---

Exhibit Number 2.1









AGREEMENT AND PLAN OF MERGER AND REORGANIZATION



among



ACTIONPOINT, INC.,



CONDOR MERGER CORP.



and



CAPTIVA SOFTWARE CORPORATION



Dated as of March 4, 2002













TABLE OF CONTENTS





Page

ARTICLE I  THE MERGER	*

SECTION 1.01  The Merger	*

SECTION 1.02  Effective Time; Closing	*

SECTION 1.03  Effect of the Merger	*

SECTION 1.04  Articles of Incorporation; Bylaws	*

SECTION 1.05  Directors and Officers	*

ARTICLE II  MERGER CONSIDERATION; EXCHANGE OF CERTIFICATES	*

SECTION 2.01  Merger Consideration	*

SECTION 2.02  Exchange of Certificates	*

SECTION 2.03  Stock Transfer Books	*

SECTION 2.04  Company Stock Options; Company Warrants	*

SECTION 2.05  Dissenting Shares	*

ARTICLE III  REPRESENTATIONS AND WARRANTIES OF THE COMPANY	*

SECTION 3.01  Organization and Qualification	*

SECTION 3.02  Articles of Incorporation and Bylaws	*

SECTION 3.03  Subsidiaries	*

SECTION 3.04  Capitalization	*

SECTION 3.05  Authority Relative to This Agreement	*

SECTION 3.06  No Conflict; Required Filings and Consents	*

SECTION 3.07  Permits; Compliance	*

SECTION 3.08  Financial Statements	*

SECTION 3.09  Absence of Certain Changes or Events	*

SECTION 3.10  Absence of Litigation	*

SECTION 3.11  Employee Benefit Plans; Labor Matters	*

SECTION 3.12  Contracts	*

SECTION 3.13  Environmental Matters	*

SECTION 3.14  Intellectual Property	*

SECTION 3.15  Taxes	*

SECTION 3.16  Vote Required	*

SECTION 3.17  Assets; Absence of Liens and Encumbrances	*

SECTION 3.18  Certain Interests	*

SECTION 3.19  Insurance Policies	*

SECTION 3.20  Brokers	*

SECTION 3.21  State Takeover Statutes	*

SECTION 3.22  Customers and Suppliers	*

SECTION 3.23  Powers of Attorney	*

SECTION 3.24  Offers	*

SECTION 3.25  Books and Records	*

SECTION 3.26  Affiliates	*

SECTION 3.27  Opinion of Financial Advisor	*

ARTICLE IV  REPRESENTATIONS AND WARRANTIES OF PARENT
AND MERGER SUB	*

SECTION 4.01  Organization and Qualification	*

SECTION 4.02  Certificate of Incorporation and Bylaws	*

SECTION 4.03  Subsidiaries	*

SECTION 4.04  Capitalization	*

SECTION 4.05  Authority Relative to This Agreement	*

SECTION 4.06  No Conflict; Required Filings and Consents	*

SECTION 4.07  Permits; Compliance	*

SECTION 4.08  SEC Filings; Financial Statements	*

SECTION 4.09  Undisclosed Liabilities	*

SECTION 4.10  Absence of Certain Changes or Events	*

SECTION 4.11  Absence of Litigation	*

SECTION 4.12  Employee Benefit Plans; Labor Matters	*

SECTION 4.13  Contracts	*

SECTION 4.14  Environmental Matters	*

SECTION 4.15  Intellectual Property	*

SECTION 4.16  Taxes	*

SECTION 4.17  Vote Required	*

SECTION 4.18  Assets; Absence of Liens and Encumbrances	*

SECTION 4.19  Certain Interests	*

SECTION 4.20  Insurance Policies	*

SECTION 4.21  Brokers	*

SECTION 4.22  State Takeover Statutes	*

SECTION 4.23  Customers and Suppliers	*

SECTION 4.24 Powers of Attorney	*

SECTION 4.25  Offers	*

SECTION 4.26  Books and Records	*

SECTION 4.27  Opinion of Financial Advisor	*

SECTION 4.28  Interim Operations of Merger Sub	*

SECTION 4.29  Rights Agreement	*

ARTICLE V  CONDUCT OF BUSINESSES PENDING THE MERGER	*

SECTION 5.01  Conduct of the Company Pending the Merger	*

SECTION 5.02  Company Litigation	*

SECTION 5.03  Company Notification of Certain Matters	*

SECTION 5.04  Conduct of Parent and the Parent Subsidiaries Pending the
Merger	*

SECTION 5.05  Parent Litigation	*

SECTION 5.06  Parent Notification of Certain Matters	*

ARTICLE VI  ADDITIONAL AGREEMENTS	*

SECTION 6.01  Registration Statement; Joint Proxy Statement	*

SECTION 6.02  Company Shareholders' Meeting	*

SECTION 6.03  Parent Stockholders' Meeting	*

SECTION 6.04  Access to Information; Confidentiality; Legal Proceedings	*

SECTION 6.05  No Company Solicitation of Transactions	*

SECTION 6.06  No Parent Solicitation of Transactions	*

SECTION 6.07  Employee Benefits Matters	*

SECTION 6.08  Further Action; Consents; Filings; Takeover Laws	*

SECTION 6.09  Plan of Reorganization	*

SECTION 6.10  Public Announcements	*

SECTION 6.11  Affiliate Agreements	*

SECTION 6.12  Indemnification of Officers and Directors	*

SECTION 6.13  Section 16 Relief	*

SECTION 6.14  WARN Act	*

SECTION 6.15  Conversion Schedule	*

SECTION 6.16  Lock-Up	*

SECTION 6.17  Obligations of Merger Sub	*

SECTION 6.18  Company Capitalization	*

SECTION 6.19  Parent Capitalization	*

SECTION 6.20  Listing	*

SECTION 6.21  Note Amendment	*

SECTION 6.22  Parent Charter Amendment	*

SECTION 6.23  Company Investors' Rights Agreement	*

ARTICLE VII  CONDITIONS TO THE MERGER	*

SECTION 7.01  Conditions to the Obligations of Each Party	*

SECTION 7.02  Conditions to the Obligations of Parent and Merger Sub	*

SECTION 7.03  Conditions to the Obligations of the Company	*

ARTICLE VIII  TERMINATION, AMENDMENT, WAIVER AND EXPENSES	*

SECTION 8.01  Termination	*

SECTION 8.02  Effect of Termination	*

SECTION 8.03  Amendment	*

SECTION 8.04  Waiver	*

SECTION 8.05  Expenses	*

SECTION 8.06  Payment	*

ARTICLE IX  GENERAL PROVISIONS	*

SECTION 9.01  Non-Survival of Representations, Warranties and
Agreements	*

SECTION 9.02  Notices	*

SECTION 9.03  Certain Definitions	*

SECTION 9.04  Severability	*

SECTION 9.05  Assignment; Binding Effect; Benefit	*

SECTION 9.06  Incorporation of Exhibits	*

SECTION 9.07  Specific Performance	*

SECTION 9.08  Governing Law; Forum	*

SECTION 9.09  Time of the Essence	*

SECTION 9.10  Waiver of Jury Trial	*

SECTION 9.11  Construction	*

SECTION 9.12  Further Assurances	*

SECTION 9.13  Headings	*

SECTION 9.14  Counterparts	*

SECTION 9.15  Entire Agreement	*



EXHIBITS AND SCHEDULES

Exhibit A	Form of Company Voting Agreement

Exhibit B	Form of Parent Voting Agreement

Exhibit C	Amended and Restated Articles of Incorporation of the Surviving
Corporation (to be filed and become effective at the Effective Time)

Exhibit D	Amended and Restated Articles of Incorporation of the Company
(to be filed and become effective prior to the Effective Time)

Exhibit E	Form of Affiliate Agreement

Exhibit F	Form of Company Lock-Up Agreement



Schedule 1		Employment Agreement Schedule

Schedule 1.06(a)	Members of the Board of Directors of Parent at the
Effective Time

Schedule 7.02(g)	Persons Entering Into Affiliate Agreements

AGREEMENT AND PLAN OF MERGER AND REORGANIZATION

AGREEMENT AND PLAN OF MERGER AND REORGANIZATION, dated as
of March 4, 2002 (this "Agreement"), among ActionPoint Inc., a
Delaware corporation ("Parent"), Condor Merger Corp., a
California corporation and a wholly owned subsidiary of Parent ("Merger
Sub"), and Captiva Software Corporation, a California corporation (the
"Company").

W I T N E S S E T H

WHEREAS, upon the terms and subject to the conditions of this
Agreement and in accordance with the California General Corporation Law (the
"CGCL"), Parent and the Company will enter into a business
combination transaction pursuant to which Merger Sub will merge with and into
the Company (the "Merger") with the Company as the surviving
corporation in the Merger;

WHEREAS, the Board of Directors of the Company has
(i) unanimously determined that the Merger is consistent with and in
furtherance of the long-term business strategy of the Company and fair to, and
in the best interests of, the Company and its shareholders,
(ii) unanimously approved the Company Charter Amendment (as defined below),
this Agreement (including the principal terms hereof), the Merger, and the other
transactions contemplated by this Agreement, and (iii) determined to
unanimously recommend that the shareholders of the Company approve the Company
Charter Amendment, this Agreement (including the principal terms hereof) and the
Merger;

WHEREAS, the Boards of Directors of each of Parent and Merger
Sub have (i) determined that the Merger is advisable, consistent with and
in furtherance of the long-term business strategy of Parent and fair to, and in
the best interests of, Parent and its stockholders, (ii) approved and
adopted this Agreement, the Merger, and the other transactions contemplated by
this Agreement and (iii) determined to unanimously recommend that the
stockholders of Parent approve the issuance of Parent Common Sock (as defined
below) pursuant to the Merger (the "Share Issuance");

WHEREAS, the Board of Directors of Parent has
(i) determined that the Parent Charter Amendment (as defined below) is
advisable and (ii) determined to unanimously recommend that the
Stockholders of Parent approve the Parent Charter Amendment;

WHEREAS, for Federal income tax purposes, the Merger is
intended to qualify as a reorganization under the provisions of
Section 368(a) of the United States Internal Revenue Code of 1986, as
amended (the "Code");

WHEREAS, pursuant to the Merger, (i) each outstanding share
of common stock of the Company ("Company Common Stock"), (ii)
all outstanding options and other rights to acquire or receive shares of Company
Common Stock and (iii) each outstanding warrant to acquire or receive shares of
Company Common Stock (a "Company Warrant") that does not by its
terms terminate at or prior to the Effective Time (as defined below) shall be
converted into the right to receive shares of Parent's authorized common stock,
par value $0.01 per share, the ("Parent Common Stock"), at the
rate determined in this Agreement;

WHEREAS, as a condition and inducement to Parent's and Merger
Sub's entering into this Agreement and incurring the obligations set forth
herein, concurrently with the execution and delivery of this Agreement, certain
of the Company shareholders are entering into a voting agreement with Parent (a
"Company Voting Agreement"), dated the date hereof, in the form
attached hereto as Exhibit A;

WHEREAS, as a condition and inducement to the Company's
entering into this Agreement and incurring the obligations set forth herein,
concurrently with the execution and delivery of this Agreement, certain of the
Parent stockholders are entering into a voting agreement with the Company (a
"Parent Voting Agreement"), dated the date hereof, in the form
attached hereto as Exhibit B;

WHEREAS, as a condition and inducement to Parent's
willingness to enter into this Agreement, concurrently with the execution and
delivery of this Agreement, certain of the holders of Senior Subordinated
Secured Convertible Promissory Notes (the "Senior Convertible
Notes") and the holders of Amended and Restated Senior Subordinated
Secured Promissory Notes (the "2000 Senior Notes," together
with the Senior Convertible Notes, the "Notes"), issued by the
Company on August 1, 2000, are entering into Amendment No. 1 to Note and
Preferred Stock Purchase Agreement with the Company (the "Note Amendment
Agreement") pursuant to which the Senior Convertible Notes will be
amended and restated as the Amended and Restated Subordinated Convertible
Promissory Notes and the 2000 Senior Notes will be amended and restated as the
Second Amended and Restated Subordinated Convertible Promissory Notes
(collectively, the amended and restated Senior Convertible Notes and the 2000
Senior Notes are referred to herein as the "Amended
Notes");

WHEREAS, as a condition and inducement to Parent's
willingness to enter into this Agreement, concurrently with the execution and
delivery of this Agreement, certain of the holders of the Notes are entering
into a Note Conversion Agreement with the Company (the "Note Conversion
Agreement") pursuant to which the outstanding principal and interest
under the Notes will be converted into shares of Company Common Stock
immediately prior to, and contingent upon, the consummation of the Merger;

WHEREAS, the Board of Directors of the Company has determined
that the conversion of the Notes into shares of Company Common Stock effective
immediately prior to and contingent upon the consummation of the Merger (the
"Note Conversion") pursuant to the terms of the Note Conversion
Agreement is fair to and in the best interest of the shareholders of the Company
who are not holders of the Notes;

WHEREAS, as a condition and inducement to Parent's
willingness to enter into this Agreement, concurrently with the execution and
delivery of this Agreement, each individuals named on Schedule 1 attached hereto
are entering into an Employment Agreement with Parent;

WHEREAS, as a condition and inducement to Parent's
willingness to enter into this Agreement, concurrently within the execution and
delivery of this Agreement, certain of the Company shareholders are entering
into a Company Lock-Up Agreement (as defined below);

WHEREAS, as a condition and inducement to the Company's
willingness to enter into this Agreement, concurrently within the execution and
delivery of this Agreement, the officers and directors of Parent are entering
into a Parent Lock-Up Agreement; and

WHEREAS, certain terms used in this Agreement are defined in
Section 9.03 of this Agreement.

NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, and intending to be legally
bound hereby, Parent, Merger Sub and the Company hereby agree as follows:

