Exhibit 10.16


 




 


ASSET  PURCHASE AGREEMENT


among


ARZOON, INC.

ARZOON ACQUISITION, INC.

ARZOON ASSET ACQUISITION, INC.

collectively, as Seller


and


SSA GLOBAL TECHNOLOGIES, INC.,





as Purchaser


 


 


Dated as of June 4, 2004




 











 


TABLE OF CONTENTS


	
   

  	
   

  	
  Page

  
	
  ARTICLE I DEFINITIONS

  	
   

  
	
   

  	
  Section 1.1.  Specific Definitions

  	
   

  
	
   

  	
  Section 1.2.  Other Definitional Provisions

  	
   

  
	
   

  	
   

  
	
  ARTICLE II THE PURCHASE AND SALE OF PURCHASED
  ASSETS

  	
   

  
	
   

  	
  Section 2.1.  Purchase and Sale of Purchased Assets.

  	
   

  
	
   

  	
  Section 2.2.  Excluded Assets

  	
   

  
	
   

  	
  Section 2.3.  Assumed Liabilities

  	
   

  
	
   

  	
  Section 2.4.  Excluded Liabilities

  	
   

  
	
   

  	
  Section 2.5.  Consideration for the Purchased Assets

  	
   

  
	
   

  	
  Section 2.6.  Closing

  	
   

  
	
   

  	
  Section 2.7.  Deliveries at Closing

  	
   

  
	
   

  	
  Section 2.8.  Allocation
  of Purchase Price

  	
   

  
	
   

  	
  Section 2.9.  Satisfaction of Bridge Notes

  	
   

  
	
   

  	
   

  
	
  ARTICLE III REPRESENTATIONS AND WARRANTIES OF
  SELLER

  	
   

  
	
   

  	
  Section 3.1.  Authority

  	
   

  
	
   

  	
  Section 3.2.  Organization, Standing and Power

  	
   

  
	
   

  	
  Section 3.3.  Subsidiaries

  	
   

  
	
   

  	
  Section 3.4.  Seller
  Financial Statements

  	
   

  
	
   

  	
  Section 3.5.  Taxes

  	
   

  
	
   

  	
  Section 3.6.  Compliance with Law

  	
   

  
	
   

  	
  Section 3.7.  Governmental Permits

  	
   

  
	
   

  	
  Section 3.8.  Litigation

  	
   

  
	
   

  	
  Section 3.9.  Contracts

  	
   

  
	
   

  	
  Section 3.10.  Consents and Approvals

  	
   

  
	
   

  	
  Section 3.11.  Intellectual Property

  	
   

  
	
   

  	
  Section 3.12.  Products

  	
   

  
	
   

  	
  Section 3.13.  Labor Matters/Employee Matters

  	
   

  
	
   

  	
  Section 3.14.  Affiliate Transactions

  	
   

  
	
   

  	
  Section 3.15.  Brokers and Finders

  	
   

  
	
   

  	
  Section 3.16.  Sufficiency and Title of Purchased Assets

  	
   

  
	
   

  	
  Section 3.17.  Absence of Certain Changes or Events

  	
   

  
	
   

  	
  Section 3.18.  Charter and Bylaws

  	
   

  
	
   

  	
  Section 3.19.  Books and Records

  	
   

  
	
   

  	
  Section 3.20.  Real Property

  	
   

  
	
   

  	
  Section 3.21.  No Public Sale or Distribution

  	
   

  
	
   

  	
  Section 3.22.  Accredited
  Investor Status

  	
   

  
	
   

  	
  Section 3.23.  Reliance on Exemptions

  	
   

  
	
   

  	
  Section 3.24.  Information

  	
   

  



 


 


i
















 


 


	
   

  	
  Section 3.25.  No Governmental Review

  	
   

  
	
   

  	
  Section 3.26.  Transfer or Resale

  	
   

  
	
   

  	
  Section 3.27.  Legends

  	
   

  
	
   

  	
  Section 3.28.  Corporate Securities Law

  	
   

  
	
   

  	
  Section 3.29.  Environmental

  	
   

  
	
   

  	
  Section 3.30.  Employees

  	
   

  
	
   

  	
  Section 3.31.  Accounts Receivables

  	
   

  
	
   

  	
  Section 3.32.  Capitalization

  	
   

  
	
   

  	
  Section 3.33.  Ownership of Stock

  	
   

  
	
   

  	
  Section 3.34.  Global Commerce

  	
   

  
	
   

  	
  Section 3.35.  Disclosure

  	
   

  
	
   

  	
   

  
	
  ARTICLE IV REPRESENTATIONS AND WARRANTIES OF
  PURCHASER

  	
   

  
	
   

  	
  Section 4.1.  Authority

  	
   

  
	
   

  	
  Section 4.2.  Organization, Standing and Power

  	
   

  
	
   

  	
  Section 4.3.  Issuance of Securities

  	
   

  
	
   

  	
  Section 4.4.  Equity Capitalization

  	
   

  
	
   

  	
  Section 4.5.  Purchaser Financial Statements

  	
   

  
	
   

  	
  Section 4.6.  Litigation

  	
   

  
	
   

  	
  Section 4.7.  Consents and Approvals

  	
   

  
	
   

  	
  Section 4.8.  Brokers and Finders

  	
   

  
	
   

  	
  Section 4.9.  Stockholder Approval

  	
   

  
	
   

  	
  Section 4.10.  Disclosure

  	
   

  
	
   

  	
  Section 4.11.  No Changes

  	
   

  
	
   

  	
  Section 4.12.  Financing

  	
   

  
	
   

  	
   

  
	
  ARTICLE V CERTAIN COVENANTS AND AGREEMENTS OF
  SELLER AND PURCHASER

  	
   

  
	
   

  	
  Section 5.1.  Access and Information

  	
   

  
	
   

  	
  Section 5.2.  Registrations, Filings and Consents

  	
   

  
	
   

  	
  Section 5.3.  Conduct of Business

  	
   

  
	
   

  	
  Section 5.4.  Retention of Books and Records

  	
   

  
	
   

  	
  Section 5.5.  Further Assurances

  	
   

  
	
   

  	
  Section 5.6.  Transfer Taxes

  	
   

  
	
   

  	
  Section 5.7.   Change of Name

  	
   

  
	
   

  	
  Section 5.8.   Employment Matters

  	
   

  
	
   

  	
  Section 5.9.   Non-Compete

  	
   

  
	
   

  	
  Section 5.10. Employee Non-Solicit

  	
   

  
	
   

  	
  Section 5.11. Customer Non-Solicit

  	
   

  
	
   

  	
  Section 5.12. Lock-Up Period

  	
   

  
	
   

  	
  Section 5.13. Seller Filings

  	
   

  
	
   

  	
  Section 5.14. COBRA Coverage

  	
   

  
	
   

  	
  Section 5.15. Confidentiality

  	
   

  
	
   

  	
   

  
	
  ARTICLE VI CONDITIONS TO CLOSING

  	
   

  
	
   

  	
  Section 6.1. Conditions to Obligations of Purchaser

  	
   

  



 


ii
















 


 


	
   

  	
  Section 6.2, Conditions to Obligations of Seller

  	
   

  
	
   

  	
   

  
	
  ARTICLE VII TERMINATION

  	
   

  
	
   

  	
  Section 7.1.  Termination

  	
   

  
	
   

  	
  Section 7.2.  Notice of Termination

  	
   

  
	
   

  	
  Section 7.3.  Abandonment

  	
   

  
	
   

  	
   

  
	
  ARTICLE VIII MISCELLANEOUS

  	
   

  
	
   

  	
  Section 8.1.  Survival of Representations and Warranties

  	
   

  
	
   

  	
  Section 8.2.  Amendment and Waiver

  	
   

  
	
   

  	
  Section 8.3.  Expenses

  	
   

  
	
   

  	
  Section 8.4.  Public Disclosure

  	
   

  
	
   

  	
  Section 8.5.  Assignment

  	
   

  
	
   

  	
  Section 8.6.  Entire Agreement

  	
   

  
	
   

  	
  Section 8.7.  Fulfillment of Obligations

  	
   

  
	
   

  	
  Section 8.8.  Parties in Interest; No Third Party
  Beneficiaries

  	
   

  
	
   

  	
  Section 8.9.  Schedules

  	
   

  
	
   

  	
  Section 8.10. Counterparts

  	
   

  
	
   

  	
  Section 8.11. Headings

  	
   

  
	
   

  	
  Section 8.12. Notices

  	
   

  
	
   

  	
  Section 8.13. No Strict Construction

  	
   

  
	
   

  	
  Section 8.14. Governing Law

  	
   

  
	
   

  	
  Section 8.15. Jurisdiction

  	
   

  
	
   

  	
  Section 8.16. Severability

  	
   

  
	
   

  	
  Section 8.17. Jury Trial Waiver

  	
   

  
	
   

  	
  Section 8.18. Bulk Sales Compliance

  	
   

  



 


 


iii
















 


SCHEDULES


	
  Schedule 2.1(a)(i)

  	
   

  	
  Products

  	
   

  	
   

  
	
  Schedule 2.1(a)(ii)

  	
   

  	
  Customer Agreements

  	
   

  	
   

  
	
  Schedule 2.1(a)(iii)

  	
   

  	
  Intellectual Property

  	
   

  	
   

  
	
  Schedule 2.1(a)(iv)

  	
   

  	
  Real Estate, Equipment and
  Other Tangible Assets

  	
   

  	
   

  
	
  Schedule 2.1(b)(i)

  	
   

  	
  Acquisition Subsidiary
  Products

  	
   

  	
   

  
	
  Schedule 2.1(b)(ii)

  	
   

  	
  Acquisition Subsidiary
  Customer Agreements

  	
   

  	
   

  
	
  Schedule 2.1(b)(iii)

  	
   

  	
  Acquisition Subsidiary
  Intellectual Property

  	
   

  	
   

  
	
  Schedule 2.1(b)(iv)

  	
   

  	
  Acquisition Subsidiary
  Real Estate, Equipment and Other Tangible Asset

  	
   

  	
  s

  
	
  Schedule 2.1(c)(i)

  	
   

  	
  Asset Acquisition
  Subsidiary Products

  	
   

  	
   

  
	
  Schedule 2.1(c)(ii)

  	
   

  	
  Asset Acquisition
  Subsidiary Customer Agreements

  	
   

  	
   

  
	
  Schedule 2.1(c)(iii)

  	
   

  	
  Asset Acquisition
  Subsidiary Intellectual Property

  	
   

  	
   

  
	
  Schedule 2.1(c)(iv)

  	
   

  	
  Asset Acquisition Subsidiary
  Real Estate, Equipment and Other Tangible Assets

  	
   

  	
   

  
	
  Schedule 2.2

  	
   

  	
  Certain Excluded Assets

  	
   

  	
   

  
	
  Schedule 2.3

  	
   

  	
  Assumed Liabilities

  	
   

  	
   

  
	
  Schedule 2.9

  	
   

  	
  Bridge Notes

  	
   

  	
   

  
	
  Schedule 3.1

  	
   

  	
  Authority

  	
   

  	
   

  
	
  Schedule 3.3

  	
   

  	
  Subsidiaries

  	
   

  	
   

  
	
  Schedule 3.4(a)

  	
   

  	
  Seller Financial
  Statements

  	
   

  	
   

  
	
  Schedule 3.4(b)

  	
   

  	
  Undisclosed Liabilities

  	
   

  	
   

  
	
  Schedule 3.7

  	
   

  	
  Governmental Permits

  	
   

  	
   

  
	
  Schedule 3.8

  	
   

  	
  Litigation

  	
   

  	
   

  
	
  Schedule 3.9

  	
   

  	
  Compliance with Customer
  Agreements/Contractual Commitments with Penalties for Cancellation/Additional
  Agreements

  	
   

  	
   

  
	
  Schedule 3.10(a)

  	
   

  	
  Material Consents

  	
   

  	
   

  
	
  Schedule 3.10(b)

  	
   

  	
  Additional Consents

  	
   

  	
   

  
	
  Schedule 3.11

  	
   

  	
  Intellectual Property
  Matters

  	
   

  	
   

  
	
  Schedule 3.12(a)

  	
   

  	
  Product Ownership

  	
   

  	
   

  
	
  Schedule 3.12(b)

  	
   

  	
  List of Third Party
  Software

  	
   

  	
   

  
	
  Schedule 3.12(d)

  	
   

  	
  Source Code Agreement

  	
   

  	
   

  
	
  Schedule 3.12(e)

  	
   

  	
  Form of Customer
  Agreements

  	
   

  	
   

  
	
  Schedule 3.12(f)

  	
   

  	
  Third Party Rights to
  Products/List of Agreements with Resellers

  	
   

  	
   

  
	
  Schedule 3.13(f)

  	
   

  	
  List of Employment and
  Consulting Agreements

  	
   

  	
   

  
	
  Schedule 3.13(h)

  	
   

  	
  List of Benefit Plans

  	
   

  	
   

  
	
  Schedule 3.14

  	
   

  	
  Affiliate Transactions

  	
   

  	
   

  
	
  Schedule 3.15

  	
   

  	
  Brokers and Finders

  	
   

  	
   

  
	
  Schedule 3.17

  	
   

  	
  Absence of Certain Changes
  or Events

  	
   

  	
   

  
	
  Schedule 3.20

  	
   

  	
  List of Leases

  	
   

  	
   

  
	
  Schedule 3.30

  	
   

  	
  Severance/Bonus Costs

  	
   

  	
   

  
	
  Schedule 3.34

  	
   

  	
  Global Commerce Assets and
  Liabilities

  	
   

  	
   

  
	
  Schedule 4.5

  	
   

  	
  Purchaser Financial
  Statements

  	
   

  	
   

  
	
  Schedule 5.3(b)

  	
   

  	
  Conduct of Business

  	
   

  	
   

  



 


iv
















 


 


EXHIBITS


	
  Exhibit A

  	
   

  	
  Form of Voting Agreement

  
	
  Exhibit 2.5(i)

  	
   

  	
  Form of Non-Transferable
  Note

  
	
  Exhibit 2.5(ii)

  	
   

  	
  Form of Debtholder Note

  
	
  Exhibit 2.5(iii)

  	
   

  	
  Form of Transferable Note

  
	
  Exhibit 2.7(b)(iii)

  	
   

  	
  Form of Assumption
  Agreement

  
	
  Exhibit 2.7(b)(iv)

  	
   

  	
  Form of Lease Assignment
  Agreement

  
	
  Exhibit 6.1(f)

  	
   

  	
  Form of Opinion of
  Seller’s Counsel

  
	
  Exhibit 6.2(e)

  	
   

  	
  Form of Opinion of
  Purchaser’s Counsel

  



 


v
















 


ASSET
PURCHASE AGREEMENT


This ASSET PURCHASE
AGREEMENT (this “Agreement”) is
made and entered into as of June 4, 2004, by and among ARZOON, INC., a Delaware
corporation (“Parent”), ARZOON
ACQUISITION, INC., a Florida corporation (“Acquisition
Subsidiary”), and ARZOON ASSET ACQUISITION, INC., a Delaware
corporation (“Asset Acquisition Subsidiary”,
and together with Acquisition Subsidiary, collectively the “Subsidiary Sellers”).  Parent and Subsidiary Sellers shall
hereinafter be collectively referred to as the “Seller”.), and SSA GLOBAL TECHNOLOGIES, INC., a Delaware
corporation (“Purchaser”).


W I T N E S
S E T H:


WHEREAS, Seller and
Purchaser wish to provide for the sale to Purchaser of the Purchased Assets and
the assumption by Purchaser of the Assumed Liabilities, upon the terms and
subject to the conditions set forth in this Agreement;


WHEREAS, as a condition and
inducement to Purchaser’s willingness to enter into this Agreement, certain
Parent stockholders representing the Seller Stockholder Vote (as defined in
Section 3.10(b)) have, concurrently with the parties execution of this
Agreement, executed and delivered Voting Agreements in the form attached hereto
as Exhibit A (the “Voting Agreements”),
pursuant to which such stockholders have agreed to vote their shares of Parent
capital stock in favor of the transactions contemplated by this Agreement and
to grant Purchaser irrevocable proxies to vote such shares;


NOW, THEREFORE, in
consideration of the premises and of the mutual covenants and undertakings
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:


ARTICLE I


DEFINITIONS


Section
1.1.            Specific Definitions.  As used in this Agreement, the following
terms shall have the meanings specified below:


“Accounts Receivable” shall mean (a) all trade accounts
receivable and other right to payment from customers of Seller and the full
benefit of all security for such account or rights to payment, including all
trade accounts receivable representing amounts receivable in respect of goods
shipped or delivered or products sold or services rendered to customers of
Seller, (b) all other accounts or notes receivable of Seller and the full
benefit of all security for such accounts or notes and (c) any claim, remedy or
other right related to any of the foregoing.


“Acquisition Subsidiary” shall have the meaning set forth in
the preamble.


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


“Additional Consents” shall have the meaning set forth in
Section 3.10.
















 


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


“Agreement” shall mean this Agreement and all Schedules and
Exhibits hereto.


“Ancillary Product Materials”
shall mean all Documentation currently used or distributed by Seller in
connection with the Products, including customer support materials such as
support and training materials, support bulletins, and any and all data
contained in the customer support organization computer system of Seller; and
marketing materials relating to the Products, including sale and marketing
collateral, white papers, performance benchmark reports, customer training
materials, sales training materials and sales presentation materials.


“Asset Acquisition Subsidiary” shall have the meaning set forth
in the preamble.


“Assumed Liabilities” shall have the meaning set forth in Section
2.3.


“Benefit Plans” shall have the meaning set
forth in Section 3.13(h).


“Bridge Notes” shall have the meaning set
forth in Section 2.9.


“Business” shall mean the business of Seller
as conducted as of the Closing Date.


“Business Day” shall mean any day other than a Saturday, a
Sunday or a day on which banks in New York, New York are authorized or
obligated by law or executive order to close.


“Business
Intellectual Property” shall mean the Owned Intellectual Property
and the Licensed Intellectual Property


“Cash Purchase Price” shall have the meaning set forth in Section
2.5.


“Closing” shall have the meaning set forth in Section 2.6.


“Closing Date” shall have the meaning set forth in Section
2.6.


“COBRA Coverage” shall have the meaning set forth in Section
5.14.


“Code” shall mean the United States Internal Revenue Code of
1986, as amended, or any successor legislation thereto, and the regulations and
rules promulgated thereunder.


“Computer
Software” shall mean computer programs, including, but not limited
to, databases and user interfaces, in source or object code versions, together
with any and all Documentation related thereto.


“Contract” shall mean any mortgage, bond, indenture, lien,
lease, franchise, license, permit, contract, agreement, obligation, trust or
instrument.


“Copyrights”
shall have the meaning ascribed to such term within the definition of
Intellectual Property.


 


2
















 


“Customer
Agreement” shall mean an agreement between Seller and a customer of
Seller with respect to a Product.


“Debtholder
Notes” shall have the meaning set forth in Section 2.5.


