exv10w1



 







Exhibit 10.1




EXECUTION COPY




STOCK PURCHASE AGREEMENT




by and among




Insight Enterprises, Inc.




Level 3 Communications, Inc.




and




Technology Spectrum, Inc.




dated as of




July 20, 2006





 









 








TABLE OF CONTENTS




	 	 	 	 	 	 	 
	 	 	 	 	Page
	 
	 	 	 	 	 	 
	ARTICLE I

	PURCHASE AND SALE OF SHARES

	 
	 	 	 	 	 	 
	Section 1.1

	 	Sale and Transfer of Shares
	 	 	1	 
	Section 1.2

	 	Consideration; Purchase Price
	 	 	1	 
	Section 1.3

	 	Closing Date Purchase Price Adjustment
	 	 	1	 
	Section 1.4

	 	Post-Closing Purchase Price Adjustment
	 	 	2	 
	 
	 	 	 	 	 	 
	ARTICLE II

	THE CLOSING

	 
	 	 	 	 	 	 
	Section 2.1

	 	The Closing
	 	 	4	 
	 
	 	 	 	 	 	 
	ARTICLE III

	REPRESENTATIONS AND WARRANTIES OF SELLER

	 
	 	 	 	 	 	 
	Section 3.1

	 	Organization
	 	 	5	 
	Section 3.2

	 	Authorization
	 	 	5	 
	Section 3.3

	 	Execution; Validity of Agreement
	 	 	5	 
	Section 3.4

	 	Consents and Approvals; No Violations
	 	 	5	 
	Section 3.5

	 	Ownership and Possession of Shares
	 	 	6	 
	Section 3.6

	 	Capitalization
	 	 	6	 
	Section 3.7

	 	Subsidiaries and Affiliates
	 	 	6	 
	Section 3.8

	 	Financial Statements
	 	 	6	 
	Section 3.9

	 	Absence of Certain Changes
	 	 	7	 
	Section 3.10

	 	Property and Assets
	 	 	7	 
	Section 3.11

	 	Leases
	 	 	7	 
	Section 3.12

	 	Contracts and Commitments
	 	 	8	 
	Section 3.13

	 	Insurance
	 	 	9	 
	Section 3.14

	 	Litigation
	 	 	9	 
	Section 3.15

	 	Environmental Matters
	 	 	9	 
	Section 3.16

	 	Compliance with Laws
	 	 	10	 
	Section 3.17

	 	Employee Benefit Plans
	 	 	10	 
	Section 3.18

	 	Tax Matters
	 	 	12	 
	Section 3.19

	 	Intellectual Property and Technology
	 	 	15	 
	Section 3.20

	 	Labor and Employment Matters
	 	 	17	 
	Section 3.21

	 	Brokers or Finders
	 	 	18	 
	Section 3.22

	 	Certain Business Relationships with the Company
	 	 	19	 
	Section 3.23

	 	Absence of Undisclosed Liabilities
	 	 	19	 
	Section 3.24

	 	Assets of the Company and the Company Subsidiaries
	 	 	19	 
	Section 3.25

	 	Customers and Suppliers
	 	 	19	 






i 




 









 





TABLE OF CONTENTS

(continued)




	 	 	 	 	 	 	 
	 	 	 	 	Page
	 
	 	 	 	 	 	 
	ARTICLE IV

	REPRESENTATIONS AND WARRANTIES OF BUYER

	 
	 	 	 	 	 	 
	Section 4.1

	 	Organization
	 	 	19	 
	Section 4.2

	 	Authorization; Validity of Agreement
	 	 	20	 
	Section 4.3

	 	Consents and Approvals; No Violations
	 	 	20	 
	Section 4.4

	 	Acquisition of Shares for Investment; Ability to Evaluate and Bear Risk
	 	 	20	 
	Section 4.5

	 	Availability of Funds
	 	 	21	 
	Section 4.6

	 	Acknowledgment by Buyer
	 	 	21	 
	Section 4.7

	 	Brokers or Finders
	 	 	21	 
	 
	 	 	 	 	 	 
	ARTICLE V

	COVENANTS

	 
	 	 	 	 	 	 
	Section 5.1

	 	Interim Operations of the Company
	 	 	21	 
	Section 5.2

	 	Access; Confidentiality
	 	 	24	 
	Section 5.3

	 	Efforts and Actions to Cause Closing to Occur
	 	 	25	 
	Section 5.4

	 	Tax Matters
	 	 	25	 
	Section 5.5

	 	Publicity
	 	 	30	 
	Section 5.6

	 	Employees
	 	 	30	 
	Section 5.7

	 	Employee Benefit Plans
	 	 	30	 
	Section 5.8

	 	Intercompany Arrangements
	 	 	32	 
	Section 5.9

	 	Maintenance of Books and Records
	 	 	32	 
	Section 5.10

	 	Bank Accounts
	 	 	33	 
	Section 5.11

	 	Assumption of Guarantees
	 	 	33	 
	Section 5.12

	 	Further Assurances
	 	 	33	 
	Section 5.13

	 	Compliance with the WARN Act and Similar Laws
	 	 	33	 
	Section 5.14

	 	Insurance Policies
	 	 	34	 
	Section 5.15

	 	Government Services Contracts
	 	 	34	 
	Section 5.16

	 	Non-Compete
	 	 	35	 
	Section 5.17

	 	Other Agreements
	 	 	36	 
	Section 5.18

	 	Release of Credit Support Obligations and Payment of Indebtedness
	 	 	36	 
	Section 5.19

	 	Indemnification of Directors and Officers
	 	 	36	 
	Section 5.20

	 	Transfer of Shares
	 	 	36	 
	Section 5.21

	 	Transfer of Parent Employees
	 	 	36	 
	 
	 	 	 	 	 	 
	ARTICLE VI

	CONDITIONS

	 
	 	 	 	 	 	 
	Section 6.1

	 	Conditions to Each Party’s Obligation to Effect the Closing
	 	 	37	 
	Section 6.2

	 	Conditions to Obligations of Buyer to Effect the Closing
	 	 	37	 
	Section 6.3

	 	Conditions to Obligations of Seller to Effect the Closing
	 	 	38	 






ii 




 









 





TABLE OF CONTENTS

(continued)




	 	 	 	 	 	 	 
	 	 	 	 	Page
	 
	 	 	 	 	 	 
	ARTICLE VII

	TERMINATION

	 
	 	 	 	 	 	 
	Section 7.1

	 	Termination
	 	 	39	 
	Section 7.2

	 	Effect of Termination
	 	 	39	 
	 
	 	 	 	 	 	 
	ARTICLE VIII

	INDEMNIFICATION

	 
	 	 	 	 	 	 
	Section 8.1

	 	Indemnification; Remedies
	 	 	40	 
	Section 8.2

	 	Limits on Indemnification
	 	 	40	 
	Section 8.3

	 	Notice of Claim; Defense
	 	 	41	 
	Section 8.4

	 	Tax Effect of Indemnification Payments
	 	 	42	 
	Section 8.5

	 	No Duplication; Exclusive Remedy
	 	 	43	 
	Section 8.6

	 	Limitation on Set-off
	 	 	43	 
	Section 8.7

	 	Assumption of Indemnification Obligations
	 	 	43	 
	Section 8.8

	 	Survival of Covenants; Investigation
	 	 	43	 
	 
	 	 	 	 	 	 
	ARTICLE IX

	DEFINITIONS AND INTERPRETATION

	 
	 	 	 	 	 	 
	Section 9.1

	 	Definitions
	 	 	43	 
	Section 9.2

	 	Interpretation
	 	 	52	 
	 
	 	 	 	 	 	 
	ARTICLE X

	MISCELLANEOUS

	 
	 	 	 	 	 	 
	Section 10.1

	 	Fees and Expenses
	 	 	53	 
	Section 10.2

	 	Amendment and Modification
	 	 	53	 
	Section 10.3

	 	Notices
	 	 	53	 
	Section 10.4

	 	Counterparts
	 	 	54	 
	Section 10.5

	 	Entire Agreement; No Third Party Beneficiaries
	 	 	54	 
	Section 10.6

	 	Severability
	 	 	54	 
	Section 10.7

	 	Governing Law
	 	 	54	 
	Section 10.8

	 	Jurisdiction
	 	 	54	 
	Section 10.9

	 	Extension; Waiver
	 	 	55	 
	Section 10.10

	 	Assignment
	 	 	55	 
	Section 10.11

	 	Obligations of Relating to the Company and the Company Subsidiaries
	 	 	55	 
	Section 10.12

	 	Specific Performance
	 	 	56	 
	 
	 	 	 	 	 	 
	Exhibits
	 
	 	 	 	 	 	 
	Exhibit A — Transition Services Agreement	 	 	 	 
	Exhibit B — Intellectual Property License Agreement	 	 	 	 






iii 




 









 





TABLE OF CONTENTS

(continued)




	 	 	 	 	 
	 	 	 	 	Page
	 
	 	 	 	 
	Schedules	 	 
	Disclosure Schedule	 	 
	 
	 	 	 	 
	Schedule 4.3(b)	 	 
	 
	Schedule 4.3(c)	 	 






iv 




 









 








STOCK PURCHASE AGREEMENT




          THIS STOCK PURCHASE AGREEMENT, dated as of July 20, 2006, is made and entered into by and
among INSIGHT ENTERPRISES, INC., a Delaware corporation (“Buyer”), LEVEL 3 COMMUNICATIONS, INC., a
Delaware corporation (“Parent”), and TECHNOLOGY SPECTRUM, INC., a Delaware corporation and a wholly
owned subsidiary of Parent (“Seller”).




          WHEREAS, Parent indirectly owns all of the issued and outstanding capital stock of Seller and
Software Spectrum, Inc., a Delaware corporation (the “Company”);




          WHEREAS, Seller directly owns all of the issued and outstanding capital stock (the “Shares”)
of the Company; and




          WHEREAS, the parties desire to enter in to this Agreement pursuant to which, on the terms and
subject to the conditions hereof, Seller proposes to sell to Buyer, and Buyer proposes to purchase
from Seller, the Shares;




          NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties,
covenants and agreements set forth herein, intending to be legally bound hereby, the parties hereto
agree as follows:




ARTICLE I

PURCHASE AND SALE OF SHARES




          Section 1.1 Sale and Transfer of Shares. Subject to the terms and conditions of this
Agreement, at the Closing, Seller shall sell, convey, assign, transfer and deliver to Buyer, good
and valid title to all the Shares, free and clear of all Encumbrances, except for any Encumbrance
arising under the Securities Act or any applicable state securities laws, and Buyer shall purchase,
acquire and accept the Shares from Seller.




          Section 1.2 Consideration; Purchase Price. Subject to the terms and conditions of
this Agreement, in consideration of the aforesaid sale, conveyance, assignment, transfer and
delivery to Buyer of the Shares, Buyer shall pay to Seller an aggregate amount in cash equal to the
sum of $287,000,000 (the “Purchase Price”), as adjusted upward or downward pursuant to Section 1.3,
which shall be paid to Seller at the Closing by wire transfer of immediately available funds in
accordance with instructions delivered by Seller to Buyer at least two Business Days prior to the
Closing Date. The Purchase Price shall be subject to further adjustment following the Closing
pursuant to Section 1.4.




          Section 1.3 Closing Date Purchase Price Adjustment. Not more than five Business Days
nor less than two Business Days prior to the Closing Date, Seller shall deliver to Buyer a schedule
(the “Estimated Adjustment Schedule”) setting forth Seller’s calculation of its good faith estimate
of the Working Capital Assets less the Working Capital Liabilities as of the Closing Date (the
“Estimated Closing Date Working Capital Amount”) based on the most recently available unaudited
month-end consolidated balance sheet of the Company and the Company Subsidiaries regularly prepared
by the Company under the Parent’s basis of presentation. Notwithstanding the foregoing, if the
Estimated Closing Date Working Capital




 









 




Amount less the Company’s cash and cash equivalents appearing on such most recently available
unaudited month-end consolidated balance sheet (the “Non-Cash Estimated Closing Date Working
Capital Amount”) exceeds $50,000,000, the Estimated Closing Date Working Capital Amount shall be
reduced by the amount that the Non-Cash Estimated Closing Date Working Capital Amount exceeds
$50,000,000. If the Non-Cash Estimated Closing Date Working Capital Amount equals or is below
$50,000,000, then the Estimated Closing Date Working Capital Amount shall not be reduced. If the
Estimated Closing Date Working Capital Amount set forth on the Estimated Adjustment Schedule (i)
exceeds zero, the Purchase Price payable to Seller at the Closing shall be increased by an amount
equal to such surplus, or (ii) is less than zero, the Purchase Price payable to Seller at the
Closing shall be decreased by an amount equal to such deficiency (such upward or downward
adjustment pursuant to this Section 1.3 is hereinafter referred to as the “Estimated Adjustment
Amount Due”).




          Section 1.4 Post-Closing Purchase Price Adjustment.




               (a) As soon as practicable, but in no event later than forty five days after the Closing Date,
Buyer shall deliver to Seller a consolidated balance sheet of the Company and its Subsidiaries as
of the Closing Date. Such balance sheet shall be accompanied by a schedule (the “Buyer Adjustment
Schedule”) setting forth Buyer’s calculation of (i) the Working Capital Assets and the Working
Capital Liabilities, in each case as of the Closing Date (the “Proposed Closing Date Working
Capital Amount”), and (ii) the amount by which the Purchase Price should be adjusted (A) upward to
the extent that the Proposed Closing Date Working Capital Amount is greater than the Estimated
Closing Date Working Capital Amount, and (B) downward to the extent that the Proposed Closing Date
Working Capital Amount is less than the Estimated Closing Date Working Capital Amount (such
proposed upward or downward adjustment is hereinafter referred to as the “Proposed Final Adjustment
Amount Due”). For the avoidance of doubt, for purposes of computing the Final Closing Date Working
Capital Amount and the Final Adjustment Amount Due, no cap or limitation on the upward or downward
adjustment, if any, to the Purchase Price in respect of the Proposed Final Adjustment Amount Due,
shall apply. Seller shall cooperate reasonably with Buyer and its Representatives in order to
facilitate preparation of the Buyer Adjustment Schedule and determination of the Proposed Final
Adjustment Amount Due, and Seller and its representatives shall have the right to perform
reasonable procedures necessary to verify accuracy thereof.



               (b) After receipt of the Buyer Adjustment Schedule, Seller may request, and Buyer will provide
to Seller and its accountants and other representatives, upon reasonable notice, reasonable access
during normal business hours to, or copies of, as Seller or such accountants and other
representatives shall reasonably request, the information (including the books and records of the
Company and its Subsidiaries), data and work papers used in connection with the preparation of the
Buyer Adjustment Schedule and to calculate the Proposed Final Adjustment Amount Due, and will make
its and the Company’s and the Company Subsidiaries’ personnel and accountants available to Seller
and its accountants and other representative to discuss any such information, data or work papers.
Seller shall notify Buyer in writing within twenty days following delivery of the Buyer Adjustment
Schedule (the “Dispute Period”) that (i) Seller agrees with the Buyer Adjustment Schedule and the
Proposed Final Adjustment Amount Due (an “Approval Notice”) or (ii) Seller disagrees with such
calculations, identifying with reasonable detail the items with which Seller disagrees (a “Dispute
Notice”).



2









 




Upon receipt by Buyer of a Dispute Notice, Buyer and Seller will use good faith efforts during
the twenty day period following the date of Buyer’s receipt of a Dispute Notice (the “Resolution
Period”) to resolve any differences they may have as to the calculations of the Buyer Adjustment
Schedule and/or the Proposed Final Adjustment Amount Due. If Buyer and Seller cannot reach a
written agreement during the Resolution Period, within five days thereafter, their disagreements,
limited to only those issues still in dispute (“Remaining Disputes”), shall be promptly submitted
to the national office of Ernst & Young LLP (the “Independent Accountant”), which firm shall
conduct such additional review as is necessary to resolve the specific Remaining Disputes referred
to it. Seller and Buyer will cooperate fully with the Independent Accountant to facilitate its
resolution of the Remaining Disputes, including by providing the information, data and work papers
used by each party (as applicable) to calculate the Proposed Final Adjustment Amount Due and the
Remaining Disputes, making its personnel and accountants available to explain any such information,
data or work papers and submitting each of their calculations of the Final Closing Date Working
Capital Amount and the Final Adjustment Amount Due. Based upon such review and other information,
the Independent Accountant shall determine the Final Closing Date Working Capital Amount and the
Final Adjustment Amount Due strictly in accordance with the calculation specified in Section 1.3 of
the Disclosure Schedule and, to the extent not specified therein, in accordance with GAAP applied
on a consistent basis (the “Independent Accountant Determination”). Such determination shall be
completed as promptly as practicable but in no event later than thirty days following the
submission of the Remaining Disputes to the Independent Accountant and shall be explained in
reasonable detail and confirmed by the Independent Accountant in writing to, and shall be final and
binding on, Seller and Buyer for purposes of this Section 1.4, except to correct manifest clerical
or mathematical errors.




               (c) The fees and disbursements of the Independent Accountant shall be apportioned between
Buyer and Seller based on the total dollar value of disputed exceptions resolved in favor of each
such party, with each such party bearing such percentage of the fees and disbursements of the
Independent Accountant as the aggregate disputed exceptions resolved against that party bears to
the total dollar value of all disputed exceptions considered by the Independent Accountant.



               (d) On the third Business Day after the earliest of (i) the receipt by Buyer of an Approval
Notice, (ii) the expiration of the Dispute Period if Buyer has not received an Approval Notice or a
Dispute Notice within such period, (iii) the resolution by Seller and Buyer of all differences
regarding the Buyer Adjustment Schedule and the Proposed Final Adjustment Amount Due within the
Resolution Period and (iv) if no payment is due under Section 1.4(e), the receipt of the
Independent Accountant Determination, Seller or Buyer, as applicable, shall pay to the other any
Final Adjustment Amount Due, plus interest calculated from the Closing Date through, but not
including, the date of such payment at the Interest Rate, by wire transfer of immediately available
funds without set-off or deduction of any kind.



               (e) If, at the end of the Resolution Period, there are Remaining Disputes but the parties
agree as to which party is to make the payment under Section 1.4(d), on the third Business Day
after the end of the Resolution Period, such party shall pay to the other party the Final
Adjustment Amount Due in the lowest amount that has been proposed by one of the parties (such
lowest amount, the “Undisputed Adjustment Amount Due”), plus interest



3









 




calculated from the Closing Date through, but not including, the date of such payment, at the
Interest Rate, by wire transfer of immediately available funds without set-off or deduction of any
kind. If an Undisputed Adjustment Amount Due becomes payable, on the third Business Day after the
receipt of the Independent Accountant Determination, Seller or Buyer, as applicable, shall pay to
the other the excess, if any, of the Final Adjustment Amount Due over the Undisputed Adjustment
Amount Due, plus interest calculated from the Closing Date through, but not including, the date of
such payment at the Interest Rate, by wire transfer of immediately available funds without set-off
or deduction of any kind.




     For purposes of this Section 1.4, the following defined terms have the following meanings:



     “Interest Rate” shall mean the rate per annum equal to (1) the LIBOR rate for deposits in U.S.
Dollars for the three month-period commencing on the Closing Date, as such LIBOR rate appears on
Telerate Page 3750 at approximately 11:00 am, London time, on the Closing Date plus (2) 1.5%;
provided, however, that if prior to the date payment is to be made under Section 1.4(d) or 1.4(e),
the party making such payment has materially breached its obligations under this Section 1.4 and as
a result of such breach, such date of payment has been delayed, the Interest Rate shall instead be
15%.