1. THE MERGER
2. The Merger.  Upon the terms of this
Agreement and subject to the conditions set forth in this Agreement, and in
accordance with the CGCL, at the Effective Time (as defined in
Section 1.02), Merger Sub shall be merged with and into the Company.  As a
result of the Merger, the separate corporate existence of Merger Sub shall
cease, and the Company shall continue as the surviving corporation of the Merger
(the "Surviving Corporation").
3. Effective Time; Closing.  No later than the
third business day following the satisfaction or, if permissible, written waiver
of the last condition set forth in Article VII remaining to be satisfied
(or such other date as may be mutually agreed by the parties hereto), the
parties hereto shall cause the Merger to be consummated by (i) filing an
agreement of merger (the "Agreement of Merger") with the
Secretary of State of the State of California in such form as is required by,
and executed in accordance with, the relevant provisions of the CGCL and (ii)
making all other filings and recordings required under the CGCL.  The term
"Effective Time" means the date and time of the filing of the
Agreement of Merger (or such later time as may be agreed by each of the parties
hereto and specified in the Agreement of Merger).  Immediately prior to the
filing of the Agreement of Merger, a closing (the "Closing")
will be held at the offices of Gunderson Dettmer Stough Villeneuve Franklin
& Hachigian, LLP ("Gunderson Dettmer"), 155
Constitution Drive, Menlo Park, California (or such other place as the parties
may agree).  The date on which the Closing shall occur is referred to herein as
the "Closing Date."
4. Effect
of the Merger.  At and after the Effective Time, the Merger shall
have the effects as set forth in the applicable provisions of the CGCL.  Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time, all the property, rights, privileges, powers and franchises of each of the
Company and Merger Sub shall vest in the Surviving Corporation, and all debts,
liabilities, obligations, restrictions, disabilities and duties of each of the
Company and Merger Sub shall become the debts, liabilities, obligations,
restrictions, disabilities and duties of the Surviving Corporation.
5. Articles of Incorporation; Bylaws
6. At the Effective Time, the Articles of Incorporation
of the Company as the Surviving Corporation shall be amended and restated in the
form attached hereto as Exhibit C.
7. At the Effective Time, the Bylaws of the Company as the
Surviving Corporation shall be amended to read the same as the Bylaws of Merger
Sub as in effect immediately prior to the Effective Time.
8. Directors and Officers of Merger Sub.  The
directors of Merger Sub immediately prior to the Effective Time shall be the
initial directors of the Surviving Corporation, each to hold office in
accordance with the Articles of Incorporation and Bylaws of the Surviving
Corporation, and the officers of Merger Sub immediately prior to the Effective
Time shall be the initial officers of the Surviving Corporation, in each case
until their respective successors are duly elected or appointed and
qualified.
9. Directors and Officers of Parent.
10. Prior to the Effective Time, Parent shall take such
action so that, from and after the Effective Time, until duly changed in
compliance with applicable Law and the Certificate of Incorporation and Bylaws
of Parent, the Board of Directors of Parent shall consist of the seven members
listed on Schedule 1.06(a) attached hereto.
11. Parent shall take such action so that, upon the Effective
Time, the following persons, subject to availability, shall hold the following
positions with Parent: Kimra D. Hawley shall be the Chairperson of the Board of
Directors, Reynolds C. Bish shall be the Chief Executive Officer of Parent and
Stephen Francis shall be the Chief Operating Officer of Parent.
12. MERGER CONSIDERATION;
EXCHANGE OF CERTIFICATES
13. Merger
Consideration.
14. At the Effective Time, by virtue of the Merger and
without any action on the part of Parent, Merger Sub, the Company or the holders
of any of the following securities:
15. Each share of Company Common Stock (all issued and
outstanding shares of Company Common Stock being hereinafter collectively
referred to as the "Company Shares"), issued and outstanding
immediately prior to the Effective Time (other than Dissenting Shares and any
Company Shares to be canceled pursuant to Section 2.01(a)(ii)) shall be
converted, subject to Section 2.02(e), into the right to receive that number of
shares of Parent Common Stock equal to the quotient (the "Exchange
Ratio") obtained by dividing (i) the difference between (a) the
number of shares of Parent Common Stock outstanding immediately prior to the
Effective Time and (b) one (the "Parent Shares"), by (ii) the
sum of (A) the number of shares of Company Common Stock issued and outstanding
immediately prior to the Effective Time and (B) the number of shares of Company
Common Stock issuable upon exercise of all of the Company Warrants issued and
outstanding on the date of this Agreement; provided that any principal
amount and interest outstanding under any of the Amended Notes that has not been
converted immediately prior to the Effective Time pursuant to the terms of the
Note Conversion Agreement into shares of Company Common Stock shall be deemed to
have been converted into Company Common Stock pursuant to the terms of the Note
Conversion Agreement immediately prior to the Effective Time for the purpose of
calculating the number of shares of Company Common Stock issued and outstanding
immediately prior to the Effective Time pursuant to (ii)(A) above.  At the
Effective Time, each Company Share shall be canceled, cease to be outstanding
and cease to exist and each holder of Company Shares shall thereafter cease to
have any rights with respect to such shares, except the right to receive,
without interest, Parent Shares in accordance with this Section 2.01(a)(i) and
cash for fractional Parent Shares in accordance with Section 2.02(e).
16. Each share of Company Stock held in the treasury of the
Company and each share of Company Stock owned by Parent or any direct or
indirect wholly owned subsidiary of Parent or of the Company immediately prior
to the Effective Time shall be cancelled and extinguished without any conversion
thereof and no payment or distribution shall be made with respect
thereto.
17. Each share of common stock of Merger Sub issued and
outstanding immediately prior to the Effective Time shall be converted into and
exchanged for one validly issued, fully paid and nonassessable share of common
stock of the Surviving Corporation.  The stock certificate evidencing shares of
common stock of Merger Sub shall then evidence ownership of the outstanding
shares of common stock of the Surviving Corporation.
18. Exchange of Certificates.
19. Exchange Agent.  Within five business days after
the Effective Time, Parent shall deposit, or shall cause to be deposited, with
any bank or trust company designated by Parent and reasonably satisfactory to
the Company (the "Exchange Agent"), for the benefit of the
holders of Company Shares, for exchange in accordance with this Article II
through the Exchange Agent, certificates representing that number of Parent
Shares that is issuable pursuant to Section 2.01 as of the Effective Time and
cash, from time to time as required to make payments in lieu of any fractional
shares pursuant to Section 2.02(e) (such cash and certificates for Parent
Shares, together with any dividends or distributions with respect thereto, being
hereinafter referred to as the "Exchange Fund").  The Exchange
Agent shall, pursuant to irrevocable instructions, deliver the Parent Shares
contemplated to be issued pursuant to Section 2.01 out of the Exchange Fund.
Except as contemplated by Section 2.02(f) hereof, the Exchange Fund shall not be
used for any other purpose.
20. Exchange Procedures.  Within five business days
after the Effective Time, Parent shall cause the Exchange Agent to mail to each
record holder of a certificate or certificates (a "Certificate"
or "Certificates") (i) a letter of transmittal (a
"Letter of Transmittal") in customary form and (ii)
instructions for use in surrendering such Certificates and receiving Parent
Shares pursuant to Section 2.01. Upon surrender to the Exchange Agent of a
Certificate for cancellation, together with a Letter of Transmittal, duly
executed and completed in accordance with the instructions thereto, and such
other documents as may be reasonably required pursuant to such instructions, the
holder of such Certificate shall be entitled to receive, in exchange therefor, a
certificate representing that number of whole Parent Shares that such holder has
the right to receive in respect of the Company Shares formerly represented by
such Certificate (after taking into account all Company Shares then held by such
holder), cash in lieu of any fractional Parent Shares to which such holder is
entitled pursuant to Section 2.02(e) and any dividends or other distributions to
which such holder is entitled pursuant to Section 2.02(c), and the Certificate
so surrendered shall forthwith be canceled.  In the event of a transfer of
ownership of Company Shares that is not registered in the transfer records of
the Company, a certificate representing the proper number of Parent Shares, cash
in lieu of any fractional Parent Shares to which such holder is entitled
pursuant to Section 2.02(e) and any dividends or other distributions to which
such holder is entitled pursuant to Section 2.02(c) may be issued to a
transferee if the Certificate representing such Company Shares is presented to
the Exchange Agent, accompanied by all documents required to evidence and effect
such transfer and by evidence satisfactory to Parent that any applicable share
transfer taxes have been paid.  Until surrendered as contemplated by this
Section 2.02, each Certificate shall be deemed at all times after the Effective
Time to represent only the right to receive upon such surrender the certificate
representing Parent Shares, cash in lieu of any fractional Parent Shares to
which such holder is entitled pursuant to Section 2.02(e) and any dividends or
other distributions to which such holder is entitled pursuant to Section
2.02(c).
21. Distributions with Respect to Unexchanged Parent
Shares.  No dividends or other distributions declared or made after the
Effective Time with respect to Parent Shares with a record date after the
Effective Time shall be paid to the holder of any unsurrendered Certificate with
respect to the Parent Shares represented thereby, and no cash payment in lieu of
any fractional shares shall be paid to any such holder pursuant to Section
2.02(e), until the holder of such Certificate shall surrender such Certificate
in accordance with this Section 2.02. Subject to the effect of escheat, tax
or other applicable Laws (as defined in Section 3.06(a)), following surrender of
any such Certificate, there shall be paid to the holder of the certificates
representing whole Parent Shares issued in exchange therefor, without interest,
(i) the amount of any cash payable with respect to a fractional Parent
Share to which such holder is entitled pursuant to Section 2.02(e) and the
amount of dividends or other distributions with a record date after the
Effective Time and theretofore payable with respect to such whole Parent Shares
and (ii) at the appropriate payment date, the amount of dividends or other
distributions, with a record date after the Effective Time but prior to
surrender and a payment date occurring after surrender, payable with respect to
such whole Parent Shares.
22. No Further Rights in Company Shares.  All Parent
Shares issued upon conversion of Company Shares in accordance with the terms
hereof and any cash paid pursuant to Section 2.02(c) or (e) shall be deemed to
have been issued in full satisfaction of all rights pertaining to such Company
Shares.
23. No Fractional Shares.  No certificates or scrip
representing fractional Parent Shares shall be issued upon the surrender for
exchange of Certificates, and such fractional share interests will not entitle
the owner thereof to vote or to any other rights of a stockholder of Parent.
Each holder of a fractional share interest shall be paid an amount in cash
(without interest) equal to the product obtained by multiplying (i) such
fractional share interest to which such holder (after taking into account all
fractional share interests then held by such holder) would otherwise be entitled
by (ii) the average closing price per share of Parent Shares for the 30 trading
day period up to and including the trading day immediately preceding the
Effective Time, as reported on The Nasdaq National Market.  As promptly as
practicable after the determination of the amount of cash, if any, to be paid to
holders of fractional share interests, the Exchange Agent shall so notify
Parent, and Parent shall deposit such amount with the Exchange Agent and shall
cause the Exchange Agent to forward payments to such holders of fractional share
interests subject to and in accordance with the terms of this Section
2.02.
24. No Liability.  Neither Parent nor the Surviving
Corporation shall be liable to any holder of Company Shares for any such shares
of Parent Common Stock (or dividends or distributions with respect thereto) or
cash properly and legally delivered to a public official pursuant to any
abandoned property, escheat or similar Law (as defined in Section
3.06(a)).
25. Withholding Rights.  Each of the Exchange Agent,
the Surviving Corporation and Parent shall be entitled to deduct and withhold
from the consideration otherwise payable pursuant to this Agreement to any
holder of Company Shares such amounts as it is required to deduct and withhold
with respect to the making of such payment under the Code, or any provision of
state, local or foreign Tax (as defined in Section 3.15(c)) Law.  To the extent
that amounts are so withheld by the Exchange Agent, the Surviving Corporation or
Parent, as the case may be, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of the Company
Shares in respect of which such deduction and withholding were made by the
Exchange Agent, the Surviving Corporation or Parent, as the case may
be.
26. Affiliates. Notwithstanding anything to the
contrary contained in this Agreement, no Parent Shares (or certificates
therefor) shall be issued in exchange for any Certificates to any person who,
prior to the Effective Time, may be an "affiliate" (as that term is
used in Rule 145 under the Securities Act of 1933, as amended (together
with the rules and regulations promulgated thereunder, the "Securities
Act")) of the Company (each such person being an
"Affiliate") until such person shall have delivered to Parent
and the Company a duly executed Affiliate Agreement as contemplated by
Section 6.11.
27. Lost Certificates.  If any Certificate shall have
been lost, stolen or destroyed, upon the making of an affidavit of that fact by
the person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Parent, the posting by such person of a bond, in such reasonable
amount as Parent may direct, as indemnity against any claim that may be made
against it with respect to such Certificate, Parent shall issue in exchange for
such lost, stolen or destroyed Certificate, the applicable Parent Shares and
cash in lieu of any fractional shares to which such person is otherwise entitled
pursuant to Section 2.20(e) (and dividends or other distributions pursuant to
Section 2.02(c)) to which such person is entitled pursuant to the provisions of
this Article II.
28. Return of Parent Shares.  Promptly following the
end of the fifth full calendar month after the Effective Time, the Exchange
Agent shall return to Parent all of the remaining Parent Shares and the Exchange
Agent's duties shall terminate.  Thereafter, upon the surrender of a Certificate
to Parent and such other documents as may reasonably be required by Parent, and
subject to applicable abandoned property, escheat and similar Laws, the holder
of such Certificate shall be entitled to receive from Parent in exchange
therefor the applicable Parent Shares (and dividends or other distributions
pursuant to Section 2.02(c)) without any interest thereon.
29. Stock
Transfer Books.  At the Effective Time, the stock transfer books of
the Company shall be closed and there shall be no further registration of
transfers of Company Shares thereafter on the records of the Company.  From and
after the Effective Time, the holders of certificates representing Company
Shares outstanding immediately prior to the Effective Time shall cease to have
any rights with respect to such Company Shares, except as otherwise provided in
this Agreement or by Law.  On or after the Effective Time, any Certificates
presented to the Exchange Agent or Parent for any reason shall be converted into
Parent Shares, any cash in lieu of fractional Parent Shares to which the holders
thereof are entitled pursuant to Section 2.02(e) and any dividends or other
distributions to which the holders thereof are entitled pursuant to
Section 2.02(c).
30. Company Stock Options; Company
Warrants.
31. At the Effective Time, Parent shall assume all options to
purchase Company Common Stock issued by the Company pursuant to the Company
Stock Plan and the Company 2002 Stock Plan (each as defined in Section 3.04(b))
whether vested or unvested and whether exercisable or unexercisable (each a
"Company Option"); provided, however, that for any optionee
residing in the United Kingdom, the assumption by Parent of the option and the
ability of the optionee to exercise the assumed option will be conditioned upon
the agreement of the optionee to execute, upon the request of Parent, an Inland
Revenue approved joint election agreement that shifts to the optionee any
Secondary Class 1 National Insurance Contribution liability of the Parent and/or
any UK employer of the optionee in connection with the exercise, assignment,
release, or cancellation of the assumed option.  The Company's repurchase right
with respect to any unvested shares acquired by the exercise of Company Options
shall be assigned to Parent by virtue of the Merger and without any further
action on the part of the Company or the holder of such unvested shares.
Immediately after the Effective Time (including, without limitation, any
repurchase rights or vesting provisions) each Company Option outstanding
immediately prior to the Effective Time shall be deemed to constitute an option
to acquire, on the same terms and conditions as were applicable under such
Company Option at the Effective Time (including, without limitation, any
repurchase rights or vesting provisions), such number of shares of Parent Common
Stock (rounded down to the nearest whole number) that is equal to the number of
shares of Company Common Stock subject to the unexercised portion of such
Company Option multiplied by the Exchange Ratio.  The per share exercise price
for the shares of Parent Common Stock issuable upon exercise of such assumed
Company Option shall be equal to the exercise price per share of such Company
Option in effect immediately prior to the Effective Time divided by the Exchange
Ratio (the exercise price per share, as so determined, being rounded up to the
nearest whole cent).  The term, vesting schedule, status as an "incentive
stock option" under Section 422 of the Code, if applicable, and all of
the other terms of the Company Options shall otherwise remain unchanged. It is
the intention of the parties that each Company Option so assumed by Parent shall
qualify following the Effective Time as an incentive stock option as defined in
Section 422 of the Code to the extent permitted under Section 422 of the
Code and to the extent such Company Option qualified as an incentive stock
option prior to the Effective Time.
32. Within 45 business days after the Effective Time, Parent
will issue to each person who, immediately prior to the Effective Time, was a
holder of a Company Option a document evidencing the foregoing assumption of
such option by Parent.  Within 20 calendar days after the Effective Time, Parent
shall file with the SEC (as defined in Section 4.08(a)) a registration statement
on Form S-8 (or any successor or other appropriate form) that will register
the shares of Parent Common Stock subject to assumed Company Options to the
extent permitted by Federal securities laws and shall use its commercially
reasonable efforts to maintain the effectiveness of such registration statement
or registration statements for so long as such options remain
outstanding.
33. At the Effective Time, each Company Warrant, whether or
not contingent or earned and whether exercisable or unexercisable, that does not
terminate by its terms at or prior to the Effective Time, shall be assumed by
Parent and shall represent a warrant to acquire shares of Parent Common Stock in
accordance with its terms.  Each Company Warrant so assumed shall continue to
have, and be subject to, the same terms and conditions set forth in such Company
Warrant immediately prior to the Effective Time, except that (i) such
Company Warrant shall be exercisable (or become exercisable in accordance with
its terms) for that number of whole shares of Parent Common Stock (rounded down
to the nearest whole number) equal to the product of the number of shares of
Company Common Stock that were issuable upon exercise of such Company Warrant
immediately prior to the Effective Time multiplied by the Exchange Ratio, and
(ii) the per share exercise price for the shares of Parent Common Stock
issuable upon exercise of such assumed Company Warrant shall be equal to the
exercise price per share of Company Stock at which such Company Warrant was
exercisable immediately prior to the Effective Time divided by the Exchange
Ratio (the exercise price per share, as so determined, being rounded up to the
nearest whole cent).
34. Dissenting Shares.
35. Notwithstanding any provision of this Agreement to the
contrary, Company Shares that are outstanding immediately prior to the Effective
Time and which are held by shareholders who have exercised and perfected
dissenters' rights for such shares of Company Stock in accordance with the CGCL
(collectively, the "Dissenting Shares") shall not be converted
into or represent the right to receive the applicable Parent Shares.  Such
shareholders shall be entitled to receive payment of the appraisal value of such
Company Shares held by them in accordance with the CGCL, unless and until such
shareholders fail to perfect or effectively withdraw or otherwise lose their
dissenters' rights under the CGCL.  All Dissenting Shares held by shareholders
who shall have failed to perfect or who effectively shall have withdrawn or lost
their right to receive the appraisal value of such Company Shares under the CGCL
shall thereupon be deemed to have been converted into and to have become
exchangeable for, as of the Effective Time, the right to receive the applicable
Parent Shares, without any interest thereon, upon the surrender, in the manner
provided in Section 2.02, of the corresponding Certificate.
36. The Company shall give Parent (i) prompt notice of
any demands for fair market value received by the Company, withdrawals of such
demands, and any other related instruments served pursuant to the CGCL and
received by the Company and (ii) the opportunity to direct all negotiations
and proceedings with respect to demands for appraisal under the CGCL.  The
Company shall not, except with the prior written consent of Parent, make any
payment with respect to any demands for appraisal or offer to settle or settle
any such demands.
37. REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
38. Organization and Qualification.  The Company
is a corporation duly organized, validly existing and in good standing under the
laws of the State of California and has all requisite corporate power and
authority to own, lease and otherwise hold and operate its properties and other
assets and to carry on its business as it is now being conducted and as
currently proposed to be conducted, except where the failure to be so organized,
existing or in good standing or to have such corporate power and authority has
not had, and could not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect (as defined below).  The Company is
duly qualified or licensed as a foreign corporation to do business, and is in
good standing, in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its business makes such qualification
or licensing necessary, except where the failure to be so qualified or licensed
and in good standing has not had, and could not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect.  The term
"Company Material Adverse Effect" means any event, change,
violation, inaccuracy, circumstance or effect that is, or could reasonably be
expected to be, individually or in the aggregate, materially adverse to (i) the
business, operations, condition (financial or otherwise), assets (tangible or
intangible), liabilities, properties, or results of operations of the Company
and the Company Subsidiaries taken as a whole, or (ii) the ability of the
Company to consummate the Merger or any of the transactions contemplated by this
Agreement or to perform its obligations under this Agreement, in each case prior
to the Termination Date; provided, however, that none of the following shall be
deemed in themselves, either alone or in combination, to constitute, and none of
the following shall be taken into account in determining whether there has been,
or will be, a Company Material Adverse Effect:  (a) any changes in general
economic or business conditions that do not disproportionately impact the
Company and the Company Subsidiaries, taken as a whole, (b) any changes or
events affecting the industry in which the Company operates that do not
disproportionately impact the Company and the Company Subsidiaries, taken as a
whole, (it being understood that in any controversy concerning the applicability
of the preceding exceptions (a) and (b), the Company shall have the burden of
proof with respect to the elements of such exceptions), (c) any adverse event,
change, violation, inaccuracy, circumstance or effect, including the payment of
fees and expenses, resulting from the terms of, or the taking of any action
required by, this Agreement, or (d) any adverse event, change, violation,
inaccuracy, circumstance or effect related to or resulting from the announcement
the Merger.
39. Articles of Incorporation and Bylaws.  The
Company has heretofore made available to Parent a complete and correct copy of
(a) the Articles of Incorporation and the Bylaws of the Company including
all amendments thereto, (b) the minute books containing all consents,
actions and meeting of the stockholders of the Company and the Company's Board
of Directors and any committees thereof, and (c) the stock transfer books
of the Company setting forth all issuances or transfers of any capital stock of
the Company.  Such Articles of Incorporation and Bylaws are in full force and
effect.  The Company is not in violation of any of the provisions of its
Articles of Incorporation or Bylaws.  The corporate minute books, stock
certificate books, stock registers and other corporate records of the Company
are complete and accurate, and the signatures appearing on all documents
contained therein are the true or facsimile signatures of the persons purported
to have signed the same.
40. Subsidiaries.
41. Section 3.03(a) of the Company Disclosure Schedule
sets forth:  (i) the name of each corporation, partnership, limited
liability company, joint venture or other entity in which the Company has,
directly or indirectly, an equity interest representing 50% or more of the
capital stock thereof or other equity interests therein (individually, a
"Company Subsidiary" and, collectively, the "Company
Subsidiaries"); and (ii) the number and type of outstanding equity
securities of each Company Subsidiary and a list of the holders
thereof.
42. Each Company Subsidiary is a corporation duly organized,
validly existing and in corporate and tax good standing under the laws of the
jurisdiction of its incorporation.  Each Company Subsidiary is duly qualified to
conduct business and is in good standing under the laws of each jurisdiction in
which the nature of its business or the ownership or leasing of its properties
requires such qualification, except where the failure to be so qualified or in
good standing has not had, and could not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect.  Each
Company Subsidiary has all requisite power and authority to carry on the
businesses in which it is engaged and to own and use the properties owned and
used by it.  The Company has delivered or made available to Parent complete and
accurate copies of the charter, Bylaws or other organizational documents of each
Company Subsidiary.  No Company Subsidiary is in default under or in violation
of any provision of its charter, Bylaws or other organizational documents.  All
of the issued and outstanding shares of capital stock of each Company Subsidiary
are duly authorized, validly issued, fully paid, nonassessable and free of
preemptive rights.  All shares of each Company Subsidiary are held of record or
owned beneficially by either the Company or another Company Subsidiary and are
held or owned free and clear of any restriction on transfer (other than
restrictions under Federal or state securities laws), claim, security interest,
option, warrant, right, contract, call, commitment, equity or demand.  There are
no outstanding or authorized options, warrants, rights, agreements or
commitments to which the Company or any Company Subsidiary is a party or which
are binding on any of them providing for the issuance, disposition or
acquisition of any capital stock of any Company Subsidiary.  There are no
outstanding stock appreciation, phantom stock or similar rights with respect to
any Company Subsidiary.  There are no voting trusts, proxies or other agreements
or understandings with respect to the voting of any capital stock of any Company
Subsidiary.
43. The Company does not control, directly or indirectly, or
have any direct or indirect equity participation or similar interest in any
corporation, partnership, limited liability company, joint venture, trust or
other business association which is not a Company Subsidiary.  There are no
contractual obligations of the Company to provide funds to, or make any
investment in (whether in the form of a loan, capital contribution or
otherwise), any other person.
44. Capitalization.
45. The authorized capital stock of the Company consists of
70,000,000 shares of Company Common Stock,  2,873,564 shares of Company
Series A Preferred Stock ("Company Series A Preferred
Stock"), 1,115,000 shares of Company Series B Preferred Stock
("Company Series B Preferred Stock"), 4,500,000 shares of
Company Series C Preferred Stock ("Company Series C Preferred
Stock"), 1,000,000 shares of Company Series D Preferred Stock
("Company Series D Preferred Stock") and  29,000,000
shares of Company Series E Preferred Stock ("Company Series E
Preferred Stock," and, collectively with the Company Series A Preferred
Stock, Company Series B Preferred Stock, Company Series C Preferred
Stock, Company Series D Preferred Stock, the "Company Preferred
Stock," and, the Company Common Stock together with the Company
Preferred Stock, the "Company Stock").  As of the date of this
Agreement, (A)  2,515,587 shares of Company Series A Preferred Stock
are issued and outstanding, (B) 875,424 shares of Company Series B
Preferred Stock are issued and outstanding, (C) 2,188,553 shares of Company
Series C Preferred Stock are issued and outstanding, (D) 769,231
shares of Company Series D Preferred Stock are issued and outstanding,  and
(E) 15,637,605 shares of Company Series E Preferred Stock are issued
and outstanding, all of which are duly authorized, validly issued, fully paid
and nonassessable.  Each share of Company Series A Preferred Stock, Company
Series B Preferred Stock and Company Series C Preferred Stock is
convertible into 1.321118 shares of Company Common Stock and each share of
Company Series D Preferred Stock and Company Series E Preferred Stock
is convertible into one share of Company Common Stock.  There are no other
shares of Company Preferred Stock outstanding. As of the date hereof, the
outstanding shares of Company Common Stock, Company Series A Preferred
Stock, Company Series B Preferred Stock, Company Series C Preferred
Stock, Company Series D Preferred Stock and Company Series E Preferred
Stock are owned as set forth in Section 3.04(a) of the Company Disclosure
Schedule. Section 3.04(a) of the Company Disclosure Schedule also provides
a complete list and brief description of each repurchase option or right of
first refusal which is held by the Company and to which any of such shares is
subject (including the name of the owner and the number of such shares held by
such owner).
46. The Company has reserved (i) 11,394,609 shares of Company
Common Stock for issuance under the Company's Amended and Restated Stock
Option/Stock Issuance Plan (the "Company Stock Plan") of which
options to purchase 8,730,419 shares of Company Common Stock are outstanding as
of the date of this Agreement and (ii) 150,000,000 shares of Company Common
Stock for issuance under the Company's 2002 Equity Incentive Plan (the
"Company 2002 Stock Plan") of which options to purchase
124,606,068 shares of Company Common Stock are outstanding as of the date of
this Agreement.  Section 3.04(b) of the Company Disclosure Schedule
accurately sets forth with respect to each Company Option that is outstanding as
of December 31, 2001: (i) the name of the holder of such Company Option;
(ii) the total number of shares of Company Common Stock that was originally
subject to such Company Option; (iii) the number of shares of Company
Common Stock that remain subject to such Company Option, (iv) the date on
which such Company Option was granted and the term of such Company Option;
(v) the vesting schedule and vesting commencement date for such Company
Option; (vi) the exercise price per share of Company Common Stock
purchasable under such Company Option; (vii) whether such Company Option
has been designated an incentive stock option ("Incentive Stock
Option") as defined in Section 422 of the Code; and (viii) the
current employee or independent contractor status of the holder of such Company
Option.  No Company Option will by its terms require an adjustment in connection
with the Merger, except as contemplated by this Agreement.  Neither the
consummation of transactions contemplated by this Agreement, nor any action
taken or to be taken by Company in connection with such transactions, will
result in (i) any acceleration of exercisability or vesting, whether or not
contingent on the occurrence of any event after consummation of the Merger, in
favor of any optionee under any Company Option; (ii) any additional
benefits for any optionee under any Company Option; or (iii) the inability
of Parent after the Effective Time to exercise any right or benefit held by
Company prior to the Effective Time with respect to any Company Option assumed
by Parent or any shares of Company Common Stock previously issued upon exercise
of a Company Option, including, without limitation, the right to repurchase an
optionee's unvested shares on termination of such optionee's employment.  The
assumption by Parent of Company Options in accordance with Section 2.04(a)
hereunder will not give rise to any event described in clauses (i) through (iii)
in the immediately preceding sentence or constitute a breach of the Company
Stock Plan, the Company 2002 Stock Plan or any agreement entered into pursuant
to such plans.
47. The Company has reserved 560,110 shares of Company Common
Stock for future issuance pursuant to the exercise of Company Warrants.
Section 3.04(c) of the Company Disclosure Schedule sets forth, with respect
to each Company Warrant issued to any person as of the date of this Agreement:
(i) the name of the holder of such Company Warrant; (ii) the total
number and type of shares of Company Stock that are subject to such Company
Warrant; (iii) the exercise price per share of Company Stock purchasable
under such Company Warrant; (iv) the total number of shares of Company Stock
with respect to which such warrant is immediately exercisable; (v) the
vesting schedule for such Company Warrant; and (vi) the term of such Company
Warrant.
48. Except as described in Section 3.04(b) above or as set
forth in Sections 3.04(b) and 3.04(c) of the Company Disclosure Schedule,
there are no options, warrants or other rights, agreements, arrangements or
commitments of any character, whether or not contingent, relating to the issued
or unissued capital stock of the Company or obligating the Company to issue or
sell any share of capital stock of, or other equity interest in, the Company.
All shares of Company Stock so subject to issuance, upon issuance in accordance
with the terms and conditions specified in the instruments pursuant to which
they are issuable, will be duly authorized, validly issued, fully paid and
nonassessable.  The holders of Company Options and Company Warrants have been or
will be given, or shall have properly waived, any required notice of the Merger
prior to the Effective Time, and all such rights to a notice, if any, will
terminate at or prior to the Effective Time.
49. The Company does not have outstanding any bonds,
debentures, notes or other obligations the holders of which have the right to
vote (or which are convertible into or exercisable for securities having the
right to vote) with the stockholders of the Company on any matter.
50. All of the securities offered, sold, issued or, to
knowledge of the Company, assumed by the Company (i) have been offered,
sold or issued in compliance with the requirements of the Federal securities
laws and any applicable state securities or "blue sky" laws and (ii)
are not subject to any preemptive right, right of first refusal, right of first
offer or right of recission.
51. There are no outstanding contractual obligations of the
Company to repurchase, redeem or otherwise acquire any share of capital stock
of, or other equity interest in, the Company.  There are no stockholder
agreements, voting trusts or other agreements or understandings to which the
Company is a party, or of which the Company is aware, that (i) relate to the
voting, registration or disposition of any securities of the Company, (ii) grant
to any person or group of persons the right to elect, or designate or nominate
for election, a director to the Board of Directors of the Company, or (iii)
grant to any person or group of persons information rights.
52. Authority Relative to This
Agreement.
53. The Company has all necessary corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and, subject to obtaining the necessary approvals of the Company
shareholders, to consummate the Merger.  The execution and delivery of this
Agreement by the Company and the consummation by the Company of the Merger and
the other transactions contemplated by this Agreement have been duly and validly
authorized by all necessary corporate action and no other corporate proceedings
on the part of the Company are necessary to authorize this Agreement or to
consummate the Merger and the other transactions contemplated by this Agreement
(other than the approval of this Agreement (including the principal terms
hereof) and the Merger by the Company shareholders as described in
Section 3.16 hereof and the filing and recordation of appropriate merger
documents as required by the CGCL).  This Agreement has been duly and validly
executed and delivered by the Company and, assuming the due authorization,
execution and delivery by Parent and Merger Sub, constitutes a legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, subject to the effect of any applicable bankruptcy,
reorganization, insolvency, moratorium or similar Laws affecting creditors'
rights generally and subject, as to enforceability, to the effect of general
principles of equity.
54. Without limiting the generality of the foregoing, the
Board of Directors of the Company, at a meeting duly called and held, has
unanimously (i) determined that the Merger and the other transactions
contemplated hereby are fair to, and in the best interests of, the Company and
its shareholders, (ii) approved the Company Charter Amendment, this
Agreement (including the principal terms hereof), the Merger and the other
transactions contemplated hereby in accordance with the provisions of the CGCL
and the Company's charter documents, and (iii) directed that the Company
Charter Amendment, this Agreement and the Merger be submitted to the Company
shareholders for their approval and (iv) resolved to recommend that the
Company shareholders vote in favor of the approval of the Company Charter
Amendment, this Agreement (including the principal terms hereof) and the
Merger.
55. No
Conflict; Required Filings and Consents.
56. The execution and delivery of this Agreement by the
Company do not, and the performance of this Agreement by the Company will not,
(i) conflict with or violate the Articles of Incorporation or Bylaws of the
Company or any Company Subsidiary, (ii) assuming that all consents,
approvals, authorizations and other actions described in Section 3.06(b)
have been obtained and all filings and obligations described in
Section 3.06(b) have been made or complied with, conflict with or violate
in any material respect any foreign or domestic (Federal, state or local) law,
statute, ordinance, franchise, permit, concession, license, writ, rule,
regulation, order, injunction, judgment or decree ("Law")
applicable to the Company or any Company Subsidiary or by which any property or
asset of the Company or any Company Subsidiary is bound or affected, or
(iii) conflict with, result in any material breach of or constitute a
material default (or an event which with notice or lapse of time or both would
become a default) under, require consent, approval or notice under, give to
others any right of termination, amendment, acceleration or cancellation of,
require any payment under, or result in the creation of a lien or other
encumbrance on any property or asset of the Company or any Company Subsidiary
pursuant to, any material note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which the
Company or any Company Subsidiary is a party or by which any property or asset
of the Company or any Company Subsidiary is bound or affected.
57. The execution and delivery of this Agreement by the
Company do not, and the performance of this Agreement by the Company will not,
require any consent, approval, order, permit, or authorization from, or
registration, notification or filing with, any domestic or foreign governmental,
regulatory or administrative authority, agency or commission, any court,
tribunal or arbitral body, or any quasi-governmental or private body exercising
any regulatory, taxing, importing or other governmental authority (a
"Governmental Entity"), except for the filing and recordation
of appropriate merger documents as required by the CGCL and for such other
consents, approvals, orders, permits, authorizations, registrations,
notifications or filings, which if not obtained or made could not reasonably be
expected, individually or in the aggregate, to prevent or materially delay the
consummation of the transactions contemplated by this Agreement.
58. Permits; Compliance.
59. Each of the Company and each Company Subsidiary is in
possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exceptions, consents, certificates, approvals and orders
of any Governmental Entity necessary for the Company and each Company Subsidiary
to own, lease and otherwise hold and operate its properties and other assets and
to carry on its business as it is now being conducted and as currently proposed
to be conducted (the "Company Permits"), except where the
failure of the Company and each Company Subsidiary to possess such Company
Permits could not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect.  All Company Permits are in full
force and effect and will remain so after the Closing and no suspension or
cancellation of any Company Permit is pending or, to the knowledge of the
Company, threatened.  Neither the Company nor any Company Subsidiary has
received any notice or other communication from any Governmental Entity
regarding (i) any actual or possible violation of or failure to comply with
any term or requirement of any Company Permit, or (ii) any actual or
possible revocation, withdrawal, suspension, cancellation, termination or
modification of any Company Permit.
60. Neither the Company nor any Company Subsidiary is in
conflict with, or in default or violation of, (i) any Law applicable to the
Company or any Company Subsidiary or by which any property or asset of the
Company or any Company Subsidiary is bound or affected, (ii) any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company or any Company
Subsidiary is a party or by which the Company or any Company Subsidiary or any
property or asset of the Company or any Company Subsidiary is bound or affected,
or (iii) any Company Permit, except where the failure of the Company and
each Company Subsidiary to possess such Company Permits could not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect.
61. Financial Statements.
62. The Company has delivered or made available to Parent
true and complete copies of (i) the audited consolidated balance sheets of
the Company and the Company Subsidiaries as of December 31, 1998, 1999, and
2000, and the related audited statements of operations, changes in stockholders'
equity and changes in cash flows for the years then ended, together with all
related notes and schedules thereto (collectively referred to herein as the
"Audited Financial Statements"), and (ii) the unaudited
consolidated balance sheet of the Company and the Company Subsidiaries as of
September 30, 2001 (the "Company Balance Sheet"), and the
related statements of operations, changes in stockholders' equity and changes in
cash flows for the nine months ended September 30, 2001 (collectively
referred to herein as the "Interim Financial Statements").  The
Audited Financial Statements and the Interim Financial Statements (including, in
each case, any notes thereto) were prepared in accordance with United States
generally accepted accounting principles ("U.S. GAAP") applied
on a consistent basis throughout the periods indicated (except as may be
indicated in the notes thereto or, in the case of unaudited statements, as
permitted by U.S. GAAP) and each present fairly, in all material respects, the
consolidated financial position of the Company and the Company Subsidiaries as
at the respective dates thereof and for the respective periods indicated
therein, except as otherwise noted therein (subject, in the case of unaudited
statements, to normal and recurring year-end adjustments which were not and are
not expected, individually or in the aggregate, to be material).
63. The Company and the Company Subsidiaries do not have any
debts, liabilities or obligations of any nature (whether known or unknown,
accrued or fixed, absolute or contingent, matured or unmatured, determined or
determinable, or as a guarantor or otherwise) ("Liabilities"),
other than Liabilities (i) that are fully reflected or reserved against on
the Company Balance Sheet, (ii) individually in an amount not exceeding
$50,000 incurred since the date of the Company Balance Sheet, (iii) incurred in
the ordinary course of business consistent with past practice that could not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect, since the date of the Company Balance Sheet and
(iv) that would not be required to be reflected on, or reserved against, in
a balance sheet of the Company, or in the notes thereto, prepared in accordance
with the published rules and regulations of the SEC and U.S. GAAP.
Reserves are reflected on the Company Balance Sheet and on the books of account
and other financial records of the Company against all Liabilities of the
Company as of the date of the Company Balance Sheet in amounts that have been
established on a basis consistent with the past practice of the Company and in