“Disabling
Devices” shall mean Computer Software viruses, time bombs, logic
bombs, Trojan horses, trap doors, back doors, or other computer instructions,
intentional devices or techniques that are designed to threaten, infect,
assault, vandalize, defraud, disrupt, damage, disable, maliciously encumber,
hack into, incapacitate, infiltrate or slow or shut down a computer system or
any component of such computer system, including any such device affecting
system security or compromising or disclosing user data.


“Documentation”
shall mean all documentation (including data entry and data processing
procedures, report generation and quality control procedures), logic and
designs for all programs, algorithms, edit controls, methodologies, flow charts
and file layouts and written narratives of all procedures used in the coding,
operation or maintenance of and customer support with respect to the Products.


“Encumbrance” shall mean liens, encumbrances, security
interests, options, rights of first refusal, charges in respect of monetary
obligations, indentures, deeds of trust, licenses to third parties, leases to
third parties and security agreements.


“Environmental Laws” shall have the meaning set forth in Section
3.29.


“Equipment” shall mean all machinery, equipment, fixtures,
computer hardware, furniture, office equipment, and other tangible personal
property and assets owned or leased by Seller including, without limitation,
manuals, maintenance records, spare parts, tooling, accessories and supplies
relating to the foregoing.


“ERISA” shall mean the Employee Retirement Income Security Act
of 1974, as amended, or any successor legislation thereto, and the regulations
and rules promulgated thereunder.


“ERISA Affiliate” shall mean any individual, company, joint
venture, firm, corporation, association, limited liability company, trust or
other enterprise or any government or political subdivision or any agency,
department or instrumentality thereof that, together with Seller, is treated as
a single employer under Section 414(b), (c), (m) or (o) of the Code.


“Excluded Assets” shall include the Excluded Assets of Parent,
the Excluded Assets of Acquisition Subsidiary and the Excluded Assets of Asset
Acquisition Subsidiary.


“Excluded Assets of Acquisition Subsidiary” shall have the
meaning set forth in Section 2.2(b).


“Excluded Assets of Asset Acquisition Subsidiary” shall have
the meaning set forth in Section 2.2(c).


“Excluded Assets of Parent” shall have the meaning set forth in
Section 2.2(a).


 


3
















 


“Excluded Liabilities” shall have the meaning set forth in Section
2.4.


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


“Global Commerce” shall have the meaning set forth in Section
3.32.


“Governmental Directive” shall have the meaning set forth in Section
3.8(b).


“Governmental Entity” shall mean any court, tribunal,
governmental or regulatory authority, agency, department, commission,
instrumentality, body or other governmental entity of the United States of
America or any State or political subdivision thereof or any court or
arbitrator.


“Hazardous Materials” shall include, without regard to amount
and/or concentration (a) any element, compound, or chemical that is defined,
listed or otherwise classified as a contaminant, pollutant, toxic pollutant,
toxic or hazardous substances, extremely hazardous substance or chemical,
hazardous waste, medical waste, biohazardous or infectious waste, special waste,
or solid waste under Environmental Laws; (b) petroleum, petroleum-based or
petroleum derived products; (c) polychlorinated biphenyls; (d) any substance
exhibiting a hazardous waste characteristic including but not limited to
corrosivity, ignitibility, toxicity or reactivity as well as any radioactive or
explosive materials; and (e) any raw materials, building components, including
but not limited to asbestos-containing materials and manufactured products
containing Hazardous Materials.


“Indemnified Party” shall have the meaning set forth in Section
8.1(d).


“Indemnifying Party” shall have the meaning set forth in Section
8.1(d).


“Indemnity Threshold” shall have the meaning set forth in Section
8.1(f).


“Intellectual
Property” shall mean all (i) foreign and domestic trademarks,
service marks, brand names, certification marks, collective marks, d/b/a’s,
Internet domain names, logos, symbols, trade dress, assumed names, fictitious
names, trade names, and other indicia of origin, all applications and registrations
for all of the foregoing, and all goodwill associated therewith and symbolized
thereby, including without limitation all extensions, modifications and
renewals of same (collectively, “Trademarks”);
(ii) foreign and domestic inventions, discoveries and ideas, whether patentable
or not, and all patents, registrations, and applications therefor, including
without limitation divisions, continuations, continuations-in-part and renewal
applications, and including without limitation renewals, extensions and reissues
(collectively, “Patents”); (iii) confidential and
proprietary information, trade secrets and know-how, including without
limitation processes, schematics, databases, formulae, drawings, prototypes,
models, designs and customer lists (collectively, “Trade
Secrets”); (iv) foreign and domestic published and unpublished works
of authorship, whether copyrightable or not (including, without limitation,
Computer Software), copyrights therein and thereto, and registrations and
applications therefor, and all renewals, extensions, restorations and
reversions thereof (collectively, “Copyrights”);
and (v) electronic data processing, information, recordkeeping, communications,
telecommunications, networking, account management, inventory management and
other applications, software, hardware and equipment (including all 


 


4
















 


databases,
firmware and related documentation) and Internet websites and related content
(collectively, “IT Systems”); and
(vi) other intellectual property or proprietary rights and claims or causes of
action arising out of or related to any infringement, misappropriation or other
violation of any of the foregoing, including without limitation rights to
recover for past, present and future violations thereof (collectively, “Other Proprietary Rights”).


“Intellectual Property Contracts” shall mean all agreements
concerning the Business Intellectual Property, including without limitation
agreements granting Seller rights to use the Licensed Intellectual Property,
agreements granting rights to use Owned Intellectual Property, confidentiality
agreements, Trademark coexistence agreements, Trademark consent agreements and
nonassertion agreements.


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


“IT Systems”
shall have the meaning ascribed to such term within the definition of
Intellectual Property.


“Judgment” shall mean any judgment, injunction, ruling, order,
writ, decree or award, including final determinations under arbitration
proceedings.


“Knowledge of Seller” shall mean the Knowledge of Bill Sickler,
Jerry Overcash, Kelyn Brannon-Ahn and Deby Veneziale, after such individuals
have made due inquiry of the employees of Seller who manage or are otherwise
responsible for the functions relevant to the matter in question.


“Law” shall mean any law, rule, regulation, code, plan,
Judgment or other restriction of any court, arbitrator or Governmental Entity.


“Lease Assignment Agreement” shall have the meaning set forth
in Section 2.7(b)(iv).


“Leases” shall have the meaning set forth in Section 3.20.


“Licensed
Intellectual Property” shall mean Intellectual Property that Seller
is licensed or otherwise permitted by other Persons to use.


“Losses” shall have the meaning set forth in Section 8.1(b).


“Material Adverse Effect” shall mean any
event, change or effect that individually or when taken together with all other
events, changes or effects is or could reasonably be expected to be materially
adverse to the business, properties, assets, liabilities, condition (financial
or otherwise), operations or performance of the business of Seller and its
Subsidiaries taken as a whole excluding any such event, change or effect
resulting from or arising in connection with (A) changes or conditions
generally affecting the industries or segments in which Seller operates and not
uniquely related to Seller or any of its Subsidiaries, (B) changes in general
economic, market or political conditions not uniquely related to Seller or any
of its Subsidiaries (including any effects relating to or arising out of war or
acts of terrorism), (C) Seller’s compliance with its obligations pursuant to
this Agreement, or (D) the 


 


5
















 


execution,
announcement or pendency of this Agreement and the transactions contemplated
hereby (including, without limitation, any loss or potential loss of
customers).


“Material Consents” shall have the meaning
set forth in Section 3.10.


“Maximum Indemnification Amount” shall have
the meaning set forth in Section 8.1(f).


“Most Recent Balance Sheet” shall have the
meaning set forth in Section 3.4.


“Non-Transferable Note” shall have the
meaning set forth in Section 2.5.


“Non-Transferred Employee” shall have the
meaning set forth in Section 5.8.


“Notes” shall have the meaning set forth in Section
2.5.


“Oracle Contract” shall mean that certain
Oracle License and Services Agreement dated as of February 27, 2004 by and
between Parent and Oracle Corporation.


“Other Proprietary Rights” shall have the meaning ascribed to
such term within the definition of Intellectual Property.


“Owned Intellectual Property” shall mean Intellectual
Property owned by Seller.


“Parent” shall have the meaning set forth in
the preamble.


“Party” or
“Parties” shall mean
the parties to the Agreement.


“Patents” shall have the meaning ascribed to such term within
the definition of Intellectual Property.


“Person” shall mean any individual, corporation, partnership
(general or limited), limited liability company, firm, joint venture,
association, joint-stock company, trust, estate, unincorporated organization or
Governmental Entity.


“Personnel List” shall have the meaning set forth in Section
3.13(g).


“Products”
shall mean the Computer Software products marketed, sold, licensed, supported,
serviced or maintained by Seller and all service offerings of Seller, together
with the inventory of the Products, the Ancillary Product Materials, any and
all such Computer Software related to, comprising or constituting such
products, any and all supplements, modifications, updates, corrections and
enhancements to past and current versions of such products, shipping versions
of such products, versions of such products currently under development, and
any and all English and foreign language versions of current and past versions
of such products, shipping versions of such products and versions of such
products currently under development, and any and all back-up tapes and
archival tapes relating to the foregoing.


“Purchase Price” shall have the meaning set forth in Section
2.5.


 


6
















 


“Purchased Assets” shall include the Purchased Assets of
Parent, the Purchased Assets of Acquisition Subsidiary and the Purchased Assets
of Asset Acquisition Subsidiary.


“Purchased Assets of Acquisition Subsidiary” shall have the
meaning set forth in Section 2.1(b).


“Purchased Assets of Asset Acquisition Subsidiary” shall have
the meaning set forth in Section 2.1(c).


“Purchased Assets of Parent” shall have the meaning set forth
in Section 2.1(a).


“Purchaser”
shall have the meaning set forth in the preamble.


“Purchaser Financial Statements” shall have the meaning set
forth in Section 4.5.


“Registered”
shall mean issued, registered, renewed or the subject of a pending application.


“Related Document” shall mean the Notes and those other
documents executed in connection with the consummation of the transaction
contemplated by this Agreement.


“Rule 144” shall have the meaning set forth in Section 3.26.


“Securities” shall have the meaning set forth in Section
3.21.


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


“Seller” shall have the meaning set forth in the preamble.


“Seller Financial Statements” shall have the meaning set forth
in Section 3.4(a).


“Seller Permits” shall have the meaning set forth in Section
3.7.


“Seller Personnel”  shall
have the meaning set forth in Section 3.13(b).


“Severance Waivers” shall have the meaning set forth in Section 3.30.


“Shares” shall have the meaning set forth in Section 3.21.


“Stock” shall have the meaning set forth in Section 3.32.


“Subsidiary” shall mean, with respect to any Party at any time,
any corporation, partnership, joint venture, association, limited liability
company, joint-stock company, trust or estate, or unincorporated organization
of which (or in which) more than 10% of: 
(i) the issued and outstanding shares of capital stock having ordinary
voting power to elect a majority of the board of directors of such corporation
(irrespective of whether at the time shares of capital stock of any other class
or classes of such corporation shall or might have voting power upon the
occurrence of any contingency), (ii) the interest in the capital or profits of
such partnership, joint 


 


7
















 


venture
or limited liability company, or (iii) the beneficial interest in such trust or
estate, is, at such time, directly or indirectly owned or controlled by such
Party, by such Parties and one or more of its other Subsidiaries or by one or
more of such Person’s other Subsidiaries.


“Subsidiary Sellers” shall have the meaning set forth in the
preamble.


“Substitute Transamerica Loan” means $440,000 of the loan
proceeds provided to Parent by Silicon Valley Bank pursuant to that certain
Loan and Security Agreement dated June 1, 2004 by and between Parent and
Silicon Valley Bank, which amount is equal to the amount paid by Parent to
discharge all of its outstanding obligations under the Master Loan and Security
Agreement between Parent and Transamerica Business Credit Corporation, as
amended.


“Suit” shall have the meaning set forth in Section 3.11(d).


“Survival Period” shall have the meaning set forth in Section
8.1(a).


“Tax” or “Taxes”
shall mean any and all federal, state, county, local, foreign and other taxes,
assessments, duties or charges of any kind whatsoever, including, without
limitation, franchise, income, sales, use, ad valorem,
gross receipts, value added, profits, license, minimum, alternative minimum,
environmental, withholding, payroll, employment, excise, property, customs and
occupation taxes, and any interest, fine, penalty, addition to tax and other
amounts imposed with respect thereto.


“Terminated Employees” shall have the meaning set forth in Section
5.14.


“Third Party
Software” shall mean all Computer Software used or held for use,
sale, distribution or license by Seller (as a separate Product or as a
component of a Product) that Seller does not own.


“Trade
Secrets” shall have the meaning ascribed to such term within the
definition of Intellectual Property.


“Trademarks”
shall have the meaning ascribed to such term within the definition of
Intellectual Property.


“Transfer Taxes” shall have the meaning set forth in Section
5.6.


“Transferable Note” shall have the meaning set forth in Section
2.5.


“Transferred Employee” shall have the meaning set forth in Section
5.8.


“Transitional Employees” shall mean the employees identified as
such on Schedule 3.30.


Section
1.2.            Other Definitional
Provisions.  (a)    The words “hereof,” “herein,” and
“hereunder” and words of similar import, when used in this Agreement, shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement.


 


8
















 


(b)           The
words and phrases “including,” and “including, but not limited to,” when used
in this Agreement shall mean “including, without limitation”.


(c)           The
terms defined in the singular shall have a comparable meaning when used in the
plural, and vice versa.


(d)           The
terms “dollars” and “$” shall mean United States dollars.


ARTICLE II


THE PURCHASE AND SALE OF PURCHASED
ASSETS


Section 2.1.            Purchase
and Sale of Purchased Assets.


(a)           Purchase
and Sale of Purchased Assets of Parent. 
Upon the terms and subject to the conditions set forth herein, on the
Closing Date, Parent will sell, assign, transfer, convey and deliver to
Purchaser and/or one or more Affiliates of Purchaser designated by the
Purchaser, and Purchaser will, or will cause one or more of such Affiliates to,
as the case may be, purchase and acquire from Parent, all of Parent’s legal and
beneficial right, title and interest in, to and under all of the assets owned,
leased or operated by Parent at the close of business on the Closing Date and
which are not Excluded Assets of Parent, including, without limitation, the
following (collectively, the “Purchased
Assets of Parent”):


(i)            all Products listed on Schedule
2.1(a)(i);


(ii)           all Customer Agreements listed on Schedule
2.1(a)(ii);;


(iii)          all Intellectual Property relating to
the Products listed on Schedule 2.1(a)(iii);;


(iv)          all real estate, Equipment and other
tangible assets owned or leased (including operating and capital leases) by
Parent and listed on Schedule 2.1(a)(iv);


(v)           all cash, cash equivalents or
marketable securities;


(vi)          all Accounts Receivable of Parent;


(vii)         all rights of Parent relating to
deposits and prepaid expenses;


(viii)        all books and records of Parent,
including client and customer lists and records and other client information,
supplier lists and other supplier information, copies of financial, accounting
and personnel records, correspondence and other similar documents and records
(except general ledger and other book of original entry, sufficient to enable
Parent to prepare and file all tax and other regulatory returns which the
Parent is obligated to file for the period through to the Closing Date and
personnel and other records that Parent is required by law to retain in its
possession;


 


9
















 


provided, however,
that copies of same shall be included in the Purchased Assets of Parent to the
extent permitted by applicable law);


(ix)           all noncompete, confidentiality and
assignment agreements and similar agreements of Parent; and


(x)            all issued and outstanding shares of
capital stock of Arzoon Global Commerce, Inc.


(b)           Purchase
and Sale of Purchased Assets of Acquisition Subsidiary.  Upon the terms and subject to the conditions
set forth herein, on the Closing Date, Acquisition Subsidiary will sell,
assign, transfer, convey and deliver to Purchaser and/or one or more Affiliates
of Purchaser designated by the Purchaser, and Purchaser will, or will cause one
or more of such Affiliates to, as the case may be, purchase and acquire from
Acquisition Subsidiary, all of Acquisition Subsidiary’s legal and beneficial
right, title and interest in, to and under all of the assets owned, leased or
operated by Acquisition Subsidiary at the close of business on the Closing Date
and which are not Excluded Assets of Acquisition Subsidiary, including, without
limitation, the following (collectively, the “Purchased
Assets of Acquisition Subsidiary”):


(i)            all Products listed on Schedule
2.1(b)(i);


(ii)           all Customer Agreements listed on Schedule
2.1(b)(ii);


(iii)          all Intellectual Property relating to
the Products listed on Schedule 2.1(b)(iii);


(iv)          all real estate, Equipment and other
tangible assets owned or leased (including operating and capital leases) by
Acquisition Subsidiary and listed on Schedule 2.1(b)(iv);


(v)           all cash, cash equivalents or
marketable securities;


(vi)          all Accounts Receivable of Acquisition
Subsidiary;


(vii)         all rights of Acquisition Subsidiary
relating to deposits and prepaid expenses;


(viii)        all books and records of Acquisition
Subsidiary, including client and customer lists and records and other client
information, supplier lists and other supplier information, copies of
financial, accounting and personnel records, correspondence and other similar
documents and records (except general ledger and other book of original entry,
sufficient to enable Acquisition Subsidiary to prepare and file all tax and
other regulatory returns which the Acquisition Subsidiary is obligated to file
for the period through to the Closing Date and personnel and other records that
Acquisition Subsidiary is required by law to retain in its possession; provided,
however, that copies of same shall be included in the Purchased Assets
of Acquisition Subsidiary to the extent permitted by applicable law); and


 


10
















 


(ix)           all noncompete, confidentiality and
assignment agreements and similar agreements of Acquisition Subsidiary.


(c)           Purchase
and Sale of Purchased Assets of Asset Acquisition Subsidiary.  Upon the terms and subject to the conditions
set forth herein, on the Closing Date, Asset Acquisition Subsidiary will sell,
assign, transfer, convey and deliver to Purchaser and/or one or more Affiliates
of Purchaser designated by the Purchaser, and Purchaser will, or will cause one
or more of such Affiliates to, as the case may be, purchase and acquire from
Asset Acquisition Subsidiary, all of Asset Acquisition Subsidiary’s legal and
beneficial right, title and interest in, to and under all of the assets owned,
leased or operated by Asset Acquisition Subsidiary at the close of business on
the Closing Date and which are not Excluded Assets of Asset Acquisition
Subsidiary, including, without limitation, the following (collectively, the “Purchased Assets of Asset Acquisition Subsidiary”):


(i)            all Products listed on Schedule
2.1(c)(i);


(ii)           all Customer Agreements listed on Schedule
2.1(c)(ii);


(iii)          all Intellectual Property relating to
the Products listed on Schedule 2.1(c)(iii);


(iv)          all real estate, Equipment and other
tangible assets owned or leased (including operating and capital leases) by
Asset Acquisition Subsidiary and listed on Schedule 2.1(c)(iv);


(v)           all cash, cash equivalents or
marketable securities;


(vi)          all Accounts Receivable of Asset
Acquisition Subsidiary;


(vii)         all rights of Asset Acquisition
Subsidiary relating to deposits and prepaid expenses;


(viii)        all books and records of Asset
Acquisition Subsidiary, including client and customer lists and records and
other client information, supplier lists and other supplier information, copies
of financial, accounting and personnel records, correspondence and other
similar documents and records (except general ledger and other book of original
entry, sufficient to enable Asset Acquisition Subsidiary to prepare and file
all tax and other regulatory returns which the Asset Acquisition Subsidiary is
obligated to file for the period through to the Closing Date and personnel and
other records that Asset Acquisition Subsidiary is required by law to retain in
its possession; provided, however, that copies of same shall be
included in the Purchased Assets of Asset Acquisition Subsidiary to the extent
permitted by applicable law); and


(ix)           all noncompete, confidentiality and
assignment agreements and similar agreements of Asset Acquisition Subsidiary.