     “Final Adjustment Amount Due” shall mean, as finally determined in accordance with this
Section 1.4, the amount by which the Purchase Price shall be adjusted (A) upward to the extent that
the Final Closing Date Working Capital Amount is greater than the Estimated Closing Date Working
Capital Amount and (B) downward to the extent that the Final Closing Date Working Capital Amount is
less than the Estimated Closing Date Working Capital Amount.



     “Final Closing Date Working Capital Amount” shall mean, as finally determined in accordance
with this Section 1.4, the amount of the Working Capital Assets and the Working Capital
Liabilities, in each case as of the Closing Date.



ARTICLE II

THE CLOSING




          Section 2.1 The Closing. (a) The sale and transfer of the Shares by Seller to Buyer
as contemplated hereby shall take place at the offices of Skadden, Arps, Slate, Meagher & Flom LLP,
300 South Grand Avenue, Los Angeles, California 90071 at 10:00 am (Los Angeles time) on the third
Business Day following the satisfaction and/or waiver of all conditions set forth in Article
VI (other than those conditions that are to be satisfied at Closing, but subject to the waiver
or fulfillment of those conditions), unless another date or place is agreed in writing by each of
the parties hereto (the “Closing”).




               (b) At the Closing:




                    (i) Seller shall deliver to Buyer one or more certificates representing all the issued
and outstanding Shares, each such certificate to be duly and validly endorsed in favor of
Buyer or accompanied by a separate stock power duly and validly executed by the Seller such
that the sole legal and beneficial ownership of the Shares are vested in Buyer; and



4









 






                    (ii) Buyer shall deliver or cause to be delivered to Seller cash in the amount of the
Purchase Price pursuant to Section 1.2.



ARTICLE III

REPRESENTATIONS AND WARRANTIES OF SELLER




          Except as set forth in the Disclosure Schedule delivered by Seller to Buyer simultaneously
with the execution hereof, Seller represents and warrants to Buyer as of the date of this Agreement
(or, if made as of a specified date, as of such date) that:




          Section 3.1 Organization. Each of Seller, the Company and the Company Subsidiaries
(a) is a corporation duly organized, validly existing and, if applicable, in good standing under
the laws of its jurisdiction of organization; (b) has all requisite corporate or other legal entity
power and authority to carry on its business as it is now being conducted and to own the properties
and assets it now owns; and (c) is duly qualified or licensed to do business in every jurisdiction
in which such qualification is required, in each case except for such failures to be so qualified
or licensed to do business that would not reasonably be expected to, individually or in the
aggregate, result in a Company Material Adverse Effect or a material adverse effect on the ability
of Seller to consummate the Closing or perform its obligations under this Agreement. Seller has
heretofore delivered or made available to Buyer complete and correct copies of the certificate of
incorporation and by-laws or comparable organizational documents of the Company and the Company
Subsidiaries as presently in effect.




          Section 3.2 Authorization. Seller has the requisite corporate power and authority to
execute, deliver and perform this Agreement and to consummate the Closing. The execution, delivery
and performance by Seller of this Agreement and the consummation by Seller of the Closing has been
duly authorized by the board of directors of Seller, and no other corporate action on the part of
Seller is necessary to authorize the execution, delivery and performance by Seller of this
Agreement or the consummation by Seller of the Closing.




          Section 3.3 Execution; Validity of Agreement. This Agreement has been duly executed
and delivered by Seller and, assuming due and valid authorization, execution and delivery hereof by
Buyer, is a valid and binding obligation of Seller, enforceable against Seller in accordance with
its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency,
moratorium, reorganization or similar laws in effect that affect the enforcement of creditors’
rights generally and by equitable limitations on the availability of specific remedies and by
principles of equity (collectively, “Enforceability Limitations”).




          Section 3.4 Consents and Approvals; No Violations. None of the execution, delivery or
performance of this Agreement by Seller or the consummation by Seller of the Closing will (a)
conflict with or result in any breach of any provision of the certificate of incorporation or
by-laws of Seller or the Company or of any organizational document of any Company Subsidiary, (b)
require any filing with, or permit, authorization, consent or approval of, any Governmental Entity,
(c) result in a violation or breach of, or constitute (with or without notice or lapse of time or
both) a default (or give rise to any right of termination, cancellation or acceleration) under, or
cause the loss of a benefit (including any increase in payments) under any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, lease, license,




5









 




contract or agreement to which Seller, the Company or any Company Subsidiary is a party or by
which any of them or any of their respective properties or assets may be bound, or result in the
creation of an Encumbrance upon any of the assets or properties of Seller, the Company or any of
the Company Subsidiaries, or (d) violate in any respect any federal, state, local or foreign law,
regulation, ordinance, rule, ruling, judgment, writ, injunction, order or decree (“Law”) applicable
to Seller, the Company or any of their respective Subsidiaries or any of their respective
properties or assets, except, in case of each of the foregoing clauses (b), (c) and (d), such
filings, permits, authorizations, consents or approvals that the failure to obtain, and such
violations, breaches or defaults that, would not reasonably be expected to result in a Company
Material Adverse Effect.




          Section 3.5 Ownership and Possession of Shares. Seller is the sole record and
beneficial owner of all the Shares free and clear of all Encumbrances whatsoever, except for any
Encumbrances created by this Agreement, Encumbrances arising under the Securities Act or any
applicable state securities laws. Seller is not a party to, or bound by, any agreement creating
rights in or to the Shares, and Seller has the power and legal right to sell, assign, transfer and
deliver the Shares as contemplated by this Agreement. There are no existing warrants, options,
stock purchase agreements, redemption agreements, restrictions of any nature, voting trust
agreements, proxies, calls or rights to subscribe of any character relating to such Shares.




          Section 3.6 Capitalization. The issued and outstanding capital stock of the Company
consists exclusively of the Shares. All the Shares are duly authorized, validly issued, fully paid
and non-assessable and free of preemptive rights. There are no options, rights or agreements to
which any of Seller, the Company or any of their respective Subsidiaries is a party or by which any
of them is bound obligating any of them (a) to issue, deliver or sell, or refrain from issuing,
delivering or selling, any shares of capital stock or other equity or ownership interest of the
Company or any Company Subsidiary, or to grant, extend or enter into any such option, right or
agreement, (b) to repurchase, redeem or otherwise acquire, or to refrain from repurchasing,
redeeming or otherwise acquiring, any shares of capital stock or other equity or ownership interest
of the Company or any Company Subsidiary, or to grant, extend or enter into any such option, right
or agreement, or (c) to vote, or to refrain from voting, any shares of capital stock or other
equity or ownership interest of the Company or any Company Subsidiary.




          Section 3.7 Subsidiaries and Affiliates. Section 3.7 of the Disclosure
Schedule lists all of the Company Subsidiaries, their jurisdictions of incorporation and the
ownership interests of the Company. All the outstanding capital stock and other equity or
ownership interests of each Company Subsidiary is owned directly by the Company or a Company
Subsidiary, free and clear of all Encumbrances (other than Permitted Encumbrances), and is duly
authorized, validly issued, fully paid and nonassessable and free of preemptive rights. Neither
the Company nor any of the Company Subsidiaries owns, directly or indirectly, any capital stock or
other equity or ownership interests, or has any obligations to acquire any capital stock or other
ownership interest, in any corporation, partnership, joint venture or other Person that is not a
Company Subsidiary.




          Section 3.8 Financial Statements. True and complete copies of the Financial
Statements are included in Section 3.8 of the Disclosure Schedule. The Audited Financial
Statements have been audited by KPMG LLP and have been prepared in accordance




6









 




with GAAP applied on a consistent basis (except as stated in the notes thereto) and fairly
present, in all material respects, the combined financial position and the combined results of
operations and cash flows for the Company and the Company Subsidiaries as of the dates and for the
periods referred to therein. The Unaudited Financial Statements have been prepared in accordance
with GAAP applied on a basis consistent with the manner in which GAAP is applied in connection with
the preparation of the financial statements of Parent and fairly present, in all material respects,
the combined financial position and the combined results of operations and cash flows for the
Company and the Company Subsidiaries as of the dates and for the periods referred to therein,
subject only to year end adjustments which are not material and the absence of footnotes. The
Company and the Company Subsidiaries maintain internal accounting controls designed to provide
reasonable assurances that (a) transactions by the Company and the Company Subsidiaries are
executed in accordance with management’s general or specific authorizations, (b) transactions by
the Company and the Company Subsidiaries are recorded as necessary to permit preparation of
financial statements in conformity with GAAP and to maintain accountability for assets, and (c) the
recorded accountability for assets of the Company and the Company Subsidiaries is compared with the
existing assets at reasonable intervals and appropriate action is taken with respect to any
differences. There have been no instances of fraud that occurred during any period covered by the
Financial Statements or subsequent to the Balance Sheet Date involving the management of Seller,
the Company or any Company Subsidiary or any other employees of Seller, the Company or any Company
Subsidiary who have a significant role in the Company’s and Company Subsidiary’s internal control
over financial reporting.




          Section 3.9 Absence of Certain Changes. Since the Balance Sheet Date, (a) no event,
change or circumstance that has had or would reasonably be expected to have a Company Material
Adverse Effect has occurred and (b) none of Seller, the Company, any Company Subsidiary or their
Affiliates has taken any action or omitted to take any action of the type described in Sections
5.1(f), (g), (h), (i), (k), (l), (o), (p) or (q) hereof, if taken or omitted to be taken after the
date hereof, would constitute a violation of Section 5.1.




          Section 3.10 Property and Assets. (a) Neither the Company nor any Company Subsidiary
owns any real property or holds any option to acquire any real property. Section 3.10(a)
of the Disclosure Schedule sets forth a true, correct and complete list of all real property leased
by the Company or any Company Subsidiary (the “Leased Properties”). To the Knowledge of Seller,
there are no defects in the buildings, improvements and structures located on the Leased Properties
which would impair the conduct of the business by Buyer immediately following the Closing. All
material tangible assets other than the Leased Properties leased by the Company or any of the
Company Subsidiaries are in operating condition for the uses to which they are presently being put,
subject to ordinary wear and tear and ordinary maintenance requirements.




               (b) No Person, other than the Company or any Company Subsidiary, has any right to occupy or
possess any portion of the Leased Properties.



          Section 3.11 Leases. (a) The leases relating to the Leased Properties (the “Real
Property Leases”) are in full force and effect, and neither the Company nor any of the Company
Subsidiaries has Knowledge of or has received any written notice of any default, or

7









 








condition which with the passage of time would constitute a material default under the Real
Property Leases, except such defaults as would not reasonably be expected to result in a Company
Material Adverse Effect.




               (b) True, correct and complete copies of the Real Property Leases have been made available to
Buyer prior to the date hereof and such Real Property Leases have not been amended, modified or
supplemented in any material respect, or restated, since that date.



          Section 3.12 Contracts and Commitments. (a) Section 3.12 of the Disclosure
Schedule sets forth, as of the date hereof, a complete list of every binding contract, agreement,
loan, license, guarantee or commitment to which the Company or any of the Company Subsidiaries is a
party or by which any of them or their respective assets or properties are bound and that (i) is
with a Major Customer or a Major Vendor; (ii) is a collective bargaining, works council agreement
or similar labor-related agreement or arrangement; (iii) contains any non-competition or similar
restrictions or contains any exclusivity provision that materially restricts the ability of the
Company to engage in any business or operate in any geographic area; (iv) is a contract or license
related to Licensed Intellectual Property Rights or Company Intellectual Property Rights; (v)
provides for Indebtedness of the Company or any Company Subsidiary; or (vi) provides for any
guaranty, excluding endorsements or guaranties of instruments made in the ordinary course of
business, including in connection with the deposit of items for collection and statutory
warranties.




               (b) Without duplication of the provisions of Section 3.12(c), there is not, and there has not
been claimed or alleged in writing by any Person, with respect to any Material Contract or
contracts other than Material Contracts, a default thereof by the Company or any Company Subsidiary
which, in the aggregate, would be material to the Company and the Company Subsidiaries (taken as a
whole), any default or event that, with notice or lapse of time or both, would constitute such a
default on the part of the Company or any Company Subsidiary or, to the Knowledge of Seller, on the
part of any other party thereto.



               (c) Without duplication of the provisions of Section 3.12(b), with respect to the Specified
Contracts: (i) (A) all representations and certifications executed, acknowledged or set forth in or
otherwise material to the Specified Contracts were complete and correct in all material respects as
of their effective date, and the Company and the Company Subsidiaries have made a good faith effort
to comply in all material respects with all such representations and certifications and (B) no
termination for convenience, termination for default, cure notice or show cause notice is in effect
as of the date hereof pertaining to any of the Specified Contracts; (ii) neither the Company nor
any Company Subsidiary nor, to the Seller’s Knowledge, any of their respective key management
personnel or officers is (or during the last three years has been) under audit by any Governmental
Entity with respect to any alleged irregularity, misstatement or omission arising under or relating
to any of the Specified Contracts (other than routine audits) and during the last three years,
neither the Company nor any Company Subsidiary has conducted or initiated any internal
investigation or made a voluntary disclosure to the United States Government, with respect to any
material alleged irregularity, misstatement or omission arising under or relating to any of the
Specified Contracts; (iii) there exist (A) no outstanding material claims against the Company or
any of the Company Subsidiaries, either by any Governmental Entity, or by any prime contractor,
subcontractor or vendor, arising under or



8









 







relating to the Specified Contract and (B) no material disputes between the Company or any
Company Subsidiary and any Governmental Entity under the Contract Disputes Act, as amended, or any
other federal or state statute or between Company or any of the Company Subsidiaries and any prime
contractor, subcontractor or vendor arising under or relating to the Specified Contract; and (iv)
neither the Company nor any of the Company Subsidiaries nor, to the Seller’s Knowledge, any of
their respective key management personnel or officers has been suspended or debarred from doing
business with the United States Government or any other Governmental Entity or is, or at any time
has been, the subject of a finding of nonresponsibility or ineligibility for United States
Government or other Governmental Entity contracting.



          Section 3.13 Insurance. Section 3.13(a) of the Disclosure Schedule lists all
insurance policies maintained by or for the Company or any Company Subsidiary in effect as of the
date hereof that provide coverage with respect to the business or assets of the Company or any of
the Company Subsidiaries (the “Insurance Policies”). Correct and complete copies of such Insurance
Policies can be made available to Buyer upon request. Section 3.13(b) of the Disclosure
Schedule lists all outstanding material insurance claims with respect to the Company and the
Company Subsidiaries (other than employee benefits related claims) as of the date hereof.




          Section 3.14 Litigation. There are no actions, suits or proceedings or legal,
administrative or arbitration proceedings or, to the Knowledge of Seller, investigations pending
or, to the Knowledge of Seller, threatened against or naming as a party the Company or the Company
Subsidiaries or any of their properties, assets or business or any of their officers, directors or
employees (in their capacities as such for the Company or the Company Subsidiaries) before any
Governmental Entity that, if adversely determined against the Company or the Company Subsidiaries,
would reasonably be expected to result in a Company Material Adverse Effect. There are no material
outstanding orders, judgments, injunctions, awards or decrees of any Governmental Entity against
the Company or the Company Subsidiaries. There is no material litigation initiated by the Company
or the Company Subsidiaries pending against any Person. There are no actions, suits, charges or
claims, or legal, administrative or arbitration proceedings or investigations pending or, to the
Knowledge of Seller, threatened against any of the present or former directors, officers or
employees (in their capacities as such for the Company or the Company Subsidiaries), in each case
where the Company or any Company Subsidiary has received written notice of an indemnification or
contribution obligation on the part of the Company or such Company Subsidiary.




          Section 3.15 Environmental Matters. The Company and each Company Subsidiary is in
compliance with all applicable Environmental Laws except for any noncompliance of such
Environmental Laws as would not reasonably be expected to result in a Company Material Adverse
Effect. Neither the Company nor any Company Subsidiary has received any written notice or
communication that alleges that the Company or a Company Subsidiary is in material violation of any
applicable Environmental Law; there is no Environmental Claim pending or, to the Knowledge of
Seller, threatened against the Company or any Company Subsidiary, or against any Person whose
liability for any Environmental Claim the Company or any Company Subsidiary has retained or assumed
either contractually or by operation of law, except any such Environmental Claim that would not
reasonably be expected to result in a Company Material Adverse Effect; and, to the Knowledge of
Seller, there are no past




9









 




or present material actions, activities, circumstances, conditions, events or incidents,
including, without limitation, the release, emission, discharge, presence or disposal of any
Material of Environmental Concern, that could reasonably be expected to form the basis of any
material Environmental Claim against the Company, any Company Subsidiary, or against any Person
whose liability for any Environmental Claim the Company or any Company Subsidiary has retained or
assumed either contractually or by operation of law, or otherwise result in any material costs or
liabilities under applicable Environmental Law. The Company has provided or made available to
Buyer all material assessments, reports, data, results of investigations or audits, and other
information that is in the possession of or reasonably available to the Company regarding
environmental matters pertaining to or the environmental condition of the business of the Company
or any Company Subsidiary, or the material compliance (or noncompliance) by the Company or any
Company Subsidiary with any applicable Environmental Laws.




          Section 3.16 Compliance with Laws. Each of the Company and the Company Subsidiaries
is in possession of all material franchises, grants, authorizations, licenses, permits, consents,
certificates, approvals and orders of any Governmental Entity that are necessary for it to carry on
its business as it is now being conducted and, to Seller’s Knowledge, no suspension or cancellation
of any of the foregoing is pending or threatened. Neither the Company nor any of the Company
Subsidiaries is in violation of any applicable Law, nor have the Company or any of the Company
Subsidiaries received written, or to Seller’s Knowledge, oral notice, charge, claim or assertion
alleging any violations of any applicable Law, except in each case any such violations that would
not reasonably be expected to result in a Company Material Adverse Effect.




          Section 3.17 Employee Benefit Plans. (a) Section 3.17(a) of the Disclosure
Schedule sets forth a complete and accurate list as of the date of this Agreement of all Employee
Benefit Plans which the Company, any Company Subsidiary or any of their ERISA Affiliates maintain
or make contributions for the benefit of the current or former employees of the Company or of any
Company Subsidiary (together, the “Company Employee Plans”). For purposes of this Agreement, the
following terms shall have the following meanings: (i) “Employee Benefit Plan” means any “employee
pension benefit plan” (as defined in Section 3(2) of ERISA), any “employee welfare benefit plan”
(as defined in Section 3(1) of ERISA), any other employee benefit plan, scheme or arrangement,
including, without limitation, any stock option, restricted stock and other equity plans and all
severance, employment, change-in-control, fringe benefit, bonus, incentive, deferred compensation
and employee loan arrangements, whether or not subject to ERISA and whether foreign or U.S.,
whether formal or informal, oral or written; (ii) “ERISA” means the Employee Retirement Income
Security Act of 1974, as amended; and (iii) “ERISA Affiliate” means any entity which is a member of
(A) a controlled group of corporations (as defined in Section 414(b) of the Code), (B) a group of
trades or businesses under common control (as defined in Section 414(c) of the Code), or (C) an
affiliated service group (as defined under Section 414(m) of the Code or the regulations under
Section 414(o) of the Code), any of which includes or included the Company or a Subsidiary of the
Company. Section 3.17(a) of the Disclosure Schedule sets forth a complete and accurate
list of any severance or change of control arrangements which will be triggered by the transactions
contemplated by this Agreement. There are no severance or change of control arrangements under
which the Company or any of the Company Subsidiaries have any obligations or would be liable for
any payments.