accordance with U.S. GAAP.  There are no outstanding warranty claims against the
Company.
64. Absence of Certain Changes or Events.  Since
September 30, 2001, except as contemplated by or as disclosed in this
Agreement, the Company and the Company Subsidiaries have conducted their
respective businesses only in the ordinary course and in a manner consistent
with past practice and, since such date, (a) there has not been any Company
Material Adverse Effect and (b) the Company and the Company Subsidiaries
have not taken or legally committed to take any of the actions specified in
Sections 5.01(a) through 5.01(z).
65. Absence of Litigation.  There is no
litigation, suit, claim, action, proceeding or investigation pending or, to the
knowledge of the Company, threatened against the Company or any Company
Subsidiary, or any property or asset owned or used by the Company or any Company
Subsidiary or any person whose liability the Company or any Company Subsidiary
has or may have assumed, either contractually or by operation of Law, before any
arbitrator or Governmental Entity (a "Company Legal
Proceeding") that could reasonably be expected, if resolved adversely
to the Company, to (i) impair the operations of the Company or any Company
Subsidiary as currently conducted, including, without limitation, any claim of
infringement of any intellectual property right, (ii) result in losses to
the Company or any Company Subsidiary in excess of $50,000, (iii) impair
the ability of the Company or any Company Subsidiary to perform its obligations
under this Agreement or (iv) prevent, delay or make illegal the
consummation of the transactions contemplated by this Agreement. To the
Company's knowledge, no event has occurred, and no claim, dispute or other
condition or circumstance exists, that could reasonably be expected to give rise
to or serve as a basis of the commencement of any Company Legal Proceeding.
None of the Company or any Company Subsidiary, the officers or directors thereof
in their capacity as such, or any property or asset of the Company or any
Company Subsidiary is subject to any continuing order of, consent decree,
settlement agreement or other similar written agreement with, or, to the
knowledge of the Company, continuing investigation by, any Governmental Entity,
or any order, writ, judgment, injunction, decree, determination or award of any
court, arbitrator or Governmental Entity.  Neither the Company nor any Company
Subsidiary has any plans to initiate any material Company Legal Proceeding
against any third party.
66. Employee Benefit Plans; Labor
Matters.
67. Schedule 3.11(a) of the Company Disclosure Schedule
listsall employee benefit plans
(as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA")) and all bonus, stock option,
stock purchase, stock appreciation right, restricted stock, phantom stock,
incentive, deferred compensation, retiree medical, disability or life insurance,
cafeteria benefit, dependent care, disability, director or employee loan, fringe
benefit, sabbatical, supplemental retirement, severance or other benefit plans,
programs or arrangements, (whether legally enforceable or not, whether formal or
informal and whether in writing or not) (each, a "Company
Plan," and collectively, the "Company Plans") to which
the Company or any Company Subsidiary is a party, with respect to which the
Company or any Company Subsidiary has any obligation or which are maintained,
contributed to or sponsored by the Company or any Company Subsidiary for the
benefit of any current or former employee, officer or director of the Company or
any Company Subsidiary
68. Each Company Plan is in writing and the Company has made
available to Parent a true and complete copy of each Company Plan (or a written
summary where the Company Plan is not in writing) and a true and complete copy
of each material document, if any, prepared in connection with each such Company
Plan, including, without limitation, and only if applicable, (i) a copy of
each trust or other funding arrangement, (ii) each summary plan description
and summary of material modifications, (iii) the two most recent annual
reports (Form 5500 series and all schedules and financial statements attached
thereto) required under ERISA or the Code, (iv) the most recently received
Internal Revenue Service determination letter for each Company Plan intended to
qualify under Section 401(a) of the Code, (v) the most recently prepared
actuarial report and financial statement in connection with each such Company
Plan, (vi) any material correspondence with the Internal Revenue Service or
the Department of Labor with respect to each such Company Plan and (vii) each
form of notice of grant and stock option agreement used to document Company
Options. Except for the Company Plans, neither the Company nor any Company
Subsidiary has an express or implied commitment, whether legally enforceable or
not, (x) to create, incur liability with respect to, or cause to exist, any
other employee benefit plan, program or arrangement that would constitute a
Company Plan, (y) to enter into any contract or agreement to provide
compensation for services to any individual, or (z) to modify, change the
terms of or terminate any Company Plan, other than with respect to a
modification, change or termination required by ERISA or the Code.
69. None of the Company Plans is a multi-employer plan
(within the meaning of Section 3(37) or 4001(a)(3) of ERISA) (a
"Multi-employer Plan") or a single employer pension plan
(within the meaning of Section 4001(a)(15) of ERISA) for which the Company
or any Company Subsidiary could incur liability under Section 4063 or 4064
of ERISA (a "Multiple Employer Plan").
70. Except as otherwise required by ERISA, the Code or other
applicable Federal, state, local or foreign law, none of the Company Plans
provides for the payment of separation, severance, termination or similar
benefits to any person, or obligates the Company or any Company Subsidiary to
pay separation, severance, termination or similar-type benefits solely or
partially as a result of any transaction contemplated by this Agreement or as a
result of a "change in ownership or control," within the meaning of
such term under Section 280G of the Code.  Neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby, either alone or together with another event, will (i) result in any
payment (including, without limitation, severance, unemployment compensation,
golden parachute, forgiveness of indebtedness or otherwise) becoming due under
any Company Plan, whether or not such payment is contingent, (ii) increase
any benefits otherwise payable under any Company Plan or other arrangement,
(iii) result in the acceleration of the time of payment, vesting or funding
of any benefits including, but not limited to, the acceleration of the vesting
and exercisability of any Company Option, whether or not contingent, or
(iv) affect in any material respects any Company Plan's current treatment
under any Laws including any Tax or social contribution Law.  No Company Plan
provides, or reflects or represents any liability to provide, retiree health,
disability, or life insurance benefits to any person for any reason, except as
may be required by the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended ("COBRA"), or other applicable Federal, state, local
or foreign statute or other law, and the Company has never represented, promised
or contracted (whether in oral or written form) to any employee (either
individually or to employees as a group) or any other person that such employee
or other person would be provided with retiree health, disability, or life
insurance benefits, except to the extent required by applicable Federal, state,
local or foreign statute or other law.
71. Each Company Plan is now and always has been operated in
accordance in all material respects with its terms and the requirements of all
applicable Laws, regulations and rules promulgated thereunder including, without
limitation, ERISA, COBRA, the Family Medical Leave Act of 1993, as amended
("FMLA"), and the Code.  Each of the Company and each Company
Subsidiary has substantially performed in all material respects all material
obligations required to be performed by it under, is not in any respect in
default under or in violation of, and has no knowledge of any default or
violation by any party to, any Company Plan.  No action, claim or proceeding is
pending or, to the knowledge of the Company, threatened with respect to any
Company Plan (other than claims for benefits in the ordinary course) and, to the
knowledge of the Company, no fact or event exists which could give rise to any
such action, claim or proceeding.  To the Company's knowledge, neither the
Company nor any ERISA Affiliate (as defined below) of the Company is subject to
any penalty or Tax with respect to any Company Plan under Section 502(i) of
ERISA or Sections 4975 through 4980 of the Code.  "ERISA
Affiliate" means a person that is a member of the same controlled group
as another person or under common control with such other person within the
meaning of Section 414 of the Code.  Each Company Plan can be amended,
terminated or otherwise discontinued at any time without material liability to
Parent, the Company or any of their ERISA Affiliates (other than ordinary
administration expenses).  Neither the Company nor any affiliate has, prior to
the Effective Time and in any material respect, violated any of the health care
continuation requirements of COBRA, the requirements of FMLA, the requirements
of the Health Insurance Portability and Accountability Act of 1996, the
requirements of the Women's Health and Cancer Rights Act of 1998, the
requirements of the Newborns' and Mothers' Health Protection Act of 1996, or any
amendment to each such act, or any similar provisions of state Law applicable to
its employees.
72. Each Company Plan intended to qualify under Section
401(a) or Section 401(k) of the Code and each trust intended to qualify
under Section 501(a) of the Code (i) has received a favorable determination,
opinion, notification or advisory letter from the Internal Revenue Service with
respect to each such Company Plan as to its qualified status under the Code,
including all amendments to the Code effected by the Tax Reform Act of 1986 and
subsequent legislation, and no fact or event has occurred since the date of such
determination letter or letters from the Internal Revenue Service to adversely
affect the qualified status of any such Company Plan or the exempt status of any
such trust, or (ii) has remaining a period of time under applicable Treasury
regulations or Internal Revenue Service pronouncements in which to apply for
such a letter and make any amendments necessary to obtain a favorable
determination as to the qualified status of each such Company Plan.
73. Neither the Company nor any Company Subsidiary nor any
ERISA Affiliate has incurred any liability under, arising out of or by operation
of Title IV of ERISA (other than liability for premiums to the Pension Benefit
Guaranty Corporation arising in the ordinary course), including, without
limitation, any liability in connection with (i) the termination or
reorganization of any employee benefit plan subject to Title IV of ERISA or
(ii) the withdrawal from any Multi-employer Plan or Multiple Employer Plan,
and no fact or event exists which could give rise to any such
liability.
74. Neither the Company nor any Company Subsidiary has, since
December 31, 1995 terminated, suspended, discontinued contributions to or
withdrawn from any employee pension benefit plan, as defined in
Section 3(2) of ERISA, including, without limitation, any Multi-employer
Plan.  All contributions, premiums or payments required to be made or accrued
with respect to any Company Plan have been made on or before their due dates.
All such contributions have been fully deducted for income tax purposes and no
such deduction has been challenged or disallowed by any Governmental Entity and,
to the Company's knowledge, no fact or event exists which could give rise to any
such challenge or disallowance.
75. Except as set forth in Section 3.11(i) of the Company
Disclosure Schedule, (i) neither the Company nor any Company Subsidiary is a
party to any collective bargaining agreement or other labor union contract
applicable to persons employed by the Company or any Company Subsidiary or in
the Company's or any Company Subsidiary's business, and, to the Company's
knowledge, currently there are no organizational campaigns, petitions or other
unionization activities seeking recognition of a collective bargaining unit that
could affect the Company or any Company Subsidiary; (ii) there are no
controversies, strikes, slowdowns or work stoppages pending or, to the Company's
knowledge, threatened between the Company or any Company Subsidiary and any of
its employees, and neither the Company nor any Company Subsidiary has
experienced any such controversy, strike, slowdown or work stoppage within the
past three years; (iii) neither the Company nor any Company Subsidiary has
breached or otherwise failed to comply with the provisions of any collective
bargaining or union contract to which the Company is a party and there are no
grievances outstanding against the Company or any Company Subsidiary under any
such agreement or contract that are now pending before any Person or
Governmental Entity or are known to the Company; (iv) there are no unfair labor
practice complaints pending against the Company or any Company Subsidiary before
the National Labor Relations Board or any other Governmental Entity or any
current union representation questions involving employees of the Company or any
Company Subsidiary, and, to the Company's knowledge, the Company and each
Company Subsidiary have not engaged in any unfair labor practice; (v) the
Company and each Company Subsidiary are currently in compliance with all
material provisions of applicable Laws relating to the employment of labor,
including those related to wages, hours, worker classification (including the
proper classification of independent contractors and consultants), collective
bargaining, workers' compensation and the payment and withholding of Taxes and
other sums as required by the appropriate Governmental Entity and has withheld
and paid to the appropriate Governmental Entity or is holding for payment not
yet due to such Governmental Entity all amounts required to be withheld from
employees of the Company or any Company Subsidiary and is not liable for any
arrears of wages, Taxes, penalties or other sums for failure to comply with any
of the foregoing; (vi) the Company and each Company Subsidiary has paid in full
to all employees or adequately accrued for in accordance with U.S. GAAP
consistently applied all wages, salaries, commissions, bonuses, benefits and
other compensation due to or on behalf of such employees; (vii) no claim that is
now pending before any Governmental Entity has been made against the Company or
any Company Subsidiary with respect to payment of wages, salary, overtime pay,
workers compensation benefits or disability benefits with respect to any person
currently or formerly employed by the Company or any Company Subsidiary, and, to
the Company's knowledge, no such claim has been threatened or asserted; (viii)
neither the Company nor any Company Subsidiary is a party to, or otherwise bound
by, any consent decree with, or citation by, any Governmental Entity relating to
employees or employment practices; (ix) the Company and each Company Subsidiary
are in compliance with all material provisions of applicable Laws and
regulations relating to occupational safety and health Laws and regulations, and
there is no charge or proceeding with respect to a violation of any occupational
safety or health standards that has been asserted or is now pending or
threatened with respect to the Company or any Company Subsidiary; (x) to the
Company's knowledge, the Company and each Company Subsidiary are in compliance
with all material Laws and regulations relating to discrimination in employment,
and there is no charge of discrimination in employment or employment practices
for any reason, including, without limitation, age, gender, race, religion or
other legally protected category, which has been asserted or, to the knowledge
of the Company, threatened against the Company or any Company Subsidiary or that
is now pending before the United States Equal Employment Opportunity Commission
or any other Governmental Entity; and (xi) to the Company's knowledge, each
employee of the Company and each Company Subsidiary who is located in the United
States and is not a United States citizen has all approvals, authorizations and
papers necessary to work in the United States in accordance with applicable
Law.
76. Section 3.11(j) of the Company Disclosure Schedule sets
forth the name and title of each employee of the Company with the title of Vice
President or higher.
77. Contracts.
78. Other than as set forth (under the appropriate
subsection) in Section 3.12(a) of the Company Disclosure Schedule neither
the Company nor any Company Subsidiary is bound by any:
79. employment, consulting, termination or severance
agreement, contract or commitment with any officer, director or higher level
employee, or member of the Company's Board of Directors;
80. agreement, contract or commitment containing any covenant
limiting the right of the Company or any Company Subsidiary to engage in any
line of business, acquire any property, distribute any product or provide any
service (including geographic restrictions) or to compete with any person or
granting any exclusive distribution rights;
81. agreement, contract or commitment (i) relating to the
disposition or acquisition by the Company or any Company Subsidiary after the
date of this Agreement of assets not in the ordinary course of business, (ii)
relating to the acquisition by the Company of any Company Subsidiary of any
other entity, whether by means of merger, consolidation, purchase of assets or
otherwise, or (iii) pursuant to which the Company or any Company Subsidiary has
any ownership interest in any corporation, partnership, joint venture or other
business enterprise (other than the Company Subsidiaries) that is material to
the Company's business as currently conducted;
82. joint venture, stockholder, partnership or other
agreement relating to any equity ownership or profit interest;
83. contract relating to any outstanding commitment for
capital expenditures in excess of $50,000;
84. indenture, mortgage, promissory note, loan agreement,
credit agreement, security agreement, guarantee of borrowed money or other
agreement or instrument relating to the borrowing of money or extension of
credit in excess of $50,000;
85. contract providing for an "earn-out" or other
contingent payment by the Company or any Company Subsidiary involving more than
$50,000 over the term of the contract;
86. contract or agreement which is terminable upon or
prohibits a change of ownership or control of the Company or any Company
Subsidiary;
87. contract providing for the indemnification of any
officer, director, employee or agent;
88. contract providing for any obligation of the Company or
any Company Subsidiary to provide funds to, or make any investment (in the form
of a loan, capital contribution or otherwise) in, any Company Subsidiary or any
other person; or
89. any other agreement, contract, license or commitment that
is material to the business of the Company and the Company Subsidiaries, taken
as a whole, as currently conducted or proposed to be conducted.
90. Each agreement, contract or commitment required to be
disclosed in the Company Disclosure Schedule pursuant to clauses (i) through
(xi) above or set forth in Section 3.12(a) of the Company Disclosure Schedule
(any such agreement, contract or commitment, a "Company Material
Contract") (i) is valid and binding in all material respects on
the Company or a Company Subsidiary, as the case may be, and, to the knowledge
of the Company, on the other parties thereto, and is in full force and effect,
and (ii) upon consummation of the transactions contemplated by this
Agreement, shall continue in full force and effect without penalty or other
adverse consequence.  Neither the Company nor any Company Subsidiary is in
breach or violation of, or default under, any material terms of any Company
Material Contract and, to the knowledge of the Company, no other party to any
Company Material Contract is in breach or violation thereof or default
thereunder.
91. The Company has delivered or made available to Parent
accurate and complete copies of all Company Material Contracts identified in
Section 3.12(a) of the Company Disclosure Schedule, including all
amendments thereto.  Section 3.12(a) of the Company Disclosure Schedule
provides an accurate description of the terms of each Company Material Contract
that is not in written form.
92. To the Company's knowledge, no event has occurred, and no
circumstance or condition exists, that (with or without notice or lapse of time)
will, or could reasonably be expected to, (i) result in a breach or
violation of, or default under, any material terms of any Company Material
Contract, (ii) give any entity the right to declare a default, seek damages
or exercise any other remedy under any Company Material Contract,
(iii) give any entity the right to accelerate the maturity or performance
of any Company Material Contract or (iv) give any entity the right to
cancel, terminate or modify any Company Material Contract.
93. Environmental Matters.
94. The Company and each Company Subsidiary (i) is in
compliance in all material respects with all applicable Environmental Laws (as
defined below), (ii) holds all material Environmental Permits (as defined
below) necessary to conduct the Company's or each Company Subsidiary's business
and (iii) is in compliance with their respective Environmental
Permits.
95. Neither the Company nor any Company Subsidiary has
released and, to the knowledge of the Company, no other person has released
Hazardous Materials (as defined below) on any real property owned or leased by
the Company or any Company Subsidiary or, during their ownership or occupancy of
such property, on any property formerly owned or leased by the Company or any
Company Subsidiary.
96. Neither the Company nor any Company Subsidiary has
received any written request for information, or been notified that it is a
potentially responsible party, under CERCLA (as defined below) or any similar
Law of any state, locality or any other jurisdiction.
97. To the knowledge of the Company, neither the Company nor
any Company Subsidiary has entered into or agreed to any consent decree or order
or is subject to any judgment, decree or judicial order relating to compliance
with Environmental Laws, Environmental Permits or the investigation, sampling,
monitoring, treatment, remediation, removal or cleanup of Hazardous Materials
and, to the knowledge of the Company, no investigation, litigation or other
proceeding is pending or threatened in writing with respect thereto.
98. None of the real property currently or formerly owned or
leased by the Company or any Company Subsidiary is listed or, to the knowledge
of the Company, proposed to be listed on the "National Priorities
List" under CERCLA, as updated through the date of this Agreement, or any
similar list of sites in the United States or any other jurisdiction requiring
investigation or cleanup.
99. Intellectual Property.
100. Except as set forth in Section 3.14(a) of the
Company Disclosure Schedule, each of the Company and the Company Subsidiaries
possesses sufficient and legally enforceable rights (by ownership or license or
otherwise) with respect to all Intellectual Property (as defined below)
necessary to conduct their respective businesses, as previously or presently
conducted, without infringement or misappropriation of any rights or property of
any person ("Infringement"), except for such items as have yet
to be conceived or developed.  "Intellectual Property" means
(i) trade names, trade and service marks, logos, domains, URLs, websites,
addresses and other designations (collectively, "Marks"); (ii)
inventions (whether or not patentable); works of authorship; mask works; data;
technology; know-how; trade secrets; ideas; information; designs; formulas;
algorithms; processes; methods; schematics; computer software (in source code
and/or object code form); and all other intellectual property of any sort
(collectively, "Inventions") and (iii) patent rights; Mark
rights; copyrights; mask work rights; sui generis database rights; trade
secret rights; moral rights; and all other intellectual and industrial property
rights of any sort throughout the world, and all applications, registrations,
issuances and the like with respect thereto (collectively,
"IP Rights").  "Company Intellectual
Property" means all Intellectual Property owned by or exclusively
licensed to the Company or any Company Subsidiary.  With respect to patent
rights, moral rights and Mark rights, the representations and warranties of this
Section 3.14(a) are made only to the Company's and the Company
Subsidiaries' knowledge and without having conducted any special investigation
or patent or trademark search.
101. To the extent included in Company Intellectual Property,
Section 3.14(b)(i) of the Company Disclosure Schedule lists (by title, number,
jurisdiction and owner) all patents and patent applications; all registered and
unregistered Marks and Marks for which registration applications are pending;
and all registered and material unregistered copyrights and mask works; and all
other issuances, registrations, applications and the like with respect to those
or any other IP Rights (collectively, "Company Scheduled IP").
Except as set forth in Section 3.14(b)(ii) of the Company Disclosure
Schedule, all items of Company Scheduled IP (other than pending applications)
are valid, enforceable and subsisting to the extent such concepts are
applicable, and Company is not aware of any questions or challenges with respect
thereto.  All filings, registrations and related correspondence in respect of
Company Scheduled IP have been provided to Parent.  No cancellation,
termination, expiration or abandonment of any item of Company Scheduled IP
(except natural expiration or termination at the end of the full possible term,
including extensions and renewals) is anticipated by the Company or any Company
Subsidiary.  Except as referenced in written documentation previously provided
to Parent (including without limitation file wrappers), neither the Company nor
any Company Subsidiary is aware of any questions or challenges with respect to
the patentability of any claims in any pending patent application included in
Company Intellectual Property.
102. Section 3.14(c)(i) of the Company Disclosure Schedule
lists:  (i) all licenses, sublicenses and other agreements (written or
otherwise) to which the Company or a Company Subsidiary is a party (or by which
it or any Company Intellectual Property is bound or subject) and pursuant to
which any person has been or may be assigned, authorized to use, exercise or
exploit ("Use"), granted any license, lien or encumbrance
regarding, or given access to any Company Intellectual Property other than
pursuant to (A) written, signed, standard form  software licenses and support or
maintenance agreements, and (B) nondisclosure or confidentiality agreements, and
(C) agreements no longer in effect; and (ii) all licenses, sublicenses and other
agreements (written or otherwise) pursuant to which the Company or a Company
Subsidiary has been or may be assigned, granted any license, authorized to Use
or incurred any obligation in connection with (A) any third party Intellectual
Property that has been or is incorporated or embodied in, or forms all or any
part of any previous, current or proposed product, service or Intellectual
Property offering of the Company or any Company Subsidiary or (B) any Company
Intellectual Property (other than agreements executed by employees and
contractors pursuant to the Company's or a Company Subsidiary's standard form of
agreement), (iii) each agreement pursuant to which the Company or a Company
Subsidiary has deposited or is required to deposit with an escrow agent or any
other person all or part of the source code for any product or service
previously or currently offered or under development by the Company or any
Company Subsidiary (the "Company Source Code") (other than such
agreements which are no longer in effect, if all Company Source Code deposited
with the escrow agent has been returned to the Company or a Company Subsidiary)
and (iv) all consulting or other agreements (written or otherwise) pursuant to
which the Company or a Company Subsidiary either (A) provides services to any
person or (B) receives services from any person, other than such agreements
pursuant to which the Company or the Company Subsidiary explicitly, in writing
retains or is assigned ownership of any Intellectual Property created pursuant
to such arrangement.  Except as disclosed on Section 3.14(c)(ii) of the Company
Disclosure Schedule, neither the Company nor any of the Company Subsidiaries has
entered into any agreement to indemnify, hold harmless or defend any other
person with respect to any assertion of Infringement or warranting the lack
thereof, other than indemnification provisions contained in standard forms of
product licenses, distribution agreements, reseller agreements, end user
licenses, or other transactions.  Any standard form of employee agreement,
consulting agreement, product license, distribution agreement, reseller
agreement, end user license, or other standard form of agreement has been
clearly identified as such and provided to Parent.
103. To the knowledge of the Company and the Company
Subsidiaries, no event or circumstance has occurred or exists that (with or
without notice, consent or the lapse of time) could reasonably be expected to
result in, and neither the execution or delivery of this Agreement nor the
consummation of the transactions contemplated by this Agreement will result in,
(i) the breach or violation of any license, sublicense or other agreement
required to be listed in Section 3.14(c)(i) of the Company Disclosure Schedule,
(ii) the loss or expiration of any material right or option by the Company or
any of the Company Subsidiaries (or the gain thereof by any third party) under
any such license, sublicense or other agreement, or (iii) the release,
disclosure or delivery to any third party of any Company Source Code.  Further,
each license, sublicense and agreement required to be listed on Section
3.14(c)(i) of the Company Disclosure Schedule shall be considered, for purposes
of this Agreement, to be a "Company Material Contract" (as such
term is defined and used elsewhere in this Agreement).
104. Except as set forth in Section 3.14(e) of the Company
Disclosure Schedule, there is, to the knowledge of the Company and the Company
Subsidiaries as of the date of this Agreement, no unauthorized Use or
disclosure, and no Infringement, of any Company Intellectual Property by any
third party, including, without limitation, any employee or former employee of
the Company or any of the Company Subsidiaries.  Except as set forth in Section
3.14(e) of the Company Disclosure Schedule, neither the Company nor any Company
Subsidiary has brought or threatened, at any time, any action, suit or
proceeding against any third party for any Infringement of any Company
Intellectual Property or any material breach of any license, sublicense or
agreement involving Company Intellectual Property.
105. Except as set forth in Section 3.14(f) of the Company
Disclosure Schedule, the Company and the Company Subsidiaries have taken
reasonable steps to protect and preserve the confidentiality of each item of
Company Intellectual Property with respect to which the Company or any Company
Subsidiary wishes to maintain confidentiality and which is not otherwise
disclosed in published patents or patent applications or registered copyrights
("Company Confidential Information").  Except as set forth in
Section 3.14(f) of the Company Disclosure Schedule, all use by and disclosure to
employees or others of Company Confidential Information has been pursuant to the
terms of valid and binding written confidentiality and nonuse/restricted-use
agreements or agreements that contain similar obligations.  Except as set forth
in Section 3.14(f) of the Company Disclosure Schedule, none of the Company or
any of the Company Subsidiaries has disclosed or delivered to any third party,
or permitted the disclosure or delivery to any escrow agent or other third
party, any Company Source Code.
106. Except as set forth in Section 3.14(g) of the Company
Disclosure Schedule, the Company and the Company Subsidiaries collectively own,
exclusively, all Intellectual Property that is incorporated or embodied in, or
that forms part of, any product or service previously offered or currently being
offered or developed by the Company or any Company Subsidiary.  Without limiting
the generality of the foregoing, (i) no current or former employee or contractor
of the Company or any Company Subsidiary has any right or interest to or in any
such Intellectual Property, and (ii) neither the Company nor any Company
Subsidiary currently has any ongoing or future obligation to pay any license
fee, royalty, or other payment to any person with respect to the manufacturing,
distribution, modification, marketing, sale or license of any product or service
previously offered or currently being offered or developed by the Company or any
Company Subsidiary.  Except as set forth in Section 3.14(g) of the Company
Disclosure Schedule, each current and former employee and contractor of the
Company or any Company Subsidiary has executed and delivered (and to the
Company's knowledge is in compliance with) an agreement in substantially the
form of the Company's standard Proprietary Information and Inventions Agreement
(in the case of current or former employees) or Consulting Agreement (in the
case of a contractor), which agreements provide valid written assignments to the
Company or such Company Subsidiary of all title and rights to Intellectual
Property that is incorporated or embodied in, or that forms part of, any product
or service previously offered or currently being offered or developed by the
Company or any Company Subsidiary, except for those current or former employees
and contractors whose failure to execute and deliver such an agreement has not
and would not have a Company Material Adverse Effect.
107. Except as set forth in Section 3.14(h) of the Company
Disclosure Schedule, neither the Company nor any Company Subsidiary has received
any communication alleging or suggesting that the Company or any Company
Subsidiary has been or may be (whether in its past, current or proposed business
or otherwise) engaged in, liable for or contributing to any Infringement, nor
does the Company or any Company Subsidiary have any reason to expect that any
such communication will be forthcoming.  To the knowledge of the Company and the
Company Subsidiaries, neither the Company nor any Company Subsidiary has ever,
at any time, infringed, misappropriated, or otherwise violated any IP Right of
any other person, nor is there any basis for a claim that the Company or any
Company Subsidiary has infringed, misappropriated or otherwise violated any IP
Right of any other person.
108. Except as set forth in Section 3.14(i) of the Company
Disclosure Schedule, none of the Company or the Company Subsidiaries is aware
that any of its employees or contractors is obligated under any agreement,
commitment, judgment, decree, order or otherwise that would conflict with the
business of the Company or any Company Subsidiary or interfere with the use of
his or her best efforts to perform his or her duties for the Company and the
Company Subsidiaries.
109. All Company Software is free of all viruses, worms,
trojan horses and other material known infections or intentionally harmful
routines and does not contain any bugs, errors, or problems of a material nature
that, to the Company's or any Company Subsidiary's knowledge, could reasonably
be expected to disrupt its operation or have an adverse impact on the operation
of other software programs or operating systems.
110. The Company and the Company Subsidiaries have obtained
all approvals from governmental entities and other regulatory bodies necessary
for exporting outside of the United States (by the Company, any Company
Subsidiary or any of their distributors, resellers or customers) any software
products previously offered or currently being offered by the Company or any
Company Subsidiary and importing any such products into any country in which
they are or have been distributed, sold or licensed for Use, and all such export
and import approvals in the United States and throughout the world are valid,
current, and in full force and effect.
111. Taxes.
112. All Tax (as defined below) returns, statements, reports,
declarations and other forms and documents (including without limitation
estimated Tax returns and reports and material information returns and reports)
required to be filed with any Tax Authority (as defined below) with respect to
any Taxable (as defined below) period ending on or before the Closing, by or on
behalf of the Company or any Company Subsidiary (collectively, "Company
Tax Returns" and individually, a "Company Tax
Return"), have been or will be completed and filed when due (including
any extensions of such due date) and all amounts shown due on such Company Tax
Returns on or before the Effective Time have been or will be paid on or before
such date.  The Interim Financial Statements (i) fully accrue all actual
and contingent liabilities for Taxes (as defined below) with respect to all
periods through September 30, 2001 and the Company has not and will not
incur any Tax liability in excess of the amount reflected (excluding any amount
thereof that reflects timing differences between the recognition of income for
purposes of U.S. GAAP and for Tax purposes) on the Company Balance Sheet
included in the Interim Financial Statements with respect to such periods, and
(ii) properly accrue in accordance with U.S. GAAP all material liabilities
for Taxes payable after September 30, 2001, with respect to all
transactions and events occurring on or prior to such date.  All information set
forth in the notes to the Interim Financial Statements relating to Tax matters
is true, complete and accurate in all material respects.  The Company has not
incurred any material Tax liability since September 30, 2001 other than in
the ordinary course of business and the Company has made adequate provisions for
all Taxes since that date in accordance with U.S. GAAP on at least a quarterly
basis.  The adjusted basis of the Company's assets exceed the sum of its
liabilities.
113. The Company has withheld and paid to the applicable
financial institution or Tax Authority all amounts required to be withheld.  To
the best knowledge of the Company, no Company Tax Returns filed with respect to
Taxable years through the Taxable year ended December 31, 2001 in the case of
the United States, have been examined and closed.  The Company (or any member of
any affiliated or combined group of which the Company has been a member) has not
granted any extension or waiver of the limitation period applicable to any
Company Tax Returns that is still in effect and there is no material claim,
audit, action, suit, proceeding, or (to the knowledge of the Company)
investigation now pending or threatened against or with respect to the Company
in respect of any Tax or assessment.  No notice of deficiency or similar
document of any Tax Authority has been received by the Company, and there are no
liabilities for Taxes (including liabilities for interest, additions to Tax and
penalties thereon and related expenses) with respect to the issues that have
been raised (and are currently pending) by any Tax Authority that could, if
determined adversely to the Company, materially and adversely affect the
liability of the Company for Taxes.  There are no liens for Taxes (other than
for current Taxes not yet due and payable) upon the assets of the Company.  The
Company has never been a member of an affiliated group of corporations, within
the meaning of Section 1504 of the Code.  The Company is not a party to any
Tax exemption or other Tax-sharing agreement or subject to an order of a foreign
government, and the consummation of the Merger will not have any adverse effect
on the continued validity and effectiveness of any such Tax exemption or other
Tax-sharing agreement or order.  Neither the Company nor any person on behalf of
the Company has entered into or will enter into any agreement or consent
pursuant to the collapsible corporation provisions of
Section 341(f) of the Code (or any corresponding provision of state,
local or foreign income tax Law) or agreed to have Section 341(f)(2) of the
Code (or any corresponding provision of state, local or foreign income tax Law)
apply to any disposition of any asset owned by the Company.  None of the assets
of the Company is property that the Company is required to treat as being owned
by any other person pursuant to the so-called "safe harbor lease"
provisions of former Section 168(f)(8) of the Code.  None of the assets of
the Company directly or indirectly secures any debt the interest on which is tax
exempt under Section 103(a) of the Code.  None of the assets of the
Company is "tax-exempt use property" within the meaning of
Section 168(h) of the Code.  The Company has not made and will not make a
deemed dividend election under Treas. Reg. 1.1502-32(f)(2) or a consent
dividend election under Section 565 of the Code.  The Company has never
been a party (either as a distributing corporation, a distributed corporation or
otherwise) to any transaction intended to qualify under Section 355 of the
Code or any corresponding provision of state Law.  The Company has not
participated in (and will not participate in) an international boycott within
the meaning of Section 999 of the Code. The Company does not have and has
not had a permanent establishment in any foreign country, as defined in any
applicable Tax treaty or convention between the United States of America and
such foreign country and the Company has not engaged in a trade or business
within any foreign country.  The Company has never elected to be treated as an
S-corporation under Section 1362 of the Code or any corresponding provision
of Federal or state Law.  All material elections with respect to the Company's
Taxes made during the fiscal years ending December 31, 1998, 1999 and 2000
are reflected on the Company Tax Returns for such periods, copies of which have
been provided to Parent.  After the date of this Agreement, no material election
with respect to Taxes will be made without the prior written consent of Parent,
which consent will not be unreasonably withheld or delayed.  The Company is not
party to any joint venture, partnership, or other arrangement or contract which
could be treated as a partnership for Federal income tax purposes.  The Company
is not currently and never has been subject to the reporting requirements of
Section 6038A of the Code.  There is no agreement, contract or arrangement
to which the Company is a party that could, individually or collectively, result
in the payment of any amount that would not be deductible by reason of
Sections 280G (as determined without regard to Section 280G(b)(4)),
162 (other than 162(a)) or 404 of the Code.  The Company is not a party to any
Contract, nor does it have any obligations (current or contingent) to compensate
any person for excise taxes paid pursuant to Section 4999 of the Code.  The
Company is not a party to or bound by any Tax indemnity, Tax sharing or Tax
allocation agreement (whether written or unwritten or arising under operation of
Federal Law as a result of being a member of a group filing consolidated Company
Tax Returns, under operation of certain state Laws as a result of being a member
of a unitary group, or under comparable Laws of other states or foreign
jurisdictions) that includes a party other than the Company nor does the Company
owe any amount under any such agreement.  The Company has previously provided or
made available to Parent true and correct copies of all income, franchise, and
Company Tax Returns regarding sales tax, and, as reasonably requested by Parent,
prior to or following the date hereof, presently existing information statements
and reports.  The Company is not, and has not been, a United States real
property holding corporation (as defined in Section 897(c)(2) of the Code)
during the applicable period specified in Section 897(c)(1)(A)(ii) of the
Code.  Other than by reason of the Merger, the Company has not been and will not
be required to include any material adjustment in Taxable income for any Tax
period (or portion thereof) pursuant to Section 481 or 263A of the Code or
any comparable provision under state or foreign Tax Laws as a result of
transactions, events or accounting methods employed prior to the
Merger.
114. For purposes of this Agreement, the following terms have
the following meanings: "Tax" (and, with correlative meaning,
"Taxes" and "Taxable") means any and all taxes
including, without limitation, (i) any net income, alternative or add-on
minimum tax, gross income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, value added, net worth, license, withholding, payroll,
employment, excise, severance, stamp, occupation, premium, property,
environmental or windfall profit tax, custom, duty or other tax, governmental
fee or other like assessment or charge of any kind whatsoever, together with any
interest or any penalty, addition to tax or additional amount imposed by any
Governmental Entity responsible for the imposition of any such tax (domestic or
foreign) (a "Tax Authority"), (ii) any liability for the
payment of any amounts of the type described in (i) as a result of being a
member of an affiliated, consolidated, combined or unitary group for any taxable
period or as the result of being a transferee or successor thereof and
(iii) any liability for the payment of any amounts of the type described in
(i) or (ii) as a result of any express or implied obligation to
indemnify any other person.  As used in this Section 3.15, the term
"Company" means the Company and any entity included in, or required
under U.S. GAAP to be included in, any of the Audited Financial Statements or
the Interim Financial Statements.
115. Vote
Required.  The only votes of the holders of any classes or series of
capital stock of the Company necessary to approve (i) the amendment and
restatement of the Articles of Incorporation of the Company in the form attached
hereto as Exhibit D (the "Company Charter Amendment")
and (ii) this Agreement and the Merger are (A) the affirmative vote of the
holders of at least a majority of the outstanding shares of Company Common Stock
voting separately as a single class in favor of the approval of the Company
Charter Amendment, the principal terms of this Agreement and the Merger and (B)
the affirmative vote of the holders of at least a majority of the outstanding
shares of each series of Company Preferred Stock, each voting separately as a
single class in favor of the approval of the Company Charter Amendment, the
principal terms of this Agreement and the Merger (the "Company
Shareholder Approval").  The Company Shareholder Approval is the only
vote of holders of any class or series of the capital stock of the Company
necessary for the Company to effect the Merger.
116. Assets; Absence of Liens and Encumbrances.
117. Neither the Company nor any of the Company Subsidiaries
owns any real property.  Section 3.17(a) of the Company Disclosure Schedule
lists all real property leases to which the Company or any Company Subsidiary is
a party and each amendment thereto (all such leases, as amended, being the
"Company Leases"), and with respect to each such lease, the
aggregate monthly rent payable thereunder and the expiration date thereof.  All
such current leases are in full force and effect, are valid and effective in