 


11
















 


Section 2.2.            Excluded
Assets.


(a)           Excluded
Assets of Parent.  Notwithstanding
anything to the contrary in this Agreement, the Purchased Assets of Parent
shall not include any of the following assets of Parent that are specifically
designated as Excluded Assets of Parent (collectively, the “Excluded Assets of Parent”):


(i)            the corporate charter, seals, minute
books, stock transfer books and other documents relating solely to the
organization, maintenance and existence of Parent as a corporation;


(ii)           any shares of capital stock of
Parent, Acquisition Subsidiary and Asset Acquisition Subsidiary;


(iii)          all claims for refund of Taxes and
other governmental charges of whatever nature;


(iv)          subject to Section 5.5(b), all
insurance policies and rights thereunder;


(v)           all personnel records and other
records that Parent is required by law to retain in its possession; provided,
however, that copies of same shall be included in the Purchased Assets
of Parent to the extent permitted by applicable law; and


(vi)          all rights of Parent under this
Agreement and the Related Agreements.


(vii)         all rights in connection with, and
assets of, the Benefit Plans;


(viii)        the property and assets expressly
designated in Schedule 2.2.


(b)           Excluded
Assets of Acquisition Subsidiary. 
Notwithstanding anything to the contrary in this Agreement, the
Purchased Assets of Acquisition Subsidiary shall not include any of the
following assets of Acquisition Subsidiary that are specifically designated as
Excluded Assets of Acquisition Subsidiary (collectively, the “Excluded Assets of Acquisition Subsidiary”):


(i)            the corporate charter, seals, minute
books, stock transfer books and other documents relating solely to the
organization, maintenance and existence of Acquisition Subsidiary as a
corporation;


(ii)           any shares of capital stock of
Acquisition Subsidiary;


(iii)          all claims for refund of Taxes and
other governmental charges of whatever nature;


 


12
















 


(iv)          subject to Section 5.5(b), all
insurance policies and rights thereunder;


(v)           all personnel records and other
records that Acquisition Subsidiary is required by law to retain in its
possession; provided, however, that copies of same shall be
included in the Purchased Assets of Acquisition Subsidiary to the extent
permitted by applicable law;


(vi)          all rights of Acquisition Subsidiary
under this Agreement and the Related Agreements;


(vii)         all rights in connection with, and
assets of, the Benefit Plans; and


(viii)        the property and assets expressly
designated in Schedule 2.2.


(c)           Excluded
Assets of Asset Acquisition Subsidiary. 
Notwithstanding anything to the contrary in this Agreement, the
Purchased Assets of Asset Acquisition Subsidiary shall not include any of the
following assets of Asset Acquisition Subsidiary that are specifically
designated as Excluded Assets of Asset Acquisition Subsidiary (collectively,
the “Excluded Assets of Asset Acquisition
Subsidiary”):


(i)            the corporate charter, seals, minute
books, stock transfer books and other documents relating solely to the
organization, maintenance and existence of Asset Acquisition Subsidiary as a
corporation;


(ii)           any shares of capital stock of Asset
Acquisition Subsidiary;


(iii)          all claims for refund of Taxes and
other governmental charges of whatever nature;


(iv)          subject to Section 5.5(b), all
insurance policies and rights thereunder;


(v)           all personnel records and other
records that Asset Acquisition Subsidiary is required by law to retain in its
possession; provided, however, that copies of same shall be
included in the Purchased Assets of Asset Acquisition Subsidiary to the extent
permitted by applicable law;


(vi)          all rights of Asset Acquisition
Subsidiary under this Agreement and the Related Agreements;


(vii)         all rights in connection with, and
assets of, the Benefit Plans; and


(viii)        the property and assets expressly
designated in Schedule 2.2.


 


13
















 


Section
2.3.            Assumed Liabilities.  (a)  
Upon the terms and subject to the conditions of this Agreement, at the
Closing, Purchaser agrees to assume (i) all liabilities arising after the
Closing Date with respect to events or periods occurring after the Closing
Date, in respect of or pursuant to the Purchased Assets which are transferred
and assigned to Purchaser (or its designee) at the Closing, (ii) all
liabilities listed on Schedule 2.3 attached hereto (which Schedule shall
be updated at Closing, with respect to accrued liabilities, in accordance with
Section 6.1(i)), (iii) all capital lease obligations listed on Schedule
2.3 attached hereto, (iv) all trade accounts payable of the Seller incurred
in the ordinary course of business listed on Schedule 2.3 attached
hereto (which shall be updated at Closing in accordance with Section 6.1(i));
and (v) the Substitute Transamerica Loan, which Purchaser agrees to pay in full
at the Closing by wire transfer to the account designated by Silicon Valley
Bank (collectively, the “Assumed Liabilities”);
provided, however, that notwithstanding the foregoing, the
Assumed Liabilities shall not include any liabilities or indebtedness owed by
Seller to any Affiliate of Seller, (including the holders of the Bridge Notes)
or any accrued interest thereon, and any liabilities or obligations in respect
of Benefit Plans (other than accrued but unpaid paid time off for the
Transferred Employees, as set forth on Schedule 2.3, and severance payable to
Transitional Employees terminated by Purchaser, as set forth on Schedule
3.30, which shall be deemed to be an Assumed Liability) which shall be
deemed to be Excluded Liabilities.


(b)           Notwithstanding
anything in this Agreement to the contrary, no contract, agreement, license or
lease of Seller that is part of the Purchased Assets and Assumed Liabilities
and that is not capable of being delegated, assigned or transferred to
Purchaser without the consent or waiver of another party to such contract,
agreement, license or lease, or under which any delegation, assignment or
purported assignment to Purchaser would constitute a breach or default, shall
be delegated, assigned or transferred to Purchaser without having first
obtained such requisite consents or waivers and, to the extent such consents
and approvals are not obtained and in full force and effect as of the Closing
Date, Seller and Purchaser shall both cooperate with each other (i) to
establish lawful arrangement that result in the benefits and obligations under
such contracts, agreements, licenses and leases being apportioned in a manner
that is consistent with the purpose and intention of this Agreement and (ii) if
so requested by the other party, to obtain any such consents and waivers, and
enforce the other party’s rights under any assignment envisioned under the
Agreement so that the rights and obligations under such contracts, agreements,
licenses and leases are apportioned in a manner that is consistent with the
purpose and intention of this Agreement; provided, however, that
if the Closing occurs, nothing in this paragraph shall prevent Seller from
dissolving at any time after 30 days following the Closing.


Section
2.4.            Excluded Liabilities.  The parties acknowledge and agree that
Purchaser is not assuming and shall not be responsible or liable for, and
Seller shall retain, all liabilities and obligations of Seller (whether fixed,
contingent or unliquidated, absolute or otherwise, known or unknown, and
whether relating to any tort, statutory or regulatory obligation, environmental
claim, Taxes, (other than Purchaser’s share of Transfer Taxes under Section
5.6 hereof), Contract, operations or otherwise), including without
limitation all fees and expenses related to this Agreement and the transactions
contemplated hereby and any other fees and expenses associated with the raising
of capital or the sale or attempted sale, directly or indirectly, of the
Business, the Purchased Assets or any Seller incurred or paid from and after
April 8, 2004, other than the Assumed Liabilities (collectively, “Excluded Liabilities”);


 


14
















 


provided, however,
that all fees and expenses of Alliant Capital incurred or paid by any Seller
prior to, on or after April 8, 2004 shall be Excluded Liabilities; provided,
further, that up to $3,000 of the fees and expenses of Joe Cowan
incurred or paid by any Seller prior to, on or after April 8, 2004 shall not be
Excluded Liabilities.  For the avoidance
of doubt, Excluded Liabilities shall include any assets and liabilities of
Seller’s Benefit Plans, including, without limitation, any liabilities associated
with claims incurred under the Benefit Plans or in connection with the
termination of the Benefit Plans.


Section
2.5.            Consideration for the
Purchased Assets.  The purchase price
for the Purchased Assets shall be as follows: 
(1) $2,000,000 payable in cash by wire transfer of immediately available
funds at the Closing (the “Cash Purchase
Price”); (2) Purchaser shall execute and deliver to Parent a
convertible promissory note in the principal amount of $1,400,000 in the form
attached hereto as Exhibit 2.5(i) at the Closing (the “Non-Transferable Note”); and (3) Purchaser
shall execute and deliver to each of the holders of the Bridge Notes, a
convertible promissory note, in the form attached hereto as Exhibit 2.5(ii)
(the “Debtholder Notes”), in the principal
amount equal to the aggregate principal amount of and accrued interest on each
of the Bridge Notes held by such holder, all in accordance with Section 2.9
hereof; and (4) Purchaser shall execute and deliver to Parent a convertible
promissory note in the form attached hereto as Exhibit 2.5 (iii), in the
principal amount equal to $10,600,000 less
the aggregate principal amount of the Debtholder Notes, at the Closing (the “Transferable Note”, and together with the
Non-Transferable Note and the Debtholder Notes, the “Notes”)  The Notes,
together with the Cash Purchase Price shall be referred to herein as the “Purchase Price”.  Subject to the terms and conditions of this
Agreement, in consideration of the sale, transfer, assignment, conveyance and
delivery of the Purchased Assets, Purchaser shall (i) assume the Assumed
Liabilities, (ii) pay to Parent at the Closing, the Cash Purchase Price, and
(iii) deliver to Parent and each of the holders of the Bridge Notes at the
Closing, the applicable Notes.  Notwithstanding
Purchaser’s direct delivery of the Debtholder Notes to the holders of the
Bridge Notes at the Closing, the Debtholder Notes shall be deemed received by Parent
as partial consideration for the Purchased Assets and thereafter transferred by
Parent to such holders in satisfaction of the Bridge Notes.


Section
2.6.            Closing.  Upon the terms and subject to the conditions
hereof, the closing of the transactions contemplated hereby (the “Closing”) shall take place at the offices
of Schulte Roth & Zabel LLP, 919 Third Avenue, New York, New York 10022, at
10:00 a.m., local time on the second Business Day following the satisfaction or
waiver (subject to applicable Law) of the conditions precedent specified in Article VI
(other than those conditions that by their nature are to be fulfilled only at
the Closing, but subject to the fulfillment or waiver (subject to applicable
Law) of such conditions) or at such other time and place as the parties hereto
may mutually agree (such date, the “Closing
Date”).


Section 2.7.            Deliveries
at Closing.  (a)     At the Closing, Seller shall deliver, or
cause to be delivered, to Purchaser, the following:


(i)            one or more bills of sale and
assignments to validly transfer title to Purchaser of the Purchased Assets,
free and clear of Encumbrances in form reasonably acceptable to Purchaser;


 


15
















 


(ii)           stock certificate or certificates
representing all of the Stock, duly endorsed in blank for transfer or delivered
with stock powers duly executed in blank sufficient to transfer to Purchaser
the Stock, free and clear of Encumbrances;


(iii)          the officer’s certificates
contemplated by Sections 6.1(a)  and 6.1(b);


(iv)          the Material Consents set forth on Schedule
3.10(a); and


(v)           such other duly executed documents,
instruments and certificates as may be necessary or appropriate to be delivered
by Seller pursuant to this Agreement.


(b)           At the Closing, Purchaser shall deliver, or cause to be
delivered, the following:


(i)            the Cash Purchase Price, by wire
transfer of immediately available funds;


(ii)           the Notes;


(iii)          an executed assumption agreement
providing for Purchaser’s assumption of the Assumed Liabilities in the form
attached hereto as Exhibit 2.7(b)(iii);


(iv)          an assignment agreement (the “Lease Assignment Agreement”) in a form
sufficient to effectuate the transfer in full of Seller’s leasehold interests
(including the transfer of rights to any security deposit or any other interest
of Seller in the Leases) in each of the Leases, to Purchaser in the form
attached hereto as Exhibit 2.7(b)(iv);


(v)           the officer’s certificates
contemplated by Section 6.2(a);


(vi)          evidence of the payment in full of the
Substitute Transamerica Loan by wire transfer to the account designated by
Silicon Valley Bank;


(vii)         all consents, waivers and approvals
obtained by Purchaser or its Affiliates that are required for the consummation
of the transactions contemplated by this Agreement; and


(viii)        such other duly executed documents,
instruments and certificates as may be necessary or appropriate to be delivered
by Purchaser pursuant to this Agreement.


Section
2.8.            Allocation of Purchase Price.  The Purchase Price shall
be allocated among the Purchased Assets to be prepared by the Purchaser no
later than 60 days after the Closing, subject to the review and approval of Parent,
not be unreasonably withheld (it being understood that the aggregate allocation
for deferred revenue and customer contracts shall be


 


16
















 


$1), and which allocation
among the Purchased Assets shall be in accordance with Section 1060 of the
Code, or any successor law and the regulations promulgated thereunder and all
applicable provisions of state, local and foreign law.  No party hereto will, and each party will
cause its Affiliates not to, take a position on any Tax return, before any
governmental agency charged with the collection of any Tax or in any proceeding
that is in any way inconsistent with the purchase price allocation set forth in
this Section 2.8.


Section
2.9.            Satisfaction of Bridge
Notes.  Schedule 2.9 sets
forth the holders of Parent’s outstanding bridge debt, together with the
outstanding principal amount of and accrued interest on (through the date
hereof) the promissory notes of Parent held by each such holder (the “Bridge Notes”), which schedule shall be
updated at Closing pursuant to Section 6.1(i) hereof.  At the Closing, each of the Bridge Notes
shall be surrendered for termination in exchange for a Debtholder Note issued
by Purchaser having a principal amount equal to the principal amount of and
accrued interest on (through the Closing Date) of the surrendered Bridge
Notes.  The Debtholder Notes shall
include representations and warranties substantially similar to those contained
in Sections 3.21 through 3.28, inclusive, and a lock-up provision similar to
that set forth in Section 5.12 hereto.


ARTICLE III



REPRESENTATIONS AND WARRANTIES OF SELLER


Seller hereby represents and
warrants, jointly and severally, to Purchaser that the statements contained in
this Article III are true and correct, as qualified by the disclosures made in
the schedules delivered by Seller to Purchaser simultaneously herewith (the “Seller Disclosure Schedule”).  The Seller Disclosure Schedule shall be
arranged in paragraphs corresponding to the sections and subsections contained
in this Agreement to which the disclosure relates.  All of Sellers’ representations and
warranties hereunder also apply to Arzoon Global Commerce, Inc. and the Stock,
where applicable.


Section
3.1.            Authority.  Subject only to the requisite approval of
this Agreement and the transactions contemplated hereby by Parent’s
stockholders, Seller has all requisite corporate or other power and authority
to execute and deliver this Agreement and any Related Document to which it is
or will be party and to perform the transactions contemplated hereby and
thereby to be performed by it.  Subject
only to the requisite approval of this Agreement and the transactions contemplated
hereby by Parent’s stockholders, all corporate or other proceedings and actions
on the part of Seller required by Law, its certificate of incorporation, bylaws
(or any comparable charter document), this Agreement and the Related Documents
to which it is or will be a party, the performance of the obligations hereunder
and thereunder to be performed by it and the consummation of the transactions
contemplated hereby and thereby have been duly taken, and no other corporate or
other proceedings or actions on the part of Seller, or its board of directors
is necessary.  This Agreement is, and
each of the Related Documents to which Seller is or will be a party will upon
execution be, a valid and binding agreement enforceable against Seller in
accordance with its terms, subject to bankruptcy, reorganization, insolvency,
moratorium, fraudulent conveyance and similar laws affecting the enforcement of
creditor’s rights generally.


 


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Section
3.2.            Organization, Standing
and Power.  Seller (a) is a corporation
or duly incorporated, validly existing and in good standing under the Laws of
the state of its incorporation; (b) has all requisite power and authority to
own, lease or operate the assets it now owns, leases or operates and to carry
on the business presently being conducted by it; and (c) is duly qualified or
licensed to do business and in good standing in each jurisdiction in which the
ownership or use of its assets or conduct of its business requires it to be so
qualified or licensed, and is in good standing except where any such failure to
be so qualified or licensed and in good standing would not, individually or in
the aggregate, have a Material Adverse Effect on Seller.


Section
3.3.            Subsidiaries.
Except as set forth on Schedule 3.3, Seller does not have any
Subsidiaries.


Section
3.4.            Seller Financial
Statements.  (a)   Schedule 3.4(a) sets forth complete
and correct copies of (i) the audited consolidated balance sheet of Seller as
of March 31, 2003 and March 31, 2002 and the related consolidated statements of
income, stockholders’ equity and cash flows for the years then ended, together
with the appropriate notes to such financial statements, accompanied by the
report thereon by Seller’s independent accountant; and (ii) the unaudited
consolidated balance sheet of Seller as of December 31, 2003 and the related
consolidated statement of income for the nine-month period then ended; and
(iii) the unaudited consolidated balance sheet of Seller as of April 30, 2004
(the “Most Recent Balance Sheet”)
and the related consolidated statement of income for the month then ended (the
financial statements described in clause (i) of this Section 3.4(a) are
collectively referred to herein as the “Seller
Financial Statements”).  The
Seller Financial Statements have been prepared in accordance with GAAP applied
on a consistent basis and present fairly, in all material respects, the
financial position of Seller as of the dates of such Seller Financial
Statements results of their operations and cash flows for the respective
periods indicated (except that the unaudited financial statements are subject
to normal year-end audit adjustments which are not expected to be material in
amount or nature and do not contain footnotes).


(b)           Except
as set forth in Schedule 3.4(b), Seller has no liabilities (absolute,
accrued, contingent or otherwise) whether or not required by GAAP to be
reflected on a balance sheet except for (i) liabilities which arose in the
ordinary course of business after December 31, 2003, (ii) liabilities which
arose in the ordinary course of business and are reflected or reserved against
on the Most Recent Balance Sheet, and (iii) liabilities that, individually or
in the aggregate with all other liabilities, would not be reasonably expected
to result in a Material Adverse Effect.


Section
3.5.            Taxes.  Seller has paid any and all Taxes of Seller
which have accrued, and become due and payable after March 31, 2003.  Upon the consummation of the transactions
contemplated hereby, none of the Purchased Assets will be subject to any
Encumbrance relating to any Tax, other than liens for Taxes not yet due and
payable, which Taxes Seller hereby agrees to pay promptly when such Taxes
become due and payable.