10









 





               (b) Seller has made available to Buyer (i) correct and complete copies of all documents
embodying each Company Employee Plan, including all amendments thereto and all related trust
documents and amendments thereto, (ii) the most recent annual reports (Form Series 5500 and all
schedules and financial statements attached thereto), if any, required under ERISA or the Code in
connection with each Company Employee Plan, (iii) the most recent summary plan description together
with the summary(ies) of material modifications thereto, if any, required under ERISA with respect
to each Company Employee Plan, (iv) all written agreements and contracts relating to each Company
Employee Plan, including administrative service agreements and group insurance contracts, that is
sponsored solely for the benefit of the current and former employees of the Company and the Company
Subsidiaries, and their related dependents, (v) all material correspondence to or from any
governmental agency relating to any Company Employee Plan, (vi) forms of COBRA notices, (vii) all
discrimination tests for each Company Employee Plan for the most recent plan year, and (viii) the
most recent IRS determination or opinion letter issued with respect to each Company Employee Plan.



               (c) All obligations required to be performed by the Company and/or Company Subsidiary under
each Company Employee Plan have been satisfied, and there has not been a default or violation of
the terms of any such plan that would reasonably be expected to result in a Company Material
Adverse Effect. Each Company Employee Plan has been established and maintained in all respects in
accordance with its terms and in compliance with applicable Law, statutes, orders, rules and
regulations, including ERISA and the Code, except in each case any such violations that would not
reasonably be expected to result in a Company Material Adverse Effect. Any Company Employee Plan
intended to be qualified under Section 401(a) of the Code has been amended in accordance with
applicable Law and has obtained a current favorable determination letter (or opinion letter, if
applicable) as to its qualified status under the Code or remains within the remedial amendment
period for obtaining such letter. No “prohibited transaction,” within the meaning of Section 4975
of the Code or Sections 406 and 407 of ERISA, and not otherwise exempt under Section 408 of ERISA,
has occurred with respect to any Company Employee Plan that would reasonably be expected to result
in a Company Material Adverse Effect.



               (d) There are no actions, suits or claims pending, or to Seller’s Knowledge, threatened or
reasonably anticipated (other than routine claims for benefits) against or relating to any Company
Employee Plan or against the assets of any Company Employee Plan. Each Company Employee Plan can
be amended, terminated or otherwise discontinued after the Closing Date in accordance with its
terms, without liability to Buyer, the Company, any of its Subsidiaries or any ERISA Affiliate
other than any liability relating to the payment or satisfaction of all benefits and obligations
accrued prior to the date of any such amendment, termination or discontinuance.



               (e) There are no audits, inquiries or proceedings pending, or to Seller’s Knowledge,
threatened by the IRS, DOL, or any other Governmental Entity with respect to any Company Employee
Plan. Neither the Company, Company Subsidiary nor any ERISA Affiliate has any liability for any
penalty or Tax with respect to any Company Employee Plan under Section 502(i) of ERISA or Sections
4975 through 4980 (including 4980B) of the Code.



11









 





               (f) The Company and each Company Subsidiary have timely made all contributions and other
payments required by and due under the terms of each Company Employee Plan.



               (g) None of the Company Employee Plans is a pension plan that is subject to Title IV of ERISA,
Section 302 of ERISA or Section 412 of the Code. With respect to any such pension plan that is
sponsored by, or to which contributions are required of, any ERISA Affiliate, there does not exist
any accumulated funding deficiency within the meaning of Section 412 of the Code or Section 302 of
ERISA, whether or not waived. None of the Company, the Company Subsidiaries or any ERISA Affiliate
has any outstanding liability under Section 4062 or 4063 of ERISA to the PBGC or to a trustee
appointed under Section 4042 of ERISA, and no events have occurred and no circumstances exist that
could reasonably be expected to result in any such liability to the Company, any Company Subsidiary
or any ERISA Affiliate.



               (h) None of the Company Employee Plans is a multiemployer plan (as described in Section 3(37)
of ERISA). None of the Company, any Company Subsidiary or any ERISA Affiliate has incurred any
liability due to a complete or partial withdrawal from any multiemployer plan or due to the
termination or reorganization of any multiemployer plan, except for any such liability which has
been satisfied in full, and no events have occurred and no circumstances exist that could
reasonably be expected to result in any such liability to the Company, any Company Subsidiary or
any ERISA Affiliate.



               (i) No Company Employee Plan provides, or reflects or represents any liability to provide,
post-termination or retiree life insurance, health or other employee welfare benefits to any person
for any reason, except as may be required by Section 4980B of the Code or other applicable statute.



               (j) Neither the Company nor any Company Subsidiary has made any payments in the current
taxable year, is obligated to make any payments, or is a party to any agreement that contemplates
the making of any payments that will not be deductible under Code Section 280G.



               (k) Each nonqualified deferred compensation plan to which the Company or any Company
Subsidiary is a party has been operated in accordance with the applicable requirements of
paragraphs (2), (3) and (4) of Section 409A(a) of the Code, including proposed regulations and
notices issued by the IRS.



               (l) Neither the Company nor any Company Subsidiary has any obligation to reimburse any
employee with respect to any penalty tax on the employee imposed by Section 409A of the Code or the
excise tax imposed by Section 4999 of the Code.



               (m) Neither the Company nor any Company Subsidiary has any liability, including for the
funding of the acquisition of stock, or payments of costs to the trustee under Parent’s United
Kingdom Trust Deed and Rules Stock Incentive Plan.



          Section 3.18 Tax Matters. (a) The Company and each Company Subsidiary and any
consolidated, combined, unitary or aggregate group for Tax purposes of which the




12









 




Company or any
Company Subsidiary is or has been a member: (i) have timely
filed (or there have been filed on their behalf) with appropriate Tax Authorities all Tax Returns required to
be filed by them, in the manner provided by Law, which Tax Returns are true, complete and correct;
and (ii) have timely paid all Taxes shown as due on any such Tax Return.




               (b) Seller has delivered or made available to Buyer complete and accurate copies of U.S.
federal, state, local and foreign Tax Returns (other than consolidated income Tax Returns and
examination reports) of each of the Company and the Company Subsidiaries and their predecessors for
each taxable year ending on or prior to December 31, 2004, including the Seller’ consolidated
income Tax Returns for such taxable years, and complete and accurate copies of all examination
reports and statements of deficiencies assessed against or agreed to by any of the Company and the
Company Subsidiaries or any predecessors since December 31, 2001.



               (c) No U.S. federal, state, local or non-U.S. audits, examinations, investigations or other
administrative proceedings (such audits, examinations, investigations and other administrative
proceedings referred to collectively as “Audits”) or court proceedings are presently pending with
regard to any Taxes or Tax Returns filed by or on behalf of the Company or any Company Subsidiary.
There are no outstanding requests, agreements, consents or waivers to extend the statutory period
of limitations applicable to the assessment of any Taxes or deficiencies against the Company or any
Company Subsidiary.



               (d) No adjustment relating to the Tax Returns described in paragraph (a) above has been
proposed, asserted, or assessed in writing by any Tax Authority (including, without limitation, any
proposed assessments or reassessments of any property owned by the Company or any Company
Subsidiaries). None of Seller, the Company nor any Company Subsidiary has received notice of any
claim made by a Tax Authority in a jurisdiction where neither the Company nor any Company
Subsidiary files a Tax Return, which states that the Company or any Company Subsidiary is subject
to Tax by that jurisdiction.



               (e) There are no Encumbrances for unpaid Taxes upon any property or assets of the Company or
any Company Subsidiary, except for Encumbrances for Taxes not yet due.



               (f) The Company and the Company Subsidiaries have no liability for the Taxes of any Person
other than the Company and the Company Subsidiaries, including, without limitation, (i) under
Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or non-U.S. Law),
(ii) as a transferee or successor, or (iii) by contract. The Company has not entered into a gain
recognition agreement under Section 367 of the Code that will continue in effect after the Closing.



               (g) Neither the Company nor any of the Company Subsidiaries is a party to any Tax sharing, Tax
indemnity or other agreement or arrangement with any Person.



               (h) Neither the Company nor any of the Company Subsidiaries has been either a “distributing
corporation” or a “controlled corporation” (within the meaning of Section 355(a)(1)(A) of the Code)
in a distribution of stock qualifying for tax-free treatment



13









 




under Section 355 of the Code (i) in the two years prior to the date of this Agreement or (ii) in a distribution which could otherwise constitute part of a “plan” or “series of related
transactions” (within the meaning of Section 355(e) of the Code and the Treasury Regulations
promulgated thereunder) with the acquisition of Shares pursuant to this Agreement.




               (i) The Company and each of the Company Subsidiaries have properly paid and/or withheld all
Taxes and established systems and processes to ensure the same (including, without limitation, all
sales and use Taxes and any amounts required to be paid and/or withheld under the Federal Insurance
Contributions Act, the Federal Unemployment Tax Act, and the Laws of any applicable jurisdiction
governing the withholding of Taxes from wages and any other remuneration), and filed all Tax
Returns related thereto, required by the Code and the Treasury Regulations promulgated thereunder
and other applicable Tax Laws (including, without limitation, with respect to all persons who
currently are, or any time in the past were, employees of, or independent contractors with respect
to, either the Company or any of the Company Subsidiaries for purposes of the Code).



               (j) Neither the Company nor any Company Subsidiary has entered into any transaction (i) that
is subject to the reporting requirements of Treasury Regulations Sections 1.6011-4, (ii) that is
required to be registered as a “tax shelter” under Section 6111 of the Code and the Treasury
Regulations promulgated thereunder, or (iii) for which a list is required to be maintained under
Section 6112 of the Code and Treasury Regulations promulgated thereunder.



               (k) Neither the Company nor any of the Company Subsidiaries (i) has consented at any time to
have the provisions of Section 341(f)(2) of the Code apply to any disposition of the assets of any
of the Company and the Company Subsidiaries; (ii) has made an election, or is required, to treat
any of its assets as tax-exempt bond financed property or tax-exempt use property within the
meaning of Section 168 of the Code; (iii) has acquired or owns any assets that directly or
indirectly secure any debt the interest on which is tax exempt under Section 103(a) of the Code; or
(iv) made any of the foregoing elections or is required to apply any of the foregoing rules under
any comparable state or local Tax provision.



               (l) Section 3.18 of the Disclosure Schedule sets forth all jurisdictions in which the
Company or any Company Subsidiaries is a resident and in which it has or has had a permanent
establishment in any foreign country, as defined in any applicable Tax treaty or convention.



               (m) All transactions between each Company or any Company Subsidiary, on the one hand, and any
non-resident person with whom it was not dealing at arm’s length, on the other (including the
Company and any Company Subsidiary), were conducted at arm’s length prices as defined in Section
482 of the Code and the related regulations (and any similar or corresponding provision of foreign
law) and the Company and the Company Subsidiaries have made or obtained records or documents
supporting these prices sufficient to meet the requirements of Section 6662 of the Code and the
regulations thereunder (and any similar or corresponding provision of foreign law). No
governmental authority responsible for Taxes has ever proposed an adjustment with respect to any
such transaction described in the preceding sentence that will have continuing effect after the
Closing.



14









 





               (n) Neither the Company nor any Company Subsidiary owns stock of any corporation that was
classified as a “passive foreign investment company” as defined in Code section 1297 for any
taxable year of such corporation ending prior to the Closing Date, except for stock of a
corporation that is a “controlled foreign corporation” as defined in Code section 957(a) with
respect to which the Company or such Company Subsidiary is a “United States shareholder” as defined
in Code section 941(b).



          Section 3.19 Intellectual Property and Technology. (a) Definitions. In
addition to the terms defined elsewhere herein, the following terms shall have the respective
meanings below:





                    (i) “Company Business” means, with respect to the Company and the Company Subsidiaries,
their respective businesses as currently conducted.




                    (ii) “Company Intellectual Property Rights” means Intellectual Property Rights owned by
the Company or a Company Subsidiary.




                    (iii) “Intellectual Property Rights” means the following rights in or arising out of
Technology in any jurisdiction: (1) rights in or arising out of Works of Authorship,
including without limitation rights granted under any copyright act (“Copyrights”); (2)
rights in or arising out of Inventions, including without limitation rights granted under
any patent act (“Patent Rights”); (3) rights in or arising out of Trademarks, including
without limitation rights granted under the Lanham Act or any trademark act (“Trademark
Rights”); (4) rights in or arising out of Confidential Information, including without
limitation rights granted under the Uniform Trade Secrets Act or any other trade secrets act
(“Trade Secret Rights”); and (5) rights in or arising out of domain names (“Domain Name
Rights”).




                    (iv) “Registered Intellectual Property Rights” means all Intellectual Property Rights
that are the subject of an application, certificate, filing, registration, or other document
issued by, filed with, or recorded by, any state, government, or other public legal
authority in any jurisdiction.




                    (v) “Technology” means: (1) published and unpublished works of authorship, including
without limitation audiovisual works, collective works, computer programs, compilations,
databases, derivative works, literary works, and sound recordings (“Works of Authorship”);
(2) inventions and discoveries, including without limitation articles of manufacture,
business methods, compositions of matter, improvements, machines, methods, and processes and
new uses for any of the preceding items (“Inventions”); (3) words, names, symbols, devices,
designs, and other designations, and combinations of the preceding items, used to identify
or distinguish a business, good, group, product, or service or to indicate a form of
certification, including without limitation logos, product designs, and product features
(“Trademarks”); and (4) information that is not generally known or readily ascertainable
through proper means, whether tangible or intangible, including without limitation
algorithms, customer



15









 







lists, user data, ideas, designs, formulas, know how, methods, processes, programs,
prototypes, systems, and techniques (“Confidential Information”).



               (b) Ownership. (i) The Company or a Company Subsidiary is the owner of all right,
title and interest in and to the Company Intellectual Property Rights free and clear of any
Encumbrances, (ii) since January 1, 2004 neither the Company nor any Company Subsidiary has
received any written notice of claims challenging the ownership, validity or enforceability of any
of the Company Intellectual Property Rights, and (iii) to the Seller’s Knowledge, all registrations
of the Company Intellectual Property Rights are subsisting, valid and enforceable and there are no
facts or circumstances that could impair the existence, validity or enforceability of any
registrations of Company Intellectual Property Rights. Neither the Company nor any Company
Subsidiary is obligated to transfer any material Company Intellectual Property Rights to a third
party.



               (c) Confidential Information. The Company and the Company Subsidiaries take
reasonable steps to maintain the confidentiality of their respective Confidential Information.



               (d) Company Registered Intellectual Property Rights. Section 3.19(d) of the
Disclosure Schedule: (i) lists all Registered Intellectual Property Rights owned by, filed in the
name of, applied for by, or subject to an obligation of assignment to the Company or a Company
Subsidiary (“Company Registered Intellectual Property Rights”) and (ii) identifies all third party
joint owners and co-applicants that share rights to the Company Registered Intellectual Property
Rights with the Company or a Company Subsidiary. Other than the domain names, which Parent and
Seller will use reasonable best efforts to transfer to the Company on or prior to Closing, the
Company or a Company Subsidiary is the sole and beneficial owner of the Company Registered
Intellectual Property Rights.



               (e) Licensed Intellectual Property Rights. Section 3.19(e) of the Disclosure
Schedule lists all (i) licenses (including sublicense) under any Company Intellectual Property
Rights granted by the Company or a Company Subsidiary to third parties; and (ii) licenses to
Intellectual Property Rights granted to the Company by third parties (“Licensed Intellectual
Property Rights”), including open source software, copy left and community source code used in,
incorporated into, integrated or bundled with, or integrated in any current Company owned
Technology, or any Company owned Technology under development, and other than agreements for (x)
licensing Copyrights, Trademark Rights and Domain Name Rights in connection with insertion orders
or comparable advertising or marketing agreements granted to the Company or a Company Subsidiary in
the ordinary course of business and (y) licensing software on nondiscriminatory terms and having an
aggregate value of less than $25,000, commercially available software, off-the-shelf software,
shrink wrap software and click-through software. To Seller’s Knowledge, there are no material
breaches by the Company or any Company Subsidiary of the agreements relating to the Licensed
Intellectual Property Rights, and neither the Company nor any Company Subsidiary has received any
written, or to Seller’s Knowledge, oral notice of claims challenging any of Licensed Intellectual
Property Rights.



               (f) Infringement. To the Seller’s Knowledge, (i) the conduct of the Company Business
does not infringe, misappropriate, or otherwise violate the Intellectual



16









 







Property Rights of a third party, (ii) neither the Company nor a Company Subsidiary has
received written notice of a claim that the conduct of the Company Business infringes,
misappropriates, or otherwise violates the Intellectual Property Rights of a third party, and (iii)
there is no infringement, misappropriation, or violation of any Company Intellectual Property
Rights.



          Section 3.20 Labor and Employment Matters.




                    (a) Section 3.20(a) of the Disclosure Schedule contains a complete and accurate list
of the following information for each employee (listed by country) (including part time employees
and temporary employees) as of May 16, 2006: name; employer; job title; place of work; date of
employment; and current base salary or wage rate and regular rate of pay for overtime purposes (the
“Employee List”).



                    (b) The Company and the Company Subsidiaries are not and, to Seller’s Knowledge, have not,
engaged in any material unfair labor practice as defined in the National Labor Relations Act or any
similar unlawful or unfair practices act that would reasonably be expected to violate in any
material respects any foreign, state or local Law comparable or similar to the National Labor
Relations Act.



                    (c) No labor union, labor organization, trade union, works council, or group of employees of
the Company or the Company Subsidiaries has made a pending demand for recognition or certification,
and there are no representation or certification proceedings or petitions seeking a representation
proceeding presently pending or, to Seller’s Knowledge, threatened to be brought or filed with the
National Labor Relations Board or any other comparable foreign, state or local labor relations
tribunal or authority. To Seller’s Knowledge, there are no labor union organizing activities with
respect to any employees of the Company or the Company Subsidiaries. There are no pending or, to
Seller’s Knowledge, threatened arbitrations, grievances, labor disputes, strikes, lockouts,
slowdowns or work stoppages or similar disputes of any kind against or affecting the Company or the
Company Subsidiaries which, if individually or collectively resolved against the Company or any
Company Subsidiary, as the case may be, would reasonably be expected to result in a Company
Material Adverse Effect.



                    (d) Except as would not reasonably be expected to result in a Company Material Adverse Effect,
the Company and the Company Subsidiaries are and have been in compliance with all applicable Laws
respecting employment and employment practices, including, without limitation, all Laws respecting
terms and conditions of employment, health and safety, wages and hours, child labor, immigration,
employment discrimination, affirmative action, disability rights or benefits, equal opportunity,
plant closures and layoffs, affirmative action, workers’ compensation, labor relations, employee
consultation, privacy, data protection, severance, redundancy, employee classification (including,
without limitation, the Fair Labor Standards Act), independent contractors and consultants, loans,
or advances to employees, consultants or independent contractors, wage withholding, employee leave
or time-off issues and unemployment insurance, and there is not currently pending against the
Company or any of the Company Subsidiaries any material complaint, action or other proceeding
respecting any of the foregoing by any employee or Governmental Entity.



17









 





               (e) The Company and the Company Subsidiaries are not delinquent with respect to any material
payments to any employees or former employees for any services or amounts required to be reimbursed
or otherwise paid. Neither the Company nor any of the Company Subsidiaries is a party to, or
otherwise bound by, any order or determination issued by any Governmental Entity relating to
employees or employment practices.



               (f) All material personnel policies, rules and procedures applicable to employees of the
Company or any of the Company Subsidiaries are in writing. True and complete copies of all written
personnel manuals, handbooks, policies, rules or procedures applicable to employees of the Company
or any of the Company Subsidiaries have heretofore been made available to Buyer.



               (g) Section 3.20(g) of the Disclosure Schedule sets forth a true and correct list of
all employment agreements or severance agreements with current or former officers or employees to
which the Company or any Company Subsidiary is a party or is bound.