accordance with their respective terms, and there is not, under any of such
leases, any existing default or event of default (or event which with notice or
lapse of time, or both, would constitute a default) that would give rise to a
material claim.  Neither the Company nor any of the Company Subsidiaries have
subleased or otherwise granted rights of use or occupancy of any of the premises
subject to such leases to any other persons.  Other than leaseholds created
under the real property leases identified in Section 3.17(a) of the Company
Disclosure Schedule, the Company and the Company Subsidiaries have no leasehold
interest in any real property.
118. The Company and each Company Subsidiary own, lease or
have the legal right to use all of the material assets, including, without
limitation, personal property (other than Intellectual Property, which is
covered by Section 3.14 hereof), used or intended to be used in the conduct
of the business of the Company or such Company Subsidiary or otherwise owned,
leased or used by the Company or such Company Subsidiary and, with respect to
contract rights, is a party to and enjoys the right to the benefits of all
material contracts, agreements and other arrangements used or intended to be
used by the Company or such Company Subsidiary in or relating to the conduct of
the business of the Company and each Company Subsidiary (all such properties,
assets and contract rights, together with the Company Leases, being the
"Company Assets").
119. The Company and each Company Subsidiary have good and
marketable title to, or, in the case of leased or subleased Company Assets,
valid and subsisting leasehold interests in, all the Company Assets, free and
clear of all mortgages, liens, pledges, charges, claims, security interests or
encumbrances of any kind or character ("Liens") except for
(x) Liens for current Taxes not yet due and payable, and (y) Liens
that have arisen in the ordinary course of business and that do not (in any case
or in the aggregate) materially detract from the value, or materially interfere
with the present or contemplated use, of the Company Assets subject thereto or
affected thereby.  The equipment of the Company and the Company Subsidiaries
used in the operations of their business is, taken as a whole, in good operating
condition and repair, ordinary wear and tear excepted.
120. Certain Interests.  No event has occurred that would
be required to be reported currently by the Company as a Certain Relationship or
Related Transaction pursuant to Item 404 of Regulation S-K promulgated
under the Securities Act assuming the Company were subject to such provisions of
the Securities Act.
121. Insurance Policies.  True and complete
copies of all insurance policies to which the Company or any Company Subsidiary
is a party or is a beneficiary or named insured such policies have been provided
or made available to Parent.  Except as set forth in Section 3.19 of the Company
Disclosure Schedule, there have been no material claim or series of claims made
under such insurance policies within the past three years.  All premiums due on
such policies have been paid, and, to the Company's knowledge, the Company and
each Company Subsidiary is otherwise in compliance with the terms of such
policies.  Neither the Company nor any Company Subsidiary has failed to give any
notice or present any material claim under any such policy in a timely fashion,
except where such failure would not prejudice the Company's or any Company
Subsidiary's ability to make such a claim.  Such insurance to the date hereof
has been maintained in full force and effect and not been canceled or changed,
except to extend the maturity dates thereof.  Neither the Company nor any
Company Subsidiary has any knowledge of any actual or possible
(i) cancellation or threatened termination of any insurance policy,
(ii) refusal of any coverage or rejection of any claim under any insurance
policy or (iii) material premium increase with respect to any insurance
policy.
122. Brokers.  Except for C.E. Unterberg, Towbin
("Company Advisor") no broker, finder or investment banker
(other than the Company Financial Advisor (as defined in Section 3.27)) is
entitled to any brokerage, finder's or other fee or commission in connection
with the origination, negotiation or execution of this Agreement, the Merger or
the other transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Company or any Company Subsidiary.  The Company has
heretofore furnished to Parent a complete and correct copy of all agreements
between the Company and Company Advisor pursuant to which such advisor would be
entitled to any payment in relation to the Merger or the transactions
contemplated by this Agreement.
123. State Takeover
Statutes.  The Board of Directors of the Company has taken all action
necessary to ensure that any restrictions on business combinations contained in
the CGCL will not apply to the Merger and the other transactions contemplated by
this Agreement.  No other "fair price," "moratorium,"
"control share acquisition" or other similar anti-takeover statute or
regulation or any anti-takeover provision in the Company's Articles of
Incorporation or Bylaws is, or at the Effective Time will be, applicable to the
Company, the shares of Company Stock, the Merger or the other transactions
contemplated by this Agreement.
124. Customers and
Suppliers.  No customer who individually accounted for more than 10% of
the Company's consolidated gross revenues during the fiscal years ended
December 31, 1999 and 2000 and the most recent fiscal quarter ended
September 30, 2001 has, within the past 12 months, cancelled or otherwise
terminated, or made any threat to cancel or terminate, its relationship with the
Company or any Company Subsidiary, or decreased materially its usage of the
Company's or any Company Subsidiary's services or products.
125. Powers of Attorney.  Except for powers of attorney
regarding immaterial matters, there are no outstanding powers of attorney
executed on behalf of the Company or any Company Subsidiary.
126. Offers.  The Company has suspended or terminated,
and has the legal right to terminate or suspend, all negotiations and
discussions of any acquisition, merger, consolidation or sale of all
substantially all of the assets of Company and the Company Subsidiaries with
parties other than Parent.
127. Books and Records.   The minute books and other
similar records of the Company and each Company Subsidiary contain complete and
accurate records of all actions taken at any meetings of the Company's or each
Company Subsidiary's stockholders, Board of Directors or any committee thereof
and of all written consents executed in lieu of the holder of any such meeting.
The books and records of the Company and each Company Subsidiary accurately
reflect in all material respects the assets, liabilities, business, financial
condition and results of operations of the Company and the Company Subsidiaries
and have been maintained in accordance with good business and bookkeeping
practices.
128. Affiliates.  Section 3.26
of the Company Disclosure Schedule contains an accurate and complete list of the
names and addresses of those persons who are Affiliates
of the Company as of the date hereof.
129. Opinion of Financial Advisor.  The Company has received the written opinion of
Houlihan, Lokey, Howard & Zukin (the "Company Financial
Advisor") that the conversion ratio set forth in the Note Conversion
Agreement is fair from a financial point of view to the shareholders of the
Company who are not also holders of any Notes, a copy of which opinion will be
delivered to Parent promptly after the date of this Agreement.
130. REPRESENTATIONS AND
WARRANTIES OF PARENT AND MERGER SUB
131. Organization and Qualification.  Parent is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
own, lease and otherwise hold and operate its properties and other assets and to
carry on its business as it is now being conducted and as currently proposed to
be conducted, except where the failure to be so organized, existing or in good
standing or to have such corporate power and authority has not had, and could
not reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect (as defined below).  The Company is duly qualified or
licensed as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of the properties owned, leased or
operated by it or the nature of its business makes such qualification or
licensing necessary, except where the failure to be so qualified or licensed and
in good standing has not had, and could not reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect.  The term
"Parent Material Adverse Effect" means any event, change,
violation, inaccuracy, circumstance or effect that is, or could reasonably be
expected to be, individually or in the aggregate, materially adverse to (i) the
business, operations, condition (financial or otherwise), assets (tangible or
intangible), liabilities, properties, or results of operations of Parent and the
Parent Subsidiaries taken as a whole, or (ii) the ability of Parent to
consummate the Merger or any of the transactions contemplated by this Agreement
or to perform its obligations under this Agreement, in each case prior to the
Termination Date; provided, however, that (i) none of the following shall
be deemed in themselves, either alone or in combination, to constitute, and none
of the following shall be taken into account in determining whether there has
been, or will be, a Parent Material Adverse Effect:  (a) any changes in general
economic or business conditions that do not disproportionately impact Parent and
the Parent Subsidiaries, taken as a whole, (b) any changes or events affecting
the industry in which Parent operates that do not disproportionately impact
Parent and the Parent Subsidiaries, taken as a whole, (it being understood that
in any controversy concerning the applicability of the preceding exceptions (a)
and (b), Parent shall have the burden of proof with respect to the elements of
such exceptions), (c) any adverse event, change, violation, inaccuracy,
circumstance or effect, including the payment of fees and expenses, resulting
from the terms of, or the taking of any action required by, this Agreement, or
(d) any adverse event, change, violation, inaccuracy, circumstance or effect
related to or resulting from the announcement the Merger, and (ii) any
change in the market price of the Parent Common Stock in and of itself shall not
be deemed to constitute a Parent Material Adverse Effect; provided,
however, that in the event any change in the market price of Parent
Common Stock is related to one or more events, facts or circumstances affecting
Parent and the Parent Subsidiaries, taken as a whole, such change in the market
price of Parent Common Stock and such events, facts or circumstances shall be
considered collectively in determining whether there has been a Parent Material
Adverse Effect.
132. Certificate of Incorporation and Bylaws.  Parent
has heretofore made available to the Company a complete and correct copy of
(a) the Certificate of Incorporation and the Bylaws of Parent including all
amendments thereto, (b) the minute books containing all consents, actions
and meeting of the stockholders of Parent and Parent's Board of Directors and
any committees thereof, and (c) the stock transfer books of Parent setting
forth all issuances or transfers of any capital stock of Parent.  Such
Certificate of Incorporation and Bylaws are in full force and effect.  Parent is
not in violation of any of the provisions of its Certificate of Incorporation or
Bylaws.  The corporate minute books, stock certificate books, stock registers
and other corporate records of Parent are complete and accurate, and the
signatures appearing on all documents contained therein are the true or
facsimile signatures of the persons purported to have signed the same.
133. Subsidiaries.
134. Section 4.03(a) of the Parent Disclosure Schedule
sets forth:  (i) the name of each corporation, partnership, limited
liability company, joint venture or other entity in which Parent has, directly
or indirectly, an equity interest representing 50% or more of the capital stock
thereof or other equity interests therein (individually, a "Parent
Subsidiary" and, collectively, the "Parent
Subsidiaries"); and (ii) the number and type of outstanding equity
securities of each Parent Subsidiary and a list of the holders thereof.
135. Each Parent Subsidiary is a corporation duly organized,
validly existing and in corporate and tax good standing under the laws of the
jurisdiction of its incorporation.  Each Parent Subsidiary is duly qualified to
conduct business and is in good standing under the laws of each jurisdiction in
which the nature of its business or the ownership or leasing of its properties
requires such qualification, except where the failure to be so qualified or in
good standing has not had, and could not reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect.  Each Parent
Subsidiary has all requisite power and authority to carry on the businesses in
which it is engaged and to own and use the properties owned and used by it.
Parent has delivered or made available to the Company complete and accurate
copies of the charter, Bylaws or other organizational documents of each Parent
Subsidiary.  No Parent Subsidiary is in default under or in violation of any
provision of its charter, Bylaws or other organizational documents.  All of the
issued and outstanding shares of capital stock of each Parent Subsidiary are
duly authorized, validly issued, fully paid, nonassessable and free of
preemptive rights.  All shares of each Parent Subsidiary are held of record or
owned beneficially by either Parent or another Parent Subsidiary and are held or
owned free and clear of any restriction on transfer (other than restrictions
under Federal or state securities laws), claim, security interest, option,
warrant, right, contract, call, commitment, equity or demand.  There are no
outstanding or authorized options, warrants, rights, agreements or commitments
to which Parent or any Parent Subsidiary is a party or which are binding on any
of them providing for the issuance, disposition or acquisition of any capital
stock of any Parent Subsidiary.  There are no outstanding stock appreciation,
phantom stock or similar rights with respect to any Parent Subsidiary.  There
are no voting trusts, proxies or other agreements or understandings with respect
to the voting of any capital stock of any Parent Subsidiary.
136. Parent does not control, directly or indirectly, or have
any direct or indirect equity participation or similar interest in any
corporation, partnership, limited liability company, joint venture, trust or
other business association which is not a Parent Subsidiary.  There are no
contractual obligations of Parent to provide funds to, or make any investment in
(whether in the form of a loan, capital contribution or otherwise), any other
person.
137. Capitalization.
138. The authorized capital stock of Parent consists of
 25,000,000 shares of Parent Common Stock,  2,000,000 shares of Parent
Preferred Stock.  As of the date hereof, (i) 4,374,874 shares of Parent
Common Stock are issued and outstanding, all of which are duly authorized,
validly issued, fully paid and nonassessable, (ii) no shares of Parent
Common Stock are held in the treasury of Parent and (iii) 2,925,645 shares
of Parent Common Stock are reserved for future issuance pursuant to outstanding
Parent Options.  As of the date of this Agreement, no shares of Parent Preferred
Stock are issued and outstanding.
139. Parent has reserved (i) 3,408,749 shares of Parent Common
Stock for issuance under Parent's 1993 Stock Option/Stock Issuance Plan and
Parent's 1999 Stock Plan (the "Parent Stock Plans") of which
options to purchase 2,925,645 shares of Parent Common Stock are outstanding as
of the date of this Agreement and (ii) 92,315 shares of Parent Common Stock for
issuance pursuant to Parent's 1998 Employee Stock Purchase Plan (the
"Parent Purchase Plan"), of which 92,315 shares are available
for issuance.  Section 4.04(b) of the Parent Disclosure Schedule accurately
sets forth with respect to each Parent Option that is outstanding as of the date
of this Agreement: (i) the name of the holder of such Parent Option;
(ii) the total number of shares of Parent Common Stock that was originally
subject to such Parent Option; (iii) the number of shares of Parent Common Stock
that remain subject to such Parent Option, (iv) the date on which such Parent
Option was granted and the term of such Parent Option; (v) the vesting
schedule and vesting commencement date for such Parent Option; (vi) the
exercise price per share of Parent Common Stock purchasable under such Parent
Option; (vii) whether such Parent Option has been designated an
"incentive stock option" as defined in Section 422 of the Code;
and (viii) the current employee or independent contractor status of the holder
of such Parent Option.  No Parent Option will by its terms require an adjustment
in connection with the Merger, except as contemplated by this Agreement.
Neither the consummation of transactions contemplated by this Agreement, nor any
action taken or to be taken by Parent in connection with such transactions, will
result in (i) any acceleration of exercisability or vesting, whether or not
contingent on the occurrence of any event after consummation of the Merger, in
favor of any optionee under any Parent Option; (ii) any additional benefits
for any optionee under any Parent Option; or (iii) the inability of Parent
after the Effective Time to exercise any right or benefit held by Parent prior
to the Effective Time with respect to any Parent Option assumed by Parent or any
shares of Parent Common Stock previously issued upon exercise of a Parent
Option, including, without limitation, the right to repurchase an optionee's
unvested shares on termination of such optionee's employment.
140. Except as described in Section 4.04(b) above, there are
no options, warrants or other rights, agreements, arrangements or commitments of
any character, whether or not contingent, relating to the issued or unissued
capital stock of Parent or obligating Parent to issue or sell any share of
capital stock of, or other equity interest in, Parent.  All shares of Parent
Common Stock so subject to issuance, upon issuance in accordance with the terms
and conditions specified in the instruments pursuant to which they are issuable,
will be duly authorized, validly issued, fully paid and nonassessable.
141. Parent does not have outstanding any bonds, debentures,
notes or other obligations the holders of which have the right to vote (or which
are convertible into or exercisable for securities having the right to vote)
with the stockholders of Parent on any matter.
142. All of the securities offered, sold or issued by Parent
(i) have been offered, sold or issued in compliance with the requirements
of the Federal securities laws and any applicable state securities or "blue
sky" laws and (ii) are not subject to any preemptive right, right of first
refusal, right of first offer or right of recission.
143. There are no outstanding contractual obligations of
Parent to repurchase, redeem or otherwise acquire any share of capital stock of,
or other equity interest in, Parent.  There are no stockholder agreements,
voting trusts or other agreements or understandings to which Parent is a party,
or of which Parent is aware, that (i) relate to the voting, registration or
disposition of any securities of Parent, (ii) grant to any person or group of
persons the right to elect, or designate or nominate for election, a director to
the Board of Directors of Parent, or (iii) grant to any person or group of
persons information rights.
144. Authority Relative to This Agreement.
145. Each of Parent and Merger Sub has all necessary corporate
power and authority to execute and deliver this Agreement, to perform its
obligations hereunder and, subject to obtaining the necessary approval of the
Parent stockholders, to consummate the Merger.  The execution and delivery of
this Agreement by Parent and Merger Sub and the consummation by Parent and
Merger Sub of the Merger and the other transactions contemplated by this
Agreement have been duly and validly authorized by all necessary corporate
action and no other corporate proceedings on the part of Parent or Merger Sub
are necessary to authorize this Agreement or to consummate the Merger and the
other transactions contemplated by this Agreement (other than the approval of
the Share Issuance by the Parent stockholders as described in Section 4.17
hereof and the filing and recordation of appropriate merger documents as
required by the CGCL).  This Agreement has been duly and validly executed and
delivered by Parent and Merger Sub and, assuming the due authorization,
execution and delivery by the Company, constitutes a legal, valid and binding
obligation of Parent and Merger Sub, enforceable against Parent and Merger Sub
in accordance with its terms, subject to the effect of any applicable
bankruptcy, reorganization, insolvency, moratorium or similar Laws affecting
creditors' rights generally and subject, as to enforceability, to the effect of
general principles of equity.
146. Without limiting the generality of the foregoing,
(i) the Board of Directors of Parent, at a meeting duly called and held,
has unanimously (A) determined that the Merger and the other transactions
contemplated hereby are fair to, and in the best interests of, Parent and its
stockholders, (B) approved and adopted this Agreement and approved the
Merger and the other transactions contemplated hereby in accordance with the
provisions of the Delaware General Corporation Law (the "DGCL")
and Parent's charter documents, and (C) directed that the Share Issuance be
submitted to the Parent stockholders for their approval and (D) resolved to
recommend that the Parent stockholders vote in favor of the approval of the
Share Issuance, (ii) the Board of Directors of Merger Sub, in an action by
written consent thereof, has unanimously (A) determined that the Merger and
the other transactions contemplated hereby are fair to, and in the best
interests of, Merger Sub and Parent, its sole stockholder, (B) approved
this Agreement (including the principal terms hereof), the Merger and the other
transactions contemplated hereby in accordance with the provisions of the CGCL
and Parent's charter documents, and (C) directed that this Agreement and
the Merger be submitted to Merger Sub's sole stockholder for its approval and
(D) resolved to recommend that the sole stockholder vote in favor of the
approval of this Agreement (including the principal terms hereof) and the
Merger, and (iii) Parent, as sole stockholder of Merger Sub, has approved and
adopted this Agreement (including the principal terms thereof) and approved the
Merger.
147. No Conflict; Required Filings and
Consents.
148. The execution and delivery of this Agreement by Parent
and Merger Sub do not, and the performance of this Agreement by Parent and
Merger Sub will not, (i) conflict with or violate the Certificate of
Incorporation or Bylaws of Parent or any Parent Subsidiary, (ii) assuming
that all consents, approvals, authorizations and other actions described in
Section 4.06(b) have been obtained and all filings and obligations
described in Section 4.06(b) have been made or complied with, conflict with
or violate in any material respect any Law applicable to Parent or any Parent
Subsidiary or by which any property or asset of Parent or any Parent Subsidiary
is bound or affected, or (iii) conflict with, result in any material breach
of or constitute a material default (or an event which with notice or lapse of
time or both would become a default) under, require consent, approval or notice
under, give to others any right of termination, amendment, acceleration or
cancellation of, require any payment under, or result in the creation of a lien
or other encumbrance on any property or asset of Parent or any Parent Subsidiary
pursuant to, any material note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which
Parent or any Parent Subsidiary is a party or by which any property or asset of
Parent or any Parent Subsidiary is bound or affected.
149. The execution and delivery of this Agreement by Parent
and Merger Sub do not, and the performance of this Agreement by Parent and
Merger Sub will not, require any consent, approval, order, permit, or
authorization from, or registration, notification or filing with, any
Governmental Entity, except for the filing and recordation of appropriate merger
documents as required by the CGCL and for such other consents, approvals,
orders, permits, authorizations, registrations, notifications or filings, which
if not obtained or made could not reasonably be expected, individually or in the
aggregate, to prevent or materially delay the consummation of the transactions
contemplated by this Agreement.
150. Permits; Compliance.
151. Each of Parent and each Parent Subsidiary is in
possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exceptions, consents, certificates, approvals and orders
of any Governmental Entity necessary for Parent and each Parent Subsidiary to
own, lease and otherwise hold and operate its properties and other assets and to
carry on its business as it is now being conducted and as currently proposed to
be conducted (the "Parent Permits"), except where the failure
of Parent and each Parent Subsidiary to possess such Parent Permits could not
reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect.  All Parent Permits are in full force and effect and
will remain so after the Closing and no suspension or cancellation of any Parent
Permit is pending or, to the knowledge of Parent, threatened.  Neither Parent
nor any Parent Subsidiary has received any notice or other communication from
any Governmental Entity regarding (i) any actual or possible violation of
or failure to comply with any term or requirement of any Parent Permit, or
(ii) any actual or possible revocation, withdrawal, suspension,
cancellation, termination or modification of any Parent Permit.
152. Neither Parent nor any Parent Subsidiary is in conflict
with, or in default or violation of, (i) any Law applicable to Parent or
any Parent Subsidiary or by which any property or asset of Parent or any Parent
Subsidiary is bound or affected, (ii) any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which Parent or any Parent Subsidiary is a party or by which
Parent or any Parent Subsidiary or any property or asset of Parent or any Parent
Subsidiary is bound or affected, or (iii) any Parent Permit, except where
the failure of Parent and each Parent Subsidiary to possess such Parent Permits
could not reasonably be expected to have, individually or in the aggregate, a
Parent Material Adverse Effect.
153. SEC Filings; Financial
Statements.
154. Parent has filed all forms, reports and documents
required to be filed by it with the Securities and Exchange Commission (the
"SEC") since December 31, 1996 through the date of this
Agreement (collectively, the "Parent SEC Reports").  As of the
respective dates they were filed (and if amended or superceded by a filing prior
to the date of this Agreement, then on the date of such filing), (i) the
Parent SEC Reports complied in all material respects with the requirements of
the Securities Act or the Securities Exchange Act of 1934, as amended (together
with the rules and regulations promulgated thereunder, the "Exchange
Act"), as the case may be, and (ii) none of the Parent SEC Reports
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading.  Parent has provided the Company with a true and correct copy of any
draft Parent SEC Reports currently being prepared and not yet filed with the
SEC.
155. Each of the consolidated financial statements (including,
in each case, any notes thereto) contained in the Parent SEC Reports (the
"Parent Financial Statements") was prepared in accordance with
U.S. GAAP applied on a consistent basis throughout the periods indicated (except
as may be indicated in the notes thereto or, in the case of unaudited
statements, as permitted by Form 10-Q or 8-K promulgated by the SEC) and
each presented fairly, in all material respects, the consolidated financial
position of Parent and its consolidated subsidiaries as at the respective dates
thereof and for the respective periods indicated therein, except as otherwise
noted therein (subject, in the case of unaudited statements, to normal and
recurring year-end adjustments which were not and are not expected, individually
or in the aggregate, to have a Parent Material Adverse Effect).  The balance
sheet of Parent contained in the Parent SEC Reports as of September 30,
2001 is hereinafter referred to as the "Parent Balance
Sheet."
156. Undisclosed Liabilities.
Except for (i) Liabilities that are fully reflected or reserved against on the
Parent Balance Sheet and (ii) Liabilities incurred in the ordinary course of
business consistent with past practice that would not, individually or in the
aggregate, reasonably be expected to have a Parent Material Adverse Effect,
since the date of the Parent Balance Sheet, Parent has not incurred any
Liability of any nature whatsoever (whether absolute, accrued, contingent or
otherwise and whether due or to become due) that would be required to be
reflected on, or reserved against, in a balance sheet of Parent, or in the notes
thereto, prepared in accordance with the published rules and regulations of the
SEC and U.S. GAAP.
157. Absence of Certain Changes or Events.  Since the
date of the Parent Balance Sheet, except as contemplated by or as disclosed in
this Agreement, Parent and the Parent Subsidiaries have conducted their
respective businesses only in the ordinary course and in a manner consistent
with past practice and, since such date, (a) there has not been any Parent
Material Adverse Effect and (b) Parent and the Parent Subsidiaries have not
taken or legally committed to take any of the actions specified in Sections
5.04(a) through 5.04(z).
158. Absence of Litigation.  There is no litigation,
suit, claim, action, proceeding or investigation pending or, to the knowledge of
Parent, threatened against Parent or any Parent Subsidiary, or any property or
asset owned or used by Parent or any Parent Subsidiary or any person whose
liability Parent or any Parent Subsidiary has or may have assumed, either
contractually or by operation of Law, before any arbitrator or Governmental
Entity (a "Parent Legal Proceeding") that could reasonably be
expected, if resolved adversely to Parent, to (i) impair the operations of
Parent or any Parent Subsidiary as currently conducted, including, without
limitation, any claim of infringement of any intellectual property right,
(ii) result in losses to Parent or any Parent Subsidiary in excess of
$50,000, (iii) impair the ability of Parent or any Parent Subsidiary to
perform its obligations under this Agreement or (iv) prevent, delay or make
illegal the consummation of the transactions contemplated by this Agreement. To
Parent's knowledge, no event has occurred, and no claim, dispute or other
condition or circumstance exists, that could reasonably be expected to give rise
to or serve as a basis of the commencement of any Parent Legal Proceeding.  None
of Parent or any Parent Subsidiary, the officers or directors thereof in their
capacity as such, or any property or asset of Parent or any Parent Subsidiary is
subject to any continuing order of, consent decree, settlement agreement or
other similar written agreement with, or, to the knowledge of Parent, continuing
investigation by, any Governmental Entity, or any order, writ, judgment,
injunction, decree, determination or award of any court, arbitrator or
Governmental Entity.  Neither Parent nor any Parent Subsidiary has any plans to
initiate any material Parent Legal Proceeding against any third party.
159. Employee Benefit Plans; Labor Matters.
160. Schedule 4.12(a) of the Parent Disclosure Schedule
listsall employee benefit plans
(as defined in Section 3(3) of ERISA) and all bonus, stock option, stock
purchase, stock appreciation right, restricted stock, phantom stock, incentive,
deferred compensation, retiree medical, disability or life insurance, cafeteria
benefit, dependent care, disability, director or employee loan, fringe benefit,
sabbatical, supplemental retirement, severance or other benefit plans, programs
or arrangements, (whether legally enforceable or not, whether formal or informal
and whether in writing or not) (each, a "Parent Plan," and
collectively, the "Parent Plans") to which Parent or any Parent
Subsidiary is a party, with respect to which Parent or any Parent Subsidiary has
any obligation or which are maintained, contributed to or sponsored by Parent or
any Parent Subsidiary for the benefit of any current or former employee, officer
or director of Parent or any Parent Subsidiary
161. Each Parent Plan is in writing and Parent has made
available to the Company a true and complete copy of each Parent Plan (or a
written summary where the Parent Plan is not in writing) and a true and complete
copy of each material document, if any, prepared in connection with each such
Parent Plan, including, without limitation, and only if applicable, (i) a
copy of each trust or other funding arrangement, (ii) each summary plan
description and summary of material modifications, (iii) the two most
recent annual reports (Form 5500 series and all schedules and financial
statements attached thereto) required under ERISA or the Code, (iv) the
most recently received Internal Revenue Service determination letter for each
Parent Plan intended to qualify under Section 401(a) of the Code, (v) the
most recently prepared actuarial report and financial statement in connection
with each such Parent Plan, (vi) any material correspondence with the
Internal Revenue Service or the Department of Labor with respect to each such
Parent Plan and (vii) each form of notice of grant and stock option agreement
used to document Parent Options. Except for the Parent Plans, neither Parent nor
any Parent Subsidiary has an express or implied commitment, whether legally
enforceable or not, (x) to create, incur liability with respect to, or
cause to exist, any other employee benefit plan, program or arrangement that
would constitute a Parent Plan, (y) to enter into any contract or agreement
to provide compensation for services to any individual, or (z) to modify,
change the terms of or terminate any Parent Plan, other than with respect to a
modification, change or termination required by ERISA or the Code.
162. None of the Parent Plans is a Multi-employer Plan or a
Multiple Employer Plan.
163. Except as otherwise required by ERISA, the Code or other
applicable Federal, state, local or foreign law, none of the Parent Plans
provides for the payment of separation, severance, termination or similar
benefits to any person, or obligates Parent or any Parent Subsidiary to pay
separation, severance, termination or similar-type benefits solely or partially
as a result of any transaction contemplated by this Agreement or as a result of
a "change in ownership or control," within the meaning of such term
under Section 280G of the Code.  Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby, either
alone or together with another event, will (i) result in any payment
(including, without limitation, severance, unemployment compensation, golden
parachute, forgiveness of indebtedness or otherwise) becoming due under any
Parent Plan, whether or not such payment is contingent, (ii) increase any
benefits otherwise payable under any Parent Plan or other arrangement,
(iii) result in the acceleration of the time of payment, vesting or funding
of any benefits including, but not limited to, the acceleration of the vesting
and exercisability of any Parent Option, whether or not contingent, or
(iv) affect in any material respects any Parent Plan's current treatment
under any Laws including any Tax or social contribution Law.  No Parent Plan
provides, or reflects or represents any liability to provide, retiree health,
disability, or life insurance benefits to any person for any reason, except as
may be required by COBRA, or other applicable Federal, state, local or foreign
statute or other law, and Parent has never represented, promised or contracted
(whether in oral or written form) to any employee (either individually or to
employees as a group) or any other person that such employee or other person
would be provided with retiree health, disability, or life insurance benefits,
except to the extent required by applicable Federal, state, local or foreign
statute or other law.
164. Each Parent Plan is now and always has been operated in
accordance in all material respects with its terms and the requirements of all
applicable Laws, regulations and rules promulgated thereunder including, without
limitation, ERISA, COBRA, FMLA and the Code.  Each of Parent and each Parent
Subsidiary has substantially performed in all material respects all material
obligations required to be performed by it under, is not in any respect in
default under or in violation of, and has no knowledge of any default or
violation by any party to, any Parent Plan.  No action, claim or proceeding is
pending or, to the knowledge of Parent, threatened with respect to any Parent
Plan (other than claims for benefits in the ordinary course) and, to the
knowledge of Parent, no fact or event exists which could give rise to any such
action, claim or proceeding.  To Parent's knowledge, neither Parent nor any
ERISA Affiliate of Parent is subject to any penalty or Tax with respect to any
Parent Plan under Section 502(i) of ERISA or Sections 4975 through 4980 of
the Code.  Each Parent Plan can be amended, terminated or otherwise discontinued
at any time without material liability to Parent, the Company or any of their
ERISA Affiliates (other than ordinary administration expenses).  Neither Parent
nor any affiliate has, prior to the Effective Time and in any material respect,
violated any of the health care continuation requirements of COBRA, the
requirements of FMLA, the requirements of the Health Insurance Portability and
Accountability Act of 1996, the requirements of the Women's Health and Cancer
Rights Act of 1998, the requirements of the Newborns' and Mothers' Health
Protection Act of 1996, or any amendment to each such act, or any similar
provisions of state Law applicable to its employees.
165. Each Parent Plan intended to qualify under Section 401(a)
or Section 401(k) of the Code and each trust intended to qualify under
Section 501(a) of the Code (i) has received a favorable determination, opinion,
notification or advisory letter from the Internal Revenue Service with respect
to each such Parent Plan as to its qualified status under the Code, including
all amendments to the Code effected by the Tax Reform Act of 1986 and subsequent
legislation, and no fact or event has occurred since the date of such
determination letter or letters from the Internal Revenue Service to adversely
affect the qualified status of any such Parent Plan or the exempt status of any
such trust, or (ii) has remaining a period of time under applicable Treasury
regulations or Internal Revenue Service pronouncements in which to apply for
such a letter and make any amendments necessary to obtain a favorable
determination as to the qualified status of each such Parent Plan.
166. Neither Parent nor any Parent Subsidiary nor any ERISA
Affiliate has incurred any liability under, arising out of or by operation of
Title IV of ERISA (other than liability for premiums to the Pension Benefit
Guaranty Corporation arising in the ordinary course), including, without
limitation, any liability in connection with (i) the termination or
reorganization of any employee benefit plan subject to Title IV of ERISA or
(ii) the withdrawal from any Multi-employer Plan or Multiple Employer Plan,
and no fact or event exists which could give rise to any such
liability.
167. Neither Parent nor any Parent Subsidiary has, since
December 31, 1995, terminated, suspended, discontinued contributions to or
withdrawn from any employee pension benefit plan, as defined in
Section 3(2) of ERISA, including, without limitation, any Multi-employer
Plan.  All contributions, premiums or payments required to be made or accrued
with respect to any Parent Plan have been made on or before their due dates.
All such contributions have been fully deducted for income tax purposes and no
such deduction has been challenged or disallowed by any Governmental Entity and,
to Parent's knowledge, no fact or event exists which could give rise to any such
challenge or disallowance.
168. (i) Neither Parent nor any Parent Subsidiary is a
party to any collective bargaining agreement or other labor union contract
applicable to persons employed by Parent or any Parent Subsidiary or in Parent's
or any Parent Subsidiary's business, and, to Parent's knowledge, currently there
are no organizational campaigns, petitions or other unionization activities
seeking recognition of a collective bargaining unit that could affect Parent or
any Parent Subsidiary; (ii) there are no controversies, strikes, slowdowns
or work stoppages pending or, to Parent's knowledge, threatened between Parent
or any Parent Subsidiary and any of its employees, and neither Parent nor any
Parent Subsidiary has experienced any such controversy, strike, slowdown or work
stoppage within the past three years; (iii) neither Parent nor any Parent
Subsidiary has breached or otherwise failed to comply with the provisions of any
collective bargaining or union contract to which Parent is a party and there are
no grievances outstanding against Parent or any Parent Subsidiary under any such
agreement or contract that are now pending before any Person or Governmental
Entity or are known to Parent; (iv) there are no unfair labor practice
complaints pending against Parent or any Parent Subsidiary before the National
Labor Relations Board or any other Governmental Entity or any current union
representation questions involving employees of Parent or any Parent Subsidiary,
and, to Parent's knowledge, Parent and each Parent Subsidiary have not engaged
in any unfair labor practice; (v) Parent and each Parent Subsidiary are
currently in compliance with all material provisions of applicable Laws relating
to the employment of labor, including those related to wages, hours, worker
classification (including the proper classification of independent contractors
and consultants), collective bargaining, workers' compensation and the payment
and withholding of Taxes and other sums as required by the appropriate
Governmental Entity and has withheld and paid to the appropriate Governmental
Entity or is holding for payment not yet due to such Governmental Entity all
amounts required to be withheld from employees of Parent or any Parent
Subsidiary and is not liable for any arrears of wages, Taxes, penalties or other
sums for failure to comply with any of the foregoing; (vi) Parent and each
Parent Subsidiary has paid in full to all employees or adequately accrued for in
accordance with U.S. GAAP consistently applied all wages, salaries, commissions,
bonuses, benefits and other compensation due to or on behalf of such employees;
(vii) no claim that is now pending before any Governmental Entity has been
made against Parent or any Parent Subsidiary with respect to payment of wages,
salary, overtime pay, workers compensation benefits or disability benefits with
respect to any person currently or formerly employed by Parent or any Parent
Subsidiary, and, to Parent's knowledge, no such claim has been threatened or
asserted; (viii) neither Parent nor any Parent Subsidiary is a party to, or
otherwise bound by, any consent decree with, or citation by, any Governmental
Entity relating to employees or employment practices; (ix) Parent and each
Parent Subsidiary are in compliance with all material provisions of applicable
Laws and regulations relating to occupational safety and health Laws and
regulations, and there is no charge or proceeding with respect to a violation of
any occupational safety or health standards that has been asserted or is now
pending or threatened with respect to Parent or any Parent Subsidiary;
(x) to Parent's knowledge, Parent and each Parent Subsidiary are in
compliance with all material Laws and regulations relating to discrimination in
employment, and there is no charge of discrimination in employment or employment
practices for any reason, including, without limitation, age, gender, race,
religion or other legally protected category, which has been asserted or, to the
knowledge of Parent, threatened against Parent or any Parent Subsidiary or that
is now pending before the United States Equal Employment Opportunity Commission
or any other Governmental Entity; and (xi) to Parent's knowledge, each
employee of Parent and each Parent Subsidiary who is located in the United
States and is not a United States citizen has all approvals, authorizations and
papers necessary to work in the United States in accordance with applicable Law.
169. Section 4.12(j) of the Parent Disclosure Schedule sets
forth the name and title of each employee of Parent with the title of Vice
President or higher.
170. Contracts.
171. Other than as set forth (under the appropriate
subsection) in Section 4.13(a) of the Parent Disclosure Schedule neither
Parent nor any Parent Subsidiary is bound by any:
172. employment, consulting, termination or severance
agreement, contract or commitment with any officer, director or higher level
employee, or member of Parent's Board of Directors;
173. agreement, contract or commitment containing any covenant
limiting the right of Parent or any Parent Subsidiary to engage in any line of
business, acquire any property, distribute any product or provide any service
(including geographic restrictions) or to compete with any person or granting
any exclusive distribution rights;
174. agreement, contract or commitment (i) relating to the
disposition or acquisition by Parent or any Parent Subsidiary after the date of
this Agreement of assets not in the ordinary course of business, (ii) relating
to the acquisition by Parent of any Parent Subsidiary of any other entity,
whether by means of merger, consolidation, purchase of assets or otherwise, or
(iii) pursuant to which Parent or any Parent Subsidiary has any ownership
interest in any corporation, partnership, joint venture or other business
enterprise (other than the Parent Subsidiaries) that is material to Parent's
business as currently conducted;
175. joint venture, stockholder, partnership or other
agreement relating to any equity ownership or profit interest;
176. contract relating to any outstanding commitment for
capital expenditures in excess of $50,000;
177. indenture, mortgage, promissory note, loan agreement,
credit agreement, security agreement, guarantee of borrowed money or other
agreement or instrument relating to the borrowing of money or extension of
credit in excess of $50,000;
178. contract providing for an "earn-out" or other
contingent payment by Parent or any Parent Subsidiary involving more than
$50,000 over the term of the contract;
179. contract or agreement which is terminable upon or
prohibits a change of ownership or control of Parent or any Parent Subsidiary;
180. contract providing for the indemnification of any
officer, director, employee or agent;
181. contract providing for any obligation of Parent or any
Parent Subsidiary to provide funds to, or make any investment (in the form of a
loan, capital contribution or otherwise) in, any Parent Subsidiary or any other
person; or
182. any other agreement, contract, license or commitment that
is material to the business of Parent and the Parent Subsidiaries, taken as a
whole, as currently conducted or proposed to be conducted.
183. Each agreement, contract or commitment required to be
disclosed in the Parent Disclosure Schedule pursuant to clauses (i) through (xi)
above or set forth in Section 4.15(a) of the Parent Disclosure Schedule (any
such agreement, contract or commitment, a "Parent Material
Contract") (i) is valid and binding in all material respects on
Parent or a Parent Subsidiary, as the case may be, and, to the knowledge of