Section
3.6.            Compliance with Law.  Seller (a) has complied in all material
respects with all Laws applicable to the Purchased Assets and (b) is not in
default in any Governmental Directive.


 


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Section
3.7.            Governmental Permits.  Seller owns, holds or possesses all licenses,
franchises, permits, privileges, immunities, approvals and other authorizations
from Governmental Entities which are necessary to entitle Seller to own, lease
or possess, and operate and use its assets and to carry on and conduct the
business substantially as currently conducted (herein collectively called the “Seller Permits”), except where the failure
to be in possession of any of the Seller Permits would not, individually or in
the aggregate, have a Material Adverse Effect. 
Seller has substantially fulfilled and performed its obligations under
each of the Seller Permits in all material respects and no suspension or
cancellation of any of the Seller Permits is pending or, to the Knowledge of
Seller, threatened and each of the material Seller Permits is valid, subsisting
and in full force and effect.


Section
3.8.            Litigation.  (a)   
Except as set forth on Schedule 3.8, there are no actions, causes
of action, claims, suits, proceedings, pleadings, investigations, charges,
complaints or demands (“Actions or
Proceedings”) pending, or to the Knowledge of Seller, threatened,
against the Seller or affecting the Purchased Assets at law or in equity, or
which seek to enjoin the consummation of the transactions contemplated hereby
or which would have a Material Adverse Effect.


(b)           Seller
is not a party to any commitment letter or similar undertaking to, or is
subject to any order, directive, writ, judgment, award, injunction or decree
by, or has adopted any board resolutions at the request of, any Governmental Entity
(a “Governmental Directive”)
affecting the Purchased Assets.


Section
3.9.            Contracts.  (a)   
Seller is not a party to any agreement (other than this Agreement) for
the acquisition, sale, lease, pledge or other disposition of any of the
Purchased Assets (by merger, purchase, syndication or sale of assets or
otherwise).


(b)           Schedules
2.1(a)(ii), 2.1(b)(ii) and 2.1(c)(ii), collectively, set forth a true and
complete list of each of the Customer Agreements.  Neither Seller nor any other party under any
of the Customer Agreements, has commenced any action against the other or given
or received any written notice of any material default or violation under any
Customer Agreement which was not withdrawn or dismissed.  Each Customer Agreement is valid, binding and
in full force and effect as against Seller. 
Except as set forth in Schedule 3.9, (i) Seller has performed, in
all material respects, the obligations required to be performed under such
Customer Agreement and (ii) there is no default by any other party to any
Customer Agreement.


(c)           Except
for the contracts (including side letters) set forth on Schedules
2.1(a)(ii), 2.1(b)(ii), 2.1(c)(ii) or 3.9, Seller is not a party to or
bound by any material contract or side letter relating to the Purchased Assets.


(d)           Except
as set forth on Schedule 3.9, Seller is not subject to any outstanding
purchase orders or contractual commitments to any individual third party
involving aggregate obligations to such third party of more than $10,000, which
cannot be cancelled without penalty.


Section
3.10.          Consents and Approvals.


 


19
















 


(a)           Subject
to the requisite approval of this Agreement and the transactions contemplated
hereby by the Parent stockholders and except for the material waivers, consents
and approvals set forth on Schedule 3.10(a) (the “Material Consents”) and the additional waivers, consents and
approvals as set forth on Schedule 3.10(b) (the “Additional Consents”), the execution and delivery of this Agreement
by Seller and the consummation by Seller of the transactions contemplated
hereby will not:  (a) violate any
provision of the certificate of incorporation or bylaws of Seller;
(b) violate any Law applicable to Seller or the Purchased Assets;
(c)  require Seller to make any filing with, obtain any permit, consent,
license or approval of, or give any notice to, any Governmental Entity; (d)
result in any breach of or constitute a default (or an event that with notice
or lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, or right to
require repurchase, pursuant to, any Customer Agreement; or (e) result in the
creation of any Encumbrance on any of the Purchased Assets except, in the case
of clauses (b), (c), (d) and (e) for such violations, filings, permits,
consents, licenses, approvals, notices, breaches or conflicts or Encumbrances
which would not be reasonably likely to (i) have a Material Adverse Effect or
(ii) prohibit Seller from consummating the transactions contemplated by this
Agreement or the Related Documents to which it is a party or performing its
obligations hereunder or thereunder.


(b)           The
only vote required of the Parent stockholders to duly adopt and approve this
Agreement and the transactions contemplated hereby is: (i) holders of a
majority of the total number of shares of Parent’s outstanding common stock,
voting as a separate class; and (ii) holders of a majority of the total number
of shares of Parent’s outstanding preferred stock, voting as a separate class
(the “Seller Stockholder Vote”).


(c)           The
authorized capital of Parent consists of: (i) 17,129,929 shares of Preferred
Stock, $0.0001 par value per share, of which 3,709,929 shares have been
designated Series A-1 Preferred Stock, 2,460,015 of which are issued and
outstanding as of the date of this Agreement, and 13,420,000 shares have been
designated Series B-1 Preferred Stock, 6,590,000 of which are issued and
outstanding as of the date of this Agreement; and (ii) 22,786,496 shares of
Common Stock, $0.0001 par value per share, 1,172,086 shares of which are issued
and outstanding as of the date of this Agreement.


Section
3.11.          Intellectual Property(a)    Schedule 3.11(a) sets forth a true
and complete list of all of the (i) Registered or material Owned Intellectual
Property (each identified as a Patent, Trademark, Copyright or Other
Proprietary Right, as the case may be) and (ii) Intellectual Property Contracts
(other than Customer Agreements and agreements concerning Third Party
Software).


(b)           All
Business Intellectual Property is valid, subsisting and enforceable.  Except as set forth on Schedule 3.11(b),
no Owned Intellectual Property has been abandoned or canceled (excepting any
expirations in the ordinary course), adjudicated invalid or unenforceable, or
is subject to any outstanding order, judgment or decree restricting its use or
adversely affecting or reflecting the Seller’s rights thereto.  To the Knowledge of Seller, no Licensed Intellectual
Property has been abandoned or canceled by the licensor (excepting any
expirations in the ordinary course), adjudicated invalid or unenforceable, or
is subject to any outstanding order, judgment or decree restricting its use or
adversely affecting or reflecting


 


20
















 


Seller’s rights
thereto.  Except as set forth on Schedule
3.11(b), the Owned Intellectual Property has been marked where appropriate
with notices and legends as permitted by Federal and State laws or otherwise
permitted to indicate Seller’s patent, trademark, copyright, confidential,
proprietary, and other Intellectual Property rights in such Owned Intellectual
Property.


(c)           Except
as set forth on Schedule 3.11(c), Seller owns or has the right to use all
Intellectual Property used or contemplated to be used in the business of Seller
in accordance with its current business plans. 
Except as set forth on Schedule 3.11(c), all such rights are free
of all Encumbrances and are fully assignable by Seller to any Person, without
payment, consent of any Person or other condition or restriction.  The Business Intellectual Property
constitutes all Intellectual Property necessary to operate the business of Seller
as currently conducted and as currently contemplated to be conducted in
accordance with its current business plans. 
No Person other than Seller has any ownership interest in, or a right to
receive a royalty or similar payment with respect to, any of the Owned
Intellectual Property.  All Persons
entitled to a royalty or similar payments with respect to Intellectual Property
not owned by Seller are set out in Schedule 3.11(c).


(d)           Except
as set forth on Schedule 3.11(d), no suit, action, reissue,
reexamination, public protest, interference, arbitration, mediation,
opposition, cancellation or other proceeding (collectively, “Suit”) is pending concerning any claim or position that
Seller has violated any Intellectual Property rights.  No claim has been threatened or asserted in
writing against Seller or any of their indemnitees for violation of any
Intellectual Property rights.  Seller is
not violating and has not violated any Intellectual Property rights.


(e)           No
Suit is pending concerning any Intellectual Property Contract, including any
Suit concerning a claim or position that Seller or another Person has breached
any Intellectual Property Contract or that any Intellectual Property Contract
is invalid or unenforceable.  No such
claim has been threatened or asserted in writing or, to the Knowledge of
Seller, orally.  Seller is in compliance
with, and has conducted its business so as to comply with, all terms of all
Intellectual Property Contracts.  There
exists no event, condition or occurrence which, with the giving of notice or
lapse of time, or both, would constitute a breach or default by Seller or, to
the Knowledge of Seller, another Person under any Intellectual Property
Contract.  Each Person who is a party to
any Intellectual Property Contract had and has all rights, power and authority
necessary to enter into, be bound by and fully perform such Intellectual
Property Contract.  No party to any
Intellectual Property Contract has given Seller notice of its intention to
cancel, terminate or fail to renew any Intellectual Property Contract.  The execution and delivery of this Agreement
and consummation of the transactions contemplated hereby will not result in the
breach of, or create on behalf of any Person the right to terminate or modify
any Intellectual Property Contract.


(f)            Except
as set forth on Schedule 3.11(f), no Suit is pending concerning the
Owned Intellectual Property, including any Suit concerning a claim or position
that the Owned Intellectual Property is invalid, unenforceable, unpatentable,
unregisterable, cancelable, not owned or not owned exclusively by Seller.  No such claim has been asserted in writing,
or to the Knowledge of Seller, threatened. 
To the Knowledge of Seller, no valid basis for any such Suits or claims
exists.


 


21
















 


(g)           To
the Knowledge of Seller, no Suit is pending concerning the Licensed
Intellectual Property, including any Suit concerning a claim or position that
the Licensed Intellectual Property has been violated or is invalid,
unenforceable, unpatentable, unregisterable, cancelable, not owned or not owned
exclusively by the licensor of such Intellectual Property.  No Suit is pending concerning the right of
Seller to use the Licensed Intellectual Property, including any Suit concerning
a claim or position that such right has been violated or is invalid,
unenforceable, not owned or not owned exclusively by Seller.  To the Knowledge of Seller, no such claims
have been threatened or asserted and no valid basis for any such Suits or
claims exists.


(h)           To
the Knowledge of Seller, no Person is violating any Business Intellectual
Property.


(i)            Seller
has timely made all filings and payments with the appropriate foreign and
domestic agencies required for maintaining in subsistence all Registered Owned
Intellectual Property.  Except as set
forth on Schedule 3.11(i), no due dates for filings or payments
concerning the Registered Owned Intellectual Property (including office action
responses, affidavits of use, affidavits of continuing use, renewals, requests
for extension of time, maintenance fees, application fees and foreign
convention priority filings) fall due within ninety (90) days of the Closing
Date, whether or not such due dates are extendable.  Seller is in compliance with the applicable
rules and regulations of such agencies with respect to Registered Owned
Intellectual Property.  Except as set
forth on Schedule 3.11(i), all documentation necessary to confirm and
effect Seller’s ownership of Owned Intellectual Property, if acquired from
other Persons, has been recorded in the United States Patent and Trademark
Office, the United States Copyright Office and other official offices, as
appropriate.


(j)            Seller
has taken all reasonable measures to protect the secrecy, confidentiality and
value of all Owned Intellectual Property (including entering into appropriate
confidentiality and intellectual property agreements with all officers,
directors, employees, and other Persons with access to the Intellectual
Property) and has required all employees, agents, consultants and contractors
who have contributed to or participated in the development, improvement or
modification of any Intellectual Property to assign all of their rights therein
to Seller.  Except as set forth on Schedule
3.11(j), one of the Owned Intellectual Property that is a trade secret has
been disclosed to any Person other than Seller’s employees or Seller’s
contractors who had a need to know and use such Owned Intellectual Property in
the ordinary course of employment or contract performance and who executed
appropriate confidentiality agreements prohibiting the unauthorized use or
disclosure of such Owned Intellectual Property and containing other terms as
reasonably necessary or appropriate for the protection and maintenance of such
Owned Intellectual Property.  To the
Knowledge of Seller, (i) no Person has any basis for claiming any right, title
or interest in and to any such Owned Intellectual Property; and (ii) no such
claim is currently pending or threatened.


(k)           To
the Knowledge of Seller, no current or former Seller employee is or was a party
to any confidentiality agreement and/or agreement not to compete that restricts
or forbids, or restricted or forbade at any time during such employee’s
employment by Seller, such employee’s performance of Seller’s business, or any
other activity that such employee was


 


22
















 


hired to perform or
otherwise performed on behalf of or in connection with such employee’s
employment by Seller.


(l)            The
IT Systems are adequate in all material respects for their intended use and for
the operation of such businesses as are currently operated and as are currently
contemplated to be operated by Seller are in good working condition (normal
wear and tear excepted).


Section 3.12.          Products.


(a)           Except
as set forth in Schedule 3.12(a), Seller is the sole and exclusive owner
of the Products and all constituent parts thereof (excluding any Third Party
Software contained therein).


(b)           Schedule
3.12(b) contains a true and complete list of all Third Party Software,
other than generally commercially available Third Party Software with up-front
or annual license and maintenance fees of less than $10,000 for each product
(aggregating all licenses for each product for purposes of this calculation),
separated into the following categories and sub-categories: (i) Third Party
Software that is incorporated into Products that is (A) embedded in one or more
Products, or (B) separate from the Products (i.e., an add-on Product) that is
sold or licensed (bundled) together with one or more Products, and (ii) Third
Party Software not licensed by Seller to customers but used internally by
Seller.


(c)           The
Products perform in all material respects in accordance with the Ancillary
Product Materials and meet all contractual terms and warranties provided to any
customers who purchase or license, or have purchased or licensed, such Products
from Seller, its agents or resellers. 
The Products do not contain any Disabling Devices.


(d)           Except
as set forth on Schedule 3.12(d), the source code for the Products will
compile into executable object code and such executable object code is capable
of performing in all material respects the functions described in the Ancillary
Product Materials.  Except as set forth
in Schedule 3.12(d), the source code for the Products and the Ancillary
Product Materials are accurate and sufficiently documented to enable a Computer
Software developer of reasonable skill to understand, modify, repair, maintain,
compile and otherwise use the material aspects of the Products.  Seller has taken commercially reasonable
steps to protect the source code for the Products as Trade Secrets of
Seller.  Except as set forth on Schedule
3.12(d), none of the Products is subject to the provisions of any open
source or other source code license agreement that (i) requires the
distribution of source code in connection with the distribution of the Products
in object code form; (ii) prohibits or limits Seller from charging a fee for or
receiving consideration in connection with distributing the Products (whether
in source code or object code format); or (iii) allows a customer or requires
that a customer have the right to decompile, disassemble or otherwise reverse
engineer the Products by its terms and not by operation of law.


(e)           Schedule
3.12(e) contains (i) true and complete copies of Seller’s current versions
of its standard Customer Agreements, and all material deviations thereto; (ii)
a true and complete list of customer names for all Customer Agreements (and
Seller has provided


 


23
















 


copies of all Customer
Agreements); and (iii) a true and complete list of all other agreements
pursuant to which Seller is obligated to provide support services with respect
to the Products (and Seller has provided copies of all such other agreements).


(f)            Except
as set forth in Schedule 3.12(f), Seller has not granted to any Person,
and no Person, other than Seller (including any independent contractors who
have performed services for Seller), holds any rights in, or licenses to
produce, support, maintain, modify, distribute, license, sublicense, sell, use
in development or otherwise use, any of the Products.  There are no exclusive arrangements between Seller
and any other Person to license, sublicense, sell, use or distribute any of the
Products.  Schedule 3.12(f) sets
forth a true and complete list of all agreements by Seller with resellers of
the Products and all agreements pursuant to which Seller is a reseller of
products.


(g)           No
Person has a license to use or the right to acquire a license to use any future
version of the Products, except for customer rights to obtain licenses to
future versions of the Products pursuant to existing Customer Agreements, and
nothing restricts Seller’s ability to charge its customers for any such new
version, other than such Customer Agreements.


(h)           No
agreement pursuant to which Seller has licensed the use of the Products to any
third party obligates Seller to develop and provide any specific improvement,
enhancement, change in functionality or other alteration in the performance of
the Products beyond general bug fixes, updates and upgrades of and to Seller’s
current Products pursuant to standard support agreements.


Section 3.13.          Labor
Matters/Employee Matters.


(a)           There
are no strikes or lockouts or work stoppages or slowdowns pending or, to the
Knowledge of Seller, threatened against Seller.


(b)           There
are no complaints, charges, claims or grievances against Seller pending or, to
the Knowledge of Seller, threatened to be brought or filed with any
Governmental Entity, arbitrator or court based on or arising out of the
employment by Seller of any of its officers, directors, employees, independent
contractors or agents (collectively, “Seller
Personnel”).


(c)           Seller
is in material compliance with all laws, regulations, rules and orders of all
Governmental Entities relating to the employment of labor, including all such
laws, regulations, rules and orders relating to wages, hours, collective
bargaining, discrimination, civil rights, safety and health, immigration,
workers’ compensation and layoffs.


(d)           None
of the employment terms of the Seller Personnel are subject to the terms of a
collective bargaining agreement and no labor organization or group of Seller
Personnel has made a demand for recognition or certification.


(e)           There
has been no event that has caused or required Seller to issue a notice under
the Worker Adjustment and Retraining Notification Act or any similar law with
respect to Seller’s employees.


 


24
















 


(f)            Except
as otherwise set forth on Schedule 3.13(f), there are no written
employment or consulting agreements for current Seller Personnel.


(g)           Seller
has previously furnished or made available to Purchaser a complete, true and
correct written list (the “Personnel List”)
of all current Seller Personnel, their respective locations, the date their
employment commenced, base compensation and bonus opportunity.  There are no Persons who devote substantially
all of their work time to the business of Seller other than as set forth on the
Personnel List.


(h)           Schedule
3.13(h) hereto contains a list of (i) each “employee benefit plan,” as
defined in Section 3(3) of ERISA, covering employees of Seller or any of its
ERISA Affiliates, or which Seller or any of its ERISA Affiliates maintains or
has an obligation to contribute; and (ii) each current stock purchase, stock
option, stock appreciation or other stock-based compensation, salary
continuation, tuition assistance, life or other insurance, severance, death
benefit, vacation, sick leave, change-in-control, welfare, fringe benefit,
bonus, retention, incentive and deferred compensation plan, agreement, program,
policy or other arrangement covering current employees of Seller or any of its
Affiliates, or which Seller or any of its Affiliates maintains or sponsors or
to which it contributes.  All such plans,
agreements, programs, policies and arrangements, shall be collectively referred
to as the “Benefit Plans”.


(i)            With
respect to each Benefit Plan, a complete and correct copy of each of the
following documents (if applicable and available) has been provided or made
available to Purchaser:  (i) the most
recent plan and related trust documents, and all amendments thereto; (ii) the
most recent summary plan description, and all related summaries of material
modifications; (iii) the most recent Form 5500 (including schedules); and (iv)
the most recent IRS determination letter.


(j)            None
of the Benefit Plans are subject to Title IV of ERISA or Section 412 of the
Code.


(k)           Neither
Seller nor any of its ERISA Affiliates is, or to the Knowledge of Seller, was,
during the preceding six years, obligated to contribute to, or contributes to,
any “multiemployer plan” within the meaning of Section 3(37) of ERISA.


