy to:

 

 

 

ClearStory Systems, Inc.

 

 

Alfred L. Browne, III

 

One Research Drive
Suite 200B
Westborough, MA 01581
Attn: Hank Nelson
Telephone: (508) 870-4100
Facsimile: (508) 870-4221

 

 

Sullivan & Worcester, LLP
One Post Office Square
Boston, MA 02109
Telephone: (617) 338-2800
Facsimile: (617) 338-2880

 

13.02      AMENDMENTS; NO WAIVERS.

 

(A)               ANY PROVISION OF THIS AGREEMENT MAY BE AMENDED PRIOR TO THE
CLOSING DATE IF, AND ONLY IF, SUCH AMENDMENT IS IN WRITING AND SIGNED BY BUYER
AND SELLER. ANY PROVISION OF THIS AGREEMENT MAY BE WAIVED BY BUYER OR SELLER IF
THE WAIVER IS IN WRITING AND SIGNED BY THE PARTY TO BE BOUND.

 

(B)              NO FAILURE OR DELAY BY EITHER PARTY IN EXERCISING ANY RIGHT,
POWER OR PRIVILEGE HEREUNDER SHALL OPERATE AS A WAIVER THEREOF NOR SHALL ANY
SINGLE OR PARTIAL EXERCISE THEREOF PRECLUDE ANY OTHER OR FURTHER EXERCISE
THEREOF OR THE EXERCISE OF ANY OTHER RIGHT, POWER OR PRIVILEGE. THE RIGHTS AND
REMEDIES HEREIN PROVIDED SHALL BE CUMULATIVE AND NOT EXCLUSIVE OF ANY RIGHTS OR
REMEDIES PROVIDED BY LAW.

 

44

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13.03      EXPENSES. ALL COSTS AND EXPENSES INCURRED IN CONNECTION WITH THIS
AGREEMENT SHALL BE PAID BY THE PARTY INCURRING SUCH COST OR EXPENSE.

 

13.04      SUCCESSORS AND ASSIGNS. THE PROVISIONS OF THIS AGREEMENT SHALL BE
BINDING UPON AND INURE TO THE BENEFIT OF THE PARTIES HERETO AND THEIR RESPECTIVE
SUCCESSORS AND ASSIGNS.

 

13.05      GOVERNING LAW. THIS AGREEMENT AND THE ANCILLARY AGREEMENTS SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF DELAWARE,
WITHOUT REGARD TO THE CONFLICTS OF LAW RULES OF SUCH STATE.

 

13.06      COUNTERPARTS; EFFECTIVENESS. THIS AGREEMENT MAY BE SIGNED IN ANY
NUMBER OF COUNTERPARTS, EACH OF WHICH SHALL BE AN ORIGINAL, WITH THE SAME EFFECT
AS IF THE SIGNATURES THERETO AND HERETO WERE UPON THE SAME INSTRUMENT. THIS
AGREEMENT SHALL BECOME EFFECTIVE WHEN EACH PARTY HERETO SHALL HAVE RECEIVED A
COUNTERPART HEREOF SIGNED BY THE OTHER PARTIES HERETO.

 

13.07      ENTIRE AGREEMENT. THIS AGREEMENT AND THE ANCILLARY AGREEMENTS
CONSTITUTE THE ENTIRE AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT
MATTER HEREOF AND SUPERSEDES ALL PRIOR AGREEMENTS, UNDERSTANDINGS AND
NEGOTIATIONS, BOTH WRITTEN AND ORAL, BETWEEN THE PARTIES WITH RESPECT TO THE
SUBJECT MATTER HEREOF. NO REPRESENTATION, INDUCEMENT, PROMISE, UNDERSTANDING,
CONDITION OR WARRANTY NOT SET FORTH HEREIN HAS BEEN MADE OR RELIED UPON BY
EITHER PARTY HERETO. NONE OF THE PROVISIONS OF THIS AGREEMENT AND THE ANCILLARY
AGREEMENTS IS INTENDED TO CONFER UPON ANY PERSON OTHER THAN THE PARTIES HERETO
ANY RIGHTS OR REMEDIES HEREUNDER.