Parent, on the other parties thereto, and is in full force and effect, and
(ii) upon consummation of the transactions contemplated by this Agreement,
shall continue in full force and effect without penalty or other adverse
consequence.  Neither Parent nor any Parent Subsidiary is in breach or violation
of, or default under, any material terms of any Parent Material Contract and, to
the knowledge of Parent, no other party to any Parent Material Contract is in
breach or violation thereof or default thereunder.
184. Parent has delivered or made available to the Company
accurate and complete copies of all Parent Material Contracts identified in
Section 4.13(a) of the Parent Disclosure Schedule, including all amendments
thereto.  Section 4.13(a) of the Parent Disclosure Schedule provides an
accurate description of the terms of each Parent Material Contract that is not
in written form.
185. To Parent's knowledge, no event has occurred, and no
circumstance or condition exists, that (with or without notice or lapse of time)
will, or could reasonably be expected to, (i) result in a breach or
violation of, or default under, any material terms of any Parent Material
Contract, (ii) give any entity the right to declare a default, seek damages
or exercise any other remedy under any Parent Material Contract, (iii) give
any entity the right to accelerate the maturity or performance of any Parent
Material Contract or (iv) give any entity the right to cancel, terminate or
modify any Parent Material Contract.
186. Environmental Matters.
187. Parent and each Parent Subsidiary (i) is in
compliance in all material respects with all applicable Environmental Laws,
(ii) holds all material Environmental Permits necessary to conduct Parent's
or each Parent Subsidiary's business and (iii) is in compliance with their
respective Environmental Permits.
188. Neither Parent nor any Parent Subsidiary has released
and, to the knowledge of Parent, no other person has released Hazardous
Materials on any real property owned or leased by Parent or any Parent
Subsidiary or, during their ownership or occupancy of such property, on any
property formerly owned or leased by Parent or any Parent Subsidiary.
189. Neither Parent nor any Parent Subsidiary has received any
written request for information, or been notified that it is a potentially
responsible party, under CERCLA or any similar Law of any state, locality or any
other jurisdiction.
190. To the knowledge of Parent and Merger Sub, neither Parent
nor any Parent Subsidiary has entered into or agreed to any consent decree or
order or is subject to any judgment, decree or judicial order relating to
compliance with Environmental Laws, Environmental Permits or the investigation,
sampling, monitoring, treatment, remediation, removal or cleanup of Hazardous
Materials and, to the knowledge of Parent, no investigation, litigation or other
proceeding is pending or threatened in writing with respect thereto.
191. None of the real property currently or formerly owned or
leased by Parent or any Parent Subsidiary is listed or, to the knowledge of
Parent, proposed to be listed on the "National Priorities List" under
CERCLA, as updated through the date of this Agreement, or any similar list of
sites in the United States or any other jurisdiction requiring investigation or
cleanup.
192. Intellectual Property.
193. Each of Parent and the Parent Subsidiaries possesses
sufficient and legally enforceable rights (by ownership or license or otherwise)
with respect to all Intellectual Property (as defined below) necessary to
conduct their respective businesses, as previously or presently conducted,
without Infringement, except for such items as have yet to be conceived or
developed.  "Parent Intellectual Property" means all
Intellectual Property owned by or exclusively licensed to Parent or any Parent
Subsidiary.  With respect to patent rights, moral rights and Mark rights, the
representations and warranties of this Section 4.15(a) are made only to
Parent's and the Parent Subsidiaries' knowledge and without having conducted any
special investigation or patent or trademark search.
194. To the extent included in Parent Intellectual Property,
Section 4.15(b)(i) of the Parent Disclosure Schedule lists (by title,
number, jurisdiction and owner) all patents and patent applications; all
registered and unregistered Marks and Marks for which registration applications
are pending; and all registered and material unregistered copyrights and mask
works; and all other issuances, registrations, applications and the like with
respect to those or any other IP Rights (collectively, "Parent Scheduled
IP").  All items of Parent Scheduled IP (other than pending
applications) are valid, enforceable and subsisting to the extent such concepts
are applicable, and Company is not aware of any questions or challenges with
respect thereto.  All filings, registrations and related correspondence in
respect of Parent Scheduled IP have been provided to the Company.  No
cancellation, termination, expiration or abandonment of any item of Parent
Scheduled IP (except natural expiration or termination at the end of the full
possible term, including extensions and renewals) is anticipated by Parent or
any Parent Subsidiary.  Except as referenced in written documentation previously
provided to the Company (including without limitation file wrappers), neither
Parent nor any Parent Subsidiary is aware of any questions or challenges with
respect to the patentability of any claims in any pending patent application
included in Parent Intellectual Property.
195. Section 4.15(c)(i) of the Parent Disclosure Schedule
lists:  (i) all licenses, sublicenses and other agreements (written or
otherwise) to which Parent or a Parent Subsidiary is a party (or by which it or
any Parent Intellectual Property is bound or subject) and pursuant to which any
person has been or may be assigned, authorized to use, exercise or exploit
("Use"), granted any license, lien or encumbrance regarding, or
given access to any Parent Intellectual Property other than pursuant to (A)
written, signed, standard form  software licenses and support or maintenance
agreements, and (B) nondisclosure or confidentiality agreements, and (C)
agreements no longer in effect; and (ii) all licenses, sublicenses and other
agreements (written or otherwise) pursuant to which Parent or a Parent
Subsidiary has been or may be assigned, granted any license, authorized to Use
or incurred any obligation in connection with (A) any third party Intellectual
Property that has been or is incorporated or embodied in, or forms all or any
part of any previous, current or proposed product, service or Intellectual
Property offering of Parent or any Parent Subsidiary or (B) any Parent
Intellectual Property (other than agreements executed by employees and
contractors pursuant to Parent's or a Parent Subsidiary's standard form of
agreement), (iii) each agreement pursuant to which Parent or a Parent
Subsidiary has deposited or is required to deposit with an escrow agent or any
other person all or part of the source code for any product or service
previously or currently offered or under development by Parent or any Parent
Subsidiary (the "Parent Source Code") (other than such
agreements which are no longer in effect, if all Parent Source Code deposited
with the escrow agent has been returned to Parent or a Parent Subsidiary) and
(iv) all consulting or other agreements (written or otherwise) pursuant to which
Parent or a Parent Subsidiary either (A) provides services to any person or
(B) receives services from any person, other than such agreements pursuant to
which Parent or the Parent Subsidiary explicitly, in writing retains or is
assigned ownership of any Intellectual Property created pursuant to such
arrangement.  Except as disclosed on Section 4.15(c)(ii) of the Parent
Disclosure Schedule, neither Parent nor any of the Parent Subsidiaries has
entered into any agreement to indemnify, hold harmless or defend any other
person with respect to any assertion of Infringement or warranting the lack
thereof, other than indemnification provisions contained in standard forms of
product licenses, distribution agreements, reseller agreements, end user
licenses, or other transactions.  Any standard form of employee agreement,
consulting agreement, product license, distribution agreement, reseller
agreement, end user license, or other standard form of agreement has been
clearly identified as such and provided to the Company.
196. No event or circumstance has occurred or exists that
(with or without notice, consent or the lapse of time) could reasonably be
expected to result in, and neither the execution or delivery of this Agreement
nor the consummation of the transactions contemplated by this Agreement will
result in, (i) the breach or violation of any license, sublicense or other
agreement required to be listed in Section 4.15(c)(i) of the Parent Disclosure
Schedule, (ii) the loss or expiration of any material right or option by Parent
or any of the Parent Subsidiaries (or the gain thereof by any third party) under
any such license, sublicense or other agreement, or (iii) the release,
disclosure or delivery to any third party of any Parent Source Code.  Further,
each license, sublicense and agreement required to be listed on Section
4.15(c)(i) of the Parent Disclosure Schedule shall be considered, for purposes
of this Agreement, to be a "Parent Material Contract" (as such
term is defined and used elsewhere in this Agreement).
197. Except as set forth in Section 4.15(e) of the Parent
Disclosure Schedule, there is, to the knowledge of Parent and the Parent
Subsidiaries as of the date of this Agreement, no unauthorized Use or
disclosure, and no Infringement, of any Parent Intellectual Property by any
third party, including, without limitation, any employee or former employee of
Parent or any of the Parent Subsidiaries.  Except as set forth in Section
4.15(e) of the Parent Disclosure Schedule, neither Parent nor any Parent
Subsidiary has brought or threatened, at any time, any action, suit or
proceeding against any third party for any Infringement of any Parent
Intellectual Property or any material breach of any license, sublicense or
agreement involving Parent Intellectual Property.
198. Except as set forth in Section 4.15(f) of the Parent
Disclosure Schedule, Parent and the Parent Subsidiaries have taken reasonable
steps to protect and preserve the confidentiality of each item of Parent
Intellectual Property with respect to which Parent or any Parent Subsidiary
wishes to maintain confidentiality and which is not otherwise disclosed in
published patents or patent applications or registered copyrights
("Parent Confidential Information").  Except as set forth in
Section 4.15(f) of the Parent Disclosure Schedule, all use by and disclosure to
employees or others of Parent Confidential Information has been pursuant to the
terms of valid and binding written confidentiality and nonuse/restricted-use
agreements or agreements that contain similar obligations.  Except as set forth
in Section 4.15(f) of the Parent Disclosure Schedule, none of Parent or any of
the Parent Subsidiaries has disclosed or delivered to any third party, or
permitted the disclosure or delivery to any escrow agent or other third party,
any Parent Source Code.
199. Except as set forth in Section 4.15(g) of the Parent
Disclosure Schedule, Parent and the Parent Subsidiaries collectively own,
exclusively, all Intellectual Property that is incorporated or embodied in, or
that forms part of, any product or service previously offered or currently being
offered or developed by Parent or any Parent Subsidiary.  Without limiting the
generality of the foregoing, (i) no current or former employee or contractor of
Parent or any Parent Subsidiary has any right or interest to or in any such
Intellectual Property, and (ii) neither Parent nor any Parent Subsidiary
currently has any ongoing or future obligation to pay any license fee, royalty,
or other payment to any person with respect to the manufacturing, distribution,
modification, marketing, sale or license of any product or service previously
offered or currently being offered or developed by Parent or any Parent
Subsidiary.  Except as set forth in Section 4.15(g) of the Parent Disclosure
Schedule, each current and former employee and contractor of Parent or any
Parent Subsidiary has executed and delivered (and to Parent's knowledge is in
compliance with) an agreement in substantially the form of Parent's standard
Proprietary Information and Inventions Agreement (in the case of current or
former employees) or Consulting Agreement (in the case of a contractor), which
agreements provide valid written assignments to Parent or such Parent Subsidiary
of all title and rights to Intellectual Property that is incorporated or
embodied in, or that forms part of, any product or service previously offered or
currently being offered or developed by Parent or any Parent Subsidiary, except
for those current or former employees and contractors whose failure to execute
and deliver such an agreement has not and would not have a Parent Material
Adverse Effect.
200. Neither Parent nor any Parent Subsidiary has received any
communication alleging or suggesting that Parent or any Parent Subsidiary has
been or may be (whether in its past, current or proposed business or otherwise)
engaged in, liable for or contributing to any Infringement, nor does Parent or
any Parent Subsidiary have any reason to expect that any such communication will
be forthcoming.  To the knowledge of Parent and the Parent Subsidiaries, neither
Parent nor any Parent Subsidiary has ever, at any time, infringed,
misappropriated, or otherwise violated any IP Right of any other person, nor is
there any basis for a claim that Parent or any Parent Subsidiary has infringed,
misappropriated or otherwise violated any IP Right of any other person.
201. Except as set forth in Section 4.15(i) of the Parent
Disclosure Schedule, none of Parent or the Parent Subsidiaries is aware that any
of its employees or contractors is obligated under any agreement, commitment,
judgment, decree, order or otherwise that would conflict with the business of
Parent or any Parent Subsidiary or interfere with the use of his or her best
efforts to perform his or her duties for Parent and the Parent Subsidiaries.
202. All Parent Software is free of all viruses, worms, trojan
horses and other material known infections or intentionally harmful routines and
does not contain any bugs, errors, or problems of a material nature that, to
Parent's or any Parent Subsidiary's knowledge, could reasonably be expected to
disrupt its operation or have an adverse impact on the operation of other
software programs or operating systems.
203. Parent and the Parent Subsidiaries have obtained all
approvals from governmental entities and other regulatory bodies necessary for
exporting outside of the United States (by Parent, any Parent Subsidiary or any
of their distributors, resellers or customers) any software products previously
offered or currently being offered by Parent or any Parent Subsidiary and
importing any such products into any country in which they are or have been
distributed, sold or licensed for Use, and all such export and import approvals
in the United States and throughout the world are valid, current, and in full
force and effect.
204. Taxes.
205. All Tax returns, statements, reports, declarations and
other forms and documents (including without limitation estimated Tax returns
and reports and material information returns and reports) required to be filed
with any Tax Authority with respect to any Taxable period ending on or before
the Closing, by or on behalf of Parent or any Parent Subsidiary (collectively,
"Parent Tax Returns" and individually, a "Parent Tax
Return"), have been or will be completed and filed when due (including
any extensions of such due date) and all amounts shown due on such Parent Tax
Returns on or before the Effective Time have been or will be paid on or before
such date.  The Parent Balance Sheet (i) fully accrues all actual and
contingent liabilities for Taxes with respect to all periods through
September 30, 2001 and Parent has not and will not incur any Tax liability
in excess of the amount reflected (excluding any amount thereof that reflects
timing differences between the recognition of income for purposes of U.S. GAAP
and for Tax purposes) on the Parent Balance Sheet with respect to such periods,
and (ii) properly accrues in accordance with U.S. GAAP all material
liabilities for Taxes payable after September 30, 2001, with respect to all
transactions and events occurring on or prior to such date.  All information set
forth in the notes to the Parent Balance Sheet relating to Tax matters is true,
complete and accurate in all material respects.  Parent has not incurred any
material Tax liability since September 30, 2001 other than in the ordinary
course of business and Parent has made adequate provisions for all Taxes since
that date in accordance with U.S. GAAP on at least a quarterly basis.  The
adjusted basis of Parent's assets exceed the sum of its liabilities.
206. Parent has withheld and paid to the applicable financial
institution or Tax Authority all amounts required to be withheld.  To the best
knowledge of Parent, no Parent Tax Returns filed with respect to Taxable years
through the Taxable year ended December 31, 2001 in the case of the United
States, have been examined and closed.  Parent (or any member of any affiliated
or combined group of which Parent has been a member) has not granted any
extension or waiver of the limitation period applicable to any Parent Tax
Returns that is still in effect and there is no material claim, audit, action,
suit, proceeding, or (to the knowledge of Parent) investigation now pending or
threatened against or with respect to Parent in respect of any Tax or
assessment.  No notice of deficiency or similar document of any Tax Authority
has been received by Parent, and there are no liabilities for Taxes (including
liabilities for interest, additions to Tax and penalties thereon and related
expenses) with respect to the issues that have been raised (and are currently
pending) by any Tax Authority that could, if determined adversely to Parent,
materially and adversely affect the liability of Parent for Taxes.  There are no
liens for Taxes (other than for current Taxes not yet due and payable) upon the
assets of Parent.  Parent has never been a member of an affiliated group of
corporations, within the meaning of Section 1504 of the Code.  Parent is
not a party to any Tax exemption or other Tax-sharing agreement or subject to an
order of a foreign government, and the consummation of the Merger will not have
any adverse effect on the continued validity and effectiveness of any such Tax
exemption or other Tax-sharing agreement or order.  Neither Parent nor any
person on behalf of Parent has entered into or will enter into any agreement or
consent pursuant to the collapsible corporation provisions of
Section 341(f) of the Code (or any corresponding provision of state,
local or foreign income tax Law) or agreed to have Section 341(f)(2) of the
Code (or any corresponding provision of state, local or foreign income tax Law)
apply to any disposition of any asset owned by Parent.  None of the assets of
Parent is property that Parent is required to treat as being owned by any other
person pursuant to the so-called "safe harbor lease" provisions of
former Section 168(f)(8) of the Code.  None of the assets of Parent
directly or indirectly secures any debt the interest on which is tax exempt
under Section 103(a) of the Code.  None of the assets of Parent is
"tax-exempt use property" within the meaning of Section 168(h) of
the Code.  Parent has not made and will not make a deemed dividend election
under Treas. Reg. 1.1502-32(f)(2) or a consent dividend election under
Section 565 of the Code.  Parent has never been a party (either as a
distributing corporation, a distributed corporation or otherwise) to any
transaction intended to qualify under Section 355 of the Code or any
corresponding provision of state Law.  Parent has not participated in (and will
not participate in) an international boycott within the meaning of
Section 999 of the Code.  Parent does not have and has not had a permanent
establishment in any foreign country, as defined in any applicable Tax treaty or
convention between the United States of America and such foreign country and
Parent has not engaged in a trade or business within any foreign country.
Parent has never elected to be treated as an S-corporation under
Section 1362 of the Code or any corresponding provision of Federal or state
Law.  All material elections with respect to Parent's Taxes made during the
fiscal years ending December 31, 1998, 1999 and 2000 are reflected on the
Parent Tax Returns for such periods, copies of which have been provided to
Parent.  After the date of this Agreement, no material election with respect to
Taxes will be made without the prior written consent of the Company, which
consent will not be unreasonably withheld or delayed.  Parent is not party to
any joint venture, partnership, or other arrangement or contract which could be
treated as a partnership for Federal income tax purposes.  Parent is not
currently and never has been subject to the reporting requirements of
Section 6038A of the Code.  There is no agreement, contract or arrangement
to which Parent is a party that could, individually or collectively, result in
the payment of any amount that would not be deductible by reason of
Sections 280G (as determined without regard to Section 280G(b)(4)),
162 (other than 162(a)) or 404 of the Code.  Parent is not a party to any
Contract, nor does it have any obligations (current or contingent) to compensate
any person for excise taxes paid pursuant to Section 4999 of the Code.  Parent
is not a party to or bound by any Tax indemnity, Tax sharing or Tax allocation
agreement (whether written or unwritten or arising under operation of Federal
Law as a result of being a member of a group filing consolidated Parent Tax
Returns, under operation of certain state Laws as a result of being a member of
a unitary group, or under comparable Laws of other states or foreign
jurisdictions) that includes a party other than Parent nor does Parent owe any
amount under any such agreement.  Parent has previously provided or made
available to the Company true and correct copies of all income, franchise, and
Parent Tax Returns regarding sales tax, and, as reasonably requested by the
Company, prior to or following the date hereof, presently existing information
statements and reports.  Parent is not, and has not been, a United States real
property holding corporation (as defined in Section 897(c)(2) of the Code)
during the applicable period specified in Section 897(c)(1)(A)(ii) of the
Code.  Parent is not, and has not been, a United States real property holding
corporation (as defined in Section 897(c)(2) of the Code) during the applicable
period specified in Section 879(c)(1)(A)(ii) of the Code.  Other than by reason
of the Merger, Parent has not been and will not be required to include any
material adjustment in Taxable income for any Tax period (or portion thereof)
pursuant to Section 481 or 263A of the Code or any comparable provision
under state or foreign Tax Laws as a result of transactions, events or
accounting methods employed prior to the Merger.
207. As used in this Section 4.16, the term
"Parent" means Parent and any entity included in, or required under
U.S. GAAP to be included in, any of the Parent Financial
Statements.
208. Vote Required.  The only vote of Parent
stockholders required to approve the Share Issuance is the vote prescribed by
Marketplace Rule 4350 of the National Association of Securities Dealers, Inc.
(as such rule may be amended after the date hereof, the "NASD
Rule")(the "Parent Stockholder Approval").  The Parent
Stockholder Approval is the only vote of holders of any class or series of the
capital stock of Parent necessary for Parent to effect the Merger and the
transactions contemplated in this Agreement. The only vote of Parent
Stockholders required to approve the amendment and restatement of the Amended
and Restated Certificate of Incorporation of Parent renaming Parent as Captiva
Software Corporation (the "Parent Charter Amendment") is the
affirmative vote of the holders of at least a majority of the outstanding shares
of Parent Common Stock voting in favor of the approval of the Parent Charter
Amendment.
209. Assets; Absence of Liens and Encumbrances.
210. Neither Parent nor any of the Parent Subsidiaries owns
any real property.  Section 4.18 of the Parent Disclosure Schedule lists all
real property leases to which Parent or any Parent Subsidiary is a party and
each amendment thereto (all such leases, as amended, being the "Parent
Leases"), and with respect to each such lease, the aggregate monthly
rent payable thereunder and the expiration date thereof.  All such current
leases are in full force and effect, are valid and effective in accordance with
their respective terms, and there is not, under any of such leases, any existing
default or event of default (or event which with notice or lapse of time, or
both, would constitute a default) that would give rise to a material claim.
Neither Parent nor any of the Parent Subsidiaries have subleased or otherwise
granted rights of use or occupancy of any of the premises subject to such leases
to any other persons.  Other than leaseholds created under the real property
leases identified in Section 4.18(a) of the Parent Disclosure Schedule,
Parent and the Parent Subsidiaries have no leasehold interest in any real
property.
211. Parent and each Parent Subsidiary own, lease or have the
legal right to use all of the material assets, including, without limitation,
personal property (other than Intellectual Property, which is covered by
Section 4.15 hereof), used or intended to be used in the conduct of the
business of Parent or such Parent Subsidiary or otherwise owned, leased or used
by Parent or such Parent Subsidiary and, with respect to contract rights, is a
party to and enjoys the right to the benefits of all material contracts,
agreements and other arrangements used or intended to be used by Parent or such
Parent Subsidiary in or relating to the conduct of the business of Parent and
each Parent Subsidiary (all such properties, assets and contract rights,
together with the Parent Leases, being the "Parent Assets").
212. Parent and each Parent Subsidiary have good and
marketable title to, or, in the case of leased or subleased Parent Assets, valid
and subsisting leasehold interests in, all the Parent Assets, free and clear of
all Liens except for (x) Liens for current Taxes not yet due and payable,
and (y) Liens that have arisen in the ordinary course of business and that
do not (in any case or in the aggregate) materially detract from the value, or
materially interfere with the present or contemplated use, of the Parent Assets
subject thereto or affected thereby.  The equipment of Parent and the Parent
Subsidiaries used in the operations of their business is, taken as a whole, in
good operating condition and repair, ordinary wear and tear
excepted.
213. Certain Interests.  Except as disclosed in Parent
SEC Reports, no event has occurred that would be required to be reported
currently by Parent as a Certain Relationship or Related Transaction pursuant to
Item 404 of Regulation S-K promulgated under the Securities Act.
214. Insurance Policies.  True and complete copies of
all insurance policies to which Parent or any Parent Subsidiary is a party or is
a beneficiary or named insured such policies have been provided or made
available to the Company.  Except as set forth in Section 4.20 of the Parent
Disclosure Schedule, there have been no material claim or series of claims made
under such insurance policies within the past three years.  All premiums due on
such policies have been paid, and, to Parent's knowledge, Parent and each Parent
Subsidiary is otherwise in compliance with the terms of such policies.  Neither
Parent nor any Parent Subsidiary has failed to give any notice or present any
material claim under any such policy in a timely fashion, except where such
failure would not prejudice Parent's or any Parent Subsidiary's ability to make
such a claim.  Such insurance to the date hereof has been maintained in full
force and effect and not been canceled or changed, except to extend the maturity
dates thereof.  Neither Parent nor any Parent Subsidiary has any knowledge of
any actual or possible (i) cancellation or threatened termination of any
insurance policy, (ii) refusal of any coverage or rejection of any claim
under any insurance policy or (iii) material premium increase with respect
to any insurance policy.
215. Brokers.  No broker, finder or investment banker
(other than the Parent Financial Advisor (as defined in Section 4.27)) is
entitled to any brokerage, finder's or other fee or commission in connection
with the origination, negotiation or execution of this Agreement, the Merger or
the other transactions contemplated by this Agreement based upon arrangements
made by or on behalf of Parent or any Parent Subsidiary.
216. State Takeover Statutes.  The Board of Directors
of Parent has taken all action necessary to ensure that any restrictions on
business combinations contained in the DGCL will not apply to the Merger and the
other transactions contemplated by this Agreement.  No other "fair
price," "moratorium," "control share acquisition" or
other similar anti-takeover statute or regulation or any anti-takeover provision
in Parent's Certificate of Incorporation or Bylaws is, or at the Effective Time
will be, applicable to Parent, the shares of Parent Stock, the Merger or the
other transactions contemplated by this Agreement.
217. Customers and Suppliers. No customer who
individually accounted for more than 10% of Parent's consolidated gross revenues
during the fiscal years ended December 31, 1999 and 2000 and the most
recent fiscal quarter ended September 30, 2001 has, within the past 12
months, cancelled or otherwise terminated, or made any threat to cancel or
terminate, its relationship with Parent or any Parent Subsidiary, or decreased
materially its usage of Parent's or any Parent Subsidiary's services or
products.
218. Powers of Attorney.  Except for powers of attorney
regarding immaterial matters, there are no outstanding powers of attorney
executed on behalf of Parent or any Parent Subsidiary.
219. Offers.  Parent has suspended or terminated, and
has the legal right to terminate or suspend, all negotiations and discussions of
any acquisition, merger, consolidation or sale of all substantially all of the
assets of Parent and the Parent Subsidiaries with parties other than the
Company.
220. Books and Records.  The minute books and other
similar records of Parent and each Parent Subsidiary contain complete and
accurate records of all actions taken at any meetings of Parent's or each Parent
Subsidiary's stockholders, Board of Directors or any committee thereof and of
all written consents executed in lieu of the holder of any such meeting.  The
books and records of Parent and each Parent Subsidiary accurately reflect in all
material respects the assets, liabilities, business, financial condition and
results of operations of Parent and the Parent Subsidiaries and have been
maintained in accordance with good business and bookkeeping practices.
221. Opinion of Financial Advisor.  Parent has received
the written opinion of Pacific Crest Securities Inc. (the "Parent
Financial Advisor"), dated the date of this Agreement, to the effect
that, as of the date of this Agreement, the Exchange Ratio is fair to the Parent
stockholders from a financial point of view, a copy of which opinion will be
delivered to Parent promptly after the date of this Agreement.
222. Interim Operations of Merger Sub.  Merger Sub was
formed by Parent solely for the purpose of engaging in the transactions
contemplated by this Agreement, has engaged in no other business activities and
has conducted its operations only as contemplated by this Agreement.  Merger Sub
has no liabilities and, except for a subscription agreement pursuant to which
all of its authorized capital stock was issued to Parent, is not a party to any
agreement other than this Agreement and agreements with respect to the
appointment of registered agents and similar matters.
223. Rights Agreement.  Neither the execution, delivery
and performance of this Agreement and the Parent Voting Agreement, nor the
consummation of the Merger and the Share Issuance will result in or cause (i)
any person to become or be deemed to become an Acquiring Person within the
meaning, and pursuant to the terms, of that certain Rights Agreement, dated as
of September 9, 1997 between Parent (f/k/a Cornerstone Imaging, Inc.) and
EquiServe Trust Company, N.A., as rights agent (as has been amended from time to
time, the "Rights Agreement"), (ii) the occurrence of a Stock
Acquisition Date or a Distribution Date, in each case as defined in, and
pursuant to the terms of, the Rights Agreement, or (iii) the occurrence of
a Flip-in Event, as defined in, and pursuant to the terms of, the Rights
Agreement.
224. CONDUCT OF BUSINESSES PENDING
THE MERGER
225. Conduct of the Company Pending the Merger.
During the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement or the Effective Time (the
"Pre-Closing Period"), the Company agrees, and shall cause each
Subsidiary (except to the extent that Parent shall otherwise consent in
writing), to carry on its business in the usual, regular and ordinary course and
in substantially the same manner as previously conducted, to pay its debts and
Taxes when due, (subject to good faith disputes over such debts or Taxes), to
pay or perform other obligations when due and, to the extent consistent with
such business, use commercially reasonable efforts consistent with past
practices and policies to preserve intact its present business organization,
keep available the services of its present officers and key employees and
consultants and preserve its relationships with customers, suppliers,
distributors, licensors, licensees, and others having business dealings with it,
to the end that its goodwill and ongoing businesses would not be materially
impaired at the Effective Time.  The Company shall promptly notify Parent of any
event or occurrence not in the ordinary course of business of Company.
226. amend or otherwise change its Articles of Incorporation
or Bylaws or equivalent organizational documents;
227. issue, sell, pledge, dispose of, grant, encumber,
authorize or propose the issuance, sale, pledge, disposition, grant or
encumbrance of any shares of its capital stock of any class, or any options,
warrants, convertible securities or other rights of any kind to acquire any
shares of such capital stock or any other ownership interest (including, without
limitation, any phantom interest), of the Company or any Subsidiary, except (A)
pursuant to the terms of options, warrants or preferred stock outstanding on the
date of this Agreement, (B) the grant and exercise of new options to purchase
Company Common Stock during the Pre-Closing Period to any employee hired during
the Pre-Closing Period consistent with past practice up to  that number of
shares in the aggregate of Company Common Stock that will be exchangeable for
25,000 shares of Parent Common Stock in the Merger or (C) as disclosed in
Section 5.01(b) of the Company Disclosure Schedule;
228. sell, lease, license, pledge, grant, encumber or
otherwise dispose of any of its properties or assets which are material,
individually or in the aggregate, to its business, except in the ordinary course
of business, consistent with past practice;
229. declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to any
of its capital stock;
230. split, combine, subdivide, redeem or reclassify any of
its capital stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock, or
purchase or otherwise acquire, directly or indirectly, any shares of its capital
stock except from former employees, directors and consultants in accordance with
agreements providing for the repurchase of shares in connection with any
termination of service by such party;
231. acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) any interest or any assets in
any corporation, partnership, other business organization or any division
thereof;
232. institute or settle any Company Legal Proceeding
requiring a payment in excess of $25,000 individually or $75,000 in the
aggregate;
233. incur any indebtedness for borrowed money or issue any
debt securities or assume, guarantee or endorse, or otherwise as an
accommodation become responsible for, the obligations of any person, or make any
loans or advances;
234. authorize any capital expenditure in excess of $25,000,
individually or $75,000 in the aggregate;
235. enter into any lease or contract for the purchase or sale
of any property, real or personal except in the ordinary course of business,
consistent with past practice;
236. waive or release any material right or claim, except in
the ordinary course of business, consistent with past practice;
237. (i) increase, or agree to increase, the compensation
payable, or to become payable, to its officers or employees, except for
increases in accordance with past practice in salaries or wages of its employees
who are not its officers, (ii) grant any severance or termination pay to, or
enter into any employment or severance agreement with, any of its directors,
officers or other employees, (iii) establish, adopt, enter into or amend any
collective bargaining, bonus, profit sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other Company Plan, agreement, trust,
fund, policy or arrangement for the benefit of any director, officer or
employee, or (iv) make (or become obligated to make) any bonus payments to any
of its officers or employees unless such payments are reflected in the Company
Balance Sheet; provided, however, that the foregoing provisions of
this subsection shall not apply to any amendments to employee benefit plans
described in Section 3(3) of ERISA that may be required by Law;
238. accelerate, amend or change the period of exercisability
or the vesting schedule of restricted stock or Company Options granted under any
option plan, employee stock plan or other agreement or authorize cash payments
in exchange for any Company Options granted under any of such plans except as
specifically required by the terms of such plans or any such agreement or any
related agreement in effect as of the date of this Agreement and disclosed in
the Company Disclosure Schedule;
239. except in the ordinary course of business and consistent
with past practice, extend any offers of employment to potential employees,
consultants or independent contractors with an annual salary in excess of
$100,000 or terminate any existing employment relationships without
cause;
240. amend or terminate any Company Material
Contract;
241. enter into, amend or terminate any contract, agreement,
commitment or arrangement that, if fully performed, would not be permitted under
this Section 5.01;
242. other than in the ordinary course of business consistent
with past practice, enter into any licensing, distribution, OEM agreements,
sponsorship, advertising, merchant program or other similar contracts,
agreements or obligations that may not be cancelled without penalties by the
Company upon notice of 30 days or less;
243. enter into any contract or agreement material to the
business, results of operations or financial condition of the Company, other
than sales contracts in the ordinary course of business;
244. take any action, other than reasonable and usual action
in the ordinary course of business, consistent with past practice, with respect
to accounting policies, principles or procedures;
245. make or change any material Tax or accounting election,
change any annual accounting period, adopt or change any accounting method, file
any amended Company Tax Return, enter into any closing agreement, settle any Tax
claim or assessment relating to the Company or any Subsidiary, surrender any
right to claim refund of Taxes, consent to any extension or waiver of the
limitation period applicable to any Tax claim or assessment relating to the
Company or any Subsidiary, or take any other action or omit to take any action
that would have the effect of increasing the Tax liability of the Company or any
Subsidiary or Parent;
246. (i) sell, assign, lease, terminate, abandon,
transfer, permit to be encumbered or otherwise dispose of or grant any security
interest in and to any item of the Company Intellectual Property, in whole or in
part, (ii) grant any license with respect to any Company Intellectual
Property, other than a license of Company Software granted to customers of the
Company or any Subsidiary to whom the Company or any Subsidiary licenses such
Company Software in the ordinary course of business, (iii) develop, create
or invent any Intellectual Property jointly with any third party, or
(iv) disclose, or allow to be disclosed, any confidential Company
Intellectual Property, unless such Company Intellectual Property is subject to a
confidentiality or non-disclosure covenant protecting against disclosure
thereof;
247. revalue any of its assets, including writing down the
value of inventory or writing off notes or accounts receivable;
248. take any action or fail to take any action that would
cause there to be a Company Material Adverse Effect;
249. permit any insurance policy naming it as a beneficiary or
a loss payable payee to be cancelled or terminated without notice to
Parent;
250. write off as uncollectible, or establish any
extraordinary reserve with respect to, any account receivable or other
indebtedness in excess of $25,000 with respect to a single matter, or in excess
of $50,000 in the aggregate; or
251. take, or agree in writing or otherwise to take any of the
actions described in subsections (a) through (y) above, or any action which
is reasonably likely to cause any of the conditions set forth in Section 7.01 or
Section 7.02 not to be able to be satisfied prior to the Termination
Date.
252. Company Litigation.  The Company shall notify
Parent in writing promptly after learning of any claim, action, suit,
arbitration, mediation, proceeding or investigation by or before any court,
arbitrator or arbitration panel, board or other Governmental Entity initiated by
it or against it, or known by the Company to be threatened against the Company
or any of its officers, directors, employees or stockholders in their capacity
as such.
253. Company Notification of Certain Matters.
The Company shall give prompt notice to Parent, of (i) the occurrence, or non-
occurrence, of any event the occurrence, or non-occurrence, of which would be
likely to cause (x) any representation or warranty contained in this
Agreement to be untrue or inaccurate such that the condition contained in
Section 7.02(a) would not be satisfied or (y) any covenant, condition or
agreement contained in this Agreement not to be complied with or satisfied such
that the condition contained in Section 7.02(b) would not be satisfied and
(ii) any failure or inability of the Company to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder such that the condition contained in Section 7.02(b) would not be
satisfied; provided, however, that the delivery of any notice
pursuant to this Section 5.03 shall not limit or otherwise affect the
remedies available hereunder to Parent.
254. Conduct of Business by Parent and the Parent
Subsidiaries Pending the Merger.  During the Pre-Closing Period, Parent
agrees, and shall cause each Parent Subsidiary (except to the extent that the
Company shall otherwise consent in writing), to carry on its business in the
usual, regular and ordinary course and in substantially the same manner as
previously conducted, to pay its debts and Taxes when due, (subject to good
faith disputes over such debts or Taxes), to pay or perform other obligations
when due and, to the extent consistent with such business, use all reasonable
efforts consistent with past practices and policies to preserve intact its
present business organization, keep available the services of its present
officers and key employees and consultants and preserve its relationships with
customers, suppliers, distributors, licensors, licensees, and others having
business dealings with it, to the end that its goodwill and ongoing businesses
would be unimpaired at the Effective Time.  Parent shall promptly notify the
Company of any event or occurrence not in the ordinary course of business of
Parent.
255. amend or otherwise change its Certificate of
Incorporation or Bylaws or equivalent organizational documents;
256. issue, sell, pledge, dispose of, grant, encumber,
authorize or propose the issuance, sale, pledge, disposition, grant or
encumbrance of any shares of its capital stock of any class, or any options,
warrants, convertible securities or other rights of any kind to acquire any
shares of such capital stock or any other ownership interest (including, without
limitation, any phantom interest), of Parent or any Parent Subsidiary, except
(A) pursuant to the terms of options, warrants or preferred stock outstanding on
the date of this Agreement or (B) the grant and exercise of new options to
purchase Parent Common Stock during the Pre-Closing Period to any employee hired
during the Pre-Closing Period consistent with past practice up to  25,000 shares
of Parent Common Stock.
257. sell, lease, license, pledge, grant, encumber or
otherwise dispose of any of its properties or assets which are material,
individually or in the aggregate, to its business, except in the ordinary course
of business, consistent with past practice;
258. declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to any
of its capital stock;
259. split, combine, subdivide, redeem or reclassify any of
its capital stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock, or
purchase or otherwise acquire, directly or indirectly, any shares of its capital
stock except from former employees, directors and consultants in accordance with
agreements providing for the repurchase of shares in connection with any
termination of service by such party;
260. acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) any interest or any assets in
any corporation, partnership, other business organization or any division
thereof;
261. institute or settle any Parent Legal Proceeding requiring
a payment of $25,000 individually or $75,000 in the aggregate;
262. incur any indebtedness for borrowed money or issue any
debt securities or assume, guarantee or endorse, or otherwise as an
accommodation become responsible for, the obligations of any person, or make any
loans or advances;
263. authorize any capital expenditure in excess of $25,000,
individually or $75,000 in the aggregate;
264. enter into any lease or contract for the purchase or sale
of any property, real or personal except in the ordinary course of business,
consistent with past practice;
265. waive or release any material right or claim, except in
the ordinary course of business, consistent with past practice;
266. (i) increase, or agree to increase, the compensation
payable, or to become payable, to its officers or employees, except for
increases in accordance with past practice in salaries or wages of its employees
who are not its officers, (ii) grant any severance or termination pay to, or
enter into any employment or severance agreement with, any of its directors,
officers or other employees, (iii) establish, adopt, enter into or amend any
collective bargaining, bonus, profit sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other Parent Plan, agreement, trust, fund,
policy or arrangement for the benefit of any director, officer or employee, or
(iv) make (or become obligated to make) any bonus payments to any of its
officers or employees unless such payments are reflected in the Parent Balance
Sheet; provided, however, that the foregoing provisions of this
subsection shall not apply to any amendments to employee benefit plans described