(l)            The
Benefit Plans and their related trusts that are intended to qualify under
Sections 401 and 501(a) of the Code, respectively, have been determined by the
IRS to qualify under such Sections and, to the Knowledge of Seller, nothing has
occurred since the time of such favorable determination to cause the loss of
such qualified status.


(m)          To
the Knowledge of Seller, all contributions required to have been made under any
Benefit Plan or any Law to any trusts established thereunder or in connection
therewith have been made by the due date therefor (including any valid
extensions).


(n)           The
Benefit Plans have been maintained and funded in material compliance with their
terms and applicable Laws and obligations to Seller Personnel, including but
not limited to the timely filing of applicable reports, documents and notices
with the Department of Labor and the IRS. 
There has been no “prohibited transaction” (including without limitation
as a result of any of the transactions contemplated hereby) within the meaning
of 


 


25
















 


Section 4975(c) of the Code
or Section 406 of ERISA involving the assets of any Benefit Plan after giving
effect to the exemptions set forth in Section 4975(d) of the Code and Section
408(b) of ERISA.


(o)           Seller
represents that there are no pending or outstanding material claims under any
Benefit Plan that is a group health plan.  There are no pending or, to the Knowledge of
Seller, threatened in writing, actions, claims or proceedings against Seller or
any of its Affiliates or any Benefit Plan or its assets with respect to such
plan, except for non-material claims pending under the claims procedures of any
Benefit Plan.


(p)           Except
as required under Section 4980B of the Code, neither Seller nor any of its
ERISA Affiliates has any obligation to provide medical, disability or death
benefits (whether or not insured) with respect to their respective current or
former employees beyond their retirement or other termination of
employment.  The Seller shall provide
timely notice to employees of their rights, if any, under the Benefit Plans, to
continue or convert to individual coverage under the Benefit Plans.


(q)           Except
as required by applicable Law, each Benefit Plan may be amended and terminated
without advance notice at any time after the Closing Date.


(r)            The
execution of, and performance of the transactions contemplated in, this
Agreement will not (either alone or upon the occurrence of any additional or
subsequent events) constitute an event under any Benefit Plan or agreement,
program, policy or other arrangement by or to which Seller or any of its ERISA
Affiliates is a party, is bound or is otherwise liable, by its terms or in
effect, or any trust or loan, that will or may result in any payment or
transfer of money, property or other consideration (whether of severance pay or
otherwise), acceleration, forgiveness or indebtedness, vesting, distribution,
increase in benefits or obligation to fund benefits with respect to any current
or former employees of the Seller or any of its ERISA Affiliates (whether or
not any such payment would constitute a “parachute payment” or “excess parachute
payment” within the meaning of Section 280G of the Code).


(s)           Neither
the Seller nor any of its ERISA Affiliates is a party to any:  (i) agreement with any Seller Personnel or
any of its ERISA Affiliates (A) the benefits of which are contingent, or the
payment or terms of which are accelerated or materially altered, upon the
occurrence of a transaction involving the Seller or any of its ERISA Affiliates
of the nature of the transactions contemplated by this Agreement, (B) providing
any term of employment or compensation guarantee or (C) providing severance
benefits or other benefits after the termination of employment of Seller
Personnel, or (ii) agreement or plan binding the Seller or any of its ERISA
Affiliates, or with respect to the premiums therefore, any of the benefits of
which shall be increased, or the vesting of the benefits of which shall be
accelerated, by the occurrence of any of the transaction contemplated by this
Agreement (either alone or upon the occurrence of any additional or subsequent
event) or the value of any of the benefits of which shall be calculated on the
basis of any of the transaction contemplated by this Agreement.


Section
3.14.          Affiliate Transactions.  Except as set forth on Schedule 3.14,
no employee, officer or director of Seller or member of his or her immediate
family is indebted to Seller, and Seller is not indebted (or committed to make
loans or extend or guarantee credit) to


 


26
















 


any of them.  No officer or director of Seller has any
direct or indirect ownership interest in any firm or corporation with which
Seller is affiliated or with which Seller has a business relationship, or any
firm or corporation that competes with Seller, except that employees, officers or
directors of Seller and members of their immediate families may own 2% or less
of the voting stock in publicly traded companies that may compete with
Seller.  No officer or director of
Seller, or any member of the immediate family of any such person, is directly
or indirectly interested in any contract with Seller and none of the foregoing
persons otherwise has any business relationship with Seller other than as an
officer, director or employee thereof.


Section
3.15.          Brokers and Finders.  Except as set forth on Schedule 3.15,
no broker, finder, consultant, advisor or intermediary is entitled to a
broker’s, finder’s or similar fee or commission in connection with the
transactions contemplated by this Agreement or upon the consummation of the
transaction contemplated hereby, or if the Closing does not occur.  Seller shall indemnify and hold Purchaser
harmless from and against any liability with respect to any and all such fees
and commissions arising out of any claimed retention by Seller of a broker or
finder in connection with the transactions contemplated by this Agreement.


Section 3.16.          Sufficiency
and Title of Purchased Assets.  The
Purchased Assets constitute all of the assets, property rights and systems used
or held for use by Seller, except for the Excluded Assets.  The Excluded Assets do not include any
assets, property rights or systems necessary for Purchaser to conduct the
Business in the same manner as currently conducted by Seller.  Title to each of the Purchased Assets will be
transferred free and clear of any Encumbrances.


Section
3.17.          Absence of Certain
Changes or Events.  Since December
31, 2003, Seller has conducted its business in the ordinary course consistent
with past practice and except as set forth on Schedule 3.17, there has
not been any:


(i)            change in the condition (financial
or otherwise), assets, liabilities, operations, performance or business of
Seller, except for changes which have been in the ordinary course of business
which, in accordance with GAAP applied in a manner consistent with such
application on April 30, 2004, have been fully recorded in the books and
records of Seller and which would not, individually or in the aggregate, have a
Material Adverse Effect;


(ii)           (A) increase in the compensation
payable or to become payable by Seller to any Seller Personnel whose total
compensation for services rendered to Seller is currently at an annual rate of
more than $50,000 or any increase of general applicability in the compensation
payable to Seller Personnel, (B) bonus, incentive compensation, service award
or other like benefit, granted, made or accrued, contingently or otherwise, of
or to the credit of Seller Personnel, or (C) employee welfare, pension,
retirement, profit-sharing or similar payment or arrangement made or agreed to
by Seller;


(iii)          addition to or modification of any of
the employee benefit plans, arrangements or practices;


 


27
















 


(iv)          establishment, agreement to establish
or any change in any pension, retirement or welfare plan for the benefit of any
Seller Personnel not theretofore in effect;


(v)           mortgage, pledge or subjection to any
Encumbrance of any of the Purchase Assets, tangible or intangible, of Seller;


(vi)          sale, assignment or transfer of any
Purchased Assets, tangible or intangible, of Seller other than in the ordinary
course of business and consistent with past practice or any conducting of
business other than in the ordinary course and consistent with past practice,
or any acquisition of all or any part of the assets, properties, stock or
business of any Person other than in the ordinary course of business and
consistent with past practice;


(vii)         change by Seller in accounting methods,
principles or practices, except as required by GAAP;


(viii)        amendment, cancellation or termination
by Seller of any contract, agreement or other instrument which is material to
Seller or its business;


(ix)           liability incurred by Seller, except
liabilities incurred in the ordinary course of business consistent in both kind
and amount with past practices of Seller and which would not, individually or
in the aggregate, have a Material Adverse Effect;


(x)            payment, discharge or satisfaction
of any claims, liabilities or obligations (absolute, accrued, contingent or
otherwise) of Seller other than in the ordinary course of business and
consistent with past practice;


(xi)           capital expenditure or the execution
of any lease with respect to any aspect of the business of Seller, or any
incurring liability therefor, involving payments in excess of $20,000 in the
aggregate, including all forward commitments to purchase equipment or
inventory;


(xii)          borrowing of money by Seller or
guaranteeing of any indebtedness of others by Seller other than in the ordinary
course of business and consistent with past practice;


(xiii)         lending of any money or otherwise
pledging the credit of Seller to any party other than Seller;


(xiv)        failure to operate the business of
Seller in the ordinary course so as to preserve the business intact, to keep
available to Seller the services of Seller Personnel employed as of the date
hereof, and to preserve for Purchaser the goodwill of the suppliers, customers
and others having business relations with Seller except where such failure
would not, individually or in the aggregate, have a Material Adverse Effect;


 


28
















 


(xv)         cancellation of, or failure to
continue, insurance coverages of Seller;


(xvi)        failure to pay any current obligations
of Seller in accordance with the general practices of Seller;


(xvii)       damage, destruction or casualty loss,
whether covered by insurance or not which would, individually or in the
aggregate, have a Material Adverse Effect;


(xviii)      transaction entered into with any
Affiliate (an “Affiliate,” for the
purposes of this Agreement, shall include with respect to any Person, a
director or officer of such Person or any other Person which directly or
indirectly, through one or more intermediaries, controls, or is controlled by,
or is under common control with, such Person) of Seller, any stockholder or
Affiliate of Seller, including any dividend payment;


(xix)         other event or condition of any
character which, individually or in the aggregate, has had or could reasonably
be expected to have a Material Adverse Effect or any agreement to do any of the
foregoing; or


(xx)          of the following payments:  (A) for broker fees, advisor fees, consultant
fees or other professional fees relating to the transactions contemplated by
this Agreement or any other sale transaction, merger or other financing
transaction, (B) to any equity holders (including, without limitation,
interest, dividends or fees thereto), (C) to employees (including, without
limitation, any bonuses, retention payments or severance payments, except for
ordinary course payroll of employees or (D) relating to management fees or
similar fees.


Section
3.18.          Charter and Bylaws.  Seller has delivered or made available to
Purchaser a copy of the Certificate of Incorporation of Seller, including any
amendments thereto through the date hereof (certified as of a recent date by
the Secretary of State of the State of Delaware) and the Bylaws (certified as
of the date hereof by the Secretary of Seller), which copies are complete and
correct as of the date hereof.


Section
3.19.          Books and Records.  The books of account and other financial
records of Seller, all of which have been made available to Purchaser, are
complete and correct and represent actual, bona fide transactions and have been
maintained in accordance with sound business practices and the requirements of Section
13(b)(2) of the Securities Exchange Act of 1934, as amended (regardless of
whether the Seller is subject to that section or not), including the
maintenance of an adequate system of internal controls.  The minute books of Seller, all of which have
been made available to Purchaser, contain accurate and complete records of all
meetings held of, and corporate action taken by, the stockholders, the board of
directors and committees of the board of directors of Seller, and no meeting of
any such stockholders, board of directors or committee has been held for which
minutes have not been prepared or are not contained in such minute books.


Section
3.20.          Real Property.  Seller does not own any real property.  Seller is not a party to and is not obligated
under any leases, licenses or other occupancy agreements on the


 


29
















 


date hereof other than the
leases identified on Schedule 3.20 annexed hereto and made a part hereof
(the “Leases”).  True and complete copies (with any and all
amendments) of each of the Leases have been previously delivered to
Purchaser.  The Leases are in full force
and effect as of the date hereof.  Seller
has not given or received any written notice of default under the Leases which
default remains uncured, nor does Seller otherwise have Knowledge of any such
uncured default.  Subsequent to the date
hereof, Seller shall not have modified, amended, renewed, terminated or
surrendered any of the Leases or entered into any new Leases without the prior
written consent of Purchaser in each instance. 
Except as set forth on Schedule 3.20, Seller is not
contractually obligated to undertake or pay for the restoration or removal of
any alterations or improvements or the repair of any damages (including any
such damages arising from lapses of maintenance) with respect to any leased
real property.


Section
3.21.          No Public Sale or
Distribution.  Parent is (i)
acquiring the Notes and, upon conversion of the Notes, will acquire the shares
of common stock of Purchaser (the “Shares”
and, together with the Notes, the “Securities”)
issuable upon conversion thereof in the ordinary course of business for its own
account and not with a view towards, or for resale in connection with, the
public sale or distribution thereof, except pursuant to sales registered or
exempted from registration under the Securities Act and applicable state
securities laws, and Parent does not have any present arrangement to effect any
distribution of the Securities to or through any person or entity, except for
the transfer of the Transferable Note and the Non-Transferable Note to a
liquidating trust of Parent for the benefit of stakeholders of Parent that are
“accredited investors” as such term is defined under Regulation D of the
Securities Act.


Section
3.22.          Accredited Investor
Status.  Parent is an “accredited
investor” as that term is defined in Rule 501(a) of Regulation D.


Section
3.23.          Reliance on Exemptions.  Parent understands that the Securities are
being offered and sold to it in reliance on specific exemptions from the
registration requirements of United States federal and state securities laws
and that the Purchaser is relying in part upon the truth and accuracy of, and
Parent’s compliance with, the representations, warranties, agreements,
acknowledgments and understandings of Parent set forth herein in order to
determine the availability of such exemptions and the eligibility of Parent to
acquire the Securities.


Section
3.24.          Information.  Parent and its advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Purchaser and materials relating to the offer and sale of the Securities
which have been requested by Parent. 
Parent and its advisors, if any, have been afforded the opportunity to
ask questions of the management of Purchaser regarding the Purchaser’s business
and operations and such other matters as Parent has deemed appropriate.  Parent understands that its investment in the
Securities thereof involves a high degree of risk and Parent is able to afford
a complete loss of such investment. 
Parent has sought such accounting, legal and tax advice as it has
considered necessary to make an informed investment decision with respect to
its acquisition of the Securities.


Section
3.25.          No Governmental Review.  Parent understands that no United States
federal or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the Securities or the
fairness or suitability of the


 


30
















 


investment in the Securities
nor have such authorities passed upon or endorsed the merits of the offering of
the Securities.


Section
3.26.          Transfer or Resale.  Parent understands that: (i) the Securities
have not been and are not being registered under the Securities Act or any
state securities laws, and may not be offered for sale, sold, assigned or
transferred unless (A) subsequently registered for resale thereunder, (B)
Parent shall have delivered to the Purchaser an opinion of counsel, in a form
reasonably acceptable to the Purchaser, to the effect that such Securities to
be sold, assigned or transferred may be sold, assigned or transferred pursuant
to an exemption from such registration, or (C) Parent provides Purchaser with
reasonable assurance that such Securities can be sold, assigned or transferred
pursuant to Rule 144 or Rule 144A promulgated under the Securities Act, as
amended, (or a successor rule thereto) (collectively, “Rule 144”); (ii) any sale of the Securities
made in reliance on Rule 144 may be made only in accordance with the terms of
Rule 144 and further, if Rule 144 is not applicable, any resale of the
Securities under circumstances in which Parent (or the Person through whom the
sale is made) may be deemed to be an underwriter (as that term is defined in
the Securities Act) may require compliance with some other exemption under the
Securities Act or the rules and regulations of the Securities and Exchange
Commission thereunder; (iii) neither Purchaser nor any other Person is under
any obligation to register the Securities under the Securities Act or any state
securities laws or to comply with the terms and conditions of any exemption
thereunder; and (iv) it has agreed, and that any subsequent transferees shall
be required to agree, to the lock-up provisions set forth in Section 5.12
relating to the Shares.


Section
3.27.          Legends.  Parent understands that the certificates or
other instruments representing the Securities until such time as the resale of
the Securities have been registered under the Securities Act, except as set
forth below, shall bear a restrictive legend in substantially the following
form (and a stop-transfer order may be placed against transfer of such stock
certificates) as well as an additional legend, as may be required by applicable
“blue sky” or state securities laws:


NEITHER THE ISSUANCE AND SALE OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES
ARE CONVERTIBLE HAVE BEEN][THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR (B) AN OPINION OF COUNSEL, IN A FORM REASONABLY ACCEPTABLE TO THE
COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD
PURSUANT TO RULE 144 UNDER SAID ACT.


Section
3.28.          Corporate Securities Law.  THE SALE OF THE SECURITIES THAT IS THE SUBJECT OF THIS
AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE
STATE OF CALIFORNIA.  THE PARENT


 


31
















 


UNDERSTANDS THAT THE TRANSFER OF THE SECURITIES AS
CONTEMPLATED BY THIS AGREEMENT ARE EXEMPT FROM REGISTRATION UNDER THE
CALIFORNIA CORPORATIONS CODE AND THAT PARENT SHALL NOT BE ELIGIBLE FOR ANY
RECISION RIGHTS PURSUANT THERETO.


Section 3.29.          Environmental.  (a)   The operations of Seller are in material
compliance with any federal, state, local or municipal laws, statutes,
regulations, rules or ordinances imposing liability or establishing standards
of conduct for protection of the environment (“Environmental Laws”) and Seller has obtained and is in
material compliance with all necessary permits or authorizations that are
required under Environmental Laws to operate the facilities, assets and
business of Seller.


(b)           There
has been no Hazardous Materials released or spilled at any of the properties
owned or operated by Seller or, to the Knowledge of Seller, a predecessor in
interest, or to the Knowledge of Seller, at any disposal or treatment facility
which received Hazardous Materials generated by Seller or any predecessor in
interest.


(c)           No
complaint, summons, citation, notice, directive, order, claim, litigation,
investigation, notice of violation, judicial or administrative proceeding,
judgment, letter or other communication from any governmental agency has been
asserted against Seller or, to the Knowledge of Seller, any predecessor in
interest.


Section
3.30.          Employees.  Schedule 3.30 sets forth the amount or the
basis for calculating the maximum severance costs of terminating each of the
Seller Personnel at Closing.  Seller
shall obtain prior to Closing waivers of any rights to advance notice and
severance or redundancy payments that may be triggered by the transactions
contemplated by this Agreement to any Seller Personnel whose employment is
terminated by Seller but who is offered employment by Purchaser on more than a
transitional basis at an annual base
salary that is no less than the current annual base salary immediately prior to
the Closing and employee benefits (including vacation and insurance), but
excluding stock-based or similar equity incentive plans, that are substantially
similar to the benefits provided to Purchaser’s other similarly situated
employees (the “Severance Waivers”) and severance benefits that are
substantially similar to the benefits set forth on Schedule 3.30 in the event
of termination of employment prior to six (6) months from the date of the
Closing.  After six months, the employees
shall be eligible for severance under the terms of the then-applicable plan of
the Purchaser, if any.  In no event shall
an employee be eligible for severance if he or she has not executed a general
release in a form acceptable to the Purchaser.


Section
3.31.          Accounts Receivables.  All Accounts Receivable of Seller that are
reflected on the Most Recent Balance Sheet represent valid obligations arising
from products sold or services actually performed in the ordinary course of
business and will have been collected on or prior to the Closing Date or will
be collected in full within 90 days after the Closing Date less the allowance
for doubtful accounts set forth on such balance sheet.  All Accounts Receivables that arise after the
date of the Most Recent Balance Sheet but before the Closing Date either will
have been collected on or prior to the Closing Date or will be collected in
full within 90 days after the Closing Date.