               (h) Neither the Company nor any of the Company Subsidiaries is currently engaged in, or is
planning to engage in, any layoffs or employment terminations sufficient in number to trigger
application of the WARN Act or any similar state, local or foreign
Law.
Section 3.20(h) of
the Disclosure Schedule contains a true and complete list of the names and the sites of employment
or facilities of those individuals who suffered an “employment loss” (as defined in the WARN Act)
or similar loss of employment as defined under any foreign, state or local law at any site of
employment or facility of the Company or any of the Company Subsidiaries during the 90-day period
prior to the date of this Agreement. Section 3.20(h) of the Disclosure Schedule shall be
updated three Business Days prior to the Closing with respect to the 90-day period prior to the
Closing.



               (i) To Seller’s Knowledge, no employee of the Company or the Company Subsidiaries is in
violation of any term of any employment agreement, nondisclosure agreement, noncompetition
agreement or restrictive covenant to a former employer of any such employee relating to the right
of any such employee to be employed by the Company or the Company Subsidiaries.



               (j) The Company and each Company Subsidiary will consult with employees in respect of the
transactions contemplated by this Agreement as required by local Laws in co-operation with Buyer,
during the period between the date of this Agreement and the Closing.



          Section 3.21 Brokers or Finders. No agent, broker, investment banker, financial
advisor or other firm or Person acting on behalf of Seller, the Company, any Company Subsidiary or
any Affiliate thereof or under the authority of any of the foregoing is or will be entitled to any
brokers’ or finder’s fee or other commission or similar fee with respect to which the Buyer or any
of its Affiliates (including the Company and the Company Subsidiaries from and after Closing) will
be liable in connection with the transactions contemplated by this Agreement.




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          Section 3.22 Certain Business Relationships with the Company. Neither Seller, Parent,
any controlled Affiliate of Parent (other than the Company or any Company Subsidiary), nor, to the
Knowledge of Seller, the Company or Company Subsidiaries’ directors or officers, or any other
Affiliate of Parent, on the one hand, and any of the Company or any Company Subsidiary, on the
other hand, are party to any material contract or agreement of the Company or the Company
Subsidiaries.




          Section 3.23 Absence of Undisclosed Liabilities. Except for liabilities which have
been or are incurred after the Balance Sheet Date in the ordinary course of business consistent
with past practice or in connection with the transactions contemplated hereunder, none of the
Company or any of the Company Subsidiaries has any material liability of a kind required by GAAP to
be reflected on a consolidated balance sheet of the Company and the Company Subsidiaries which was
not reflected or reserved against in the most recent unaudited balance sheet included in the
Unaudited Financial Statements.




          Section 3.24 Assets of the Company and the Company Subsidiaries. The assets,
properties and rights of each of the Company and the Company Subsidiaries constitute all of the
assets, properties and rights which are necessary for the operation of their respective businesses
as currently conducted, including MediaPlane and Mobility Manager. There are no material assets,
properties or rights of any kind or nature that either of the Company or any of the Company
Subsidiaries has been using, holding or operating in their respective businesses prior to the
Closing that will not be used, held or owned by each of the Company or the Company Subsidiaries
immediately following the Closing, including MediaPlane and Mobility Manager.




          Section 3.25 Customers and Suppliers. Section 3.25 of the Disclosure Schedule
lists, (a) by revenue generated to the Company and the Company Subsidiaries during fiscal year
2005, the 20 largest customers of the Company and the Company Subsidiaries (the “Major Customers”),
and (b) by consolidated gross profit, including estimated supplier rebates, each of the Company’s
vendors, suppliers and publishers, the sale of whose product constituted more than 5% of the
Company’s consolidated gross profit, including estimated supplier rebates, during fiscal year 2005
(the “Major Vendors”). As of the date hereof, none of the Company or any of the Company
Subsidiaries has received any written, or, to Seller’s Knowledge, oral notice from any Major
Customer or Major Vendor that it has ceased, or will cease, to use or has substantially reduced or
will substantially reduce its use of the products, equipment, goods or services of the Company or
any Company Subsidiary, or has ceased, or will cease to, or has substantially reduced or will
substantially reduce its supply to the Company or any Company Subsidiary, or has terminated or will
terminate its agreement with the Company or any Company Subsidiary.




ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF BUYER




          Buyer represents and warrants to Seller as of the date of this Agreement that:




          Section 4.1 Organization. Buyer (a) is a corporation duly organized, validly existing
and, in good standing under the laws of the State of Delaware, (b) has all requisite corporate
power and authority to carry on its business as it is now being conducted and




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to own the properties and assets it now owns and (c) is duly qualified or licensed to do
business in every jurisdiction in which such qualification is required, in each case except for
such failures that would not, individually or in the aggregate, either (i) have a material adverse
effect on the ability of Buyer to consummate the Closing or perform its obligations under this
Agreement or (ii) impede or delay the consummation of the Closing in any material respect.




          Section 4.2 Authorization; Validity of Agreement. Buyer has the requisite corporate
power and authority to execute, deliver and perform this Agreement and to consummate the Closing.
The execution, delivery and performance by Buyer of this Agreement and the consummation by Buyer of
the Closing have been duly approved by the board of directors of Buyer, and no other corporate
action on the part of Buyer is necessary to authorize the execution, delivery and performance by
Buyer of this Agreement or the consummation by Buyer of the Closing. This Agreement has been duly
executed and delivered by Buyer, and, assuming due and valid authorization, execution and delivery
hereof by Seller, is a valid and binding obligation of Buyer, enforceable against Buyer in
accordance with its terms subject to the Enforceability Limitations.




          Section 4.3 Consents and Approvals; No Violations. None of the execution, delivery or
performance of this Agreement by Buyer or the consummation by Buyer of the Closing will (a)
conflict with or result in any breach of any provision of the certificate of incorporation or
by-laws or similar organizational document of Buyer, (b) except as set forth on Schedule 4.3(b)
hereto, require any notice to, filing with, or permit, authorization, consent or approval of,
any Governmental Entity, (c) except as set forth on Schedule 4.3(c) hereto, result in a
violation or breach of, or constitute (with or without notice or lapse of time or both) a default
(or give rise to any right of termination, cancellation or acceleration) under, or cause the loss
of the benefit under, any of the terms, conditions or provisions of any material note, bond,
mortgage, indenture, lease, license, contract, agreement or other instrument or obligation to which
Buyer or any of its Subsidiaries is a party or by which any of them or any of their respective
properties or assets may be bound, or result in the creation of an Encumbrance upon any of the
assets or properties of Buyer or any of its Subsidiaries, or (d) violate any Law applicable to
Buyer, any of its Subsidiaries or any of their respective properties or assets, except, in case of
each of the foregoing clauses (b), (c) and (d), such filings, permits, authorizations, consents or
approvals that the failure to obtain, and such violations, breaches or defaults that, would not,
individually or in the aggregate, either (i) have a material adverse effect on the ability of Buyer
to consummate the Closing or perform its obligations under this Agreement or (ii) impede or delay
the consummation of the Closing in any material respect.




          Section 4.4 Acquisition of Shares for Investment; Ability to Evaluate and Bear Risk.




                    (a) Buyer is acquiring the Shares for investment and not with a view toward, or for sale in
connection with, any “distribution” as such term is used in the Securities Act of 1933, as amended
(the “Securities Act”), nor with any present intention of distributing or selling the Shares.



20









 





                    (b) Buyer is able to bear the economic risk of holding the Shares for an indefinite period,
and has knowledge and experience in financial and business matters such that it is capable of
evaluating the risks of the investment in Shares.



                    (c) Buyer acknowledges that the Shares have not been registered under the Securities Act or
any state securities laws and may not be transferred unless subsequently registered thereunder or
pursuant to a valid exemption from registration.



                    (d) Buyer is an “accredited investor” as such term is defined in Rule 501(a) of Regulation D
promulgated under the Securities Act.



          Section 4.5 Availability of Funds. Buyer has obtained a written financing commitment
from a financial institution for a portion of the Purchase Price (the “Commitment Letter”), which,
together with Buyer’s cash on hand, constitutes sufficient funds to pay the Purchase Price and to
make other necessary payments by Buyer in connection with the transactions contemplated hereby and
to pay all related fees and expenses. Buyer will have available to it on the Closing Date
sufficient funds to pay such amounts. Buyer has delivered to Seller true, correct and complete
copies of the Commitment Letter. The Commitment Letter is valid and in full force and effect, and
Buyer is not in default of any of its obligations thereunder.




          Section 4.6 Acknowledgment by Buyer. Buyer acknowledges that neither Seller nor any
of its Affiliates, agents or representatives makes or has made any representation or warranty,
either express or implied, as to the Company or any Company Subsidiary, except as and only to the
extent expressly set forth herein with respect to the representations and warranties contained in
Article III of this Agreement and subject to the limitations and restrictions contained in
this Agreement.




          Section 4.7 Brokers or Finders. Other than MartinWolf Securities LLC, the fees and
expenses of which are to be paid solely by Buyer, neither Buyer nor any of its Subsidiaries or its
Affiliates has entered into any agreement or arrangement entitling any agent, broker, investment
banker, financial advisor or other firm or Person to any broker’s or finder’s fee or any other
commission or similar fee in connection with any of the transactions contemplated by this Agreement
for which Seller or any of its Affiliates are or may be responsible.




ARTICLE V

COVENANTS




          Section 5.1 Interim Operations of the Company. Except as expressly contemplated by
this Agreement or as may be reasonably necessary for the consummation of the transactions
contemplated by the Transition Services Agreement, except as required by applicable Law, except as
set forth in the Disclosure Schedule, and except as may be consented to in writing by Buyer (which
consent shall not be unreasonably withheld or delayed), after the date hereof and prior to the
Closing Date:




                    (a) the Company and the Company Subsidiaries shall conduct their respective businesses in the
ordinary course in a manner consistent with past practice;



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                    (b) Seller will use, and will cause each of the Company and the Company Subsidiaries to use,
their reasonable efforts to preserve the business organization of the Company and the Company
Subsidiaries intact, to preserve the goodwill of suppliers, customers, independent contractors and
others with whom business relationships exist and to keep available the services of the present
executive officers, employees and consultants of each of the Company and the Company Subsidiaries;



                    (c) (i) neither the Company nor any Company Subsidiary shall amend its certificate of
incorporation or by-laws or similar organizational documents and (ii) neither the Company nor any
Company Subsidiary shall (A) issue, sell, transfer, pledge, dispose of or encumber any shares of
any class or series of its capital stock or other equity or ownership interests, or securities
convertible into or exchangeable for, or options, warrants, calls, commitments or rights of any
kind to acquire, any shares of any class or series of its capital stock or other equity or
ownership interests, (B) except for any cash dividend or distribution, declare, set aside or pay
any dividend or any other distribution payable in stock or other equity or ownership interests, or
property with respect to any shares of any class or series of its capital stock or other equity or
ownership interests, (C) split, combine or reclassify any shares of any class or series of its
stock or other equity or ownership interests, or (D) redeem, purchase or otherwise acquire directly
or indirectly any shares of any class or series of its capital stock or other equity or ownership
interests, or any instrument or security which consists of or includes a right to acquire such
shares or other equity or ownership interests;



                    (d) except as may be required by applicable Law or under any existing Company Employee Plan,
arrangement, practice or other agreement or policy maintained by the Company or any Company
Subsidiary, neither the Company nor any Company Subsidiary shall (i) increase the compensation or
benefits payable or to become payable to or grant any bonus, salary increase, severance pay or
retention pay to any of the Company or Company Subsidiaries’ officers, directors, employees, agents
or consultants; (ii) (A) enter into or amend or alter the terms of any Company Employee Plan or any
collective bargaining agreement or similar agreement with any labor union, works council or similar
organization representing employees or the Company or any Company Subsidiary, (B) hire any
employee, agent or consultant on terms providing for annual base compensation thereto in excess of
$100,000, or (C) amend any loans to any of its officers, directors, employees, Affiliates, agents
or consultants or make any change in its existing borrowing or lending arrangements for or on
behalf of any of such Persons pursuant to Company Employee Plan or otherwise (other than (1)
general increases in compensation or benefits to employees other than officers or directors that
are made in the ordinary course of business consistent with past practices; (2) employee advances
in the ordinary course of business consistent with past practices; (3) new hires for non management
positions for the purposes of the business of the Company and the Company Subsidiaries; (4) new
placements of consultants for the purposes of the business of the Company and the Company
Subsidiaries; (5) as required under any existing agreement with the Company or any of the Company
Subsidiaries or (6) as permitted in clause 5.1(i) below); or (iii) discharge any executive officer
of the Company or Company Subsidiaries without cause, or engage in any employee layoffs, plant
closures or reductions in force without first providing notices and complying with any other
applicable requirements of the WARN Act or any similar applicable Law;



22









 





                    (e) neither the Company nor any Company Subsidiary shall adopt a plan of complete or partial
liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other corporate
reorganization of the Company or any Company Subsidiary;



                    (f) neither the Company nor any Company Subsidiary shall change any of the accounting methods
used by it unless required by GAAP or applicable Law;



                    (g) the Company and the Company Subsidiaries shall not become legally committed to any new
capital expenditure requiring expenditures in excess of $25,000, except as consistent with the
consolidated capital expenditure budget of the Company, a copy of which is included in Section
5.1(g) of the Disclosure Schedule;



                    (h) the Company and the Company Subsidiaries shall not transfer, sell, lease, license,
mortgage or create an Encumbrance (other than a Permitted Encumbrance) upon any of their respective
material assets or properties or license, sell, transfer, pledge, modify, disclose, dispose of or
permit to lapse any right under or respecting, or enter into any settlement (other than in the
ordinary course of business consistent with past practices) regarding the breach or infringement
of, any Company Intellectual Property Rights owned by the Company or any Company Subsidiary;



                    (i) the Company and the Company Subsidiaries shall not make any loans or advances to any
Person other than the extension of credit to customers, loans to Affiliates and advances to
directors, officers and employees for travel, lodging, entertainment and relocation expenses, in
each case in the ordinary course of business consistent with past practice;



                    (j) none of the Company or the Company Subsidiaries will incur, or assume or become subject
to, whether directly or by way of guarantee or otherwise, any material Indebtedness or other
liability, including purchase money indebtedness, except trade or business obligations incurred in
the ordinary course of business consistent with past practice;



                    (k) none of the Company or the Company Subsidiaries will merge or consolidate with, purchase
all or any substantial part of the assets of, or otherwise acquire any Person;



                    (l) none of the Company or the Company Subsidiaries will (i) modify in any material respect,
amend in any material respect or terminate any of its Material Contracts, or (ii) waive, release or
assign any rights or claims, other than (in the case of clauses (i) and (ii)) such modifications,
amendments, terminations, exercises, actions, waivers, releases or assignments as are in the
ordinary course of business consistent with past practice;



                    (m) none of the Company or the Company Subsidiaries will enter into any contract that: (i)
would have been a Material Contract with a Major Vendor (other than contracts relating to the
marketing and sale of goods and services entered into in the ordinary course of business); (ii) has
a term greater than one year and cannot by its terms be terminated without penalty on less than
ninety days notice; (iii) grants exclusivity in favor of another Person; or (iv) imposes a minimum
buying commitment that is not passed through to customers;



23









 





                    (n) commence, join, make an appeal with respect to or settle any action, claim, lawsuit,
arbitration or other proceeding before any court or Governmental Entity in any jurisdiction other
than in the ordinary course of business and consistent with past practice;



                    (o) none of the Company or the Company Subsidiaries will pay, discharge or satisfy any
material claims or liabilities (absolute, accrued, asserted or unasserted, contingent or otherwise)
other than the payment, discharge or satisfaction in the ordinary course of business consistent
with past practice of claims or liabilities which (i) are reflected or reserved against in the
Financial Statements or incurred thereafter in the ordinary course of business consistent with past
practice, or (ii) are paid, discharged or satisfied as required under this Agreement;



                    (p) neither the Company nor any Company Subsidiary shall (i) adopt or change any method of Tax
accounting, (ii) make or revoke any election related to Taxes, (iii) settle or compromise any Audit
or court proceeding related to Taxes, in each case which could affect the Tax liability of the
Company or any Company Subsidiary for any Post-Closing Tax Period or (iv) consent to any extension
or waiver of the limitation period applicable to any claim or assessment in respect of Taxes; and



                    (q) neither the Company nor any of the Company Subsidiaries shall enter into any agreement,
contract, commitment or arrangement to do any of the foregoing.



          Section 5.2 Access; Confidentiality. (a) Seller shall cause the Company prior to the
Closing to (i) give Buyer and its authorized representatives, upon reasonable advance notice and
during regular business hours, reasonable access to all books, records, Tax Returns, personnel,
representatives, officers and other facilities and properties of the Company and Company
Subsidiaries, (ii) permit Buyer to make such copies and inspections thereof, upon advance notice
and during regular business hours, as Buyer may reasonably request and (iii) cause the officers of
the Company and Company Subsidiaries to furnish Buyer with such financial and operating data and
other information with respect to the business and properties of the Company that Buyer may from
time to time reasonably request; provided, however, that any such access shall be
conducted at Buyer’s expense, at a reasonable time, under the supervision of Seller’ or the
Company’s personnel and in such a manner as to not unreasonably interfere with the normal
operations of the business of Seller or the Company.




                    (b) Buyer hereby acknowledges that any information provided or made available to it by or on
behalf of Seller, the Company or any Company Subsidiary pursuant to this Section 5.2 shall be
deemed “Evaluation Material” within the meaning of the Confidentiality Agreement and shall be
treated as confidential by Buyer, and Buyer shall cause its Affiliates, accountants and other
representatives to whom such information is provided or made available to treat it as confidential,
in accordance with the Confidentiality Agreement.



                    (c) From and after the Closing, Parent, Seller and their controlled Affiliates shall not
disclose, furnish or make available to any Person (other than the directors, officers, employees,
Affiliates, representatives and agents of Parent, Seller and such Affiliates who need to know such
information in connection with the performance of their services or duties to, or their ownership
of or affiliation with, Parent, Seller and/or their respective




24









 






Affiliates) or utilize any nonpublic information of the Company and the Company Subsidiaries;
provided, however, that the provisions of this Section 5.2(c) shall not apply to any such
information that (i) is disclosed or made available to the public other than by Parent, Seller or
its controlled Affiliates in breach of the provisions of this Section 5.2(c) or (ii) is required to
be disclosed by Law or in connection with filings with any Governmental Entity, provided that, if
permitted by Law and to the extent reasonably practicable, prior to any such required disclosure
(other than in connection with any such filing) Seller shall promptly notify Buyer thereof so that
Buyer may, at its sole expense, seek a protective order or other appropriate remedy in respect of
such required disclosure. Parent, Seller and their controlled Affiliates shall keep the terms and
conditions of the Commitment Letter confidential except as may be required to be disclosed by Law.




          Section 5.3 Efforts and Actions to Cause Closing to Occur. (a) Prior to the Closing,
upon the terms and subject to the conditions of this Agreement, Buyer and Seller shall use their
respective reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause
to be done and cooperate with each other in order to do, all things necessary, proper or advisable
to consummate the Closing as promptly as practicable, including the preparation and filing of all
forms, registrations and notices required to be filed to consummate the Closing and the taking of
such actions as are necessary to obtain any requisite approvals, authorizations, consents, orders,
licenses, permits, qualifications, exemptions or waivers by any third party or Governmental Entity.




               (b) If any party hereto or Affiliate thereof receives a request for information or documentary
material from any Governmental Entity with respect to this Agreement or any of the transactions
contemplated hereby, then such party shall endeavor in good faith to make, or cause to be made, as
soon as reasonably practicable and after consultation with the other party, an appropriate response
in compliance with such request.