in Section 3(3) of ERISA that may be required by Law;
267. accelerate, amend or change the period of exercisability
or the vesting schedule of restricted stock or Parent Options granted under any
option plan, employee stock plan or other agreement or authorize cash payments
in exchange for any Parent Options granted under any of such plans except as
specifically required by the terms of such plans or any such agreement or any
related agreement in effect as of the date of this Agreement and disclosed in
the Parent Disclosure Schedule;
268. extend any offers of employment to potential employees,
consultants or independent contractors with an annual salary in excess of
$100,000 or terminate any existing employment relationships without
cause;
269. amend or terminate any Parent Material Contract;
270. enter into, amend or terminate any contract, agreement,
commitment or arrangement that, if fully performed, would not be permitted under
this Section 5.04;
271. other than in the ordinary course of business consistent
with past practice, enter into any licensing, distribution, OEM agreements,
sponsorship, advertising, merchant program or other similar contracts,
agreements or obligations that may not be cancelled without penalties by the
Company upon notice of 30 days or less;
272. enter into any contract or agreement material to the
business, results of operations or financial condition of Parent, other than
sales Contracts in the ordinary course of business;
273. take any action, other than reasonable and usual action
in the ordinary course of business, consistent with past practice, with respect
to accounting policies, principles or procedures;
274. make or change any material Tax or accounting election,
change any annual accounting period, adopt or change any accounting method, file
any amended Parent Tax Return, enter into any closing agreement, settle any Tax
claim or assessment relating to Parent or any Parent Subsidiary, surrender any
right to claim refund of Taxes, consent to any extension or waiver of the
limitation period applicable to any Tax claim or assessment relating to Parent
or any Parent Subsidiary, or take any other action or omit to take any action
that would have the effect of increasing the Tax liability of Parent;
275. (i) sell, assign, lease, terminate, abandon,
transfer, permit to be encumbered or otherwise dispose of or grant any security
interest in and to any item of the Parent Intellectual Property, in whole or in
part, (ii) grant any license with respect to any Parent Intellectual
Property, other than a license of Parent Software granted to customers of Parent
or any Parent Subsidiary to whom Parent or any Parent Subsidiary licenses such
Parent Software in the ordinary course of business, (iii) develop, create
or invent any Intellectual Property jointly with any third party, or
(iv) disclose, or allow to be disclosed, any confidential Parent
Intellectual Property, unless such Parent Intellectual Property is subject to a
confidentiality or non-disclosure covenant protecting against disclosure
thereof;
276. revalue any of its assets, including writing down the
value of inventory or writing off notes or accounts receivable;
277. take any action or fail to take any action that would
cause there to be a Parent Material Adverse Effect;
278. permit any insurance policy naming it as a beneficiary or
a loss payable payee to be cancelled or terminated without notice to
Parent;
279. write off as uncollectible, or establish any
extraordinary reserve with respect to, any account receivable or other
indebtedness in excess of $25,000 with respect to a single matter, or in excess
of $50,000 in the aggregate; or
280. take, or agree in writing or otherwise to take, or
intentionally omit to take, any of the actions described in subsections (a)
through (y) above, or any action which is reasonably likely to cause any of the
conditions set forth in Section 7.01 or Section 7.02 not to be able to be
satisfied prior to the Termination Date.
281. Parent Litigation.  Parent shall notify the
Company in writing promptly after learning of any claim, action, suit,
arbitration, mediation, proceeding or investigation by or before any court,
arbitrator or arbitration panel, board or other Governmental Entity initiated by
it or against it, or known by Parent to be threatened against Parent or any of
its officers, directors, employees or stockholders in their capacity as
such.
282. Parent Notification of Certain Matters.  Parent
shall give prompt notice to the Company, of (i) the occurrence, or non-
occurrence, of any event the occurrence, or non-occurrence, of which would be
likely to cause (x) any representation or warranty contained in this
Agreement to be untrue or inaccurate such that the condition contained in
Section 7.01(a) would not be satisfied or (y) any covenant, condition or
agreement contained in this Agreement not to be complied with or satisfied such
that the condition contained in Section 7.01(b) would not be satisfied and
(ii) any failure or inability of Parent to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder such that the condition contained in Section 7.01(b) would not be
satisfied; provided, however, that the delivery of any notice
pursuant to this Section 5.06 shall not limit or otherwise affect the
remedies available hereunder to the Company.
283. ADDITIONAL
AGREEMENTS
284. Registration Statement; Joint Proxy
Statement.
285. As promptly as practicable after the execution of this
Agreement, (i) Parent and the Company shall prepare and Parent shall file
with the SEC a joint proxy statement (together with any amendments thereof or
supplements thereto, the "Joint Proxy Statement") relating to
the respective meetings of the Company shareholders (the "Company
Shareholders' Meeting") to be held to consider approval of the Company
Charter Amendment, the Merger and this Agreement (including the principal terms
hereof) and of the Parent stockholders (the "Parent Stockholders'
Meeting") to be held to consider approval of the Share Issuance and the
Parent Charter Amendment and (ii) Parent shall prepare and file with the SEC a
registration statement on Form S-4 (together with all amendments and supplements
thereto, the "Registration Statement") in which the Joint
Proxy Statement shall be included as part of the prospectus, in connection with
the registration under the Securities Act of the Parent Shares to be issued to
the shareholders of the Company pursuant to the Merger.  Each of Parent and the
Company shall use its reasonable best efforts to cause the Registration
Statement to become effective as promptly as practicable, and prior to the
effective date of the Registration Statement. Prior to the Effective Time,
Parent shall use its reasonable best efforts to obtain all applicable approvals
needed to ensure that the Parent Common Stock to be issued in the Merger will be
registered or qualified as may be required under the securities law of every
jurisdiction of the United States in which any registered holder of Company
Shares has an address of record on the record date for determining the
shareholders entitled to notice of and to vote at the Company Shareholders'
Meeting.  Each of Parent and the Company shall furnish all information
concerning itself as the other may reasonably request in connection with such
actions and the preparation of the Registration Statement and Joint Proxy
Statement.  As promptly as practicable, but in no event later than the third
business day, after the Registration Statement shall have become effective, each
of Parent and the Company shall mail or cause to be mailed the Joint Proxy
Statement to their respective stockholders.  The Registration Statement shall
register for resale the shares of Parent Common Stock received in the Merger by
each affiliate (within the meaning of Rule 145 of the Securities Act) of the
Company that is not an affiliate (within the meaning of Rule 144 of the
Securities Act) of Parent immediately following the Effective Time, and shall
include the information required by Item 7 of Form S-4 and Item 507 of
Regulation S-K under the Securities Act for the benefit of such affiliates as
selling stockholders of the number of shares of Parent Common Stock received in
the Merger.  If required by applicable Legal Requirements after the Effective
Time, Parent shall file a post-effective amendment on Form S-3 to the
Registration Statement (the "S-3 Amendment") which shall
include a resale prospectus for the selling stockholders of the number of shares
of Parent Common Stock received by them in the Merger, and Parent shall keep the
S-3 Amendment effective until the earlier of one year after the Effective Time
or the date of final sale by the selling stockholders of all shares of Parent
Common Stock registered on the S-3 Amendment.
286. Subject to paragraph (c) of this Section 6.01, the Joint
Proxy Statement shall include the unanimous recommendation of the Board of
Directors of the Company to the shareholders of the Company to vote in favor of
approving the Company Charter Amendment, this Agreement (including the principal
terms hereof) and the Merger (the "Company Board
Recommendation") and neither the Board of Directors of the Company nor
any committee thereof shall withhold, withdraw, amend, modify or change, or
propose or resolve to withhold, withdraw, amend, modify or change, in each case
in a manner adverse to Parent, the Company Board Recommendation.  For purposes
of this Agreement, the Company Board Recommendation shall be deemed to have been
modified in a manner adverse to Parent if such recommendation shall no longer be
unanimous.
287. Prior to the approval of this Agreement and the approval
of the Merger by the requisite vote of the shareholders of the Company, nothing
in this Agreement shall prevent the Company's Board of Directors from
withholding, withdrawing, amending, modifying or changing the Company Board
Recommendation if (i) a Company Superior Proposal (as defined in Section 6.05(c)
below) is made to the Company and is not withdrawn, (ii) the Company shall
have promptly, but in no event more than 24 hours after receiving such Company
Superior Proposal, provided written notice to Parent advising Parent that the
Company has received a Company Superior Proposal, specifying the terms and
conditions of such Company Superior Proposal in reasonable detail and
identifying the person or entity making such Company Superior Proposal (a
"Notice of Company Superior Proposal"), (iii) Parent shall not
have, within five business days of Parent's receipt of the Notice of Company
Superior Proposal, made an offer that the Company's Board of Directors by a
majority vote determines in its good faith judgment to be at least as favorable
to the Company and its shareholders as such Company Superior Proposal (it being
agreed that the Company's Board of Directors shall convene a meeting to consider
any such offer by Parent promptly following the receipt thereof), (iv) the Board
of Directors of the Company concludes in good faith, after consultation with its
outside legal counsel, that, in light of such Superior Proposal, the failure to
withhold, withdraw, amend, modify or change such recommendation would create a
substantial risk of liability for breach of its fiduciary obligations to the
Company and its shareholders under applicable Law and (v) the Company shall not
have violated any of the restrictions set forth in Section 6.05 and shall have
complied with this Section 6.01(c).  The Company shall provide Parent with
reasonable advance notice of any meeting of the Company's Board of Directors
(provided that in no event shall such notice be given less than 36 hours
prior to any such meeting) at which the Company's Board of Directors is
reasonably expected to consider any Company Acquisition Transaction (as defined
in Section 6.05(b) below).  Subject to applicable Law, nothing contained in this
Section 6.01(c) shall limit the Company's obligation to convene and hold the
Company Shareholders' Meeting (regardless of whether the Company Board
Recommendation shall have been withheld, withdrawn, amended, modified or
changed).
288. Subject to paragraph (e) of this Section 6.01, the Joint
Proxy Statement shall include the unanimous recommendation of the Board of
Directors of Parent to the stockholders of Parent to vote in favor of the Share
Issuance and the Parent Charter Amendment (the "Parent Board
Recommendation") and neither the Board of Directors of Parent nor any
committee thereof shall withhold, withdraw, amend, modify or change, or propose
or resolve to withhold, withdraw, amend, modify or change, in each case in a
manner adverse to the Company, the Parent Board Recommendation.  For purposes of
this Agreement, such recommendation of the Board of Directors shall be deemed to
have been modified in a manner adverse to the Company if such recommendation
shall no longer be unanimous.
289. Prior to the adoption and approval of this Agreement and
the approval of the Merger by the requisite vote of the stockholders of Parent,
nothing in this Agreement shall prevent the Parent's Board of Directors from
withholding, withdrawing, amending, modifying or changing the Parent Board
Recommendation if (i) a Parent Superior Proposal (as defined in Section
6.06(c) below) is made to Parent and is not withdrawn, (ii) Parent shall have
promptly, but in no event more than 24 hours after receiving such Company
Superior Proposal, provided written notice to the Company advising the Company
that Parent has received a Parent Superior Proposal, specifying the terms and
conditions of such Parent Superior Proposal in reasonable detail and identifying
the person or entity making such Parent Superior Proposal (a "Notice of
Parent Superior Proposal"), (iii) the Company shall not have,
within five business days of the Company's receipt of the Notice of Parent
Superior Proposal, made an offer that the Parent's Board of Directors by a
majority vote determines in its good faith judgment (based on the written advice
of a reputable financial advisor) to be at least as favorable to Parent and its
stockholders as such Parent Superior Proposal (it being agreed that the Parent's
Board of Directors shall convene a meeting to consider any such offer by the
Company promptly following the receipt thereof), (iv) the Board of Directors of
Parent concludes in good faith, after consultation with its outside legal
counsel, that, in light of such Parent Superior Proposal, the failure to
withhold, withdraw, amend, modify or change such recommendation would create a
substantial risk of liability for breach of its fiduciary obligations to Parent
and its stockholders under applicable Law and (v) Parent shall not have violated
any of the restrictions set forth in Section 6.06 and shall have complied with
this Section 6.01(e). Parent shall provide the Company with reasonable advance
notice of any meeting of the Parent's Board of Directors at which the Parent's
Board of Directors (provided that in no event shall such notice be given
less than 36 hours prior to any such meeting) is reasonably expected to consider
any Parent Acquisition Transaction (as defined in Section 6.06(b) below).
Subject to applicable Law, nothing contained in this Section 6.01(e) shall limit
the Parent's obligation to convene and hold the Parent Stockholders' Meeting
(regardless of whether the Parent Board Recommendation shall have been withheld,
withdrawn, amended, modified or changed).
290. Subject to Sections 6.01(c) and (e) with respect to the
Company Board Recommendation or the Parent Board Recommendation, no amendment or
supplement to the Joint Proxy Statement or the Registration Statement will be
made by Parent or the Company without the approval of the other party (such
approval not to be unreasonably withheld or delayed).  Each of Parent and the
Company will advise the other, promptly after it receives notice thereof, of the
time the SEC has issued formal comments to the Registration Statement, of the
time at which the Registration Statement has become effective or any supplement
or amendment has been filed, of the issuance of any stop order, of the
suspension of the qualification of the Parent Shares issuable in connection with
the Merger for offering or sale in any jurisdiction, or of any request by the
SEC for amendment of the Joint Proxy Statement or the Registration Statement or
comments thereon and responses thereto or requests by the SEC for additional
information.
291. The information supplied by Parent for inclusion in the
Registration Statement and the Joint Proxy Statement shall not, at (i) the time
the Registration Statement is declared effective, (ii) any time the Joint Proxy
Statement is mailed to the stockholders of the Company and/or Parent,
(iii) the time of the Company Shareholders' Meeting, (iv) the time of
the Parent Stockholders' Meeting, and (v) the Effective Time, contain any untrue
statement of a material fact or fail to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.  If, at any time
prior to the Effective Time, any event or circumstance relating to Parent or any
Parent Subsidiary, or their respective officers or directors, that should be set
forth in an amendment or a supplement to the Registration Statement or Joint
Proxy Statement is discovered by Parent, Parent shall promptly inform the
Company.  All documents that Parent is responsible for filing with the SEC in
connection with the Merger or the other transactions contemplated by this
Agreement will comply as to form and substance in all material respects with the
applicable requirements of the Securities Act and the Exchange Act.
292. The information supplied by the Company for inclusion in
the Registration Statement and the Joint Proxy Statement shall not, at (i) the
time the Registration Statement is declared effective, (ii) any time the Joint
Proxy Statement is mailed to the stockholders of the Company and/or Parent,
(iii) the time of the Company Shareholders' Meeting, (iv) the time of the
Parent Stockholders' Meeting and (v) the Effective Time, contain any untrue
statement of a material fact or fail to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.  If, at any time
prior to the Effective Time, any event or circumstance relating to the Company
or any Company Subsidiary, or their respective officers or directors, that
should be set forth in an amendment or a supplement to the Registration
Statement or Joint Proxy Statement is discovered by the Company, the Company
shall promptly inform Parent.  All documents that the Company is responsible for
filing with the SEC in connection with the Merger or the other transactions
contemplated by this Agreement will comply as to form and substance in all
material respects with the applicable requirements of the Securities Act and the
Exchange Act.
293. At or prior to the filing of the Form S-4 Registration
Statement, Parent, Merger Sub and the Company shall execute and deliver to
Gunderson Dettmer and Cooley Godward certificates as contemplated in Section
6.09 of this Agreement.  At the Effective Time, Parent, Merger Sub and the
Company shall each confirm to Gunderson Dettmer and Cooley Godward the accuracy
and completeness as of the Effective Time of the certificates delivered pursuant
to the immediately preceding sentence.  Following delivery of such certificates,
each of Parent and the Company shall use its reasonable efforts to cause
Gunderson Dettmer and Cooley Godward, respectively, to deliver to it a tax
opinion satisfying the requirements of Item 601 of Regulation S-K promulgated
under the Securities Act.  In rendering such opinions, each of such counsel
shall be entitled to rely of the certificates referred to in this Section
6.02(i).
294. Company Shareholders' Meeting.  The Company shall
(i) call and hold the Company Shareholders' Meeting as promptly as practicable
for the purpose of voting upon the approval of the Company Charter Amendment,
this Agreement (including the principal terms hereof) and the Merger; it
being expressly understood that the shareholder approval of the Merger and
the shareholder approval of the Company Charter Amendment shall be contingent
upon each other, (ii) use its reasonable best efforts to hold the Company
Shareholders' Meeting as soon as practicable after the date on which the
Registration Statement becomes effective and (iii) shall in any event hold such
Company Shareholders' Meeting within 45 days after the date on which the
Registration Statement becomes effective.  The Company shall use its reasonable
best efforts to solicit from its shareholders proxies in favor of the approval
of the Merger and this Agreement (including the principal terms hereof), and
shall take all other commercially reasonable action necessary or advisable to
secure the vote or consent of stockholders required by the CGCL, to obtain such
approvals, in each case in compliance with applicable Laws.
295. Parent Stockholders' Meeting.  Parent shall (i)
call and hold the Parent Stockholders' Meeting as promptly as practicable for
the purpose of obtaining the approval of the Share Issuance and the Parent
Charter Amendment by the Parent stockholders, (ii) use its reasonable best
efforts to hold the Parent Stockholders' Meeting as soon as practicable after
the date on which the Registration Statement becomes effective and (iii) shall
in any event hold such Parent Stockholders' Meeting within 45 days after the
date on which the Registration Statement becomes effective.  Parent shall use
its reasonable best efforts to solicit from its stockholders proxies in favor of
the Share Issuance and the Parent Charter Amendment, and shall take all other
commercially reasonable action necessary or advisable to secure the vote or
consent of stockholders required by the NASD Rule, to obtain such approval in
compliance with applicable Laws.
296. Access to Information; Confidentiality; Legal
Proceedings
297. Except as required pursuant to any confidentiality
agreement or similar agreement or arrangement to which Parent or the Company or
any of their subsidiaries is a party or pursuant to applicable Law, from the
date of this Agreement to the Effective Time, each of Parent and the Company
shall (and shall cause their respective subsidiaries to): (i) provide to
the other (and its officers, directors, employees, subsidiaries, accountants,
consultants, legal counsel, investment bankers, advisors, agents and other
representatives, collectively, "Representatives") access at
reasonable times upon prior notice to the officers, employees, agents,
properties, offices and other facilities of it and its subsidiaries and to the
books and records thereof and (ii) furnish promptly such information
concerning the business, properties, contracts, assets, liabilities, personnel
and other aspects of it and its subsidiaries as the other party or its
Representatives may reasonably request.
298. The parties shall comply with, and shall cause their
respective Representatives to comply with, all of their respective obligations
under the Non-Disclosure Agreement, dated August 16, 2001, as amended (the
"Confidentiality Agreement"), between the Company and
Parent.
299. No investigation pursuant to this Section 6.04 shall
affect any representation or warranty in this Agreement or any condition to the
obligations of the parties hereto to consummate the Merger.
300. Each of the Company and Parent shall (1) give the other
party prompt notice of the commencement or threat of commencement of any suit,
action, investigation or proceeding (each a "Legal Proceeding")
by or before any Person or Governmental Body with respect to the Merger or any
of the other transactions contemplated by this Agreement once such party has
knowledge of any such Legal Proceeding, (2) keep the other party informed as to
the status of any such Legal Proceeding or threat, and (3) promptly inform the
other party of any communication to or from such Person or any Governmental Body
regarding the Merger. Except as may be prohibited by any Governmental Body or by
any applicable Laws, the Company and Parent will consult and cooperate with one
another, and will consider in good faith the views of one another, in connection
with any analysis, appearance, presentation, memorandum, brief, argument,
opinion or proposal made or submitted in connection with any Legal Proceeding
relating to the Merger or any of the other transactions contemplated by this
Agreement.  In addition, except (i) as may be prohibited by any Governmental
Body or by any applicable Laws or (ii) as could be reasonably expected to limit
or restrict either party's ability to claim that any information is subject to
the attorney-client privilege, in connection with any Legal Proceeding under or
relating to the Merger or any of the other transactions contemplated by this
Agreement, each of the Company and Parent will permit authorized Representatives
of the other party to be present at each meeting or conference relating to any
such Legal Proceeding and to have access to and be consulted in connection with
any document, opinion or proposal made or submitted to any Governmental Body in
connection with any such Legal Proceeding.
301. No
Company Solicitation of Transactions.
302. The Company will not, directly or indirectly, and will
instruct its Representatives not to, directly or indirectly, solicit, initiate
or encourage (including by means of furnishing nonpublic information), or take
any other action to facilitate, any inquiries or the making of any proposal or
offer (including, without limitation, any proposal or offer to its stockholders)
that constitutes, or could reasonably be expected to lead to, any Company
Acquisition Transaction (as defined below), or enter into or maintain or
continue discussions or negotiate with any person or entity in furtherance of
such inquiries or to obtain a Company Acquisition Transaction, or agree to or
endorse any Company Acquisition Transaction, or authorize or permit any of its
Representatives to take any such action.  If any proposal or offer, or any
inquiry or contact with any person with respect thereto, regarding a Company
Acquisition Transaction is made, the Company shall notify Parent within 24 hours
of the receipt thereof and inform Parent as to the material details of any such
proposal, offer, inquiry or contact, including, without limitation, the identity
of the party making any such proposal, offer, inquiry or contact, and, if in
writing, promptly deliver or cause to be delivered to Parent a copy of such
proposal, offer, inquiry or contact and any other written material relating
thereto.  The Company immediately shall cease and cause to be terminated all
existing discussions or negotiations with any parties conducted heretofore with
respect to a Company Acquisition Transaction.  The Company shall not release any
third party (other than Parent) from, or waive any provision of, any
confidentiality or standstill agreement to which it is a party and shall use its
reasonable best efforts to enforce each such arrangement at the request of
Parent.  Notwithstanding anything to the contrary in this Section 6.05, the
Company's Board of Directors may furnish information to, and enter into
discussions with, a person who has made (and has not withdrawn) an unsolicited,
written, bona fide proposal or offer regarding a Company Acquisition Transaction
if the Company's Board of Directors has (i) reasonably concluded after
consultation with a reputable financial advisor that such proposal or offer
could reasonably be expected to lead to a Company Superior Proposal (as defined
below), (ii) reasonably concluded, after consultation with its outside
legal counsel, that, in light of such Company Superior Proposal, the failure to
furnish such information or enter into discussions would create a substantial
risk of liability for breach of its fiduciary obligations to the Company and its
stockholders under applicable Law, (iii) provided written notice to Parent of
its intent to furnish information or enter into discussions with such person at
least three business days prior to taking any such action and (iv) obtained from
such person an executed confidentiality agreement on terms no less favorable to
the Company than those contained in the Non-Disclosure Agreement;
provided, however, that no information may be furnished and no
discussions may be entered into in the event that the Company has taken any
actions inconsistent with this Section 6.05(a); provided further,
however, that the Company's Board of Directors shall furnish to Parent
all information provided to the person who has made the Company Superior
Proposal to the extent that such information has not been previously provided to
Parent and shall keep Parent promptly and reasonably informed as to the status
of any discussions regarding such Company Superior Proposal.  The Company shall
not be entitled to enter into any letter of intent or similar document or any
agreement (other than a confidentiality agreement as permitted by this
Section 6.05) contemplation or otherwise relating to a Company Superior
Proposal unless and until this Agreement is terminated pursuant to Article VIII
hereof and the Company has paid in cash to Parent all amounts due pursuant to
Section 8.05. Without limiting the generality of the foregoing, for all
purposes under this Agreement other than clause (vi) of
Section 8.01(d), the Company acknowledges and agrees that any violation of
any of the restrictions set forth in this Section 6.05 by any Representative of
the Company, whether or not such Representative is purporting to act on behalf
of any of the Company, shall be deemed to constitute a breach of this Section
6.05 by the Company.
303. For purposes of this Agreement, a "Company
Acquisition Transaction" means any of the following involving the
Company (other than the Merger and the other transactions contemplated by this
Agreement):  (i) a merger, consolidation, share exchange, business
combination or other similar transaction; (ii) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition of 20% or more of the assets of
the Company and the Company Subsidiaries, taken as a whole; (iii) a tender offer
or exchange offer for, or any offer to purchase directly from the Company, 20%
or more of the outstanding voting securities of the Company; (iv) any
solicitation in opposition to approval by the Company shareholders of this
Agreement or the Company Charter Amendment; or (v) any liquidation,
dissolution, recapitalization or other significant corporate reorganization of
the Company.
304. A "Company Superior Proposal" means an
unsolicited written bona fide offer made by a third party to consummate a
Company Acquisition Transaction  (i) that is not attributable to a material
breach by the Company of Section 6.05(a) hereof and (ii) on terms (including
conditions to consummation of the contemplated transaction) that the Board of
Directors of the Company determines, in its good faith reasonable judgment
(based on the written advice of a reputable financial advisor), to be more
favorable to the Company shareholders from a financial point of view than the
terms of the Merger and with any financing required to consummate the
transaction contemplated by such offer committed or likely, in the reasonable
good faith judgment of the Company's Board of Directors (based on the written
advice of a reputable financial adviser), to be obtained by such third party on
a timely basis.
305. The Company agrees not to release any Person (other than
Parent) from or waive any provision of any confidentiality,
"standstill" or similar agreement to which the Company
is a party and will use its reasonable best efforts to enforce each such
agreement at the request of Parent.  The Company also will promptly request each
Person (other than Parent) that has executed, within 12 months prior to the date
of this Agreement, a confidentiality, standstill or similar agreement in
connection with its consideration of a possible Company Acquisition Transaction
to return all confidential information heretofore furnished to such Person by or
on behalf of the Company.
306. No Parent Solicitation of Transactions.
307. Parent will not, directly or indirectly, and will
instruct its Representatives not to, directly or indirectly, solicit, initiate
or encourage (including by means of furnishing nonpublic information), or take
any other action to facilitate, any inquiries or the making of any proposal or
offer (including, without limitation, any proposal or offer to its stockholders)
that constitutes, or could reasonably be expected to lead to, any Parent
Acquisition Transaction (as defined below), or enter into or maintain or
continue discussions or negotiate with any person or entity in furtherance of
such inquiries or to obtain a Parent Acquisition Transaction, or agree to or
endorse any Parent Acquisition Transaction, or authorize or permit any of its
Representatives to take any such action. If any proposal or offer, or any
inquiry or contact with any person with respect thereto, regarding a Parent
Acquisition Transaction is made, Parent shall notify the Company within 24 hours
of the receipt thereof and as to the material details of any such proposal,
offer, inquiry or contact, including, without limitation, the identity of the
party making any such proposal, offer, inquiry or contact, and, if in writing,
promptly deliver or cause to be delivered to the Company a copy of such
proposal, offer, inquiry or contact and any other written material relating
thereto.  Parent immediately shall cease and cause to be terminated all existing
discussions or negotiations with any parties conducted heretofore with respect
to a Parent Acquisition Transaction. Parent shall not release any third party
(other than the Company) from, or waive any provision of, any confidentiality or
standstill agreement to which it is a party and shall use its reasonable best
efforts to enforce each such arrangement at the request of the Company.
Notwithstanding anything to the contrary in this Section 6.06, the Parent's
Board of Directors may furnish information to, and enter into discussions with,
a person who has made (and has not withdrawn) an unsolicited, written, bona fide
proposal or offer regarding a Parent Acquisition Transaction if the Parent's
Board of Directors has (i) reasonably concluded after consultation with its
financial advisor that such proposal or offer could reasonably be expected to
lead to a Parent Superior Proposal (as defined below), (ii) reasonably
concluded, after consultation with its outside legal counsel, that, in light of
such Parent Superior Proposal, the failure to furnish such information or enter
into discussions would create a substantial risk of liability for breach of its
fiduciary obligations to the Parent and its stockholders under applicable Law,
(iii) provided written notice to the Company of its intent to furnish
information or enter into discussions with such person at least three business
days prior to taking any such action and (iv) obtained from such person an
executed confidentiality agreement on terms no less favorable to Parent than
those contained in the Non-Disclosure Agreement; provided,
however, that no information may be furnished and no discussions may be
entered into in the event that Parent has taken any actions inconsistent with
this Section 6.06(a); provided further, however, that
Parent's Board of Directors shall furnish to the Company all information
provided to the person who has made Parent Superior Proposal to the extent that
such information has not been previously provided to the Company and shall keep
the Company promptly and reasonably informed as to the status of any discussions
regarding such Company Superior Proposal. Parent shall not be entitled to enter
into any letter of intent or similar document or any agreement (other than a
confidentiality agreement as permitted by this Section 6.06) contemplation
or otherwise relating to a Parent Acquisition Transaction unless and until this
Agreement is terminated pursuant to Article VIII hereof and Parent has paid in
cash to the Company all amounts due pursuant to Section 8.05. Without
limiting the generality of the foregoing, for all purposes under this Agreement
other than clause (vi) of Section 8.01(e), Parent acknowledges and
agrees that any violation of any of the restrictions set forth in this Section
6.06 by any Representative of Parent, whether or not such Representative is
purporting to act on behalf of any of Parent, shall be deemed to constitute a
breach of this Section 6.06 by Parent.
308. For purposes of this Agreement, a "Parent
Acquisition Transaction" means any of the following involving Parent
(other than the Merger and the other transactions contemplated by this
Agreement):  (i) a merger, consolidation, share exchange, business
combination or other similar transaction; (ii) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition of 20% or more of the assets of
Parent and Parent Subsidiaries, taken as a whole; (iii) a tender offer or
exchange offer for, or any offer to purchase directly from Parent, 20% or more
of the outstanding voting securities of Parent; (iv) any solicitation in
opposition to approval by the Parent stockholders of the Share Issuance; or
(v) any liquidation, dissolution, recapitalization or other significant
corporate reorganization of Parent.
309. A "Parent Superior Proposal" means an
unsolicited written bona fide offer made by a third party to consummate a Parent
Acquisition Transaction (as defined below) (i) that is not attributable to a
material breach by Parent of Section 6.06(a) hereof and (ii) on terms (including
conditions to consummation of the contemplated transaction) that the Board of
Directors of Parent determines, in its good faith reasonable judgment (based on
the written advice of a reputable financial advisor), to be more favorable to
Parent stockholders from a financial point of view than the terms of the Merger
and with any financing required to consummate the transaction contemplated by
such offer committed or likely, in the reasonable good faith judgment of
Parent's Board of Directors (based on the written advice of a reputable
financial adviser), to be obtained by such third party on a timely basis.
310. Nothing contained in this Agreement shall prohibit Parent
or its Board of Directors from taking and disclosing to its stockholders a
position contemplated by Rules 14d-9 and 14e-2(a) promulgated under the Exchange
Act.
311. Parent agrees not to release any Person (other than the
Company) from or waive any provision of any confidentiality,
"standstill" or similar agreement to which Parent is a
party and will use its reasonable best efforts to enforce each such agreement at
the request of the Company.  Parent also will promptly request each Person
(other than the Company) that has executed, within 12 months prior to the date
of this Agreement, a confidentiality, standstill or similar agreement in
connection with its consideration of a possible Parent Acquisition Transaction
to return all confidential information heretofore furnished to such Person by or
on behalf of Parent.
312. Employee Benefits Matters.
313. All employees of the Company and the Company Subsidiaries
shall continue in their existing benefit plans until such time as, in Parent's
sole discretion, an orderly transition can be accomplished to employee benefit
plans and programs maintained by Parent for its and its affiliates' employees in
the United States.  Parent shall take such reasonable actions, to the extent
permitted by Parent's benefits programs, as are necessary to allow eligible
employees of the Company to participate in the health, welfare and other benefit
programs of Parent or alternative benefits programs in the aggregate that are
substantially equivalent to those applicable to employees of Parent in similar
functions and positions on similar terms (it being understood that equity
incentive plans are not considered employee benefits).  Pending such action,
Parent shall maintain the effectiveness of the Company's and each Subsidiary's
benefit plans. Each continuing employee shall be given credit, for purposes of
any service requirements for participation or vesting, for his or her period of
service with the Company credited under a similar benefit plan or program prior
to the Closing Date.
314. During the Pre-Closing Period Parent and the Company may
agree that the Company take all necessary corporate action to terminate its
401(k) plan (the "401(k) Plan") effective as of the date
immediately prior to the Closing Date, but contingent on the Closing.  If Parent
and the Company have so agreed, Parent shall receive from the Company evidence
that the Company's Board of Directors has adopted resolutions to terminate the
401(k) Plan (the form and substance of which resolutions shall be subject to
review and approval of Parent), effective as of the date immediately preceding
the Closing Date.
315. With respect to all stock purchase, stock option and
stock award agreements (including any restricted stock, stock purchase, stock
option or stock award agreement under the Company Stock Plan) between the
Company and any current or former employee, director, consultant or founder
effective as of the Effective Time, any and all rights of repurchase and rights
of first refusal under each such agreement shall be assigned to Parent (or to
such other entity as Parent shall designate) by virtue of the Merger and without
any further action on the part of the Company, such assignment to be effective
as of the Effective Time.
316. Further Action; Consents; Filings; Takeover
Laws.
317. Upon the terms and subject to the conditions hereof, each
of the parties hereto shall use its reasonable best efforts to (i) take, or
cause to be taken, all appropriate action and do, or cause to be done, all
things necessary, proper or advisable under applicable Law or otherwise to
consummate and make effective the Merger and the other transactions contemplated
by this Agreement, (ii) obtain from any Governmental Entity or any other
person all consents, licenses, permits, waivers, approvals, authorizations or
orders required to be obtained or made by Parent or the Company or any of their
subsidiaries in connection with the authorization, execution and delivery of
this Agreement and the consummation of the Merger and the other transactions
contemplated by this Agreement and (iii) make all necessary filings, and
thereafter make any other required submission, with respect to this Agreement,
the Merger and the other transactions contemplated by this Agreement required
under applicable Law.  The parties hereto shall cooperate with each other in
connection with the making of all such filings and shall provide to each other
copies of such filings for review in advance of submitting such
filings.
318. During the Pre-Closing Period, each party shall promptly
notify the other party in writing of any pending or, to the knowledge of such
party, threatened action, proceeding or investigation by any Governmental Entity
or any other person (i) challenging or seeking material damages in
connection with this Agreement or the transactions contemplated hereunder or
(ii) seeking to restrain or prohibit the consummation of the Merger or the
transactions contemplated hereunder or otherwise limit the right of Parent or
its subsidiaries to own or operate all or any portion of the business, assets or
properties of the Company.  Each party shall use its reasonable best efforts to
lift any restraint, injunction or other legal bar to the Merger.
319. If any Takeover Law (as defined below) may become, or may
purport to be, applicable to the transactions contemplated in this Agreement,
each of Parent and the Company and the members of their respective Boards of
Directors will grant such approvals and take such actions as are necessary and
within the authority of the applicable Board of Directors so that the
transactions contemplated by this Agreement may be consummated as promptly as
practicable, and in any event prior to the Termination Date, on the terms and
conditions contemplated hereby and thereby and otherwise act to eliminate the
effect of any Takeover Law on any of the transactions contemplated by this
Agreement. "Takeover Laws" means (1) any
"moratorium," "control share," "fair price,"
"supermajority," "affiliate transactions," "business
combination" or other state antitakeover laws and regulations and
(2) Section 203of the DGCL.
320. Plan
of Reorganization.
321. This Agreement is intended to constitute a "plan of
reorganization" within the meaning of Section 1.368-2(g) of the income tax
regulations promulgated under the Code.  During the Pre-Closing Period, each
party hereto shall use its reasonable best efforts to cause the Merger to
qualify, and will not knowingly take any action, cause any action to be taken,
fail to take any action or cause any action to fail to be taken which action or
failure to act could prevent the Merger from qualifying as a reorganization
under the provisions of Section 368(a) of the Code.  Following the Effective
Time, neither the Surviving Corporation, Parent nor any of their affiliates
shall knowingly take any action, cause any action to be taken, fail to take any
action or cause any action to fail to be taken, which action or failure to act
could cause the Merger to fail to qualify as a reorganization under Section
368(a) of the Code.
322. As of the date hereof, the Company does not know of any
reason (i) why it would not be able to deliver to Cooley Godward LLP
("Cooley Godward") (counsel to the Company) or Gunderson
Dettmer (counsel to Parent), at the date of the legal opinions referred to
below, certificates substantially in compliance with Internal Revenue Service
published advance ruling guidelines, with customary exceptions and modifications
thereto, to enable such firms to deliver the legal opinions contemplated by
Sections 7.02(d) and 7.03(d), and the Company hereby agrees to deliver such
certificates effective as of the date of such opinions, or (ii) why Cooley
Godward or Gunderson Dettmer would not be able to deliver the opinions required
by Sections 7.02(d) and 7.03(d).
323. As of the date hereof, Parent and Merger Sub do not know
of any reason why they would not be able to deliver to Gunderson Dettmer or
Cooley Godward, at the date of the legal opinions referred to below,
certificates substantially in compliance with the Internal Revenue Service
published advance ruling guidelines, with customary exceptions and modifications
thereto, to enable such firms to deliver the legal opinions contemplated by
Sections 7.02(d) and 7.03(d), and Parent hereby agrees to deliver such
certificates effective as of the date of such opinions, or (ii) why Gunderson
Dettmer or Cooley Godward would not be able to deliver the opinions required by
Sections 7.02(d) and 7.03(d).
324. Public
Announcements.  The initial press release relating to this Agreement
shall be a joint press release the text of which has been agreed to by each of
Parent and the Company.  Thereafter, neither the Company nor Parent shall issue
any press release or otherwise make any public statements with respect to this
Agreement, the Merger or any of the other transactions contemplated by this
Agreement without the prior written agreement of the Company and Parent unless
the disclosing party shall have been advised in writing by its outside legal
counsel that such disclosure is required under applicable Laws or any other rule
that Parent must comply with in connection with the listing of its Common Stock
on The Nasdaq National Exchange.
325. Affiliate Agreements.  The Company shall cause
each Affiliate to execute and deliver to Parent, as promptly as practicable
after the execution of this Agreement, an Affiliate Agreement in the form
attached hereto as Exhibit E.
326. Indemnification of Officers and Directors
327. For a period of six years from and after the Closing
Date, Parent agrees to indemnify (including advancement of expenses) and hold
harmless all past and present officers and directors of the Company (the
"Indemnified Persons") to the same extent that the officers and
directors are indemnified by the Company as of the date of this Agreement
pursuant to the Company's Articles of Incorporation and Bylaws, employment
agreements or indemnification agreements identified on the Company Disclosure