 


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Section
3.32.          Capitalization.  The authorized capital stock of Arzoon Global
Commerce, Inc. (“Global Commerce”)
consists of 10,000 shares of common stock, par value $0.0001 per share, 100 of
which are issued and outstanding and none of which are held in the treasury of
Global Commerce.  All of the issued and
outstanding shares of capital stock of Global Commerce (the “Stock”) are validly issued, fully paid and
non-assessable.  There are no other
shares of capital stock of Global Commerce outstanding and no other outstanding
options, warrants, convertible or exchangeable securities, subscriptions,
rights (including any preemptive rights), stock appreciation rights, calls or
commitments of any character whatsoever to which Global Commerce is a party or
may be bound requiring the issuance or sale of shares of any capital stock of
the Company, and there are no contracts or other agreements by which the
Company is or may become bound to issue additional shares of its capital stock
or any options, warrants, convertible or exchangeable securities, subscriptions,
rights (including any preemptive rights), stock appreciation rights, calls or
commitments of any character whatsoever relating to such shares.


Section
3.33.          Ownership of Stock.  Parent is, and at the Closing Date will be,
without exception, the record and beneficial owner of the Stock and has full
power and authority to convey the Stock free and clear of all Encumbrances, and
there are no voting trusts, proxies or other voting agreements with respect to
the Stock.  The delivery to Purchaser of
the Stock pursuant to the provisions of this Agreement will transfer to
Purchaser good and valid title thereto, free and clear of all
Encumbrances.  The delivery to Purchaser
of the Stock pursuant to the provisions of this Agreement will transfer to
Purchaser ownership of 100% of all of the issued and outstanding stock of, and
all equity in, Global Commerce free and clear of all Encumbrances (other than
those that may be created by, or  on
behalf of, Purchaser).


Section
3.34.          Global Commerce.  Schedule 3.34 contains a complete and
accurate list of all of the assets and liabilities of Global Commerce.  Global Commerce does not now, and has not
ever, conducted operations.


Section
3.35.          Disclosure.  (a)  
No representation or warranty or other statement made by Seller in this
Agreement (or any schedule or exhibit hereto) or otherwise in connection with
the transactions contemplated by this Agreement contains any untrue statement
or omits to state a material fact necessary to make any of them, in light of
the circumstances in which it was made, not misleading.


(b)           Seller
does not have Knowledge of any fact that has specific application to Seller
(other than general economic or industry conditions) and that may materially
adversely affect the assets, business, prospects, financial condition or
results of operations of Seller that has not been set forth in this Agreement
(or any schedule or exhibit hereto).


 


33
















 


ARTICLE IV


REPRESENTATIONS AND WARRANTIES OF PURCHASER


Purchaser
hereby represents and warrants to Seller as follows:


Section
4.1.            Authority.  Purchaser has the requisite corporate power
and authority to execute and deliver this Agreement and any Related Documents
to which it is or will be a party and to consummate the transactions
contemplated hereby and thereby to be performed by it.  All corporate proceedings and actions on the
part of Purchaser required by Law, its certificate of incorporation, bylaws,
this Agreement and the Related Documents to which it is or will be a party, the
performance of the obligations hereunder and thereunder to be performed by it
and the consummation of the transactions contemplated hereby and thereby have
been duly taken, and no other corporate proceedings or actions on the part of
Purchaser, its board of directors or its stockholders is necessary.  This Agreement is, and each of the Related
Documents to which Purchaser is or will be a party will upon execution be, a
valid and binding agreement enforceable against Purchaser in accordance with
its terms, subject to bankruptcy, reorganization, insolvency, moratorium,
fraudulent conveyance and similar laws affecting the enforcement of creditor’s
rights generally.


Section
4.2.            Organization, Standing
and Power.  Purchaser (a) is a
corporation duly incorporated, validly existing and in good standing under the
Laws of the state of its incorporation; (b) has all requisite corporate power
and authority to own, lease or operate the assets it now owns, leases or
operates and to carry on the business now being conducted by it; and (c) is
duly qualified or licensed to do business and in good standing in each
jurisdiction in which the ownership or use of its assets or conduct of its
business requires it to be so qualified or licensed and in good standing except
where any such failure to be so qualified or licensed and in good standing
would not, individually or in the aggregate, have a material adverse effect on
Purchaser.


Section
4.3.            Issuance of Securities.  The Notes are duly authorized and, upon
issuance in accordance with the terms hereof, shall be free from all taxes,
liens and charges with respect to the issue thereof.  Within ten (10) Business Days following the
Closing Date, Purchaser shall have duly authorized and shall have reserved for
issuance a number of shares of common stock of Purchaser which equals the
number of Shares as required pursuant to Section 5.5(g).  Purchaser shall, so long as the Notes are
outstanding, take all action necessary to reserve and keep available out of its
authorized and unissued capital stock, solely for the purpose of effecting the
conversion of the Notes, 100% of the number of shares of common stock issuable
upon conversion of the Notes.  Upon
conversion in accordance with the Notes, the Shares will be validly issued, fully
paid and nonassessable and free from all taxes, liens and charges with respect
to the issue thereof, with the holders being entitled to all rights accorded to
a holder of the Purchaser’s common stock. 
Assuming the truth and accuracy of the representations and warranties of
Parent set forth herein, the issuance by Purchaser of the Notes is exempt from
registration under the Securities Act.


Section
4.4.            Equity Capitalization.  As of the date hereof, the authorized capital
stock of the Purchaser consists of (x) 12,000,000 shares of common stock, $0.01
par value per


 


34
















 


share, of which as of the
date hereof, 330,000 shares are issued and outstanding and 610,000 shares are
reserved for issuance pursuant to options granted to employees and directors,
and (y) 4,000,000 shares of preferred stock, $0.01 par value per share, of
which as of the date hereof, 3,000,000 shares, designated as the Series A
Convertible Preferred Stock, are issued and outstanding.


Section
4.5.            Purchaser Financial
Statements.  Schedule 4.5 sets
forth complete and correct copies of (i) the unaudited consolidated balance
sheets of Purchaser as of July 31, 2003 and July 31, 2002 and the related
consolidated statements of operations, changes in stockholders’ equity and cash
flows for the year ended July 31 2003, the nine months ended July 31, 2002 and
the year ended October 31, 2001, together with the appropriate notes to such
financial statements; and (ii) the unaudited consolidated balance sheet of
Purchaser as of January 31, 2004 and the related consolidated statement of
operations for the six months then ended (the financial statements described in
clause (i) of this Section 4.5 are collectively referred to herein as
the “Purchaser Financial Statements.”  The Purchaser Financial Statements have been
prepared in accordance with GAAP applied on a consistent basis and present
fairly, in all material respects, the financial position of Purchaser as of the
dates of such Purchaser Financial Statements results of their operations and
cash flows for the respective periods indicated (except that the unaudited
financial statements are subject to normal year-end audit adjustments which are
not expected to be material in amount or nature and do not contain footnotes).


Section
4.6.            Litigation.  No Actions or Proceedings are pending or, to
the Knowledge of Purchaser, threatened against Purchaser which seeks to delay
or prevent the consummation of, or which would materially adversely affect
Purchaser’s ability to consummate, the transactions contemplated by this
Agreement.


Section
4.7.            Consents and Approvals.  The execution and delivery of this Agreement
by Purchaser and the consummation by Purchaser of the transactions contemplated
hereby will not:  (a) violate any
provision of the certificate of incorporation or bylaws of Purchaser; (b)
violate any Law applicable to Purchaser; or (c) require Purchaser to make any
filing with, obtain any permit, consent, license or approval of, or give any
notice to, any Governmental Entity except, in the case of clauses (a), (b) and
(c), for such violations, filings, permits, consents, licenses, approvals,
notices, breaches or conflicts which would not be reasonably likely to prohibit
Purchaser from consummating the transactions contemplated by this Agreement or
the Related Documents to which it is a party or performing its obligations
hereunder and thereunder.


Section
4.8.            Brokers and Finders.  No broker, finder, consultant, advisor or
intermediary is entitled to a broker’s, finder’s or similar fee or commission
in connection with the transactions contemplated by this Agreement or upon the
consummation of the transactions contemplated hereby, or if the Closing does
not occur and Purchaser shall indemnify and hold harmless Seller from and
against any liability with respect to any and all such fees and commissions
arising out of any claimed retention by Purchaser of a broker or finder in
connection with the transactions contemplated by this Agreement.


 


35
















 


Section
4.9.            Stockholder Approval.  No consent or approval of the stockholders of
Purchaser is required or necessary for Purchaser to enter into this Agreement
or to consummate the transactions contemplated hereby.


Section
4.10.          Disclosure. No
representation or warranty or other statement made by Purchaser in this
Agreement (or any schedule or exhibit hereto) or otherwise in connection with
the transactions contemplated by this Agreement contains any untrue statement
or omits to state a material fact necessary to make any of them, in light of
the circumstances in which it was made, not misleading.


Section
4.11.          No Changes.  From January 31, 2004 through the date
hereof, Purchaser has not suffered any change that has resulted, or could
reasonably be expected to result, in a material adverse effect on the assets,
business, financial condition or results of operations of Purchaser.


Section
4.12.          Financing.  Purchaser possesses and will possess
sufficient cash funds and has and will have available to it adequate financial
resources to pay the Cash Purchase Price and all cash amounts under the Notes
when due and payable.


ARTICLE V




CERTAIN COVENANTS AND AGREEMENTS




OF SELLER AND PURCHASER


 


Section
5.1.            Access and Information.  Upon reasonable notice and during customary
business hours, or otherwise as mutually agreed to by the parties, Seller will
afford Purchaser and its counsel, accountants and other representatives full
and complete access to the books, records and properties of Seller and the
opportunity to discuss the business, affairs and finances of Seller with
directors, officers, employees, accountants, attorneys, representatives, and
customers of Seller in order to enable Purchaser and its counsel, accountants
and other representatives to make such investigations of Seller and the
Purchased Assets.  Seller agrees that it
will cause its officers and employees, and will request Seller’s legal counsel
and accountants, to reasonably cooperate with Purchaser, including promptly
disclosing to Purchaser any material facts known to such parties which has
resulted in, or could be reasonably expected to result in, a Material Adverse
Effect.


Section
5.2.            Registrations, Filings
and Consents.  Purchaser and Seller
shall use their respective reasonable best efforts to promptly take, or cause
to be taken, all action and do, or cause to be done, all things necessary,
proper or appropriate under applicable Laws to consummate and make effective
the transactions contemplated by this Agreement as soon as practicable.  Purchaser and Seller will cooperate and use
their respective reasonable best efforts to obtain, as promptly as practicable,
all consents, approvals, waivers and authorizations required.


 


36
















 


Section 5.3.            Conduct
of Business.


(a)           Seller
agrees that during the period from the date hereof and to the Closing Date, it
will:


(i)            preserve the business of Seller
intact;


(ii)           subject to the preceding, maintain
the existing material relationships
of Seller with third parties;


(iii)          subject to the preceding, operate the
business of Seller in the ordinary course; provided, that Parent may
incur up to $20,000 of indebtedness to acquire capital equipment in order to
satisfy customer requirements in the ordinary course of business;


(iv)          subject to the preceding, maintain in
effect all Seller Permits;


(v)           maintain in good repair the material properties
and equipment of Seller, subject to normal wear and tear; and


(vi)          use commercially reasonable efforts to
preserve and protect all Business Intellectual Property.


(b)           Except
as set forth on Schedule 5.3(b), Seller agrees that during the period
from the date hereof and to the Closing Date, it will not, without the prior
consent of Purchaser:


(i)            amend any of its organizational documents, except as otherwise permitted
hereunder;


(ii)           enter into, or make or permit any
amendment of (or relinquish any right under), any Customer Agreement or
Intellectual Property Contract, other than in the ordinary course of business;


(iii)          violate in any material respect any
Law, rule, judgment, award or decree, other than an inadvertent violation that
could not reasonably be expected (individually, or together with other
violations) to have a Material Adverse Effect on the Purchased Assets;


(iv)          make any change in its method of
accounting except in accordance with GAAP;


(v)           other than in the ordinary course of
business, enter into any transactions with Affiliates that would survive the
Closing or sell, transfer or otherwise dispose of any of the Purchased Assets
to any of its affiliates;


(vi)          make any changes in management
personnel;


 


37
















 


(vii)         enter into any agreement or arrangement
in violation of the foregoing; or


(viii)        make any of the following payments:  (A) for broker fees, advisor fees, consultant
fees or other professional fees relating to the transactions contemplated by
this Agreement or any other sale transaction, merger or other financing
transaction, (B) to any equity holders (including, without limitation,
interest, dividends or fees thereto), (C) to employees (including, without
limitation, any bonuses, retention payments or severance payments, except for
ordinary course payroll of employees at rates no greater than those in effect
on April 1, 2004 and severance payments contemplated pursuant to Section 3.30
and Section 5.8) or (D) of management fees or similar fees.


(c)           From
and after the Closing Date, Seller shall discontinue the use of Business
Intellectual Property in any manner whatsoever.


Section
5.4.            Retention of Books and
Records.  Purchaser shall retain, for
a period of one year following the Closing, all books, records and other
documents pertaining to the Purchased Assets in existence on the Closing Date
that are required to be retained under current retention policies and to make
the same available after the Closing Date for inspection and copying by Seller
or its agents at Seller’s expense, during regular business hours and upon
reasonable request and upon reasonable advance notice.  Purchaser shall hold all such information in
strict confidence.  After the expiration
of such period, Purchaser shall not destroy any books or records that Seller is
required by law to keep in order make required filings without first advising
Seller in writing and giving Seller at least 5 Business  Days to obtain possession thereof; provided,
however, that Purchaser shall be entitled to keep copies of same.


Section
5.5.            Further Assurances.


(a)           At
any time after the Closing Date, at Purchaser’s expense, Seller  and Purchaser shall promptly execute,
acknowledge and deliver any other assurances or documents reasonably requested
by Purchaser or Seller, as the case may be, and necessary for Purchaser or
Seller, as the case may be, to satisfy its obligations hereunder or obtain the
benefits contemplated hereby.  Without
limiting the generality of the foregoing, following the Closing Date, Purchaser
and Seller shall reasonably cooperate to the extent not prohibited by
applicable law in providing each other access to documents and information
useful in connection with their respective rights and obligations flowing from
this Agreement, which in the case of Purchaser includes the continued operation
of the Business and in the case of Seller includes the orderly winding up of
its affairs.


(b)           If
at any time after the Closing Date, Purchaser reasonably determines that a
claim relating to the Business for which Purchaser has responsibility or risk
of liability exposure, whether occurring prior to or following the Closing
Date, is reimbursable pursuant to any of the Seller’s insurance policies in
effect as of the Closing Date (the “Insurance
Policies”), Seller agrees, upon Purchaser’s request and at its
expense, to act as Purchaser’s agent in pursuing such insurance claims to the
extent permissible under the applicable Insurance Policies; provided, however,
that nothing in this Section 5.5(b) shall require Seller to pay any


 


38
















 


premiums to continue the
effectiveness of any of the Insurance Policies or prohibit Seller from
permitting any or all of the Insurance Policies to lapse in accordance with
their respective terms; provided, further, that nothing is this Section
5.5(b) shall prohibit Seller from independently submitting and pursuing
insurance claims under the Insurance Policies for its own account for any
liabilities, whether arising prior to or following the Closing Date, that are
not directly related to the operation of the Business.


(c)           Parent
agrees to (i) use its best efforts to cause its independent accountants to
complete the audit of the consolidated operations of the Business for the
nine-months ended December 31, 2003 as promptly as practicable following the
Closing Date and (ii) provide Purchaser a copy of such audited financials upon
receipt from its independent accountants.


(d)           If
after the Closing Date a third party (i) makes a claim against Seller or (ii)
makes a claim against Purchaser that Seller defends pursuant to its indemnification
obligations under Section 8.1 hereof, regardless of whether such claims arise
out of events occurring prior to or following the Closing Date, Purchaser shall
take such actions as are reasonably requested by Seller to enable Seller to
pursue, at its own expense, such claims, counterclaims, rights or interests
under any contractual provisions, liability limitations or personal guarantees
in any Contract included in the Purchased Assets applicable to any such claim
to the same extent Seller would have been entitled to pursue such claims,
counterclaims, rights or interests prior to the Closing Date.


(e)             Seller agrees to remove or delete, or cause
to be removed or deleted, all information, data, Computer Software, designs and
other materials including, but not limited to, all versions of the Products
(collectively “Business Information”)
from all IT Systems listed under the heading “Non-Transferred Employees’
Equipment” on Schedule 2.2, except to the extent that Seller is required
to retain any such Business Information in order to comply with a Law or as is
reasonably necessary for Seller to retain in connection any of the Excluded
Assets; provided, however, that prior to removing or deleting, or
causing to be removed or deleted, any Business Information, from such IT
Systems, Seller shall save, or cause to be saved, a true, complete and fully
operational backup copy of all Business Information contained on such IT
Systems on a server that is a Purchased Asset. 
For the avoidance of doubt, Seller agrees and acknowledges that
Purchaser is not licensing or sublicensing to Seller the right to use or retain
any Business Information contained on any IT System listed under the heading
“Non-Transferred Employees’ Equipment” on Schedule 2.2 by virtue of Seller’s
retention of such IT System.


(f)            Seller
will provide to Purchaser complete and accurate records of all withholding and
other payments made by it in respect of FICA, FUTA and SUTA taxes in respect of
payments made to employees since January 1, 2004, it being understood that
Purchaser will rely on such records for purposes of withholding such taxes for
the remainder of 2004 in accordance with Treasury Regulation Section
1.3121(a)(1)-1.


(g)           Within
ten (10) Business Days following the Closing Date, Purchaser shall have taken
all corporate actions on the part of its board of directors and stockholders to
duly authorize and reserve for issuance a number of shares of common stock of 


 


39
















 


Purchaser which equals the
number of Shares issuable upon the conversion of the Notes, and shall provide
Seller reasonably satisfactory evidence of such authorization and reservation.


Section
5.6.            Transfer Taxes.  All sales, use, transfer, real estate
transfer, stamp, documentary and other similar Taxes which may be imposed or
assessed as a result of Purchaser’s acquisition of the Purchased Assets (“Transfer Taxes”) shall be borne one-half by
Seller and one-half by Purchaser; provided, however, that to the
extent that the aggregate amount of all Transfer Taxes exceeds $30,000,
Purchaser shall be obligated to pay $15,000 of such amount and Seller shall be
obligated to pay the remainder.  Seller
shall file all necessary documentation and Tax Returns with respect to such Transfer
Taxes.  Any refund of Transfer Taxes
shall shared in the same proportions as such Transfer Taxes were borne by
Seller and Purchaser pursuant to the first sentence of this Section 5.6.  Seller and Purchaser agree to cooperate
reasonably to minimize the amount of Transfer Taxes, including Seller making
and Purchaser accepting delivery of any Purchased Assets that constitute
“prewritten programs” within the meaning of California Sales and Use Tax
Regulation 1502(b)(9) in a form qualifying for the exemption from California
sales and use tax under California Sales and Use Tax Regulation
1502(f)(1)(D).  In addition, Purchaser
represents that it intends to reproduce or copy any such prewritten programs in
order for such programs to be published and distributed for a consideration to
third parties within the meaning of the exemption from California sales and use
tax provided by California Sales and Use Tax Regulation 1502(f)(1)(B); provided,
however, that Purchaser shall not be liable for breach of the foregoing
representation to the extent that Purchaser acts in a manner inconsistent with
the foregoing.