               (c) Without limiting the generality of the undertakings set forth in this Section 5.3, Buyer
and Seller shall use their respective reasonable best efforts to file as soon as practicable
notifications under the HSR Act and under any applicable foreign anti-trust laws to permit
consummation of the acquisition of the Shares and the transactions contemplated by this Agreement,
and to respond as promptly as practicable to any inquiries received from the United States Federal
Trade Commission, the Antitrust Division of the United States Department of Justice, and any State
Attorney General or any applicable foreign governmental antitrust authority or any other
Governmental Entity for additional information or documentation. Notwithstanding the foregoing or
any other covenant contained herein, in connection with the receipt of any necessary approvals
under the HSR Act or under any applicable foreign anti-trust laws, nothing shall require Buyer to
(i) divest or hold separate any material part of its or the Company’s businesses or operations (or
of a combination of Buyer’s and the Company’ businesses or operations) or (ii) agree not to compete
in any geographic area or line of business in such a manner as would reasonably be expected to
result in a Company Material Adverse Effect or a material adverse effect on the business, financial
condition, assets, liabilities or results of operations of Buyer.



          Section 5.4 Tax Matters. (a) Tax Indemnification. Parent and Seller shall,
jointly and severally, indemnify, save and hold the Buyer Indemnified Persons harmless from




25









 




and against any and all Losses incurred in connection with, arising out of, resulting from or
incident to (i) any Taxes of any of the Company and the Company Subsidiaries with respect to any
Tax year or portion thereof ending on or before the Closing Date (or for any Tax year beginning
before and ending after the Closing Date, to the extent allocable (as determined in the following
sentence) to the portion of such period beginning before and ending on the Closing Date), (ii) the
unpaid Taxes of any Person (other than any of the Companies and the Company Subsidiaries) under
Treasury Regulations Section 1.1502-6 (or any similar provision of state, local or foreign law), as
a transferee or successor, by contract, or otherwise, and (iii) any breach of the representations
and warranties set forth in Section 3.18; provided that neither Parent nor Seller shall have any
liability for the payment of a Loss in respect of Taxes under this Section 5.4(a) to the extent
that such Taxes are reflected in the reserve for Tax liability (rather than any reserve for
deferred Taxes established to reflect timing differences between book and Tax income) shown on the
face of the balance sheets included with the Audited Financial Statements (rather than in any notes
thereto), as such reserve is adjusted for the passage of time through the Closing Date in
accordance with past custom and practice of the Companies and the Company Subsidiaries in filing
their Tax Returns, unless such Taxes are part of a reserve for Taxes which is excluded from the
calculation of Working Capital Liabilities. For purposes of the preceding sentence, in the case of
any Taxes that are imposed on a periodic basis and are payable for a Tax period that includes (but
does not end on) the Closing Date (a “Straddle Period”), the portion of such Tax that relates to
the portion of such Straddle Period ending on the Closing Date shall (i) in the case of any Taxes
other than Taxes based upon or related to income or receipts, be deemed to be the amount of such
Tax for the entire Straddle Period multiplied by a fraction the numerator of which is the number of
days in the Straddle Period ending on the Closing Date and the denominator of which is the number
of days in the entire Straddle Period, and (ii) in the case of any Tax based upon or related to
income or receipts, be deemed equal to the amount which would by payable if the relevant Tax period
ended on the Closing Date, provided, that for purposes of this sentence any transactions occurring
in the ordinary course of business on the Closing Date after the Closing shall be treated as having
occurred on the day after the Closing Date. For purposes of this Section 5.4(a), the provisions of
Section 8.4 shall apply.




               (b) Tax Periods Ending On or Before the Closing Date — Nonconsolidated Tax Returns.
Buyer shall prepare or cause to be prepared and file or cause to be filed all Tax Returns for each
of the Company and the Company Subsidiaries that are due to be filed after the Closing Date, other
than Tax Returns with respect to periods for which a consolidated, unitary or combined Tax Return
of Seller will include the operations of the Company and the Company Subsidiaries. Buyer shall
permit Seller to review and comment on each Tax Return that relates to a period ending on or prior
to the Closing Date which is filed after the Closing Date prior to such filing, and shall make such
revisions to such Tax Returns as are reasonably requested by Seller. Buyer shall deliver to Seller
completed drafts of all such Tax Returns at least thirty days prior to the filing thereof for
Seller’s review, comment and reasonable approval without undue delay. Seller shall pay to Buyer,
within fifteen days after the date on which Taxes are paid with respect to such periods, that
amount equal to such Taxes of each of the Company and the Company Subsidiaries with respect to such
periods, except to the extent that such Taxes are reflected or otherwise taken into account in
determining the Final Closing Date Working Capital Amount.



26









 





               (c) Tax Periods Ending On or Before the Closing Date — Seller Consolidated Tax
Returns. For all Tax periods ending on or prior to the Closing Date, Seller shall cause the
Company and the Company Subsidiaries to join in any consolidated, unitary or combined Tax Return of
Seller to the extent such Companies were included in such Tax Returns as a matter of past practice,
and Seller shall pay any such Taxes attributable to the Company and the Company Subsidiaries
(including without limitation, in the case of Seller’ consolidated federal income Tax Return, any
intercompany items taken into income under Treasury Regulation Section 1.1502-13 and any excess
loss account taken into income under Treasury Regulation Section 1.1502-19). All such Tax Returns
shall be prepared and filed in a manner consistent with prior practice.



               (d) Cooperation on Tax Matters. Buyer and Seller shall cooperate, as and to the
extent reasonably requested by the other party, in connection with the filing of Tax Returns
pursuant to this Agreement and any Audit, litigation or other proceeding with respect to Taxes.
Such cooperation shall include the retention and (upon the other party’s request) the provision of
records and information which are reasonably relevant to any such audit, litigation or other
proceeding, making employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder, and timely notification of receipt
of any notice of an Audit or notice of deficiency relating to any Tax or Tax Return with respect to
which the non-recipient may have liability hereunder. From and after the Closing, Buyer shall
cause the Company and the Company Subsidiaries to (i) retain all books and records with respect to
Tax matters pertinent to each of the Company and the Company Subsidiaries relating to any Taxable
period beginning before the Closing Date until the expiration of the statute of limitations of the
respective Taxable periods, and to abide by all record retention agreements entered into with any
Taxing authority, (ii) give Seller reasonable written notice prior to transferring, destroying or
discarding any such books and records, and (iii) make available to Seller all books and records as
requested for use in any audit. Buyer and Seller further agree, upon request, to use their
reasonable best efforts to obtain any certificate or other document from any governmental authority
or any other Person as may be necessary to mitigate, reduce or eliminate any Tax that could be
imposed (including, but not limited to, with respect to the transactions contemplated hereby).



               (e) Tax Proceedings. If an audit, examination, litigation or claim is commenced by
any Tax authority which may result in an indemnity payment pursuant to Section 5.4(a), Buyer shall
promptly notify Parent of such audit or claim (a “Tax Proceeding”), stating the nature and basis of
any such claim and the amount thereof, to the extent known. Failure to give such notice shall not
relieve Parent from any liability which it may have on account of this indemnification or
otherwise, unless the Parent is materially prejudiced thereby. Parent will have the right, at its
option, upon timely notice to Buyer, to assume control or any defense of any Tax Proceeding with
their own counsel. Parent’s right to control a Tax Proceeding will be limited to amounts in
dispute which would be paid by Seller or Parent or for which Seller or Parent would be liable
pursuant to Section 5.4(a). Buyer, the Company and the Company Subsidiaries shall cooperate with
Parent in connection with any Tax Proceeding, which cooperation shall include the retention and,
upon Parent’s request, the provision of records and information which are reasonably relevant to
such Tax Proceeding, making employees available on a mutually convenient basis to provide
additional information or explanation of any material provided hereunder and providing Parent with
any powers of attorney that would be necessary



27









 




for Parent to assume the control or defense of any Tax Proceedings. Notwithstanding the
foregoing, Parent shall neither consent nor agree (nor cause the Company to consent or agree) to
the settlement of any Tax Proceeding with respect to any liability for Taxes that may adversely
affect the liability of the Company or any Company Subsidiaries for any tax not otherwise
indemnifiable under Section 5.4(a) without the prior written consent of Buyer (which consent shall
not be unreasonably withheld or delayed), and neither Parent, nor any of its Affiliates, shall file
an amended Tax Return that may adversely affect the liability for Taxes of the Company or any
Company Subsidiaries that is not otherwise indemnifiable under Section 5.4(a) without the prior
written consent of Buyer (which consent shall not be unreasonably withheld or delayed).




               (f) Certain Taxes. All transfer, documentary, sales, use, stamp, registration and
other substantially similar Taxes and fees (including any penalties and interest) incurred in
connection with this Agreement (collectively, “Transfer Taxes”) and costs incurred in connection
with the payment thereof shall be borne equally by Buyer and Seller. Transfer Taxes shall be
timely paid, and all applicable filings, reports and returns shall be filed, as provided by
applicable law by the party ordinary required to pay such taxes and make such filings. The paying
party shall be entitled to reimbursement from the non-paying party. Upon payment of any such
Transfer Tax, the paying party shall present a statement to the non-paying party setting forth the
amount of reimbursement to which the paying party is entitled together with such supporting
evidence as is reasonably necessary to calculate the amount to be reimbursed. The non-paying party
shall make such reimbursement promptly but in no event later than ten days after the presentation
of such statement.



               (g) FIRPTA Certificate. The Company shall have delivered to Buyer a certificate
substantially in the form set forth in Treasury Regulation Section 1.1445-2(b)(2)(iv)(B).



               (h) Section 338(h)(10) Election.




                    (i) Seller and Buyer shall jointly make or cause to be made the election provided for
by Section 338(h)(10) of the Code and Section 1.338(h)(10)-1 of the Treasury Regulations and
any comparable election under state, local or foreign tax law with respect to the Company
and any Company Subsidiaries with respect to which such election can be made (the “Section
338(h)(10) Election”).




                    (ii) Within 120 days after the Closing Date, (1) Buyer shall prepare a Form 8023 (with
all attachments) and Seller and Buyer shall reasonably cooperate with each other to take all
actions necessary and appropriate (including filing such additional forms, returns,
elections, schedules and other documents as may be required) to effect and preserve such
Section 338(h)(10) Election in accordance with the provisions of Section 1.338(h)(10)-1 of
the Treasury Regulations (or any comparable provisions of state and local tax law) or any
successor provisions, and (2) Buyer shall determine the amount of the “adjusted gross-up
basis” with respect to the Section 338(h)(10) Election (within the meaning of Treasury
Regulation Section 1.338-5) and the allocations of the “adjusted grossed-up basis” among the
relevant assets in accordance with Section 338(b)(5) of the Code and the Treasury
regulations thereunder. Buyer’s determination shall be subject to Seller’s reasonable
review. In the event that the parties



28









 







cannot agree on a mutually satisfactory allocation within thirty days after the
presentation of Buyer’s computations and allocations described in clause (2), a mutually
selected independent accounting firm shall, at Seller’s and Buyer’s joint expense, determine
the appropriate allocation, which determination shall be binding on the parties. Any
allocation of Purchase Price hereunder shall be made final no later than ten days prior to
the due date for filing the Form 8023.




                    (iii) The parties agree to be bound by the allocation of the Purchase Price as agreed
upon and shall take no action inconsistent with the Section 338(h)(10) Election or the
agreed upon allocation of the Purchase Price for the purpose of all income Tax Returns filed
by them, and shall not voluntarily take any action inconsistent therewith unless required by
law.



               (i) Refunds. Seller shall be entitled to, and Buyer shall pay to Seller within thirty
days of the receipt, or the utilization as a credit, by the Buyer or any of its Affiliates, of any
refund of any Taxes of the Company or any Company Subsidiary that is attributable to a Tax period
(or portion thereof) ending on or prior to the Closing Date or any other Taxes that are
indemnifiable by Seller (including any interest received thereon) to the extent that such refunds
are in excess of amounts reflected in the Final Closing Date Working Capital Amount, in any case
net of any Taxes incurred by Buyer, its Affiliates, the Company or a Company Subsidiary in the year
in which such refund is received in respect of receipt of such refund. None of Buyer, its
Affiliates, the Company or any Company Subsidiary shall be required to return to Seller any refund
attributable to any carrybacks described in Section 5.4(i).



               (j) Carrybacks. To the extent that Buyer either chooses, or is required by Law, to
carryback any operating losses, net operating losses, capital losses, tax credits or similar items
of any non-U.S. Company Subsidiary to a Pre-Closing Tax Period and/or a Straddle Period (including,
without limitation, if such losses are required to be carried back prior to being carried forward),
all relevant amended Tax Returns shall be prepared and filed promptly by the party responsible for
filing such Tax Return, and any refund or credit attributable to such carryback shall be for the
benefit of such Company Subsidiary, and, if received by Seller or any Affiliate of the Seller
(other than the Company or any Company Subsidiary), the Seller or such Affiliate, as applicable,
shall promptly upon receipt remit such refund or the amount of such credit to the Company
Subsidiary entitled thereto.



               (k) Termination of Existing Tax Sharing Agreements. Any and all existing Tax sharing
agreements or arrangements, written or oral, between Seller, on the one hand, and the Company or
any Company Subsidiary, on the other hand, shall terminate as of the Closing. After the Closing
Date, neither the Company nor any of the Company Subsidiaries nor any member of Seller affiliated
group shall have any further rights or obligations under any such Tax sharing agreements.



               (l) The representations contained in Section 3.18 of this Agreement shall survive until the
expiration of the applicable statute of limitations (giving effect to extensions thereof).



29









 





     Notwithstanding anything in this Section 5.4 to the contrary, any item of income, gain, loss,
or deduction arising from the transactions contemplated by Article I or Section 5.4(h) of this
Agreement, including any Section 338(h)(10) Election, shall be allocated to the period prior to the
Closing.



          Section 5.5 Publicity. Seller and Buyer shall consult with each other before issuing
any public release or announcement concerning the transactions contemplated hereby (each an
“Announcement”), provided that nothing contained in this Section 5.5 shall restrict Seller, Buyer
or their respective Affiliates from timely making any Announcement required by applicable Law.




          Section 5.6 Employees. No more than five days prior to the Closing, the Company shall
provide Buyer with an Employee List as of a date not more than ten days prior to such delivery.




          Section 5.7 Employee Benefit Plans.




               (a) Parent and Seller shall cause all benefits that have accrued and vested in any employee as
of the Closing pursuant to the terms of any Company Employee Plan to remain so vested in such
accrued benefits as of the Closing under, and in accordance with, the applicable terms of such
Company Employee Plan. Parent and Seller shall take such action as is necessary such that the
Company and the Company Subsidiaries shall cease being a “participating employer” and shall cease
any co-sponsorship and participation in each Company Employee Plan that is jointly adopted,
sponsored or maintained by Parent, Seller, the Company or any Company Subsidiary and in which any
current, terminated or retired employee of the Company or any Company Subsidiary participates (each
such Company Employee Plan being a “Seller Plan”). The Company and the Company Subsidiaries shall
remain liable, and shall reimburse Parent in accordance with past practice, for insurance premiums
and claims incurred by the current and former employees of the Company and the Company Subsidiaries
prior to the Closing Date, whether such claims are made prior to, on or after the Closing Date,
under any Seller Plans that are “welfare plans” (within the meaning of Section 3(1) of ERISA).
Following the Closing Date, Buyer or its Affiliates shall assume full responsibility for providing
continuation coverage pursuant to Section 4980B of the Code and Section 601 of ERISA, and the
regulations thereunder (“COBRA”), to current and former employees of the Company and the Company
Subsidiaries who are “M&A Qualified Beneficiaries” as such term is defined in Treas. Reg. §§
54.4980B-9 only to the extent required under COBRA.



               (b) On or prior to the Closing, Seller shall deliver to Buyer a schedule (the “Sale Bonus
Schedule”) setting forth the Sale Bonus Payment (as defined in the Sale Bonus Agreements described
below) payable, as a result of the transactions contemplated by this Agreement, to each employee
who is a party to a Sale Bonus Agreement listed on Section 5.7(b) of the Disclosure
Schedule (including, but not limited to, any payments for excise taxes, gross-up of income taxes
and cost to the Company of loss of deductibility of the payments). The aggregate Sale Bonus
Payments set forth on the Sale Bonus Schedule shall be accrued as Working Capital Liabilities for
purposes of the adjustments to the Purchase Price pursuant to Sections 1.3 and 1.4 of this
Agreement. Following the Closing, Buyer shall cause the Company



30









 







to pay when due under the Sale Bonus Agreements all Sale Bonus Payments in the respective
amounts set forth on the Sale Bonus Schedule.



               (c) Following the Closing, Buyer and its Affiliates shall be responsible for the payment of
severance to any Company Employee, in accordance with the Buyer or its Affiliates applicable
polices and procedures; provided, however, if any such individual’s employment with the Company or
the Company Subsidiaries is terminated by the Company or its Affiliates without cause within one
year following the Closing Date, and such individual is not otherwise entitled any severance
benefits that are otherwise payable under the terms of any employment or similar agreement
(including any Specific Employment Agreement, or any agreement listed on Section 5.7(b) of
the Disclosure Schedule) between any Company Employee and the Company or any Company Subsidiary,
such individual shall be entitled to severance benefits in the amounts set forth on Section
5.7(c) of the Disclosure Schedule. Notwithstanding anything herein to the contrary, the
provisions of this Section 5.7(c) shall not supersede, replace or be paid in addition to any
Company Employees’ entitlement to any severance benefits that are payable under the terms of any
employment or similar agreement (including any Specific Employment Agreement, or any agreement
listed on Section 5.7(b) of the Disclosure Schedule) between any Company Employee and the
Company or any Company Subsidiary. For the purposes of this Section 5.7(c), Company Employees
shall receive credit for prior service with the Company, Parent, Seller or any of their Affiliates.
For the purposes of this Section 5.7(c), Company Employees shall receive credit for prior service
with the Company, Parent, Seller or any of their Affiliates. Severance paid to employees following
the Closing (with the exception of severance paid in connection with the transactions listed at
Item 1 on Section 3.23 of the Disclosure Schedule) shall not be accrued as Working Capital
Liabilities for purposes of the adjustments to the Purchase Price pursuant to Sections 1.3 and 1.4.



               (d) Following the Closing, and for a period of 12 months thereafter, the Company Employees
shall be entitled to participate in Buyer’s medical, dental and vision plans (without regard to
pre-existing and at-work conditions, if any, except for limitations or waiting periods that have
not been satisfied under any of Seller’s medical, dental and vision plans with respect to any such
employee) at a level that is comparable to the Seller’s medical, dental and vision plans as in
effect immediately prior to the Closing; provided, however, that the Company Employees shall not be
required to pay a premium for such coverage that exceeds the greater of (1) the employee premium
payable under the Seller’s plans or (2) 80% of the employee premium payable under the Buyer’s
plans, plus any premium related to any post-Closing increase in the cost of providing benefits
under such Buyer’s plan(s) (not including any deductibles and/or co-payments applicable to the
Company Employees). Buyer shall provide each Company Employee with appropriate credit for any
deductibles and/or co-payments paid prior to the Closing in satisfying any applicable deductibles
and/or co-payment requirements under any of Buyer’s medical, dental and vision plans in which such
employees participate following the Closing.