Schedule or under applicable Law for acts or omissions which occurred at or
prior to the Effective Time.  The Company hereby represents to Parent that no
claim for indemnification has been made by any director or officer of the
Company and, to the knowledge of the Company, no facts exist that would serve as
a valid legal basis for any such claim for indemnification.
328. From the Effective Time until the sixth anniversary of
the Effective Time, Parent shall maintain in effect, for the benefit of the
Indemnified Persons with respect to claims arising from facts or events that
occurred prior to the Effective Time, the existing policy of directors' and
officers' liability insurance maintained by Parent for the benefit of its
current officers and directors as of the date of this Agreement (the
"Existing Policy") or a new policy providing comparable
coverage containing terms and conditions, taken as a whole, that are no less
advantageous to the Indemnified Persons than the terms of conditions in the
Existing Policy would be to the Indemnified Persons if such policy covered such
persons; provided, however, that Parent shall not be required to pay
annual premiums for the Existing Policy (or for any combination of the Existing
Policy and any substitute or additional policies) in excess of 150% of the
annual premium payable under the Existing Policy as of the date hereof.  In the
event any future annual premiums for the Existing Policy (or any substitute
policies) exceed 150% of such current annual premium, Parent shall be entitled
to reduce the amount of coverage of the Existing Policy (or any substitute
policies) to the amount of coverage that can be obtained for a premium equal to
150% of such current annual premium.
329. This Section 6.12 is intended to be for the benefit of,
and shall be enforceable by, the officers and directors and their heirs and
personal representatives and shall be binding on the Surviving Corporation and
its successors and assigns.  In the event the Company or the Surviving
Corporation or any of their respective successors or assigns (i) consolidates
with or merges into any other person and shall not be the continuing or
surviving corporation or entity in such consolidation or merger or (ii)
transfers all or substantially all of its properties and assets to any person,
then, and in each case, Parent shall use best efforts to ensure that the
successors and assigns of the Company or the Surviving Corporation, as the case
may be, are subject to and honor the indemnification obligations set forth in
this Section 6.12.
330. Section 16 Relief.  Provided that the Company
delivers to Parent the Section 16 Information (as defined below) in a timely
fashion, the Board of Directors of Parent, or a committee of two or more Non-
Employee Directors thereof (as such term is defined for purposes of Rule 16b-3
under the Exchange Act), shall adopt resolutions prior to the consummation of
the Merger providing that the receipt by the Company Insiders (as defined below)
of the Parent Common Stock upon conversion of the Company Shares, and of options
for Parent Common Stock upon assumption of the Company Options, in each case
pursuant to the transactions contemplated hereby and to the extent such
securities are listed in the Section 16 Information, are intended to be exempt
from liability pursuant to Section 16(b) under the Exchange Act.  Such
resolutions shall comply with the approval conditions of Rule 16b-3 under the
Exchange Act for purposes of such Section 16(b) exemption, including, but not
limited to, specifying the name of the Company Insiders, the number of
securities to be acquired or disposed of for each such person, the material
terms of any derivative securities, and that the approval is intended to make
the receipt of such securities exempt pursuant to Rule 13b-3(d).
"Section 16 Information" shall mean information regarding the
Company Insiders, the number of shares of the Company Stock held by each such
Company Insider and expected to be exchanged for Parent Common Stock in
connection with the Merger, and the number and description of the Company
Options held by each such Company Insider and expected to be converted into
options for Parent Common Stock in connection with the Merger.  "Company
Insiders" shall mean those officers and directors of the Company who
will be subject to the reporting requirement of Section 16(b) of the Exchange
Act with respect to Parent and who are listed in the Section 16
Information.
331. WARN Act.  The parties agree to consult with each
other on the need for and timing of notices pursuant to the Worker Adjustment
and Retraining Notification Act, as amended (the "WARN Act").
Prior to the Closing, the Company agrees that, if reasonably requested by
Parent, it shall, on behalf of Parent and Merger Sub, issue such notices as are
required under the WARN Act to its employees when requested by Parent in order
to comply with the applicable provisions of the WARN Act or any similarly
applicable state or local law.  Any such request by Parent shall be given in
time to permit the Company to issue notices sufficiently in advance of any lay-
off or closing of any offices so that neither Parent nor any subsidiary of
Parent shall be liable under the WARN Act for any penalty or payment in lieu of
notice to any employee or Governmental Entity.  Parent and the Company shall
cooperate in the preparation and giving of such notices, and no such notices
shall be given without the approval of Parent and Company, which approval shall
not be reasonably withheld.
332. Conversion Schedule.  The Company and Parent shall
prepare a final schedule as of the Effective Time (the "Final Conversion
Schedule"), and an officer of each party shall certify the Final Conversion
Schedule with respect to the information prepared by such party.
333. Lock-Up.  The Company shall use reasonable efforts
to obtain an executed Company Lock-Up Agreement, in the form attached hereto as
Exhibit F (each a "Company Lock-Up Agreement") from
each of the Company shareholders.
334. Obligations of Merger Sub.  Parent shall take all
action necessary to cause Merger Sub to perform its obligations under this
Agreement and to consummate the Merger on the terms and subject to the
conditions set forth in this Agreement.
335. Company Capitalization.  An updated
Section 3.04 of the Company Disclosure Schedule reflecting changes
permitted by this Agreement in the capitalization of the Company between the
date hereof and the Effective Time shall be delivered by the Company to Parent
on the Closing Date.
336. Parent Capitalization.  An updated
Section 4.04 of the Parent Disclosure Schedule reflecting changes permitted
by this Agreement in the capitalization of Parent between the date hereof and
the Effective Time shall be delivered by Parent to the Company on the Closing
Date.
337. Listing.  Prior to the
Effective Time, to the extent required under the applicable listing agreement,
Parent shall use its reasonable best efforts to cause the Parent Shares being
issued in the Merger to be approved for quotation (subject to official notice of
issuance) on The Nasdaq National Market.
338. Note Amendment. From and after the date on which
the Registration Statement is declared effective by the SEC until the Effective
Time, the Company and Parent will exercise their respective reasonable best
efforts to ensure that all of the holders of outstanding Notes have executed and
delivered to the Company the Note Amendment Agreement, the Amended Notes and the
Note Conversion Agreement.
339. Parent Charter Amendment.  Parent shall use its
reasonable best efforts to obtain the approval of its stockholders of the Parent
Charter Amendment which shall include the submission of such amendment to the
Parent stockholders in connection with the Parent Stockholder Meeting.
340. Company Investors' Rights Agreement.  The Company
shall use reasonable efforts to obtain the agreement of its shareholders
necessary to terminate that certain Amended and Restated Investors' Rights
Agreement dated August 1, 2000, including the delivery of a consent to such
effect as part of the mailing to its shareholders for the purpose of delivering
the Joint Proxy Statement.
341. CONDITIONS TO THE
MERGER
342. Conditions to the Obligations of Each
Party.  The respective obligations of the Company, Parent and Merger
Sub to consummate the Merger are subject to the satisfaction or waiver (where
permissible) of the following conditions:
343. Company Shareholder Approval.  The Company Charter
Amendment and this Agreement (including the principal terms hereof) shall have
been approved by the Company Shareholder Approval in accordance with the CGCL
and the Company's Articles of Incorporation and Bylaws;
344. Parent Stockholder Approval.  The Share Issuance
shall have been approved by the Parent Stockholder Approval in accordance with
the NASD Rule and Parent's Bylaws;
345. No Order.  No Governmental Entity or court of
competent jurisdiction located or having jurisdiction in the United States shall
have enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, decree, judgment, injunction or other order, whether temporary,
preliminary or permanent (each an "Order") which is then in
effect and has the effect of making the Merger, the Company Charter Amendment or
the Share Issuance illegal or otherwise prohibiting consummation of the Merger
in accordance with the terms of this Agreement;
346. No Governmental Litigation.  There shall not be
pending or threatened any Legal Proceeding to which a Governmental Entity is a
party (i) seeking to restrain or prohibit the consummation of the Merger or
any of the other transactions contemplated by this Agreement or seeking to
obtain from Parent or the Company any damages that would cause a Parent Material
Adverse Effect after the Effective Time (taking into account the combined
operations of Parent and the Company) or (ii) seeking to prohibit or limit
the ownership or operation by Parent or the Company after the Effective Time of
any material portion of their respective businesses or assets;
347. No Other Litigation. There shall not be pending
any Legal Proceeding related to the transactions contemplated by this Agreement
in which, in the reasonable judgment of either Parent or the Company, there is a
reasonable possibility of an outcome that would have a Parent Material Adverse
Effect after the Effective Time (taking into account the combined operations of
Parent and the Company);
348. Compliance with the Securities Act.  The
Registration Statement relating to the issuance of the shares of Parent Common
Stock in the Merger shall have become effective under the Securities Act and
shall not be the subject of any stop order or proceeding seeking a stop
order;
349. Listing on NASDAQ. The shares of Parent Common
Stock to be issued in the Merger shall have been approved for listing (subject
to official notice of issuance) on The Nasdaq National Market;
350. Company Charter Amendment. The Company Charter
Amendment shall have become effective in accordance with the provisions of the
CGCL;
351. Dissenters.  As of the date of the Company
Shareholder Meeting, shareholders holding no more than 7.5% of the Company
Shares (other than any Company Shares to be canceled pursuant to Section
2.01(a)(ii)) shall have perfected their dissenters' right in accordance with
Chapter 13 of the CGCL;
352. Conversion of Company Preferred Stock.  Sufficient
holders of Company Preferred Stock shall have elected to convert the Company
Preferred Stock into Company Common Stock such that all of the Company Preferred
Stock may be converted into shares of Company Common Stock in accordance with
the Company's Articles of Incorporation, and each holder thereof shall have been
given or shall have waived prior notice of the consummation of the
Merger.
353. Note Amendment.  The holders of at least 50% of
the principal amount of the Senior Convertible Notes and the holders of at least
50% of the principal amount of the 2000 Senior Notes shall have executed and
delivered to the Company the Note Amendment and their respective Amended Notes;
and
354. Note Conversion Election.  The holders of at least
75% of the principal amount of the Notes shall have, effective upon the Closing,
elected to convert their Amended Notes into shares of Company Common Stock
pursuant to the Note Conversion Agreement and shall have executed and delivered
to the Company the Note Conversion Agreement, as provided for in the Amended
Notes.
355. Parent Name Change.  Parent shall have changed its
name to "Captiva Software Corporation" effective as of the Effective
Time.
356. Conditions to the Obligations of Parent and Merger
Sub.  The obligations of Parent and Merger Sub to consummate the
Merger are subject to the satisfaction or written waiver (where permissible) of
the following additional conditions:
357. Representations and Warranties. The
representations and warranties of the Company contained in Article 3 of this
Agreement shall be accurate in all respects as of the date of this Agreement and
as of the Closing Date as if made on and as of the Closing Date (except to the
extent such representations and warranties speak as of an earlier date) and
Parent shall have received a certificate to that effect signed on behalf of the
Company by the Chief Executive Officer and the Chief Financial Officer of the
Company; provided, however,that for the purposes of this
paragraph, such representations and warranties shall be deemed to be accurate
unless the failure or failures of such representations and warranties to be
accurate, either individually or in the aggregate, has had or could reasonably
be expected to have, a Company Material Adverse Effect; it being
understood that, for purposes of determining the accuracy of such
representations and warranties, (i) all Company Material Adverse Effect
qualifications or qualification regarding materiality, and any similar
qualifications, contained in such representations and warranties shall be
disregarded, and (ii) any update of or modification to the Company Disclosure
Schedule made or purported to have been made after the date of this Agreement
shall be disregarded;
358. Agreements and Covenants.  The Company shall have
performed or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it on or prior to
the Effective Time; and Parent shall have received a certificate to that effect
signed on behalf of the Company by the Chief Executive Officer and the Chief
Financial Officer of the Company;
359. Approvals.  The Company shall have received, each
in form and substance reasonably satisfactory to Parent, all authorizations,
consents, orders and approvals (i) required by any Governmental Entity or
official, if any, or (ii) set forth in Section 7.02(c) of the Company
Disclosure Schedule;
360. Tax Opinion of Parent's Counsel.  Parent shall
have received the opinion of Gunderson Dettmer, counsel to Parent, based upon
representations of Parent, Merger Sub and the Company and normal assumptions, to
the effect that the Merger will be treated for Federal income tax purposes as a
reorganization qualifying under the provisions of Section 368(a) of the
Code, which opinion shall not have been withdrawn or modified in any material
respect.  The issuance of such opinion shall be conditioned on receipt by
Gunderson Dettmer of certificates from each of Parent, Merger Sub and the
Company as contemplated in Section 6.09 of this Agreement.  Each such
certificate shall be dated on or before the date of such opinion and shall not
have been withdrawn or modified in any material respect as of the Effective
Time.  Notwithstanding the foregoing, if Parent's counsel does not render such
opinion, this condition shall nevertheless be deemed satisfied with respect to
Parent if Cooley Godward, counsel to the Company, renders such opinion to
Parent;
361. Affiliate Agreements.  Each of the Affiliates of
the Company set forth on Schedule 7.02(e) attached hereto shall have executed
and delivered to Parent an Affiliate Agreement and such agreement shall remain
in full force and effect and shall not have been anticipatorially breached or
repudiated by any of such Affiliates;
362. Secretary's Certificate.  Parent shall have
received a certificate executed by the Secretary of the Company attaching and
certifying as to matters customary for a transaction of this sort, including,
without limitation, the true and correct copies of the Company's current
Articles of Incorporation and Bylaws, a copy of the resolutions of the Company's
Board of Directors approving and adopting this Agreement and the transactions
relating hereto and the Company Shareholder Approval obtained at the Company
Shareholder Meeting;
363. FIRPTA. Parent shall have received a certificate
of the Company that the Company is not, and has not been, a United States real
property holding corporation (as defined in Section 897(c)(2) of the Code)
during the applicable period specified in Section 897(c)(1)(A)(ii) of the
Code; and
364. Termination of Company's Agreements.  Parent shall
have been furnished evidence reasonably satisfactory to it that (i) all
rights granted by the Company to its shareholders under the Company's
Shareholders' Agreement dated October 6, 1994, as amended, and the Security
Agreement by the Company in favor of the holders of the Notes dated
August 1, 2000, (ii) all of the rights granted to Enterprise Partners
III, L.P. ("Enterprise") pursuant to the letter agreement from
the Company to Enterprise dated October 6, 1994, and (iii) all of the
board observation and management related rights granted to Nissho Electronics
Corporation shall have been terminated prior to the Closing.
365. Conditions to the Obligations of the
Company.  The obligations of the Company to consummate the Merger
are subject to the satisfaction or written waiver (where permissible) of the
following additional conditions:
366. Representations and Warranties. The
representations and warranties of Parent and Merger Sub contained in Article 4
of this Agreement shall be accurate in all respects as of the date of this
Agreement and as of the Closing Date as if made on and as of the Closing Date
(except to the extent such representations and warranties speak as of an earlier
date) and the Company shall have received a certificate to that effect signed on
behalf of Parent by the Chief Executive Officer and the Chief Financial Officer
of Parent; provided, however, that for the purposes of this
paragraph, such representations and warranties shall be deemed to be accurate
unless the failure or failures of such representations and warranties to be
accurate, either individually or in the aggregate, has had or could reasonably
be expected to have, a Parent Material Adverse Effect; it being
understood that, for purposes of determining the accuracy of such
representations and warranties, (i) all Parent Material Adverse Effect
qualifications and other materiality qualifications, and any similar
qualifications, contained in such representations and warranties shall be
disregarded, and (ii) any update of or modification to the Parent Disclosure
Schedule made or purported to have been made after the date of this Agreement
shall be disregarded;
367. Agreements and Covenants.  Each of Parent and
Merger Sub shall have performed or complied in all material respects with all
agreements and covenants required by this Agreement to be performed or complied
with by it on or prior to the Effective Time; and the Company shall have
received a certificate to that effect signed on behalf of Parent by the Chief
Executive Officer and the Chief Financial Officer of Parent;
368. Approvals. Parent shall have received, each in
form and substance reasonably satisfactory to the Company, all authorizations,
consents, orders and approvals (i) required by any Governmental Entity or
official, if any, or (ii) set forth in Section 7.03(c) of the Parent
Disclosure Schedule;
369. Tax Opinion of Company's Counsel.  The Company
shall have received the opinion of Cooley Godward, counsel to the Company, based
upon representations of Parent, Merger Sub and the Company and normal
assumptions, to the effect that the Merger will be treated for Federal income
tax purposes as a reorganization qualifying under the provisions of
Section 368(a) of the Code, which opinion shall not have been withdrawn or
modified in any material respect.  The issuance of such opinion shall be
conditioned on receipt by Cooley Godward of certificates from each of Parent,
Merger Sub and the Company as contemplated in Section 6.09 of this
Agreement.  Each such certificate shall be dated on or before the date of such
opinion and shall not have been withdrawn or modified in any material respect as
of the Effective Time.  Notwithstanding the foregoing, if the Company's counsel
does not render such opinion, this condition shall nevertheless be deemed
satisfied with respect to the Company if Gunderson Dettmer, counsel to Parent,
renders such opinion to the Company;
370. Secretary's Certificate.  The Company shall have
received a certificate executed by the Secretary of Parent attaching and
certifying as to matters customary for a transaction of this sort, including,
without limitation, the true and correct copies of Parent's current Certificate
of Incorporation and Bylaws, a copy of the resolutions of Parent's Board of
Directors approving and adopting this Agreement and the transactions relating
hereto and the Parent Shareholder Approval obtained at the Parent Stockholder
Meeting; and
371. Board and Resignations and Elections.  Parent
shall have received written letters of resignation that shall have not been
revoked or rescinded from each of John Finegan, Thomas T. van Overbeek and
Daniel D. Tompkins in each case effective at the Effective Time, and the Board
of Directors of Parent shall have duly adopted by unanimous vote or by a
majority vote at a meeting of such Board of Directors prior to the receipt of
the aforementioned resignations resolutions that shall not have been revoked or
rescinded electing Reynolds C. Bish, Mel S. Lavitt and Jim Berglund, effective
at the Effective Time, to fill the vacancies created by the aforementioned
resignations
372. TERMINATION, AMENDMENT,
WAIVER AND EXPENSES
373. Termination.  This Agreement may be
terminated and the Merger and the other transactions contemplated by this
Agreement may be abandoned at any time prior to the Effective Time,
notwithstanding any requisite approval and adoption of this Agreement and the
transactions contemplated by this Agreement by the stockholders of Parent or the
shareholders of the Company, as applicable, as follows:
374. by mutual written consent duly authorized by the Boards
of Directors of each of Parent and the Company;
375. by either Parent or the Company if the Effective Time
shall not have occurred on or before May 31, 2002 (the "Termination
Date"); provided, however, that the right to terminate
this Agreement under this Section 8.01(b) shall not be available to any
party whose failure to fulfill any obligation under this Agreement has been the
cause of, or resulted in, the failure of the Effective Time to occur on or
before the Termination Date;
376. by either Parent or the Company upon the issuance of any
Order which is final and nonappealable which would prevent the consummation of
the Merger;
377. by Parent if (i) the Board of Directors of the
Company withholds, withdraws, amends, modifies or changes the Company Board
Recommendation in a manner adverse to Parent or shall have resolved to do so,
(ii) the Board of Directors of the Company shall have recommended to the
stockholders of the Company a Company Acquisition Transaction or shall have
resolved to do so or shall have entered into any letter of intent or similar
document or any agreement, contract or commitment accepting any Company
Acquisition Transaction, (iii) the Board of Directors of the Company fails
to reject a Company Acquisition Transaction within 10 days following public
announcement or receipt by the Company of the proposal for such Company
Acquisition Transaction; it being understood that taking no position or
indicating its inability to take a position does not constitute a rejection of
such Company Acquisition Transaction, (iv) the Company shall have failed to
include in the Joint Proxy Statement the Company Board Recommendation or shall
have failed to hold the Company Shareholder Meeting as promptly as practicable
and in any event within 45 days after the Registration Statement is declared
effective, (v) the Company's Board of Directors fails to reaffirm the
Company Board Recommendation within five business days after Parent requests in
writing that such recommendation be reaffirmed, (vi) the Company shall have
willfully breached its obligations under Section 6.05;
378. by the Company if (i) the Board of Directors of
Parent withholds, withdraws, amends, modifies or changes the Parent Board
Recommendation in a manner adverse to the Company or shall have resolved to do
so, (ii) the Board of Directors of Parent shall have recommended to the
stockholders of Parent a Parent Acquisition Transaction or shall have resolved
to do so or shall have entered into any letter of intent or similar document or
any agreement, contract or commitment accepting any Parent Acquisition
Transaction, (iii) the Board of Directors of Parent fails to reject a
Parent Acquisition Transaction within 10 days following public announcement or
receipt by Parent of the proposal for such Parent Acquisition Transaction; it
being understood that taking no position or indicating its inability to take a
position does not constitute a rejection of such Parent Acquisition Transaction,
(iv) Parent shall have failed to include in the Joint Proxy Statement the
Parent Board Recommendation or shall have failed to hold the Parent Stockholder
Meeting as promptly as practicable and in any event within 45 days after the
Registration Statement is declared effective, (v) the Parent's Board of
Directors fails to reaffirm the Parent Board Recommendation within five business
days after Parent requests in writing that such recommendation be reaffirmed or
(vi) Parent shall have willfully breached its obligations under Section
6.06;
379. by Parent upon a breach of any representation, warranty,
covenant or agreement on the part of the Company set forth in this Agreement, or
if any representation or warranty of the Company shall have become untrue as of
a date subsequent to the date of this Agreement (as if made on such subsequent
date), in either case such that any of the conditions set forth in
Sections 7.02(a) and 7.02(b), as applicable, would not be satisfied as of
such subsequent date ("Terminating Company Breach");
provided, however, that, if such Terminating Company Breach is
curable by the Company through the exercise of its best efforts and for so long
as the Company continues to exercise such best efforts, Parent may not terminate
this Agreement under this Section 8.01(f) unless such breach is not cured
within 30 days after notice thereof is provided by Parent to the Company
(but no cure period is required for a breach which, by its nature, cannot be
cured);
380. by the Company upon a breach of any representation,
warranty, covenant or agreement on the part of Parent and Merger Sub set forth
in this Agreement, or if any representation or warranty of Parent and Merger Sub
shall have become untrue as of a date subsequent to the date of this Agreement
(as if made on such subsequent date), in either case such that any of the
conditions set forth in Sections 7.03(a) and 7.03(b), as applicable, would not
be satisfied as of such subsequent date ("Terminating Parent
Breach"); provided, however, that, if such Terminating
Parent Breach is curable by Parent and Merger Sub through the exercise of their
respective best efforts and for so long as Parent and Merger Sub continue to
exercise such best efforts, the Company may not terminate this Agreement under
this Section 8.01(g) unless such breach is not cured within 30 days after
notice thereof is provided by the Company to Parent (but no cure period is
required for a breach which, by its nature, cannot be cured);
381. by either Parent or the Company if (i) the Company
Shareholders' Meeting (including any adjournments or postponements thereof)
shall have been held and completed and the Company shareholders shall have taken
a final vote on a proposal to approve this Agreement (including the principal
terms hereof), the Company Charter Amendment and the Merger, and (ii) the
Company Charter Amendment, this Agreement (including the principal terms hereof)
or the Merger shall not have been approved at such meeting by the Company
Shareholder Approval (and shall not have been approved at any adjournment or
postponement thereof); provided, however, that a party shall not
be permitted to terminate this Agreement pursuant to this Section 8.01(j) if the
failure to obtain the Company Shareholder Approval is attributable to a failure
on the part of such party to perform any material obligation required to be
performed by such party at or prior to the Effective Time;
382. by either Parent or the Company if (i) the Parent
Stockholders' Meeting (including any adjournments or postponements thereof)
shall have been held and completed and the Parent stockholders shall have taken
a final vote on the Share Issuance, and (ii) the Share Issuance shall not have
been approved at such meeting (and shall not have been approved at any
adjournment or postponement thereof) by the Parent Stockholder Approval;
provided, however, that a party shall not be permitted to
terminate this Agreement pursuant to this Section 8.01(k) if the failure to
obtain the Parent Stockholder Approval is attributable to a failure on the part
of such party to perform any material obligation required to be performed by
such party at or prior to the Effective Time; or
383. by Parent or the Company if the condition set forth in
Section 7.01(l) has not been satisfied by the Termination Date,
provided, however, a party may not terminate this Agreement
pursuant to this Section 8.01(j) if the failure to satisfy such condition
or failure to close is principally due to the failure or refusal of such party
to perform or observe the covenants or agreements contained herein to be
performed or observed by it at or prior to the Effective Time.
384. Effect
of Termination.  In the event of termination of this Agreement
pursuant to Section 8.01, this Agreement shall forthwith become void, there
shall be no liability under this Agreement on the part of Parent, Merger Sub or
the Company or any of their respective officers or directors, and all rights and
obligations of each party hereto shall cease; provided, however,
that (i) Section 6.04(b), Sections 8.02, 8.03, 8.04, 8.05, and 8.06
and Article IX shall remain in full force and effect and survive any termination
of this Agreement and (ii) nothing herein shall relieve any party from
liability for the willful breach of any of its representations or warranties or
the breach of any of its covenants or agreements set forth in this
Agreement.
385. Amendment.  This Agreement may be amended by
the parties hereto by action taken by or on behalf of their respective Boards of
Directors at any time prior to the Effective Time; provided, however, that (i)
after any approval of this Agreement (including the principal terms hereof) by
the shareholders of the Company, no amendment shall be made which by Law would
require further approval of the shareholders of the Company without the further
approval of the shareholders of the Company, (ii) after any approval of the
Share Issuance by the stockholders of Parent, no amendment shall be made which
by Law would require further approval of the stockholders of Parent without the
further approval of the stockholders of Parent and (iii) no amendment shall be
made which would adversely affect the tax consequences of the Merger to the
shareholders of the Company.   This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
386. Waiver.  At any time prior to the Effective
Time, any party hereto may (a) extend the time for the performance of any
obligation or other act of any other party hereto, (b) waive any inaccuracy
in the representations and warranties contained herein or in any document
delivered pursuant hereto, and (c) waive compliance with any agreement or
condition contained herein. No failure on the part of any party to exercise any
power, right, privilege or remedy under this Agreement, and no delay on the part
of any party in exercising any power, right, privilege or remedy under this
Agreement, shall operate as a waiver of such power, right, privilege or remedy;
and no single or partial exercise of any such power, right, privilege or remedy
shall preclude any other or further exercise thereof or of any other power,
right, privilege or remedy. No party shall be deemed to have waived any claim
arising out of this Agreement, or any power, right, privilege or remedy under
this Agreement, unless the waiver of such claim, power, right, privilege or
remedy is expressly set forth in a written instrument duly executed and
delivered on behalf of such party; and any such waiver shall not be applicable
or have any effect except in the specific instance in which it is
given.
387. Expenses.
388. Except as set forth in this Section 8.05, all Expenses
(as defined below) incurred in connection with this Agreement, the Merger and
the other transactions contemplated by this Agreement shall be paid by the party
incurring such expenses, whether or not the Merger or any other transaction is
consummated, except the Company shall pay fifty percent of the first $20,000 of
all Expenses relating to printing, filing and mailing the Registration Statement
and the Joint Proxy Statement and all SEC and other regulatory filing fees
incurred in connection with the Registration Statement and the Joint Proxy
Statement.  "Expenses" as used in this Agreement shall include
all reasonable out-of-pocket expenses (including, without limitation, all fees
and expenses of counsel, accountants, investment bankers, experts and
consultants to a party hereto and its affiliates) incurred by a party or on its
behalf in connection with or related to the authorization, preparation,
negotiation, execution and performance of this Agreement, the preparation,
printing, filing and mailing of the Registration Statement and the Joint Proxy
Statement, the solicitation of stockholder approval, the filing of any required
notices and all other matters related to the closing of the Merger and the other
transactions contemplated by this Agreement.
389. The Company agrees that the Company shall pay to Parent
an amount equal to all of Parent's Expenses up to $250,000 if Parent shall
terminate this Agreement pursuant to Section 8.01(d) or either Parent or
the Company shall terminate the Agreement pursuant to Section 8.01(h) or
(j).
390. The Company agrees that the Company shall pay to Parent
an additional $100,000 of Parent's Expenses if (i) this Agreement is terminated
by Parent pursuant to Section 8.01(d) or by either Parent or the Company
pursuant Section 8.01(h) and (ii) the Company shall have, within 4 months
of the date of such termination, entered into an agreement to consummate a
Company Acquisition Transaction; provided, however, in no event
shall the Company be obligated pursuant to the provisions of this Section 8.05
to pay to Parent in the aggregate more than $350,000.
391. Parent agrees that Parent shall pay to the Company an
amount equal to all of the Company's Expenses up to $250,000 if the Company
shall terminate this Agreement pursuant to Section 8.01(e) or either Parent
or the Company shall terminate the Agreement pursuant to Section
8.01(i).
392. Parent agrees that Parent shall pay to the Company an
additional $100,000 of Company Expenses if (i) this Agreement is terminated by
the Company pursuant to Section 8.01(e) or by either Parent or the Company
pursuant Section 8.01(i) and (ii) Parent shall have, within 4 months of the
date of such termination, entered into an agreement to consummate a Parent
Acquisition Transaction; provided, however, in no event shall
Parent be obligated pursuant to the provisions of this Section 8.05 to pay to
the Company in the aggregate more than $350,000.
393. Any payment required to be made pursuant to Section
8.05(b) or (c) shall be made not later than five business days after
delivery to Parent or the Company, as the case may be (the "Requesting
Party"), of notice of demand for payment and an itemization setting
forth in reasonable detail all Expenses being demanded by the Requesting Party
(which itemization may be supplemented and updated from time to time by the
Requesting Party until the 60th day after the Requesting Party delivers such
notice of demand for payment), and shall be made by wire transfer of immediately
available funds to an account designated by the Requesting Party  Payment of the
Expenses described in Section 8.05(b), (c), (d) or (e) shall not be in lieu of
damages incurred in the event of willful breach of the representations and
warranties set forth in this Agreement or the breach of any of the covenants or
agreements set forth in this Agreement.
394. Payment.  In the event that Parent or the Company
shall fail to pay the Expenses of the Requesting Party as required by Section
8.05(b), (c), (d) and/or (e) as applicable, when due, then such Expenses shall
be increased to include the costs and expenses actually incurred or accrued by
the Requesting Party (including, without limitation, fees and expenses of
counsel) in connection with the collection under and enforcement of this Section
8.06, together with interest on such unpaid Expenses, commencing on the date
that such Expenses became due, at a rate equal to the rate of interest publicly
announced by Citibank, N.A., from time to time, in The City of New York, as such
bank's Prime Rate (the "Prime Rate") plus 2.00%; and as a
result of such increase, Expenses of the Requesting party may exceed $250,000.
395. GENERAL
PROVISIONS
396. Non-Survival of Representations, Warranties and
Agreements.  The representations, warranties and agreements in this
Agreement and in any certificate delivered pursuant hereto shall terminate at
the Effective Time or upon the termination of this Agreement pursuant to Section
8.01, as the case may be, except that the agreements set forth in Articles I
and II and Sections 6.04(b), 6.07 and 6.12 and this Article IX shall
survive the Effective Time and those set forth in Sections 6.04(b), 8.02,
8.05 and 8.06 and this Article IX shall survive termination of this
Agreement.
397. Notices.  All notices, requests, claims,
demands and other communications hereunder shall be in writing and shall be
given (and shall be deemed to have been duly given upon receipt) by delivery in
person, by cable, telecopy, facsimile, telegram or telex or by registered or
certified mail (postage prepaid, return receipt requested) to the respective
parties at the following addresses (or at such other address for a party as
shall be specified in a notice given in accordance with this
Section 9.02):
398. if to Parent or Merger Sub:
399. if to the Company:
400. Certain Definitions.
401. As used in this Agreement, the following terms shall have
the following meanings:
402. "affiliate" of a specified person means
a person who directly or indirectly through one or more intermediaries controls,
is controlled by, or is under common control with such specified
person.
403. "beneficial owner" with respect to any
shares means a person who shall be deemed to be the beneficial owner of such
shares (i) which such person or any of its affiliates or associates (as
such term is defined in Rule 12b-2 promulgated under the Exchange Act)
beneficially owns, directly or indirectly, (ii) which such person or any of
its affiliates or associates has, directly or indirectly, (A) the right to
acquire (whether such right is exercisable immediately or subject only to the
passage of time), pursuant to any agreement, arrangement or understanding or
upon the exercise of consideration rights, exchange rights, warrants or options,
or otherwise, or (B) the right to vote pursuant to any agreement,
arrangement or understanding, or (iii) which are beneficially owned,
directly or indirectly, by any other persons with whom such person or any of its
affiliates or associates or person with whom such person or any of its
affiliates or associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of any shares.
404. "business day" means any day on which
Banks are not required or authorized to close in San Francisco,
California.
405. "control" (including the terms
"controlled by" and "under common control with") means the
possession, directly or indirectly or as trustee or executor, of the power to
direct or cause the direction of the management and policies of a person,
whether through the ownership of voting securities, as trustee or executor, by
contract or credit arrangement or otherwise.
406. "knowledge" means, with respect to any
party hereto, actual or deemed knowledge of the directors, officers or financial
personnel of such party.  An individual will be deemed to have knowledge of a
particular fact, circumstance, event or other matter if (i) such fact
circumstance, event or other matter is reflected in one or more documents,
written or electronic, that are or have been in such individual's possession or
that could reasonably be expected to be reviewed by an individual who has the
duties and responsibilities of such individual in the customary performance of
such duties and responsibilities, or (ii) such knowledge could be obtained
from reasonable inquiry of or due investigation by those persons employed by the
Company or Parent (as the case may be) and their respective subsidiaries, if
any, charged with administrative or operational responsibility for such matter
for such party.
407. "person" means an individual,
corporation, partnership, limited partnership, syndicate, person (including,
without limitation, a "person" as defined in Section 13(d)(3) of
the Exchange Act), trust, association or entity or government, political
subdivision, agency or instrumentality of a government.
408. "subsidiary" or
"subsidiaries" of any person means any corporation,
partnership, joint venture or other legal entity of which such person (either
alone or through or together with any other subsidiary) owns, directly or
indirectly, more than 50% of the stock or other equity interests, the holders of
which are generally entitled to vote for the election of the board of directors
or other governing body of such corporation or other legal entity.
409. The following terms shall have the meanings defined for
such terms in the Sections of this Agreement set forth below:
410. Severability.  If any term or other
provision of this Agreement is invalid, illegal or incapable of being enforced
by any rule of Law or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated by this Agreement
is not affected in any manner materially adverse to any party.  Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the transactions
contemplated by this Agreement be consummated as originally contemplated to the
fullest extent possible.
411. Assignment; Binding Effect; Benefit.
Neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by any of the parties hereto (whether by operation of Law or
otherwise) without the prior written consent of the other parties, and any
purported assignment (whether by operation of Law or otherwise) in violation of
this Section 9.05 shall be null and void. Subject to the preceding sentence,
this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns.  Except for the
provisions of Sections 6.12 and  6.13, notwithstanding anything
contained in this Agreement to the contrary, nothing in this Agreement,
expressed or implied, is intended to confer on any person other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
412. Incorporation of Schedules and Exhibits.
The Company Disclosure Schedule, the Parent Disclosure Schedule, the Schedules
and all Exhibits attached hereto and referred to herein are hereby incorporated
herein and made a part hereof for all purposes as if fully set forth
herein.
413. Specific Performance.  The parties hereto
agree that irreparable damage would occur in the event any provision of this
Agreement was not performed in accordance with the terms hereof and that the
parties shall be entitled to specific performance of the terms hereof in
addition to any other remedy at law or in equity.
414. Governing Law; Forum.  Except for the
mandatorily applicable provisions of the CGCL, this Agreement shall be governed
by, and construed in accordance with, the laws of the State of Delaware
applicable to contracts executed in and to be performed in that state and
without regard to any applicable conflicts of law.  In any action between the
parties hereto arising out of or relating to this Agreement or any of the
transactions contemplated by this Agreement: (i) each of the parties irrevocably
and unconditionally consents and submits to the exclusive jurisdiction and venue
of either the state courts located in Santa Clara County, California or the
United States District Court for the Northern District of California and (ii)
each of the parties irrevocably consents to service of process by first class
certified mail, return receipt requested, postage prepaid.
415. Time of the Essence.  For purposes of this
Agreement and the transactions contemplated by this Agreement, time is of the
essence.
416. Waiver of Jury Trial.  Each of the parties hereto
hereby irrevocably waives any and all right to trial by jury in any Legal
Proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby.  Each party shall pay its own legal fees and expenses
incurred in any such action or suit.
417. Construction.
418. For purposes of this Agreement, whenever the context
requires: the singular number shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders; the feminine
gender shall include the masculine and neuter genders; and the neuter gender
shall include the masculine and feminine genders.
419. The parties hereto agree that any rule of construction to
the effect that ambiguities are to be resolved against the drafting party shall
not be applied in the construction or interpretation of this Agreement.
420. As used in this Agreement, the words "include"
and "including," and variations thereof, shall not be deemed to be
terms of limitation, but rather shall be deemed to be followed by the words
"without limitation."
421. Except as otherwise indicated, all references in this
Agreement to "Articles," "Sections," "Schedules"
and "Exhibits" are intended to refer to an Article or Section of, or
Schedule or Exhibit to, this Agreement.
422. Except as otherwise indicated, all references (i) to any
agreement (including this Agreement), contract or Law are to such agreement,
contract or Law as amended, modified, supplemented or replaced from time to
time, and (ii) to any Governmental Entity include any successor to that
Governmental Entity.
423. Further Assurances.  Each party hereto shall
execute and cause to be delivered to each other party hereto such instruments
and other documents, and shall take such other actions, as such other party may
reasonably request (prior to, at or after the Closing) for the purpose of
carrying out or evidencing any of the transactions contemplated by this
Agreement.
424. Headings.  The descriptive headings
contained in this Agreement are included for convenience of reference only and
shall not affect in any way the meaning or interpretation of this
Agreement.
425. Counterparts.  This Agreement may be
executed and delivered (including by facsimile transmission) in two or more
counterparts, each of which when executed and delivered shall be deemed to be an
original but all of which taken together shall constitute one and the same
agreement.
426. Entire
Agreement.  This Agreement (including the Exhibits, the Schedules,
the Company Disclosure Schedule and the Parent Disclosure Schedule) and the Non-
Disclosure Agreement constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings among the parties with respect thereto.  No addition to or
modification of any provision of this Agreement shall be binding upon any party
hereto unless made in writing and signed by all parties hereto.