Section
5.7.            Change of Name.  On the Closing Date, Seller shall (a) amend
its charter and bylaws and take all other actions necessary to change its name
to one sufficiently dissimilar to Seller’s present name, in Purchaser’s
judgment, to avoid confusion and (b) take all actions requested by Purchaser to
enable Purchaser to use Seller’s present name. 
Seller shall promptly provided Purchaser with evidence of such name
change.


Section
5.8.            Employment Matters.  (a)   Seller represents and warrants to Purchaser
that the Personnel List identifies all Seller Personnel currently employed by
Seller in connection with the operation of the Business.  As soon as practicable after the date of this
Agreement, Purchaser and Seller shall mutually agree upon the timing and method
of formally contacting the current Seller Personnel (including the form of any
written communications) regarding the transactions contemplated by this Agreement.   Subject to the procedures established
pursuant to the immediately preceding sentence, Purchaser shall have the right,
prior to the Closing, to contact such Seller Personnel, as Purchaser deems
appropriate in its discretion, for the purpose of making offers of employment
with Purchaser effective as of the Closing on terms and conditions of
employment determined by Purchaser and receiving written acceptances of such
employment (in each case contingent upon the occurrence of the Closing and the
consummation of the transactions contemplated by this Agreement).  Purchaser shall offer employment at
the Closing, on a full-time or transitional basis, to all employees of Seller
other than the Non-Transferred Employees listed on Schedule 3.30.  Any
Seller Personnel, other than any Transitional Employees, who receives and
accepts an offer of employment from Purchaser is hereinafter referred to as a “Transferred Employee.”
At the Closing, Seller shall terminate each Transferred Employee and
Transitional Employee and Purchaser’s offers of employment shall become
effective immediately upon such termination by Seller.  Purchaser shall give each


 


40
















 


Transferred
Employee credit for his or her years of most recent continuous service with
Seller for purposes of determining participation in, and benefit levels under,
all of Purchaser’s vacation policies and benefit plans and programs (other than
stock-based or similar equity incentive plans). 
Any Seller Personnel who does not become an employee of the Purchaser
shall remain an employee of the Seller. 
Purchaser shall not be liable for any employees who do not become
employed by Purchaser, except that Purchaser shall be responsible for payment
of severance to Transitional Employees upon termination of their employment by
Purchaser.  Purchaser shall have no
obligation with respect to, and Seller shall remain fully responsible for, all
amounts (including, without limitation, any severance payments) owing to any
Seller Personnel who do not become Transferred Employees or Transitional
Employees (the “Non-Transferred Employees”); provided, however, that severance payments owing to
those Non-Transferred Employees identified on Schedule 3.30 who are
terminated by Seller on the Closing Date and amounts owed for accrued but
unpaid paid time off vacation to Transitional Employees identified on Schedule
3.30 whose employment is terminated by Seller may be paid by Seller out of
its cash balances prior to the Closing; provided, further, that,
to the extent the severance amount paid by Seller to any Non-Transferred
Employee prior to the Closing exceeds the severance amount with respect to such
individual on Schedule 3.30, the Cash Purchase Price shall be reduced by
the amount of such excess on a dollar for dollar basis.  Purchaser shall not be deemed to be a
successor employer with respect to the employment of any Transferred Employee
or Transitional Employee with respect to any benefit plans maintained by Seller
for the benefit of such Transferred Employee or Transitional Employee.  Nothing contained in this Agreement shall
confer upon any Transferred Employee or Transitional Employee any right with
respect to employment by Purchaser, nor shall anything herein interfere with
the right of Purchaser, following any employment of any Transferred Employee or
Transitional Employee, to terminate the employment of such Transferred Employee
or Transitional Employee at any time, with or without cause, or restrict
Purchaser in the exercise of its independent business judgment in modifying any
of the terms and conditions of the employment of any such Transferred Employee
or Transitional Employee.  For avoidance
of doubt, nothing in this Agreement shall create a contract of employment or
alters the at will status of any employee hired by Purchaser.


(b)           The
offer of employment of each Transferred Employee shall expressly provide that
(i) any accrued paid time off balances owing to such individual by Seller shall
be carried over by Purchaser as an Assumed Liability (“Transferred Paid Time Off”), (ii) such
individual will be eligible for Purchaser’s paid time off program (it being
understood that Transferred Employees may accrue paid time off under
Purchaser’s paid time off program until December 31, 2004 (“Accrued Paid Time Off”); however, beginning
January 1, 2005, Transferred Employees may only accrue additional paid time off
under Purchaser’s paid time off program to the extent that the balance of their
Transferred Paid Time Off and Accrued Paid Time Off does not exceed Purchaser’s
paid time off accrual limitations), and (iii) such individual is waiving his or
her right to payment of accrued paid time off upon termination by Seller at
Closing and releasing Seller (and its officers and directors) from any wage
liability in connection with Purchaser’s agreement to carry over such accrual
in lieu of Seller’s payment thereof at Closing.


(c)           The
bonus amounts due and owing to certain Seller Personnel set forth on Schedule
3.30 may be paid by Seller out of its cash balances prior to the Closing; provided,
however, that, to the extent the bonus amount paid prior to the Closing
by Seller to any


 


41
















 


Seller Personnel exceeds the
amount set forth or calculated with respect to such individual in accordance
with Schedule 3.30, the Cash Purchase Price shall be reduced by the
amount of such excess on a dollar for dollar basis.  Seller represents and warrants that the
bonus(es) shall be paid only to the extent accrued in accordance with the terms
of the bonus plan or arrangement in the ordinary course of business.


(d)           All
amounts paid pursuant to this Section 5.8 in accordance with Schedule 3.30
shall be subject to applicable tax withholdings.


Section
5.9.            Non-Compete.  For a period of three years following the
Closing Date, neither Seller nor any of its Subsidiaries shall in North
America, directly or indirectly, (i) engage in any business for its own account
competitive, directly or indirectly, with the Business; (ii) render any
services, directly or indirectly, to any person engaged in such competitive
activities; or (iii) become interested in any such person as, a partner,
shareholder, principal, agent, trustee, consultant or in any other relationship
or capacity; provided, however, Seller may own, directly or indirectly,
solely as an investment, securities of any person which are traded on any
national securities exchange if the Seller (a) is not a controlling person of,
or a member of a group which controls, such person or (b) does not, directly or
indirectly, own 2% or more of any class of securities of such person.


Section
5.10.          Employee Non-Solicit.  For a period of three years following the
Closing Date, neither Seller, nor any of its Subsidiaries, shall directly or
indirectly, hire, solicit or encourage to leave the employment of the Purchaser
or any of its Affiliates, any employee of the Seller or any of its Affiliates
as of the Closing Date or hire any such employee who has left the employment of
Seller, any of Seller’s Subsidiaries, Purchaser or any of Purchaser’s
Affiliates within one year of the termination of such employee’s employment
with Seller, any of Seller’s Subsidiaries, Purchaser or any of Purchaser’s
Affiliates; provided, however, that none of the following
activities by Seller  with respect to
solicitation of employment shall constitute a breach of this Section 5.10:
(x) advertising for employment in any bulletin board (including electronic
bulletin boards), online careers website, newspaper, trade journal or other
publication available for general distribution to the public without specific
reference to any particular employees; (y) participation in any hiring fair or
similar event open to the public not targeted at the Seller Personnel; and (z)
use of recruiting or employee search firms that have been instructed by Seller
not to target any Seller Personnel provided, further, that Seller
may  continue to employ after Closing any
Seller Personnel that Purchaser does not employ, and Seller may solicit or hire
any Seller Personnel after Closing provided that such Seller Personnel is no
longer employed by Purchaser, but only to the extent that any such Seller
Personnel be employed by Seller to wind-up operations of Seller, and such
employment shall in no way be in competition with Purchaser.


Section
5.11.          Customer Non-Solicit.  For a period of three years following the
Closing Date, neither Seller nor any of its Subsidiaries shall, directly or
indirectly, initiate communications with, solicit, persuade, entice, induce,
encourage or assist any person who is then or has been within the preceding
12-month period a client, customer, supplier or account subject to a Customer
Agreement, to terminate or adversely change its contractual or other
relationship with the Purchaser or any of its Affiliates.


 


42
















 


Section
5.12.          Lock-Up Period.  Except
for transfer to a liquidating trust of Seller or to stakeholders of Seller in
accordance with the transfer provisions of the Notes, without the prior written
consent of the Purchaser, for a period of one
year after the date on which any Shares are issued upon conversion of the Notes
in accordance therewith, Parent will not offer, sell, contract to sell,
pledge or otherwise dispose of, directly or indirectly, any such Shares or
securities convertible into or exchangeable or exercisable for any such Shares,
enter into any transaction that would have the same effect, or enter into any
swap, hedge or other arrangement that transfers, in whole or in part, any of
the economic consequences of ownership of the Shares, whether any such
aforementioned transaction is to be settled by delivery of the Shares or such
other securities, in cash or otherwise, or publicly disclose the intention to make
any such offer, sale, pledge or disposition, or to enter into any such
transaction, swap, hedge or other arrangement, without, in each case, the prior
written consent of Purchaser.  In
addition to any transfer restrictions contained herein or in the Notes, Parent
shall not transfer the Notes or any portion thereof or interest therein to any
Person unless such Person agrees in writing to be subject to a substantially
similar lock-up provision.


Section
5.13.          Seller Filings.  Seller acknowledges and agrees that it is
obligated to file all Tax and other regulatory filings of Seller relating to
all periods prior to the Closing Date, including, but not limited to, all sales
tax returns, W-2s, federal and state income tax returns, Forms 5500 and other
Benefit Plan filings.


Section
5.14.          COBRA Coverage.  Individuals who are “M&A Qualified
Beneficiaries” within the meaning of Treasury Regulation 54.4980B-9, Q&A 8
shall be referred to herein as “Terminated
Employees.” Purchaser shall be responsible for providing the
coverage required under Code section 4980B and similar extended benefits
provisions under applicable California state law (“COBRA Coverage”) to Terminated Employees under Purchaser’s
applicable benefits plan(s), for such period as the Terminated Employees would
have been eligible for COBRA Coverage in the absence of termination of the
Benefit Plans, in accordance with Treasury Regulation 54.4980B-9, Q&A 8 and
similar extended benefits provisions under applicable state law.


Section
5.15.          Confidentiality.  Each Party acknowledges that Seller and
Purchaser have previously executed a Mutual Non-Disclosure Agreement dated as
of April 8, 2004 (the “Confidentiality
Agreement”), which agreement, until the Closing Date, shall continue
in effect in accordance with its terms.


ARTICLE VI



CONDITIONS TO CLOSING


Section
6.1.            Conditions to
Obligations of Purchaser.  The
obligations of Purchaser to consummate the transactions contemplated by Article
II shall be subject to the satisfaction or waiver by Purchaser in writing
on or prior to the Closing Date of each of the following conditions:


(a)           Representations;
Covenants.  (i)  Each of the representations and warranties of
Seller contained in this Agreement that is qualified by materiality or Material


 


43
















 


Adverse Effect shall be true
and correct when made and as of the Closing Date, in each case with the same
effect as though such representations and warranties had been made on and as of
the Closing Date (except that representations and warranties that are made as
of a specific date need be true and correct only as of such date); (ii) each of
the representations and warranties that is not so qualified shall be true and
correct in all material respects when made and as of the Closing Date, in each
case with the same effect as though such representations and warranties had
been made on and as of the Closing Date (except representations and warranties
that are made as of a specific date need be true and correct in all material respects
only as of such date); and (iii) each of the covenants and agreements of Seller
to be performed on or prior to the Closing Date shall have been duly performed
in all material respects; and Purchaser shall have received at the Closing a
certificate to the foregoing effect, dated as of the Closing Date and executed
on behalf of Seller.


(b)           No
Material Adverse Effect.  From
December 31, 2003 to the Closing Date, (i) there shall have been no
Material Adverse Effect and (ii) Seller shall have delivered to Purchaser a
certificate, dated as of the Closing Date, to such effect.


(c)           No
Injunction; Absence of Certain Litigation. 
No preliminary or permanent injunction issued by any court of competent
jurisdiction restraining or prohibiting the transaction contemplated hereby
shall be in effect.  No other action or
proceeding shall be pending against Seller which would reasonably be expected
to have a Material Adverse Effect on Seller.


(d)           Regulatory
Approvals.  All regulatory approvals
shall have been obtained from and made with all required Governmental Entities.


(e)           Material
Consents; Severance Waivers.  All
Material Consents and Severance Waivers required pursuant to Section 3.30
shall have been received.


(f)            Opinion
of Seller’s Counsel.  There shall
have been delivered to Purchaser an opinion of Heller Ehrman White &
McAuliffe LLP, dated as of the Closing Date and addressed to Purchaser, in form
and substance as set forth in Exhibit 6.1(f) attached hereto.


(g)           No
Change in Law.  There shall not have
been any action, or any statute enacted, by the United States, any state or any
foreign country which render the parties unable to consummate the transaction
contemplated herein or make the transactions contemplated herein illegal or
prohibited, restrict or substantially delay the consummation of the transaction
contemplated herein.


(h)           Loss
of Customers.  Seller shall not have
received notice, whether oral or written, or have any reason to believe, that
one or more customers representing an aggregate of 15% or more of its annual
revenues for the year ended March 31, 2004, has terminated, or intends to
terminate, its relationship with Seller or that such customer(s) intends to
terminate its relationship with Purchaser after Closing; provided, however,
that the loss of one or more customers shall not be used to calculate the
percentage set forth above if such customer(s) notify Seller that the reason
for its termination of such relationship is primarily because of the fact that
Purchaser will be operating the business after the Closing.


 


44
















 


(i)            Updated
Schedules.  Seller shall have
provided to Purchaser an updated Schedule 2.9 setting forth the final
principal amount of accrued interest through the Closing Date, on each of the
Bridge Notes and (ii) an updated Schedule 2.3 reflecting the liabilities
and trade accounts payable accrued in the ordinary course of business through
the Closing Date; provided, however, that the updated Schedule
2.3 shall not, without the prior written approval of Purchaser, reflect an
aggregate increase in liabilities and trade accounts payable of greater than
$50,000 as compared to the aggregate liabilities and trade accounts payable
reflected in the “Projected Closing” column of Schedule 2.3 delivered to
Purchaser concurrently with the parties’ execution of this Agreement.


(j)            Securities.  Parent shall have tendered to Purchaser the
stock certificate(s) representing all of the Stock in accordance with Section
2.7(a)(ii) hereof.


Section
6.2.            Conditions to
Obligations of Seller.  The
obligation of Seller to consummate the transactions contemplated by Article
II shall be subject to the satisfaction or waiver in writing by Seller on
or prior to the Closing Date of each of the following conditions:


(a)           Representations;
Covenants.  (i)  Each of the representations and warranties of
Purchaser contained in this Agreement that is qualified by materiality shall be
true and correct when made and as of the Closing Date, in each case with the
same effect as though such representations and warranties had been made on and
as of the Closing Date (except that representations and warranties that are
made as of a specific date need be true in all material respects only as of
such date); (ii) each of the representations and warranties of Purchaser that
is not so qualified shall be true and correct in all material respects when
made and as of the Closing Date, in each case with the same effect as though
such representations and warranties had been made on and as of the Closing Date
(except representations and warranties that are made as of a specific date need
be true and correct in all material respects only as of such date); and (iii)
each of the covenants and agreements of Purchaser to be performed on or prior
to the Closing Date shall have been duly performed in all material respects;
and Seller shall have received at the Closing certificate to the foregoing
effect, dated as of the Closing Date and executed on behalf of Purchaser.


(b)           No
Injunction; Absence of Certain Litigation. 
No preliminary or permanent injunction issued by any court of competent
jurisdiction restraining or prohibiting the transactions contemplated hereby
shall be in effect.


(c)           Regulatory
Approvals.  All regulatory approvals
shall have been obtained from and made with all required Governmental Entities.


(d)           No
Change in Law.  There shall not have
been any action, or any statute enacted, by the United States, any state or any
foreign country which render the parties unable to consummate the transaction
contemplated herein or make the transactions contemplated herein illegal or
prohibited, restrict or substantially delay the consummation of the transaction
contemplated herein.


 


45
















 


(e)           Opinion
of Purchaser’s Counsel.  There shall
have been delivered to Seller an opinion of Schulte Roth & Zabel LLP, dated
as of the Closing Date and addressed to Seller, in form and substance as set
forth in Exhibit 6.2(f) attached hereto.


Section 6.3             Conditions to Obligations of
Purchaser and Seller.  The
obligations of the parties to consummate the transactions contemplated by this
Agreement shall be subject to the satisfaction or waiver by both parties on or
prior to the Closing Date of the condition that no court or governmental
authority of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any statute, rule, regulation, or non-appealable Judgment
which is in effect on the Closing Date and prohibits the consummation of the
Closing.


ARTICLE VII



TERMINATION


Section
7.1.            Termination.  Anything contained herein to the contrary
notwithstanding, this Agreement may be terminated and the transactions
contemplated hereby abandoned at any time prior to the Closing Date:


(a)           by
mutual written consent of Seller and Purchaser;


(b)           by
Parent, on the one hand, or Purchaser, on the other hand, if the Closing does
not occur on or prior to June 30, 2004; or


(c)           by
either Parent, on the one hand, or Purchaser, on the other hand, if
consummation of the transactions contemplated by Article II would
violate any non-appealable final Judgment of any court or Governmental Entity
having competent jurisdiction.


Section
7.2.            Notice of Termination.  In the event of any termination pursuant to
this Article VII, written notice thereof setting forth the reasons
therefor shall promptly be given to the other parties and the transactions
contemplated by this Agreement shall be terminated, without further action by
any party.


Section
7.3.            Abandonment.  If this Agreement is terminated and the
transactions contemplated hereby are abandoned as described in this Section
7.3, this Agreement shall become void and of no further force or effect,
except for the provisions of (a) Section 8.4 relating to publicity; and
(b) Section 8.3 relating to certain expenses.  Nothing in this Section 7.3 shall be
deemed to release any party from any liability for any breach by such party of
the terms and provisions of this Agreement or to impair the right of any party
to compel specific performance by any other party of its obligations under this
Agreement.


ARTICLE VIII



MISCELLANEOUS


Section
8.1.            Survival of
Representations and Warranties. 
(a)    All representations and
warranties and the agreements, covenants and obligations required to be
performed prior to the Closing Date contained in this Agreement (including,
without limitation,


 


46
















 


the Schedules, Annexes and
Exhibits hereto and the certificates delivered hereunder) shall survive until
the one year anniversary of the Closing Date, notwithstanding any investigation
at any time made by or on behalf of the other party; provided, however,
that the representations of Seller with respect to tax matters and employee
benefit matters governed by ERISA shall survive until expiration of the statute
of limitations applicable to claims with respect to such matters (the “Survival Period”).