               (e) Following the Closing, Buyer or its Affiliates will provide the Company Employees (for so
long as they remain employees of the Company, Buyer or its Affiliates), with life insurance,
short-term disability insurance and long-term disability insurance under Buyer’s plans on such
terms and under such conditions that are no less favorable to the Company Employees than to
similarly situated employees of the Buyer or its Affiliates;



31









 







provided, however, that, for a period of twelve months following the Closing Date, such
insurance provided to the Company Employees shall be provided on terms and under conditions no less
favorable than the following:




                    (i) Buyer or its Affiliates shall provide life insurance at no cost to the Company
Employees in an amount equal to their base salary, up to $200,000 per year; and




                    (ii) Company Employees who elect to participate in the Buyer’s long- and short-term
disability plans shall not be required to pay a premium for such benefits that exceeds 50%
of the total premium for benefits under such plans.



               (f) Following the Closing, the Company Employees will be allowed to participate in Buyer’s
401(k) plan on such terms and under such conditions that are no less favorable to the Company
Employees than to similarly situated employees of the Buyer or its Affiliates.



               (g) Following the Closing, Buyer or its Affiliates will provide the Company Employees (for so
long as they remain employees of the Company, Buyer or its Affiliates), with vacation and sick
leave benefits that are no less favorable to the Company Employees than to similarly situated
employees of Buyer or its Affiliates; provided, however, that with respect to any accrued but
unused vacation time and sick leave to which any Company Employee is entitled pursuant to the
vacation and sick leave policy applicable to such employee immediately prior to the Closing, Buyer
shall allow such employee to utilize such accrued vacation time and sick leave in accordance with
Buyer’s current practice.



               (h) Service with the Company, Parent, Seller or any of their Affiliates shall be recognized
for purposes of Sections 5.7(d) — (g) for purposes of determining eligibility for participation,
eligibility for commencement of benefits, level of benefits under any paid time off policy and
vesting of benefits under such plan(s), to the extent applicable under such plan(s).



          Section 5.8 Intercompany Arrangements. All agreements and commitments, whether
written, oral or otherwise, which are solely between the Company or any Company Subsidiary, on the
one hand, and Seller and its Affiliates (excluding the Company and the Company Subsidiaries), on
the other hand, as set forth in Section 5.8 of the Disclosure Schedule (and in the case of
oral agreements including a summary of terms), shall be terminated and of no further effect,
simultaneously with the Closing without any further action or liability on the part of the parties
thereto.




          Section 5.9 Maintenance of Books and Records. After the Closing, each of the parties
hereto shall preserve, until at least the eighth anniversary of the Closing Date, all material
pre-Closing Date records possessed or to be possessed by such party relating to the Company. After
the Closing Date and up until at least the eighth anniversary of the Closing Date, upon any
reasonable request from a party hereto or its representatives, the party holding such records shall
(a) provide to the requesting party or its representatives reasonable access to such records during
normal business hours and (b) permit the requesting party or its representatives to make copies of
such records, in each case at no cost to the requesting party or




32









 




its representatives (other than for reasonable out-of-pocket expenses); provided,
however, that nothing herein shall require either party to disclose any information to the
other if such disclosure would jeopardize any attorney-client or other legal privilege or
contravene any applicable Law. Such records may be sought under this Section 5.9 solely to the
extent reasonably required in connection with the audit, accounting, tax, litigation, federal
securities disclosure or other similar needs of the party seeking such records. Any information
obtained pursuant to this Section 5.9 will be treated as if it were confidential information and
subject (for the benefit of the delivering party) to the terms of Section 5.2. Notwithstanding the
foregoing, any and all such records may be destroyed by a party if such destroying party sends to
the other party hereto written notice of its intent to destroy such records, specifying in
reasonable detail the contents of the records to be destroyed; such records may then be destroyed
after the sixtieth day following such notice unless the other party hereto notifies the destroying
party that such other party desires to obtain possession of such records, in which event the
destroying party shall transfer the records to such requesting party and such requesting party
shall pay all reasonable expenses of the destroying party in connection therewith.




          Section 5.10 Bank Accounts. Seller shall provide Buyer with a complete list of each of
the bank accounts of the Company and the Company Subsidiaries and the authorized signatories for
each such account as soon as practicable before the Closing Date. The parties shall cooperate in
connection with the replacement or supplementation of such signatories effective as of the Closing.




          Section 5.11 Assumption of Guarantees. At Closing, Buyer will expressly assume, and
cause Seller and its Affiliates to be fully released and discharged from all obligations in respect
of, all guarantees currently provided by Seller or any of its Affiliates for those Contracts set
forth on Section 5.11 of the Disclosure Schedule (the “Guarantees”). If an assumption,
release and discharge of any Guarantee is not permitted, Buyer will indemnify Parent pursuant to
Article VIII for any amounts owed under any such Guarantee.




          Section 5.12 Further Assurances. (a) From and after the Closing, each of Seller and
Buyer shall furnish or cause to be furnished to the other party and its employees, counsel,
auditors and other representatives such information and assistance relating to the Company and the
Company Subsidiaries (to the extent within the control of such other party) as is reasonably
necessary for required financial reporting and required accounting matters of the other party,
including the furnishing of such documentation and information relating to the Company and the
Company Subsidiaries as may be reasonably requested in connection with the preparation of reports,
accounts and other documents and materials to be filed with or submitted to the SEC or any stock
exchange or in connection with any proposed capital markets offering.




               (b) At any time and from time to time, each party to this Agreement agrees, subject to the
terms and conditions of this Agreement, to take such actions and to execute and deliver such
documents as may be necessary to effectuate the purposes of this Agreement at the earliest
practicable time.



          Section 5.13 Compliance with the WARN Act and Similar Laws. Seller shall cause the
Company and each of the Company Subsidiaries not to, at any time within the 90-day period before
the Closing Date, without complying fully with the notice and other




33









 




requirements of the WARN Act or similar state, local or foreign Law, effectuate (a) a “plant
closing” (as defined in the WARN Act) affecting any single site of employment or one or more
facilities or operating units within any single site of employment of the Company or any of the
Company Subsidiaries; or (b) a “mass layoff” (as defined in the WARN Act) at any single site of
employment or one or more facilities or operating units within any single site of employment of the
Company or any of the Company Subsidiaries. For purposes of the WARN Act and this Agreement, the
Closing Date is and shall be the same as the “effective date” within the meaning of the WARN Act.




          Section 5.14 Insurance Policies.




               (a) As of the Closing Date, the coverage of all Insurance Policies related to the Company and
the Company Subsidiaries (other than such Insurance Policies, if any, held by the Company or the
Company Subsidiaries and not shared with Parent or its other Affiliates, which shall be assigned to
Buyer at Closing) shall continue in force only for the benefit of Parent, Seller and their
Affiliates and not for the benefit of Buyer. Buyer agrees to arrange for its own insurance
policies with respect to the Company and Company Subsidiaries effective at Closing. Furthermore,
Buyer shall make its own arrangements to cover prior acts under any claims made insurance policies
where the claim is not made or reported prior to the Closing Date. Seller shall be entitled to
cause the Company to pursue claims (known or unknown) insured under an occurrence policy which
claims emanate from an occurrence(s) prior to the Closing Date.



               (b) At the Closing, Seller shall assign to Buyer, and Buyer shall be entitled to receive the
benefits of, any and all claims and proceeds Seller or its Affiliates may have with respect to any
insurance policies with respect to the Company and the Company Subsidiaries which relate to
occurrences between the date hereof and the Closing, provided that pursuing claims under any policy
of Seller will remain the responsibility of Seller. Seller will act on behalf of Buyer to secure
the protection or benefits due under any policy of insurance and will provide to Buyer status
reports upon receipt of reasonable requests. Notwithstanding anything in this Section 5.14 to the
contrary, Seller does not guarantee the performance or payment under any of the policies of
insurance.



               (c) After the Closing, Buyer and the Company, and not Seller, shall remain responsible for the
payment of all deductibles to the extent they provide coverage or claim payments on behalf of the
Company, any Company Subsidiary or any employee thereof or the Company’s or any Company
Subsidiary’s assets. Buyer shall make direct payments to the insurer for such obligations.



          Section 5.15 Government Services Contracts. From and after the Closing, Parent and
Seller shall, and shall cause each of their Affiliates to, cooperate fully with Buyer in executing
any agreements as required by any governmental authority for any contract between Company and
Company Subsidiaries on the one hand, and any governmental authority on the other hand (the
“Government Service Contracts”), including guaranteeing the performance of the Government Service
Contracts if so required by the governmental authority and shall do all such other acts and things,
all as may be reasonably requested by Buyer as necessary to assure to Buyer all the rights and
interests granted or intended to be granted under this Agreement.




34









 








          Section 5.16 Non-Compete.




               (a) For a period of two years from and after the Closing Date (the “Non-Compete Period”),
Parent and Seller agree that they and their respective controlled Affiliates shall not, directly or
indirectly, either for themselves or for any other Person, operate anywhere in the world a business
that (i) is authorized by Microsoft Corporation or any other software publisher to resell volume
licenses to end-users under Select License and Enterprise Agreements or substantially similar
agreements, or (ii) provides software license reconciliation or software license management
services to end-users (a “Competitive Business”).



               (b) For the avoidance of doubt and notwithstanding any provision of this Agreement to the
contrary, Seller and its Affiliates shall not be deemed to be engaged directly or indirectly in a
Competitive Business or otherwise to have breached any obligation set forth in Section 5.16(a) if
Seller or any of its Affiliates:




                    (i) beneficially owns ten percent or less of the equity of any Person that engages in a
Competitive Business;




                    (ii) beneficially owns Indebtedness or other non-voting securities of any Person that
engages in a Competitive Business;




                    (iii) provides any service, including (A) transport, collocation, hosting, content
distribution or any other communications services, or (B) with respect to video or
multi-media content, services involving content or digital rights management, distribution
or transport, which services are not in and of themselves, Competitive Businesses, but which
may enable an unrelated Person to engage in a Competitive Business;




                    (iv) solicits any customer of the Company or any Company Subsidiary for the sale of any
product or service other than a Competitive Business service; or




                    (v) engages in a Competitive Business that results from the acquisition of a Person, or
the assets of a Person, that is engaged in a Competitive Business, provided that the total
earnings before interest, taxes, depreciation and amortization (“EBITDA”) of such acquired
Person or acquired assets that are attributable to the Competitive Business represent less
than twenty percent of the consolidated EBITDA of such Person.



               (c) From and after the Closing Date and until the first anniversary thereof, without the prior
written consent of Buyer, Parent and its controlled Affiliates will not directly or indirectly
solicit for employment (as an employee or independent contractor) any employee of the Company and
the Company Subsidiaries, including those employees with a Specified Employment Contract, or hire
any employee of the Company and the Company Subsidiaries with a Specified Employment Contract;
provided, however, that (i) Parent may solicit or hire any such individual as an employee or
independent contractor if such individual’s employment shall have been terminated by the employer
prior to the expiration of such one-year period, and (ii) Parent or Seller may place an
advertisement in a newspaper, periodical or other



35









 







similar media of general circulation, or on the radio, Internet or similar media, and may hire
any such individual (other than an employee with a Specified Employment Contract) who responds
thereto.



               (d) For the avoidance of doubt and notwithstanding any provision of this Agreement to the
contrary, nothing in this Agreement (including, without limitation, this Section 5.16) shall
restrict or prohibit the actions or conduct of or otherwise apply to, any third party (or any
Affiliate thereof) that consummates a merger, consolidation, business combination, acquisition of
assets or purchase of capital stock with respect to Parent, Seller or any of their respective
Affiliates.



          Section 5.17 Other Agreements. At Closing, (a) Parent will cause Level 3
Communications, LLC to enter into (directly or through its Affiliates) the Transition Services
Agreement and (b) Parent and the Company will enter into the Intellectual Property License
Agreement.




          Section 5.18 Release of Credit Support Obligations and Payment of Indebtedness. Parent
and Seller shall, prior to Closing, release, or cause to be released, the Company and each Company
Subsidiary from any credit support obligations of the Indebtedness of Parent, Seller or their
respective Affiliates (other than the Company or any of the Company Subsidiaries) and shall repay,
or cause to be repaid, all Indebtedness list in Section 3.12 of the Disclosure Schedule.




          Section 5.19 Indemnification of Directors and Officers. From and after the Closing
Date, Buyer shall, or shall cause the Company and the Company Subsidiaries, to provide
indemnification to each Covered Person to the same extent and under similar conditions and
procedures as such Covered Person is entitled on the date hereof in connection with any Proceeding
based directly or indirectly (in whole or in part) on, or arising directly or indirectly (in whole
or in part) out of, the fact that such Covered Person is or was an officer or director (or Person
in a similar position) of the Company or any Company Subsidiary, or is or was serving at the
request of the Company or any Company Subsidiary as an officer or director (or Person in a similar
position) of another Person, including, without limitation, a general partner or trustee of any
other Person, whether pertaining to any matter arising before or after the Closing Date.




          Section 5.20 Transfer of Shares. At or prior to the Closing, the transfer of shares
of Software Spectrum Netherlands BV (“BV”) to the Company will be completed and it will be a
Company Subsidiary. BV will be considered a Company Subsidiary for all purposes of this Agreement.




          Section 5.21 Transfer of Parent Employees. As of the Closing Date, each employee of
Parent or its Affiliates listed in Section 5.21 of the Disclosure Schedule (the
“Transferred Employees”) shall be offered employment by the Company on such terms and
conditions as are agreed to by Buyer, the Company and the Transferred Employee. Any claims that
any Transferred Employee that accepts employment may have that pre-date the Closing Date shall be
for the account of Parent and Parent shall indemnify and hold Buyer and its Affiliates harmless in
respect of all Losses arising from such claims. From the date hereof and continuing through the
Closing Date, Buyer shall have reasonable access, during normal business hours, to

36









 








communicate with the Transferred Employees regarding the terms and conditions of their
employment with the Company following the Closing.




ARTICLE VI

CONDITIONS




          Section 6.1 Conditions to Each Party’s Obligation to Effect the Closing. The
obligation of each party to consummate the Closing shall be subject to the satisfaction or waiver
on or prior to the Closing Date of each of the following conditions:




               (a) Statutes; Court Orders. No Law shall have been enacted or promulgated by any
Governmental Entity which makes the transactions contemplated hereby illegal, results in material
damages or imposes material restrictions or conditions on the post-Closing operations of Buyer or
it Subsidiaries (solely as a result of the consummation of the transactions contemplated hereby),
the Company or the Company Subsidiaries, or otherwise prohibits the consummation of the Closing;
there shall not be a temporary restraining order, preliminary or permanent injunction or other
judgment or order issued by any Governmental Entity of competent jurisdiction (collectively,
“Restraints”) in effect preventing the consummation of the Closing.



               (b) Orders and Approvals. All material consents, orders or approvals of, declarations
or filings with, and expirations of waiting periods imposed by, any Governmental Entity listed in
Section 6.1(b) of the Disclosure Schedule, that are required for the consummation of the
transactions contemplated hereby, if any, shall have been obtained and in effect.



          Section 6.2 Conditions to Obligations of Buyer to Effect the Closing. The obligation
of Buyer to consummate the Closing shall be subject to the satisfaction or waiver on or prior to
the Closing Date of each of the following conditions:




               (a) Representations and Warranties. The representations and warranties of Seller
contained in Article III of this Agreement shall be true and correct (without giving effect
to any materiality or Company Material Adverse Effect qualifiers) as of the date of this Agreement
and, except for representations and warranties that speak as of a specific date other than the
Closing Date, which need only be true and correct (without giving effect to any materiality or
Company Material Adverse Effect qualifiers) as of such specific date, as of the Closing Date, with
the same force and effect as though such representations and warranties had been made on and as of
the Closing Date, except where the failure of such representations or warranties to be true and
correct, in the aggregate, would not reasonably be expected to have a Company Material Adverse
Effect. The satisfaction of the condition set forth in this Section 6.2(a) notwithstanding the
existence of any failure of the representations and warranties of Seller contained in Article
III hereof to be so true and correct as of the Closing Date shall not affect any right of Buyer
to indemnification in respect thereof as provided in Article VIII hereof.



               (b) Performance of Obligations. Parent and Seller shall have performed and complied
with, in all material respects, all agreements, covenants and obligations required by this
Agreement to be performed or complied with by them prior to or at the Closing.



37









 





               (c) Seller Certificates. Buyer shall have received certificates signed by an
appropriate executive officer of Parent (solely as to clause (b) of Section 6.2) and Seller, dated
the Closing Date, to the effect set forth in clauses (a) and (b) of this Section 6.2.



               (d) Transition Services Agreement. Level 3 Communications, LLC shall have delivered
an executed Transition Services Agreement to Buyer.



               (e) Resignations. Parent and Seller shall have delivered to Buyer the resignations of
all members of the boards of directors of the Company and the Company Subsidiaries from their
positions as directors of such entities immediately before the Closing including the director who
the Company has the right to appoint pursuant to the joint venture agreement with Uchida Yoko Co.
Limited.



               (f) Release of Credit Support Obligations and Payment. Parent and Seller shall have
delivered to Buyer reasonable evidence that the Company and the Company Subsidiaries have been
released from any credit support obligations pursuant to Section 5.18 and that all Indebtedness on
Section 3.12 of the Disclosure Schedule has been repaid.



          Section 6.3 Conditions to Obligations of Seller to Effect the Closing. The
obligations of Seller to consummate the Closing shall be subject to the satisfaction or waiver on
or prior to the Closing Date of each of the following conditions:




               (a) Representations and Warranties. The representations and warranties of Buyer
contained in Article IV of this Agreement shall be true and correct (without giving effect
to any materiality qualifiers) as of the date of this Agreement and, except for representations and
warranties that speak as of a specific date other than the Closing Date, which need only be true
and correct (without giving effect to any materiality qualifiers) as of such specific date, as of
the Closing Date, with the same force and effect as though such representations and warranties had
been made on and as of the Closing Date, except where the failure of such representations or
warranties to be true and correct, in the aggregate, would not reasonably be expected to either (i)
have a material adverse effect on the ability of Buyer to consummate the Closing or perform its
obligations under this Agreement or (ii) impede or delay the consummation of the Closing in any
material respect. The satisfaction of the condition set forth in this Section 6.3(a)
notwithstanding the existence of any failure of the representations and warranties of Seller
contained in Article IV hereof to be so true and correct as of the Closing Date shall not
affect any right of Parent or Seller to indemnification in respect thereof as provided in
Article VIII hereof.



               (b) Performance of Obligations. Buyer shall have performed and complied with, in all
material respects, all agreements, covenants and obligations required by this Agreement to be
performed or complied with by it prior to or at the Closing.



               (c) Buyer Certificate. Seller shall have received a certificate signed by an
appropriate executive officer of Buyer, dated the Closing Date, to the effect set forth in clauses
(a) and (b) of this Section 6.3.



               (d) Intellectual Property License Agreement. The Company shall have delivered an
executed Intellectual Property License Agreement to Seller.



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ARTICLE VII

TERMINATION




          Section 7.1 Termination. The transactions contemplated hereby may be terminated or
abandoned at any time prior to the Closing Date:




               (a) by the mutual written consent of Buyer and Seller;



               (b) by either Buyer or Seller on prior written notice to the other if any Governmental Entity
of competent jurisdiction shall have issued an order, decree or ruling or taken any other action
which permanently restrains, enjoins or otherwise prohibits the transactions contemplated by this
Agreement and such order, decree, ruling or other action shall have become final and
non-appealable;



               (c) by Buyer or Seller on prior written notice to the other if the Closing shall not have
occurred on or prior to December 31, 2006 (the “Termination Date”); provided,
however, that if either such party determines that additional time is necessary in
connection with obtaining any consent, approval, permit or authorization under the HSR Act or under
any applicable foreign anti-trust laws, the Termination Date may be extended by either such party
from time to time by written notice to the other party to a date not beyond March 31, 2007;



               (d) by Seller, if there has been a material breach of any representation, warranty, agreement
or covenant of Buyer, which breach shall have not been cured within thirty Business Days after
written notice thereof from Seller or which breach is not reasonably susceptible to cure within
thirty Business Days, provided that such breach shall have rendered the conditions set forth in
Section 6.3 incapable of fulfillment on or before the Termination Date (as extended pursuant to
Section 7.1(c), if applicable); or



               (e) by Buyer, if there has been a material breach of any representation, warranty, agreement
or covenant of Seller, which breach shall have not been cured within thirty Business Days after
written notice thereof from Buyer or which breach is not reasonably susceptible to cure within
thirty Business Days, provided that such breach shall have rendered the conditions set forth in
Section 6.2 incapable of fulfillment on or before the Termination Date (as extended pursuant to
Section 7.1(c), if applicable).