 

13.08      BULK SALES LAWS. BUYER AND SELLER EACH HEREBY WAIVE COMPLIANCE BY
SELLER WITH THE PROVISIONS OF THE “BULK SALES”, “BULK TRANSFER” OR SIMILAR LAWS
OF ANY STATE.

 

13.09      CAPTIONS. THE CAPTIONS HEREIN ARE INCLUDED FOR CONVENIENCE OF
REFERENCE ONLY AND SHALL BE IGNORED IN THE CONSTRUCTION OR INTERPRETATION
HEREOF.

 

13.10      JURISDICTION. ANY ACTION OR PROCEEDING SEEKING TO ENFORCE ANY
PROVISION OF, OR BASED ON ANY RIGHT ARISING OUT OF, THIS AGREEMENT MAY BE
BROUGHT AGAINST ANY OF THE PARTIES IN THE COURTS OF THE STATE OF DELAWARE, AND
EACH OF THE PARTIES HEREBY CONSENTS TO THE JURISDICTION OF SUCH COURTS (AND OF
THE APPROPRIATE APPELLATE COURTS) IN ANY SUCH ACTION OR PROCEEDING AND WAIVES
ANY OBJECTION TO VENUE LAID THEREIN. PROCESS IN ANY SUCH ACTION OR PROCEEDING
MAY BE SERVED ON ANY PARTY ANYWHERE IN THE WORLD, WHETHER WITHIN OR WITHOUT THE
STATE OF DELAWARE.

 

45

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IN WITNESS WHEREOF, the parties hereto here caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.

 

 

 

DATAWATCH CORPORATION

 

 

 

 

 

By:

/s/ Robert W. Hagger

 

 

Name: Robert W. Hagger

 

 

Title: President and CEO

 

 

 

 

 

CLEARSTORY SYSTEMS, INC.

 

 

 

 

 

By:

/s/ Henry T. Nelson

 

 

Name: Henry T. Nelson

 

 

Title: President and CEO

 

[Signature Page to Asset Purchase Agreement]

 

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Exhibit A

 

ASSIGNMENT AND ASSUMPTION AGREEMENT

 

ASSIGNMENT AND ASSUMPTION AGREEMENT, dated as of March 10, 2006, between
DATAWATCH CORPORATION, a Delaware corporation (“Buyer”), and CLEARSTORY SYSTEMS,
INC., a Delaware corporation (“Seller”).

 

W I T N E S S E T H

 

WHEREAS, Buyer and Seller have concurrently herewith consummated the purchase by
Buyer of the Purchased Assets pursuant to the terms and conditions of the Asset
Purchase Agreement dated March 10, 2006 between Buyer and Seller (the “Asset
Purchase Agreement”); terms defined in the Asset Purchase Agreement and not
otherwise defined herein being used herein as therein defined);

 

WHEREAS, pursuant to the Asset Purchase Agreement, Buyer has agreed to assume
certain liabilities and obligations of Seller with respect to the Purchased
Assets and the Business;

 

NOW, THEREFORE, in consideration of the sale of the Purchase Assets and in
accordance with the terms of the Asset Purchase Agreement, Buyer and Seller
agree as follows:

 

1.             (a)           Seller does hereby sell, transfer, assign and
deliver to Buyer all of the right, title and interest of Seller in, to and under
the Purchased Assets; provided that no sale, transfer, assignment or delivery
shall be made of any or any material portion of any of the Contracts or Permits
if an attempted sale, assignment, transfer or delivery, without the consent of a
third party, would constitute a breach or other contravention thereof or in any
way adversely affect the rights of Buyer or Seller thereunder.

 

(b)           Buyer does hereby accept all the right, title and interest of
Seller in, to and under all of the Purchased Assets (except as aforesaid) and
Buyer assumes and agrees to pay, perform and discharge promptly and fully when
due all of the Assumed Liabilities and to perform all of the obligations of
Seller to be performed under the Contracts.

 

2.             This Agreement shall be construed in accordance with and governed
by the law of the State of Delaware, without regard to the conflicts of law
rules of such state.

 

3.             This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.

 

 

 

DATAWATCH CORPORATION

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

Title:

 

 

 

 

 

CLEARSTORY SYSTEMS, INC.

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

Title:

 

[Signature Page to Assignment & Assumption Agreement]

 

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