[Remainder of page intentionally left blank]



IN WITNESS WHEREOF, each of Parent, Merger Sub and the
Company has executed or has caused this Agreement to be executed by its
respective officers thereunto duly authorized as of the date first written
above.



ActionPoint, Inc.

By:	/s/  Stephen S. Francis
Name:  Stephen S. Francis
Title:  President and Chief Executive Officer

MERGER SUB

By:	/s/  Stephen S. Francis
Name: Stephen S. Francis
Title:  President and Chief Executive Officer

Captiva Software Corporation

By:	/s/  Reynolds C. Bish
Name:  Reynolds C. Bish
Title:  President and Chief Executive Officer

Schedule 1



Individuals Entering Into Employment Agreements

Reynolds C. Bish

Rick Russo





Schedule 1.06(a)



Members of the Board of Directors of Parent at the Effective
Time



Jim Berglund

Reynolds C. Bish

Patrick Edsell

Stephen Francis

Kimra D. Hawley

Mel S. Lavitt

Bruce Silver



Schedule 7.02(e)



Persons Entering Into Affiliate Agreements



|C.E. Unterberg, Towbin, LLC                                                                               
|----------------------------------------------------------------------------------------------------------
|C.E. Unterberg Towbin Capital Partners I, L.P.                                                            
|C.E. Unterberg, Towbin Capital                                                                            
|UT Technology Fund Ltd.                                                                                   
|UT Technology Partners I, L.P.                                                                            
|UT Technology Partners II, L.P.                                                                           
|UT Technology Partners LDC                                                                                
|UT Technology Partners LDS                                                                                
|UT Technology Partners LLC                                                                                
|Enterprise Partners III, L.P.                                                                             
|Enterprise Partners III Associates, L.P.                                                                  
|Novus Ventures, L.P.                                                                                      
|Bish, Reynolds C. & Patricia M. Norman, Trustees of the Reynolds C. Bish
Family Living Trust dated 3/28/90
|Reynolds C. Bish                                                                                          
|Steven D. Burton                                                                                          
|Rick Russo                                                                                                
|Blaine J. Owens                                                                                           
|Randall A. Stern                                                                                          
|Baird W. Brueseke                                                                                         
|James L. Haley                                                                                            
|Jim Berglund                                                                                              
|Shirley Cerrudo                                                                                           
|John E. Jones                                                                                             
|Mel S. Lavitt                                                                                             
|Jordan M. Libit                                                                                           
|Edward H. Pendergast                                                                                      
|Nissho Electronics Corporation                                                                            
|J.F. Shea & Co., Inc.