          Section 7.2 Effect of Termination. In the event of the termination of this agreement
in accordance with Section 7.1, (a) this Agreement shall become null and void and of no further
force or effect except for Section 5.5, this Article VII, and Article X, (b) such termination shall
relieve each party from all violations of this Agreement that occurred prior to such termination
other than intentional or reckless breaches and breaches which result in such termination, and (c)
there shall be no liability on the part of any party hereto or any of its Affiliates, or any of
their respective directors, officers or stockholders.

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ARTICLE VIII

INDEMNIFICATION




          Section 8.1 Indemnification; Remedies. (a) From and after the Closing, Parent and
Seller shall, jointly and severally, indemnify, defend and hold harmless Buyer and the Company, and
their respective Subsidiaries, Affiliates, successors, assigns, officers, directors, stockholders
and employees (“Buyer Indemnified Persons”) from and against all Losses incurred by, or claimed or
assessed against, any of them that arise out of or relate to (i) any breach of Seller’s
representations and warranties contained in Article III of this Agreement (other than Section 3.18
which is addressed in Section 5.4), (ii) any breach by Parent or Seller of any of their covenants
in this Agreement, or (iii) the Covered Matter and the Scheduled Matter.




               (b) From and after the Closing, Buyer shall indemnify, defend and hold harmless Parent,
Seller, and their respective Subsidiaries, Affiliates, successors, assigns, officers, directors,
stockholders and employees (“Seller Indemnified Persons”) from and against all Losses incurred by,
or claimed or assessed against, any of them that arise out of or relate to (i) any breach of
Buyer’s representations and warranties contained in Article IV of this Agreement, (ii) any breach
by Buyer of any of its covenants in this Agreement, or (iii) Parent’s guarantee obligations under
the Guarantees pursuant to Section 5.11 or under the guarantees under Section 5.15. Such
obligation to indemnify under Section 8.1(b)(i) shall terminate on the earlier of (x) a date
eighteen months after the Closing and (y) March 1, 2008, unless before such termination date Seller
shall have delivered to Buyer a Claim Notice with respect to which any claim for indemnification
set forth therein has not been finally resolved as contemplated by this Article VIII as of the
expiration of such period, provided that such obligation to indemnify shall continue beyond such
period only with respect to any such unresolved claim and only until such unresolved claim is
finally resolved as contemplated by this Article VIII.



          Section 8.2 Limits on Indemnification. Notwithstanding anything to the contrary
contained in this Agreement, Parent’s and Seller’s indemnification obligation under Section 8.1(a)
shall be subject to each of the following limitations:




               (a) With respect to indemnification for Losses arising out of or relating to any breaches of
any representation or warranty by Seller in this Agreement (other than Sections 3.1, 3.2, 3.3, 3.5,
3.6 or 3.17(m) (the “Fundamental Reps”), as to which Seller’s obligations under Section 8.1(a)
shall survive indefinitely and any breaches of Seller’s representations and warranties contained in
Section 3.18 which are addressed in Section 5.4 and as to which Seller shall have no
indemnification obligations under Section 8.1(a)) and to the Scheduled Matter, such obligation to
indemnify shall terminate on the earlier of (x) a date eighteen months after the Closing and (y)
March 1, 2008, unless before such termination date Buyer shall have delivered to Seller a Claim
Notice with respect to which any claim for indemnification set forth therein has not been finally
resolved as contemplated by this Article VIII as of the expiration of such period, provided that
such obligation to indemnify shall continue beyond such period only with respect to any such
unresolved claim and only until such unresolved claim is finally resolved as contemplated by this
Article VIII;



               (b) Except with respect to any breach of the Fundamental Reps or the Covered Matter, there
shall be no obligation to indemnify under Section 8.1(a) unless the



40









 







aggregate of all Losses for which Parent and Seller, but for this clause (b), would be liable
under Section 8.1(a) exceeds on a cumulative basis an amount equal to $4,500,000, and then only to
the extent of such excess;



               (c) Except with respect to any breach of the Fundamental Reps:




                    (i) subject to clause (ii) of this Section 8.2(c), there shall be no obligation to
indemnify under Section 8.1(a) to the extent amounts previously actually indemnified under
Section 8.1(a) are, in the aggregate, in excess of $28,700,000 (the “General Indemnity
Cap”);




                    (ii) with respect only to the Specified Matters, there shall be no obligation to
indemnify under Section 8.1(a) in respect of such Specified Matters to the extent amounts
previously actually indemnified under Section 8.1(a) in respect thereof are, in the
aggregate, in excess of $10,000,000 (the “Special Indemnity Cap”), it being understood that
in the event that the aggregate amount of the Losses incurred by, or claimed or assessed
against, the Buyer Indemnified Parties in respect of the Specified Matters exceeds the
Special Indemnity Cap, such excess shall remain subject to indemnification under Section
8.1(a) to the extent that there is then any remaining availability under the General
Indemnity Cap; it being understood that Losses related to the Specified Matters shall first
be applied against the Special Indemnity Cap and then against the General Indemnity Cap in
accordance with this Article VIII; and




                    (iii) the aggregate liability of Parent and Seller under Section 8.1(a) shall not
exceed the sum of the General Indemnity Cap and, subject to the provisions of the
immediately preceding clause (ii), the Special Indemnity Cap;



               (d) For the avoidance of doubt, Parent’s and Seller’s obligations under Section 8.1(a)
relating to the Covered Matter shall survive indefinitely;



               (e) For the avoidance of doubt, indemnification may not be sought under Section 8.1(a) to the
extent that any amount claimed as a Loss thereunder has been paid to Buyer pursuant to Section 1.4;
and



               (f) Each Loss shall be reduced by (i) the amount of any insurance proceeds actually received
by the relevant Buyer Indemnified Person with respect to such Loss, (ii) any indemnity,
contribution or other similar payment actually received by the relevant Buyer Indemnified Person
from any third party with respect to such Loss, and (iii) any reduction in Taxes actually realized
by the relevant Buyer Indemnified Party with respect to such Loss in the year such Loss was
actually incurred.



          Section 8.3 Notice of Claim; Defense. (a) If (i) any third-party institutes or
asserts any claim, demand, investigation, action or proceeding (each of the foregoing, a
“Proceeding”) that may give rise to Losses for which a party (an “Indemnifying Party”) may be
liable for indemnification under this Article VIII (a “Third-Party Claim”) or (ii) any Person
entitled to indemnification under this Agreement (an “Indemnified Party”) shall have a claim to be
indemnified by an Indemnifying Party that does not involve a Third-Party Claim (a “Direct Claim”),
then, in case of clause (i) or (ii), the Indemnified Party shall reasonably promptly send




41









 




to the Indemnifying Party a written notice specifying the nature of such claim and, to the
extent practicable, the estimated amount of all related liabilities (a “Claim Notice”). If an
Indemnified Party fails to timely deliver an adequate Claim Notice to any Indemnifying Party, such
Indemnifying Party shall be relieved of its indemnification obligations under this Article
VIII solely (and only) to the extent that it is materially prejudiced by such failure of the
Indemnified Parties to provide a timely and adequate Claim Notice.




               (b) In the event of a Third-Party Claim, the Indemnifying Party may, upon prompt notice to the
Indemnified Parties, elect to retain counsel of its choice, reasonably acceptable to the relevant
Indemnified Parties, to represent such Indemnified Parties in connection with such Proceeding and
shall pay the fees, charges and disbursements of such counsel. The Indemnified Parties may
participate, at their own expense and through legal counsel of their choice, in any such
Proceeding, provided that (i) the Indemnifying Party may elect to control the defense of the
Indemnified Parties in connection with such Proceeding and (ii) the Indemnified Parties and their
counsel shall reasonably cooperate with the Indemnifying Party and its counsel in connection with
such Proceeding. The Indemnifying Party shall not settle any such Proceeding without the relevant
Indemnified Parties’ prior written consent, unless the terms of such settlement provide for no
relief other than the payment of monetary damages, which amounts will be indemnified under Section
8.1(a) or (b), as applicable, subject to the limitations set forth in Article VIII.
Notwithstanding the foregoing, if the Indemnifying Party elects not to retain counsel and assume
control of such defense (or fails to give prompt notice of its intention to do so) or if conflicts
of interests exist or arise between the Indemnifying Party and such Indemnified Party (other than
with respect to the Covered Matter), or different defenses are available with respect to such
Proceeding, then the Indemnified Parties shall retain counsel in connection with such Proceeding
and assume control of the defense in connection with such Proceeding, and the fees, charges and
disbursements of counsel selected by each Indemnified Party shall be reimbursed promptly by the
Indemnifying Party. Under no circumstances will the Indemnifying Party have any liability in
connection with any settlement of any Proceeding that is entered into without its prior written
consent (which shall not be unreasonably delayed or withheld).



               (c) From and after the delivery of a Claim Notice, at the reasonable request of the
Indemnifying Party, each Indemnified Party shall grant the Indemnifying Party and its counsel,
experts and representatives reasonable access, during normal business hours, to the books, records,
personnel and properties of the Indemnified Party to the extent reasonably related to the Claim
Notice at no cost to the Indemnifying Party (other than for reasonable out-of-pocket expenses of
the Indemnified Parties).



               (d) After the Closing, Buyer shall cause the Company to pursue recovery under the existing
insurance policies of the Company or the Company Subsidiaries (or their respective predecessors)
with respect to any Losses related to the Covered Matter.



          Section 8.4 Tax Effect of Indemnification Payments. All indemnity payments made
pursuant to this Article VIII or Section 5.4 shall be treated for all Tax purposes as
adjustments to the Purchase Price.




42









 








          Section 8.5 No Duplication; Exclusive Remedy. (a) Any liability for indemnification
hereunder shall be determined without duplication of recovery solely by reason of the state of
facts giving rise to such liability constituting a breach of more than one representation,
warranty, covenant or agreement.




               (b) From and after the Closing, the exclusive remedy of each party in connection with the
representations, warranties, covenants and agreements set forth in this Agreement shall be as
provided in this Article VIII or, with respect to Section 3.18, in Section 5.4, except for
willful misconduct or common law fraud claims.



          Section 8.6 Limitation on Set-off. Neither Buyer nor Seller shall have any right to
set-off any unresolved indemnification claim pursuant to this Article VIII against any
payment due pursuant to Article I.




          Section 8.7 Assumption of Indemnification Obligations. In the event that Seller or
Buyer or any of their respective successors or assigns (a) consolidates with or merges into any
other Person and is not the continuing or surviving corporation or entity of such consolidation or
merger or (b) transfers or conveys all or a substantial portion of its properties and assets to any
Person (whether by sale, merger, operation of law or otherwise), then, and in each such case and as
a condition precedent to the validity of any such action, proper provision will be made so that the
successors and assigns of Seller or Buyer, as the case may be, shall fully assume the obligations
thereof set forth in Sections 5.4, 8.1(a) and 8.1(b) (as applicable).




          Section 8.8 Survival of Covenants; Investigation. The parties’ respective covenants
and agreements contained in this Agreement shall survive indefinitely unless otherwise set forth
herein.




ARTICLE IX

DEFINITIONS AND INTERPRETATION




          Section 9.1 Definitions. For all purposes of this Agreement, except as otherwise
expressly provided or unless the context clearly requires otherwise:




          “Affiliate” shall have the meaning set forth in Rule 12b-2 of the Securities Exchange Act of
1934, as amended.




          “Agreement” or “this Agreement” shall mean this Stock Purchase Agreement, together with the
Exhibits, Appendices and Schedules hereto and the Disclosure Schedule.




          “Announcement” shall have the meaning set forth in Section 5.5.




          “Approval Notice” shall have the meaning set forth in Section 1.4(b).




          “Audited Financial Statements” shall mean the audited consolidated balance sheets for the
Company and the Company’s consolidated Subsidiaries as at December 31, 2005 and 2004, together with
the audited consolidated statements of income and cash flows for the years ended December 31, 2005,
2004, 2003, together with the notes to the consolidated balance




43









 




sheets and statements of income and cash flows, certified by KPMG LLP, whose reports thereon
are included therein.




          “Audits” shall have the meaning set forth in Section 3.18(c).




          “Balance Sheet Date” shall mean March 31, 2006.




          “Business Day” shall mean a day other than Saturday, Sunday or any day on which the principal
commercial banks located in the State of New York are authorized or obligated to close under the
laws of such state.




          “Buyer” shall have the meaning set forth in the opening paragraph.




          “Buyer Adjustment Schedule” shall have the meaning set forth in Section 1.4(a).




          “Buyer Indemnified Persons” shall have meaning set forth in Section 8.1(a).




          “BV” shall have the meaning set forth in Section 5.20.




          “Claim Notice” shall have the meaning set forth in Section 8.3(a).




          “Closing” shall mean the closing referred to in Section 2.1(a).




          “Closing Date” shall mean the date on which the Closing occurs.




          “COBRA” shall have the meaning set forth in Section 5.7(c).




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




          “Commitment Letter” shall have the meaning set forth in Section 4.5.




          “Company” shall have the meaning set forth in the opening paragraph hereto.




          “Company Business” shall have the meaning set forth in Section 3.19(a)(i).




          “Company Employees” means collectively, all employees of the Company or any Company Subsidiary
on the Closing Date and all Transferred Employees.




          “Company Employee Plans” shall have the meaning set forth in Section 3.17(a).




          “Company Intellectual Property Rights” shall have the meaning set forth in Section
3.19(a)(ii).




          “Company Material Adverse Effect” shall mean any material adverse effect on the business,
financial condition, assets, liabilities or results of operations of the Company and the Company
Subsidiaries, taken as a whole; provided, however, that a Company Material Adverse
Effect shall not include the impact of changes in or attributable to (i) the announcement of this
Agreement, including without limitation, any impact thereof on relationships with




44









 




customers, suppliers or employees, or the performance by Seller, the Company or any Company
Subsidiary of the transactions contemplated by this Agreement, (ii) general economic conditions,
(iii) financial or securities market conditions, (iv) GAAP or in Laws or interpretations thereof by
a Governmental Entity of competent jurisdiction, (v) any act or omission by Seller, the Company or
any of the Company Subsidiaries taken with the prior written consent of Buyer, (vi) the industry in
which the Company and the Company Subsidiaries operate, (vii) any adverse change or event that is
cured by Seller or the Company prior to the earlier of termination of this Agreement and the
Closing or (viii) the implementation of Microsoft Corporation’s Enterprise Software Advisor 2.0
licensing model, except, in the cases of clauses (ii), (iii), (iv), and (vi) to the extent that
such changes have a disproportionately adverse effect on the Company and the Company Subsidiaries
as compared to other comparable businesses.




          “Company Registered Intellectual Property Rights” shall have the meaning set forth in Section
3.19(d).




          “Company Subsidiary” shall mean each Subsidiary of the Company.




          “Competitive Business” shall have the meaning set forth in Section 5.16.




          “Confidential Information” shall have the meaning set forth in Section 3.19(a)(v).




          “Confidentiality Agreement” shall mean the letter agreement dated May 19, 2005 between Parent
and Buyer.




          “Copyrights” shall have the meaning set forth in Section 3.19(a)(iii).




          “Covered Matter” shall mean the item described in Section 9.1(b) of the Disclosure Schedule.




          “Covered Person” shall mean any Person who is now, or has been at any time prior to the
Closing Date, an officer or director (or Person in a similar position) of the Company or any
Company Subsidiary or who was serving at the request of the Company or any Company Subsidiary as an
officer or director (or Person in a similar position) of another Person.




          “Direct Claim” shall have the meaning set forth in Section 8.3(a).




          “Disclosure Schedule” shall mean the disclosure schedule of even date herewith delivered by
Seller to Buyer simultaneously with the execution hereof.




          “Dispute Notice” shall have the meaning set forth in Section 1.4(b).




          “Dispute Period” shall have the meaning set forth in Section 1.4(b).




          “Domain Name Rights” shall have the meaning set forth in Section 3.19(a)(iii).




          “Employee Benefit Plan” shall have the meaning set forth in Section 3.17(a).




45









 





          “Employee List” shall have the meaning set forth in Section 3.20(l).




          “Enforceability Limitations” shall have the meaning set forth in Section 3.3.




          “Encumbrances” shall mean any and all liens, charges, security interests, options, claims,
mortgages, pledges, proxies, voting trusts or agreements, obligations, understandings or
arrangements or other similar restrictions or conditions of any nature whatsoever.




          “Environmental Claim” means any claim, action, cause of action, suit, proceeding,
investigation, order, or written demand or notice by any Person alleging liability (including,
without limitation, actual or potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resources damages, property damages, personal injuries, or
penalties) arising out of, based on or resulting from (a) the presence, or release into the
environment, of, or exposure to, any Material of Environmental Concern at any location, whether or
not owned or operated by the Company or any Company Subsidiary or (b) circumstances forming the
basis of any violation, or alleged violation, of any Environmental Law.




          “Environmental Laws” means all applicable federal, state, local and foreign laws, regulations,
ordinances, requirements of governmental authorities, and common law relating to pollution,
protection of human health from adverse environmental impacts, or the environment (including,
without limitation, ambient air, surface water, ground water, land surface or subsurface strata,
and natural resources), including, without limitation, laws and regulations relating to (a)
emissions, discharges, releases or threatened releases of, or exposure to, Materials of
Environmental Concern, (b) the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Materials of Environmental Concern, (c) recordkeeping,
notification, disclosure and reporting requirements regarding Materials of Environmental Concern,
and (d) endangered or threatened species of fish, wildlife and plant and the management or use of
natural resources.




          “ERISA” shall have the meaning set forth in Section 3.17(a).




          “ERISA Affiliate” shall have the meaning set forth in Section 3.17(a).




          “Estimated Adjustment Amount Due” shall have the meaning set forth in Section 1.3.




          “Estimated Adjustment Schedule” shall have the meaning set forth in Section 1.3.




          “Estimated Closing Date Working Capital Amount” shall have the meaning set forth in Section
1.3.




          “Existing Policy” shall have the meaning set forth in Section 5.20(b).




          “Final Adjustment Amount Due” shall have the meaning set forth in Section 1.4.




46









 





          “Final Closing Date Working Capital Amount” shall have the meaning set forth in Section 1.4.




          “Financial Statements” shall mean the Audited Financial Statements and the Unaudited Financial
Statements.




          “Fundamental Reps” shall have the meaning set forth in Section 8.2(a).




          “GAAP” shall mean United States generally accepted accounting principles.




          “General Indemnity Cap” shall have the meaning set forth in Section 8.2(c)(i).




          “Governmental Entity” shall mean a court, arbitral tribunal, administrative agency or
commission or other governmental or other regulatory authority or agency, whether federal, state,
local or foreign.




          “Government Services Contracts” shall have the meaning set forth in Section 5.15.




          “Guarantees” shall have the meaning set forth in Section 5.11.




          “HSR Act” shall mean Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended.




          “Indebtedness” of any Person shall mean, without duplication: (a) all liabilities and
obligations, contingent or otherwise, of any such Person or any of its Subsidiaries, including,
without limitation, penalties, interest and premiums (i) in respect of borrowed money, or (ii)
evidenced by bonds, notes, debentures or similar instruments, or (iii) for the payment of money
relating to a capitalized lease obligation, or (iv) evidenced by a letter of credit or a
reimbursement obligation of such Person with respect to any letter of credit; and (b) all
liabilities and obligations of others of the kind described in the preceding clause (a) that such
Person or any of its Subsidiaries has guaranteed or which are secured by an Encumbrance on any
assets or property of such Person or any of its Subsidiaries.




          “Indemnified Party” shall have the meaning set forth in Section 8.3(a).




          “Indemnifying Party” shall have the meaning set forth in Section 8.3(a).




          “Independent Accountant” shall have the meaning set forth in Section 1.3(b).




          “Independent Accountant Determination” shall have the meaning set forth in Section 1.4(b).




          “Insurance Policies” shall have the meaning set forth in Section 3.13.




          “Intellectual Property Rights” shall have the meaning set forth in Section 3.19(a)(iii).




          “Interest Rate” shall have the meaning set forth in Section 1.4(b).




47









 





          “Intellectual Property License Agreement” shall mean the intellectual property license
agreement attached hereto as Exhibit B.




          “Inventions” shall have the meaning set forth in Section 3.19(a)(v).




          “IRS” shall mean the United States Internal Revenue Service.




          “Knowledge” shall mean, with respect to Seller, the actual knowledge of the individuals listed
in Section 9.1(a) of the Disclosure Schedule.




          “Law” shall have the meaning set forth in Section 3.4.




          “Leased Properties” shall have the meaning set forth in Section 3.10(a).




          “Licensed Intellectual Property Rights” shall have the meaning set forth in Section 3.19(i).




          “Losses” shall mean any and all losses, liabilities, penalties, fines, damages, judgments,
settlement costs and expenses (including interest and penalties recovered by a third party with
respect thereto and reasonable attorneys’, accountants’ and other professional fees and expenses)
of any kind or nature; provided that Losses shall not (i) include any consequential, incidental or
punitive damages, or any loss of profits or business or damage to goodwill except to the extent the
foregoing constitute direct damages or (ii) be calculated on the basis of a multiplier (other than
consequential, incidental or punitive damages or any loss of profits or business or damage to
goodwill that are components of judgment awards against Buyer Indemnified Parties, in actions by
third parties related to the Covered Matter).




          “Major Customer” shall have the meaning set forth in Section 3.25.




          “Major Vendor” shall have the meaning set forth in Section 3.25.




          “Material Contracts” shall mean those contracts listed in Section 3.12 of the
Disclosure Schedule; provided, however, that no Specified Employment Agreement shall be deemed to
be a Material Contract.




          “Materials of Environmental Concern” means chemicals, pollutants, contaminants, wastes, toxic
substances, hazardous substances, petroleum and petroleum products, asbestos or asbestos-containing
materials or products, polychlorinated biphenyls, lead or lead-based paints or materials, radon,
fungus, mold, mycotoxins or other substances that may have an adverse effect on human health or the
environment.




          “Non-Cash Estimated Closing Date Working Capital Amount” shall have the meaning set forth in
Section 1.3.




          “Non-Compete Period” shall have the meaning set forth in Section 5.16.




          “Parent” shall have the meaning set forth in the opening paragraph.




48









 





          “Patent Rights” shall have the meaning set forth in Section 3.19(a)(iii).




          “Permitted Encumbrance” means (a) Encumbrances to secure any Indebtedness of the Company or
any Company Subsidiary and that, subject to the occurrence of the transactions contemplated hereby
to occur on the Closing Date, will be released at or prior to the Closing Date, (b) Encumbrances
which, in the aggregate, are not reasonably likely to impair, in any material respect, the
continued use of the assets of the Company and the Company Subsidiaries that are material to the
operations of the Company and the Company Subsidiaries (taken as a whole), (c) any zoning or other
governmentally established restrictions or Encumbrances, (d) Encumbrances arising or resulting from
any action taken by Buyer or its Affiliates, and (e) Encumbrances for current Taxes, assessments,
levies and other governmental charges not yet due and payable or that may subsequently be paid
without penalty.




          “Person” shall mean a natural person, partnership, corporation, limited liability company,
business trust, joint stock company, trust, unincorporated association, joint venture, Governmental
Entity or other entity or organization.




          “Post-Closing Tax Period” shall mean all taxable periods beginning after the Closing Date and
the portion of any Straddle Period beginning after the Closing Date.




          “Pre-Closing Tax Period” shall mean all taxable periods ending on or before the Closing Date
and the portion of any Straddle Period ending on the Closing Date.




          “Proceeding” shall have the meaning set forth in Section 8.3(a).




          “Proposed Final Adjustment Amount Due” shall have the meaning set forth in Section 1.4(a).




          “Proposed Final Working Capital Amount” shall have the meaning set forth in Section 1.4(a).




          “Purchase Price” shall have the meaning set forth in Section 1.2.




          “Real Property Leases” shall have the meaning set forth in Section 3.11(a).




          “Registered Intellectual Property Rights” shall have the meaning set forth in Section
3.19(a)(iv).




          “Remaining Disputes” shall have the meaning set forth in Section 1.3(b).




          “Resolution Period” shall have the meaning set forth in Section 1.3(b).




          “Restraints” shall have the meaning set forth in Section 6.1(a).




          “Sale Bonus Schedule” shall have the meaning set forth in Section 5.7(b).




          “Scheduled Matter” shall mean the matter set forth as Item 5 on Section 3.14 of the Disclosure
Schedule.




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          “Section 338(h)(10) Election” shall have the meaning set forth in Section 5.4(h)(i).




          “Securities Act” shall mean the Securities Act of 1933, as amended.




          “SEC” shall mean the United States Securities and Exchange Commission.




          “Seller Indemnified Persons” shall have the meaning set forth in Section 8.1(b).




          “Seller Plan” shall have the meaning set forth in Section 5.7(a).




          “Seller” shall have the meaning set forth in the opening paragraph.




          “Shares” shall have the meaning set forth in the recitals hereto.




          “Special Indemnity Cap” shall have the meaning set forth in Section 8.2(c)(ii).




          “Specified Employment Agreements” shall mean the employment agreements listed in Section
9.1(c) of the Disclosure Schedule.




          “Specified Contracts” shall mean the agreements described in Section 9.1(d) of the
Disclosure Schedule.




          “Specified Matters” shall mean, collectively, the Covered Matter, the Scheduled Matter and any
breach of the representations and warranties contained in Section 3.12(c).




          “Straddle Period” shall have the meaning set forth in Section 5.4(a).




          “Subsidiary” shall mean, with respect to any Person, any corporation or other organization,
whether incorporated or unincorporated, of which (a) at least a majority of the securities or other
interests having by their terms ordinary voting power to elect a majority of the board of directors
or others performing similar functions with respect to such corporation or other organization is
directly or indirectly owned or controlled by such Person or by any one or more of its
Subsidiaries, or (b) such Person or any other Subsidiary of such Person is a general partner
(excluding any such partnership where such Person or any Subsidiary of such Person does not have a
majority of the voting interest in such partnership).




          “Tax” or “Taxes” shall mean any and all taxes, customs, duties or similar fees, assessments or
charges of any kind whatsoever however denominated, including any interest or penalties that may
become payable in respect thereof, imposed by any Tax Authority, which taxes shall include, without
limiting the generality of the foregoing, those on, or measured by or referred to as income
(including, but not limited to, United States federal income taxes and state income taxes), payroll
and employee withholding, unemployment compensation, social security, sales, use, excise,
environmental, franchise, gross receipts, minimum, occupation, real and personal property, stamp,
transfer, withholding, workers’ compensation, capital ad valorem, profits, license, severance, net
worth, value added, premium, windfall profits, and other obligations of the same or of a similar
nature, whether arising before, on or after the Closing Date.





50









 







          “Tax Authority” shall mean any competent domestic or foreign national, state, provincial,
municipal or other local judicial, legislative, executive, administrative or regulatory authority
or any governmental or private body exercising any regulatory or taxing authority responsible for
the determination, assessment or collection of Taxes.



          “Tax Return” means any report, return, certificate, form, similar statement or document or
other information (including without limitation any related or supporting information or schedule
attached thereto and any information, return, amended tax return, claim for refund or declaration
of estimated Tax) permitted or required to be supplied to, or filed with, a Tax Authority in
connection with the determination, assessment or collection of any Taxes or the administration of
any Laws of any Tax Authority relating to any Taxes, a Governmental Entity with respect to Taxes
including, where permitted or required, combined or consolidated returns for any group of entities
that includes the Company or any of the Company Subsidiaries.




          “Technology” shall have the meaning set forth in Section 3.19(a)(v).




          “Termination Date” shall have the meaning set forth in Section 7.1(c).




          “Third-Party Claim” shall have the meaning set forth in Section 8.3(a).




          “Trademark Rights” shall have the meaning set forth in Section 3.19(a)(iii).




          “Trademarks” shall have the meaning set forth in Section 3.19(a)(v).




          “Trade Secret Rights” shall have the meaning set forth in Section 3.19(a)(iii).




          “Transfer Taxes” shall have the meaning set forth in Section 5.4(f).




          “Transferred Employees” shall have the meaning in Section 5.21.




          “Transition Services Agreement” shall mean the transition services agreement attached hereto
as Exhibit A.




          “Unaudited Financial Statements” shall mean the unaudited combined condensed balance sheets
for the Company and the Company’s consolidated Subsidiaries as at the most recently available
quarter together with unaudited combined condensed statements of income and cash flows for the end
of the most recently available quarter, together with the notes to the consolidated balance sheets
and statements of income and cash flows.




          “U.S.” shall mean the United States of America.




          “U.S. Dollar” or “$” means the lawful currency of the United States of America.




          “WARN Act” shall mean the Worker Adjustment and Retraining Notification Act of 1988, as
amended.




          “Working Capital Assets” shall mean all current assets of the Company and the Company
Subsidiaries as of the Closing Date, determined in accordance with
the methodology



51









 






specified in Section 1.3 of the Disclosure Schedule and, to the extent not specified
therein, in accordance with GAAP on a consistent basis.




          “Working Capital Liabilities” shall mean all current liabilities of the Company and the
Company Subsidiaries as of the Closing Date, determined in accordance with the methodology
specified in Section 1.3 of the Disclosure Schedule and, to the extent not specified
therein, in accordance with GAAP on a consistent basis.




          “Works of Authorship” shall have the meaning set forth in Section 3.19(a)(v).




          Section 9.2 Interpretation. (a) The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or interpretation of this
Agreement.




               (b) Whenever the words “include”, “includes” or “including” are used in this Agreement they
shall be deemed to be followed by the words “without limitation.”



               (c) The words “hereof,” “herein” and “herewith” and words of similar import shall, unless
otherwise stated, be construed to refer to this Agreement as a whole and not to any particular
provision of this Agreement, and article, section, paragraph, exhibit and schedule references are
to the articles, sections, paragraphs, exhibits and schedules of this Agreement unless otherwise
specified.



               (d) The meaning assigned to each term defined herein shall be equally applicable to both the
singular and the plural forms of such term, and words denoting any gender shall include all
genders. Where a word or phrase is defined herein, each of its other grammatical forms shall have
a corresponding meaning.



               (e) A reference to any party to this Agreement or any other agreement or document shall
include such party’s successors and permitted assigns.



               (f) A reference to any legislation or to any provision of any legislation shall include any
amendment to, and any modification or re-enactment thereof, any legislative provision substituted
therefor and all regulations and statutory instruments issued thereunder or pursuant thereto.



               (g) The parties have participated jointly in the negotiation and drafting of this Agreement.
In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement.



               (h) All payments and adjustments under this Agreement shall be made in U.S. Dollars.



52









 





ARTICLE X

MISCELLANEOUS




          Section 10.1 Fees and Expenses. All costs and expenses incurred in connection with
this Agreement and the consummation of the Closing shall be paid by the party incurring such
expenses, except as specifically provided to the contrary in this Agreement, it being understood
that all costs and expenses of the Company and the Company Subsidiaries prior to the Closing shall
be paid in full by Seller at or prior to the Closing or accrued on the Estimated Adjustment
Schedule and taken into consideration in determining the Estimated Closing Date Working Capital
Amount.




          Section 10.2 Amendment and Modification. This Agreement may be amended, modified and
supplemented in any and all respects, but only by a written instrument signed by Parent and Buyer
expressly stating that such instrument is intended to amend, modify or supplement this Agreement.




          Section 10.3 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if mailed, delivered personally, telecopied (which is confirmed)
or sent by an overnight courier service, such as Federal Express, to the parties at the following
addresses (or at such other address for a party as shall be specified by like notice):




          if to Buyer, to:



Insight Enterprises, Inc.

1305 West Auto Drive

Tempe, AZ 85284

Attention: Stanley Laybourne, Chief Financial Officer

Telephone: (480) 350-1142

Telecopy: (480)760-7003




          with a copy to:



Skadden, Arps, Slate, Meagher & Flom LLP

300 South Grand Avenue

Los Angeles, CA 90071

Attention: Brian J. McCarthy, Esq.

Telephone: (213) 687-5000

Telecopy: (213) 687-5600




          and if to Parent and Seller, to and in care of :



Level 3 Communications, Inc.

1025 Eldorado Boulevard

Broomfield, CO 80021

Attention: General Counsel

Telephone: (720) 888-1000

Telecopy: (720) 888-5127




53









 








          with a copy to:



Willkie Farr & Gallagher LLP

787 Seventh Avenue

New York, NY 10019

Attention: David K. Boston, Esq.

Telephone: (212) 728-8000

Telecopy: (212) 728-8911




          Section 10.4 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and shall become
effective when two or more counterparts have been signed by each of the parties and delivered to
the other parties.




          Section 10.5 Entire Agreement; No Third Party Beneficiaries. This Agreement, the
Transition Services Agreement, the Intellectual Property License Agreement and the Confidentiality
Agreement (a) constitute the entire agreement and supersede all prior agreements and
understandings, both written and oral, between the parties hereto with respect to the subject
matter hereof and thereof and (b) except as expressly provided in Section 5.4 and Article
VIII with respect to this Agreement, are not intended to confer upon any Person other than the
parties hereto and thereto any rights or remedies hereunder.




          Section 10.6 Severability. Any term or provision of this Agreement that is held by a
court of competent jurisdiction or other authority to be invalid, void or unenforceable in any
situation in any jurisdiction shall not affect the validity or enforceability of the remaining
terms and provisions hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction. If the final judgment of a court of competent
jurisdiction or other authority declares that any term or provision hereof is invalid, void or
unenforceable, the parties agree that the court making such determination shall have the power to
reduce the scope, duration, area or applicability of the term or provision, to delete specific
words or phrases, or to replace any invalid, void or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision.




          Section 10.7 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without giving effect to the principles of
conflicts of law thereof.




          Section 10.8 Jurisdiction. To the fullest extent permitted by applicable Law, each
party hereto (a) agrees that any claim, action or proceeding by such party seeking any relief
whatsoever arising out of, or in connection with, this Agreement or the transactions contemplated
hereby shall be brought only in the United States District Court in Delaware or any Delaware State
court and not in any other State or Federal court in the United States of America or any court in
any other country, (b) agrees to submit to the exclusive jurisdiction of such courts located in the
state of Delaware for purposes of all legal proceedings arising out of, or in connection with, this
Agreement or the transactions contemplated hereby, (c) waives and agrees not to assert any
objection that it may now or hereafter have to the laying of the venue of any




54









 





such proceeding brought in such a court or any claim that any such proceeding brought in such
a court has been brought in an inconvenient forum, (d) agrees that mailing of process or other
papers in connection with any such action or proceeding in the manner provided in Section 10.3
(Notices) or any other manner as may be permitted by Law shall be valid and sufficient service
thereof and (e) agrees that a final judgment in any such action or proceeding shall be conclusive
and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided
by applicable Law. The preceding sentence shall not limit the jurisdiction of the Accounting
Arbitrator as set forth in Section 2.2, although claims may be asserted in such courts described in
the preceding sentence for purposes of enforcing the jurisdiction of the Accounting Arbitrator.




          Section 10.9 Extension; Waiver. At any time prior to the Closing Date, either party
hereto may extend the time for the performance of any of the obligations or other acts of the other
party. Any agreement on the part of a party to any such extension shall be valid only if set forth
in an instrument in writing signed by or on behalf of such party. The failure of either party to
this Agreement to assert any of its rights under this Agreement or otherwise shall not constitute a
waiver of those rights.




          Section 10.10 Assignment. (a) This Agreement and all provisions hereof will be
binding upon and inure to the benefit of the parties hereto and their respective successors and
permitted assigns; provided, however, that neither this Agreement nor any right,
interest, or obligation hereunder may be assigned by any party hereto without the prior written
consent of the other party, except that Buyer may assign all or any portion of its rights,
interests or obligations to one or more Subsidiaries of Buyer, which assignees may thereafter
assign any such rights, interests or obligations to one or more Subsidiaries; provided, further,
that no such assignment by Buyer or any such subsequent assignment shall relieve Buyer of any of
its obligations hereunder.




               (b) Notwithstanding anything to the contrary set forth herein, Buyer may assign all or a
portion of its rights under Section 5.4 or Article VIII of this Agreement in connection
with the direct or indirect sale of the outstanding capital stock or other equity or ownership
interest of any of the Company or any of the Company Subsidiaries or the direct or indirect sale of
the assets or businesses of any of the Company or any of the Company Subsidiaries; provided,
however, that no such assignment by Buyer shall relieve Buyer of any of its obligations under
Article VIII.



          Section 10.11 Obligations of Relating to the Company and the Company Subsidiaries.




               (a) Whenever this Agreement requires the Company to take any action at or prior to the
Closing, that requirement shall be deemed to include an undertaking on the part of Seller to cause
the Company to take that action. Whenever this Agreement requires a Company Subsidiary to take any
action at or prior to the Closing, that requirement shall be deemed to include an undertaking on
the part of Seller and the Company to cause such Company Subsidiary to take that action.



55









 





               (b) Whenever this Agreement requires the Company to take any action after the Closing, that
requirement shall be deemed to include an undertaking on the part of Buyer to cause the Company to
take that action. Whenever this Agreement requires a Company Subsidiary to take any action after
the Closing, that requirement shall be deemed to include an undertaking on the part of Buyer and
the Company to cause such Company Subsidiary to take that action.



          Section 10.12 Specific Performance. The parties hereto agree that irreparable damage
would occur in the event any of the provisions of this Agreement were not performed in accordance
with the terms hereof and that the parties will be entitled to specific performance of the terms
hereof, in addition to any other remedy at law or equity.




[remainder of page intentionally left blank]




56









 








          IN WITNESS WHEREOF, Buyer, Parent and Seller have caused this Stock Purchase Agreement to be
executed by their respective officers thereunto duly authorized as of the date first written above.




	 	 	 
	INSIGHT ENTERPRISES, INC.
	 
	 	 
	By

	 	/s/ Richard A. Fennessy
	 

	 	Name: Richard A. Fennessy
	 

	 	Title: President and CEO
	 
	 	 
	LEVEL 3 COMMUNICATIONS, INC.
	 
	 	 
	By

	 	/s/ Charles C. Miller, III
	 

	 	Name: Charles C. Miller, III
	 

	 	Title: Executive Vice President
	 
	 	 
	TECHNOLOGY SPECTRUM, INC.
	 
	 	 
	By

	 	/s/ Keith R. Coogan
	 

	 	Name: Keith R. Coogan
	 

	 	Title: President