(b)           Sellers’
Agreement to Indemnify.  Seller,
jointly and severally shall fully indemnify and hold harmless and satisfy and
defend Purchaser, its Affiliates and its Subsidiaries and all of their
Affiliates, officers, directors, employees, representatives, attorneys,
consultants and agents against and in respect of any and all claims,
obligations, liabilities, losses, damages, deficiencies, penalties, fines,
costs or expenses (including, without limitation, reasonable legal, expert and
consultant fees and expenses and Taxes) (collectively “Losses”) arising out of or resulting from:


(i)            any misrepresentation or breach of
any warranty or representation of Seller made in this Agreement (including,
without limitation, the Schedules, Annexes and Exhibits hereto and the
certificates delivered hereunder);


(ii)           any breach or nonfulfillment of any
agreement, covenant or obligation of Seller made in this Agreement (including,
without limitation, the Schedules, Annexes and Exhibits hereto and the
certificates delivered hereunder);


(iii)          any Actions or Proceedings listed on Schedule
3.8; and


(iv)          any Excluded Liabilities;


(v)           any brokerage of finder’s fees or
commissions or similar payments based upon any agreement or understanding made,
or alleged to have been made, by any Person with Seller (or any Person acting
on its behalf) in connection with any of the transactions contemplated by this
Agreement;


(vi)          (A) any liability that Purchaser may
become subject in order to effect the assignment of the Oracle Contract to
Purchaser and/or obtain the consent of Oracle Corporation to such assignment
(including all costs associated therewith), and (B) the reasonable costs
incurred by Purchaser to cause all out-of-compliance software referred to in Schedule
3.4(b) to become subject to compliant licenses;


(vii)         any liability to which Purchaser may
become subject as a result of the fact that the transactions contemplated by
this Agreement are being effected, at the request of Seller, without compliance
with the provisions of any bulk transfer provisions of the Uniform Commercial
Code (or any similar law (including, without limitation, the bulk sales laws of
the State of California)); and


(viii)        any suit, action or other proceeding
brought by any governmental authority or other Person arising out of, or in any
way related to, any of the matters referred to in Section 8.1(b)(i) through
(vii).


 


47
















 


Any such Losses may be
satisfied by Seller on a dollar for dollar basis, at the election of Seller, by
forgiving any of the then outstanding principal amount of the Notes.  Any net insurance proceeds or net proceeds
from a third party indemnification payment received by Purchaser during the
pendency of an indemnification claim against Seller with respect to that claim
shall be credited against the amount of such indemnification claim and any such
net proceeds received by Purchaser after payment in full of such
indemnification claim by Seller shall be paid over to Seller.


 


(c)           Purchaser’s
Agreement to Indemnify.  Purchaser
will fully indemnify and hold harmless Seller and all of its Affiliates,
employees, representatives, attorneys, consultants and agents against and in
respect of any and all of Seller’s Losses arising out of or resulting from:


(i)            any misrepresentation or breach of
any warranty or representation of Purchaser made in this Agreement (including,
without limitation, the Schedules, Annexes and Exhibits hereto and the
certificates delivered hereunder);


(ii)           any breach or nonfulfillment of any
agreement, covenant or obligation of Purchaser made in this Agreement
(including, without limitation, the Schedules, Annexes and Exhibits hereto and
the certificate delivered hereunder);


(iii)          any Assumed Liability;


(iv)          Purchaser’s ownership of the Purchased
Assets or operation or control of the Business on and after the Closing Date,
including, without limitation, any and all liabilities arising from the sale of
the Products or under the Customer Agreements which relate to events occurring
after the Closing Date;


(v)           any liability arising in connection
with any claim asserted by Leon Falic against Seller, as described in Schedule
3.8, including liability for any possible settlement of any such claim; provided,
that the amount of any indemnification hereunder shall be limited to $36,500;


(vi)          any brokerage or finder’s fees or
commissions or similar payments based upon any agreement or understanding made,
or alleged to have been made, by any Person with Purchaser (or any Person
acting on Purchaser’s behalf) in connection with any of the transactions
contemplated by this Agreement; and


(vii)         any suit, action or other proceeding
brought by any governmental authority or other Person arising out of, or in any
way related to, any of the matters referred to in Section 8.1(c)(i) through
(vi).


Any net insurance proceeds
or net proceeds from a third party indemnification payment received by Seller
during the pendency of an indemnification claim against Purchaser with respect
to that claim shall be credited against the amount of such indemnification
claim and any such net proceeds received by Seller after payment in full of
such indemnification claim by Purchaser shall be paid over to Purchaser.


 


 


48
















 


 


(d)           Third
Party Claims.  Promptly after the
receipt by any party hereto of notice of any claim, action, suit or proceeding
of any Person which is subject to indemnification hereunder, each such Person
(the “Indemnified Party”) shall
give written notice of such claim to the party obligated to provide
indemnification hereunder (collectively, the “Indemnifying
Party”), stating the nature and basis of such claim and the amount
thereof, to the extent known.  So long as
notice is given prior to the expiration of the Survival Period, failure of the
Indemnified Party to give such notice promptly shall not relieve the
Indemnifying Party from any liability which it may have on account of this
indemnification or otherwise, except to the extent that the Indemnifying Party
is materially prejudiced thereby, and in such case, only to the extent of the prejudice
caused by such delay.  The Indemnifying
Party shall be entitled to participate in the defense or settlement of such
matter and the parties agree to cooperate in any such defense or settlement and
to give each other full access to all information relevant thereto.  The Indemnifying Party shall not be obligated
to indemnify an Indemnified Party hereunder for any settlement entered into
without the Indemnifying Party’s prior written consent, which consent shall not
be unreasonably withheld, conditioned or delayed.  If, with the consent of the Indemnified
Party, the Indemnifying Party assumes the defense of any claim, no compromise
or settlement of such claim may be effected by the Indemnifying Party without
the prior written consent of the Indemnified Party.  The parties shall use commercially reasonable
efforts to minimize Losses from claims by third parties and shall act in good
faith in responding to, defending against, settling or otherwise dealing with
such claims, notwithstanding any dispute as to liability as between the parties
under this Section 8.1.  The
parties shall also cooperate in any such defense, give each other reasonable
access to all information relevant thereto and make employees and other
representatives available on a mutually convenient basis to provide additional
information and explanation of any material provided in connection
therewith.  If the Loss incurred relates
to the failure of Purchaser to collect any note or account receivable and if
Seller pays in full the unpaid balance thereof to Purchaser or Seller,
Purchaser will cause Seller to assign said note or account without recourse to
Seller paying same in full satisfaction of Seller’s indemnification obligation
as to such uncollected note or account. 
Any collection procedures by Seller will be carried out in a reasonable
manner so as not to prejudice Seller’s relationship with the account debtor.


(e)           Purchaser
shall not be entitled to deduct or offset the amount of any payment due from
Seller pursuant to this Section 8.1 or otherwise from any payments that
Purchaser is obligated to make to Seller pursuant to any of the Notes, except
as follows:


(i)            during the period beginning on the
Closing Date and ending on the date the New Restricted Note is issued,
Purchaser may deduct or offset payments under the Non-Transferable Note against
any indemnification claims (including 
Tax/Employee Benefit Claims and Sales Tax Claims) submitted prior to the
first anniversary of the Closing Date and finally resolved prior to the date
the New Restricted Note is issued;


(ii)           during the period beginning on the
date the Non-Transferable Note is surrendered for exchange in accordance with
its terms and ending on the date the New Restricted Note is surrendered for
exchange in accordance with its terms, Purchaser may deduct or offset payments
under the New Restricted Note against (A) any indemnification claims (including
Tax/Employee Benefit Claims and Sales Tax


 


49
















 


Claims) submitted prior to
the first anniversary of the Closing Date that remain unresolved as of the date
the New Restricted Note is issued but are finally resolved prior to the date
the New Restricted Note is surrendered for exchange in accordance with its
terms and (B) any Tax/Employee Benefit Claims or Sales Tax Claims submitted
prior to the second anniversary of the Closing Date that are finally resolved
prior to the date the New Restricted Note is surrendered in accordance with its
terms; and


(iii)          from and after the date the New Restricted
Note is surrendered in accordance with its terms, Purchaser may deduct or
offset payments under the Final Restricted Note against (A) any timely
submitted indemnification claims (including any indemnification claim submitted
prior to the first anniversary of the Closing Date that remain unresolved as of
the date the Final Restricted Note is issued, Tax/Employee Benefit Claims
submitted prior to the second anniversary of the Closing Date that remain
unresolved as of the date the Final Restricted Note is issued and Sales Tax
Claims submitted prior to the first business day following the third
anniversary of the Closing Date that remain unresolved as of the date the Final
Restricted Note is issued, in each case only upon final resolution of such
claims.  For the avoidance of doubt,
Purchaser shall not be entitled to deduct or offset the amount of any payment
due to Purchaser pursuant to Section 8.1 or otherwise from any payments that
Purchaser is obligated to make to Seller or its permitted transferees under the
Transferable Note,  the Initial
Unrestricted Note, the Additional Unrestricted Note or any of the Debtholder
Notes.   All capitalized terms referred
to in this Section 8.1(e) that are not otherwise defined in this Agreement
shall have the meanings ascribed to such terms in the Non-Transferable Note.


(f)            Notwithstanding
any provision of this Agreement to the contrary, Seller shall have no liability
(for indemnification or otherwise) with respect to claims under Section
8.1(b)(i) or Section 8.1(b)(vi) to the extent relating to a matter referred to
in Section 8.1(b)(i): (i) until the total of all Losses with respect to such
matters exceeds One Hundred Thousand Dollars ($100,000) (the “Indemnity Threshold”), in which case the
Purchaser indemnities shall be entitled to recover all Losses from the first
dollar of Losses, and (ii) in excess of One Million Four Hundred Thousand
Dollars ($1,400,000) (the “Maximum
Indemnification Amount”); provided, however, that such
limitations shall not apply (A) to Losses arising pursuant to Section
8.1(b)(ii) through (vii) or Section 8.1(b)(viii) to the extent relating to a
matter referred to in Section 8.1(b)(ii) through (vii), (B) in the case of
fraud or willful breach, or (C) to Losses arising pursuant to Section 8.1(c)(v).  Notwithstanding the foregoing, the fees and
expenses (including interest) associated with the credit facility provided
pursuant to the Loan and Security Agreement dated June 1, 2004 by and between
Parent and Silicon Valley Bank specified on Schedule 2.3 shall be deemed to be
a Loss to be applied against the Indemnity Threshold relating to Seller’s
agreement to indemnify Purchaser.  For
avoidance of doubt, by way of illustration, if the fees and expenses (including
interest) associated with such credit facility are $80,000 and Purchaser incurs
an additional $50,000 of Losses, Seller shall be liable to indemnify Purchaser
for $130,000.  Further, if the fees and
expenses (including interest) associated with such credit facility are $80,000
and Purchaser incurs less than $20,000 of additional Losses (in the aggregate),
Seller shall not be liable to indemnify Purchaser for any such amounts.


 


50
















 


(g)           Notwithstanding
any provision of this Agreement to the contrary, Purchaser shall have no
liability (for indemnification or otherwise) with respect to claims under
Section 8.1(c)(i) or Section 8.1(c)(vi) to the extent relating to a matter
referred to in Section 8.1(c)(i): (i) until the total of all Losses with respect
to such matters exceeds the Indemnity Deductible, in which case the Seller
indemnities shall be entitled to recover all Losses in excess of the Indemnity
Deductible, and (ii) in excess of the Maximum Indemnification Amount; provided,
however, that such limitations shall not apply (A) to Losses arising
pursuant to Section 8.1(c)(ii) through (v) or Section 8.1(c)(vi) to the extent
relating to a matter referred to in Section 8.1(c)(ii) through (v), or (B) in
the case of fraud or willful breach.


(h)           Notwithstanding
the foregoing, except as set forth in Section 8.1(e) above and as otherwise set
forth in the Notes, nothing in this Agreement shall (i) impair the obligation
of Purchaser, which is absolute and unconditional,  to pay Seller all principal of and interest
on the Notes as and when due and payable, or (ii) prevent Seller, upon default
of the Notes, from exercising all rights, powers and remedies otherwise
provided in the Notes or by applicable law.


(i)            The
indemnification provided in this Section 8.1 shall, except for fraud,
and except for equitable remedies, constitute the exclusive legal remedy
available to the parties with respect to claims made pursuant to this Agreement
(including, without limitation, the Schedules, Annexes and Exhibits hereto and
the certificates delivered hereunder).


Section
8.2.            Amendment and Waiver.  Any provision of this Agreement may be
amended or waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by Parent and Purchaser, or in the case of
a waiver, by the party against whom the waiver is to be effective.  No failure or delay by any party or parties
in exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege.


Section
8.3.            Expenses.  Except as otherwise expressly provided in
this Agreement, whether or not the transactions contemplated by this Agreement
are consummated, the parties shall bear their own respective expenses
(including, but not limited to, all compensation and expenses of counsel,
financial advisors, consultants, actuaries and independent accountants)
incurred in connection with this Agreement and the transactions contemplated
hereby.  No expenses incurred by Seller
in connection with the transactions contemplated by this Agreement shall be
assumed by Purchaser as an Assumed Liability, nor shall any of the Purchased
Assets be in any way reduced by the payment of any such expenses.


Section
8.4.            Public Disclosure.  Each of the parties to this Agreement agrees
with the other parties hereto that, except (i) as may be required to comply
with the requirements of applicable Law (including, without limitation,
disclosure requirements of Regulation S-K) or (ii) for public disclosure
necessary or appropriate in the reasonable judgment of the Purchaser and/or any
underwriters of the Purchaser in connection with any private placement or
public offering of securities of the Purchaser (including, without limitation,
offering memoranda, filings with the Securities Exchange Commission, filings
with any securities exchange or market, road shows and rating agency
presentations), no press release or similar public announcement or 


 


51
















 


communication will be made
or caused to be made concerning the execution or performance of this Agreement
unless specifically approved in advance by all parties hereto; provided,
however, that to the extent that either party to this Agreement is
required by applicable Law to make such a public disclosure, such public
disclosure shall only be made after prior consultation with the other party to
this Agreement.


Section
8.5.            Assignment.  This Agreement and the rights and obligations
of the parties hereunder shall not be assigned, delegated or otherwise
transferred, by Purchaser or by Seller; provided, however, that
Purchaser may assign its rights and obligations hereunder to an Affiliate of
Purchaser or for collateral security purposes to any lender providing financing
to Purchaser.  Seller agrees to enter
into such amendments to, or restatements of, this Agreement and the Schedules
and Exhibits hereto as may be reasonably required to give effect to this Section
8.5, so long as such amendments or restatements do not materially adversely
affect the rights of Seller hereunder or thereunder.


Section
8.6.            Entire Agreement.  This Agreement (including all Schedules and
Exhibits hereto), the Related Documents and the Confidentiality Agreement
contains the entire agreement between the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements and understandings,
oral or written, with respect to such matters.


Section
8.7.            Fulfillment of
Obligations.  Any obligation of any
party to any other party under this Agreement, which obligation is performed,
satisfied or fulfilled by an Affiliate of such party, shall be deemed to have
been performed, satisfied or fulfilled by such party.


Section
8.8.            Parties in Interest; No
Third Party Beneficiaries.  This
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors and permitted assigns.  Nothing in this Agreement, express or
implied, is intended to confer upon any Person other than Purchaser and Seller
or their successors or permitted assigns, any rights or remedies under or by
reason of this Agreement.


Section
8.9.            Schedules.  Each of the parties hereto shall (a) give prompt
notice to the other party of the occurrence or non-occurrence of any event the
occurrence or non-occurrence of which would cause any representation or
warranty by such party contained in this Agreement to be untrue or inaccurate
in any material respect at or prior to the Closing Date and shall promptly
deliver to the other party an amended or supplemental Schedule to such
representation or warranty; and (b) give prompt notice to the other party of
any failure of such party to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder or under any Related
Document; provided, however, that the delivery of any notice
pursuant to this Section 8.9 shall not limit or otherwise affect the
remedies available hereunder to the party receiving such notice.   No notification under this Section 8.9
shall be deemed to cure any breach or default or event of default or render any
representation or warranty incomplete or inaccurate.  No disclosure set forth in a particular
schedule shall be deemed to apply to any other schedule unless specifically
cross-referenced to such other schedule.


Section
8.10.           Counterparts.  This Agreement and any amendments hereto may
be executed in one or more counterparts, each of which shall be deemed to be an
original by the


 


52
















 


parties executing such
counterpart, but all of which shall be considered one and the same instrument.


Section
8.11.           Headings.  The section and paragraph headings and table
of contents contained in this Agreement are for reference purposes only and
shall not in any way affect the meaning or interpretation of this Agreement.


Section
8.12.           Notices.  All notices hereunder shall be deemed given
if in writing and delivered personally, sent by facsimile (confirm receipt), by
registered or certified mail (return receipt requested) or nationally
recognized overnight courier to the parties at the following addresses (or at
such other addresses as shall be specified by like notice):


	
   

  	
  (a)

  	
  if to Seller:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Arzoon, Inc.

  
	
   

  	
   

  	
   

  	
  2075 Pioneer Court

  
	
   

  	
   

  	
   

  	
  San Mateo, California
  94403

  
	
   

  	
   

  	
   

  	
  Attn.:  Chief Executive Officer

  
	
   

  	
   

  	
   

  	
  Fax:  (650) 522-6070

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  with a copy to:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Heller Ehrman White & McAuliffe LLP

  
	
   

  	
   

  	
   

  	
  275 Middlefield Road

  
	
   

  	
   

  	
   

  	
  Menlo Park, California 94025

  
	
   

  	
   

  	
   

  	
  Attn.: 
  Donald M. Keller, Jr., Esq.

  
	
   

  	
   

  	
   

  	
  Fax: 
  (650) 324-0638

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  if to Purchaser:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  SSA Global Technologies, Inc.

  
	
   

  	
   

  	
   

  	
  500 West Madison

  
	
   

  	
   

  	
   

  	
  Chicago, Illinois 60661

  
	
   

  	
   

  	
   

  	
  Attn.:  General Counsel

  
	
   

  	
   

  	
   

  	
  Fax:  (312) 474-7451

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  with a copy to:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Schulte Roth & Zabel LLP

  
	
   

  	
   

  	
   

  	
  919 Third Avenue

  
	
   

  	
   

  	
   

  	
  New York, New York 10022

  
	
   

  	
   

  	
   

  	
  Attn:  Robert
  B. Loper, Esq.

  
	
   

  	
   

  	
   

  	
  Fax:  (212)
  593-5955

  
	
   

  	
  Any notice given by mail
  shall be effective when received.

  



 


 


53
















 


Section
8.13.           No Strict
Construction.  Notwithstanding the
fact that this Agreement has been drafted or prepared by one of the parties,
the parties confirm that both they and their respective counsel have reviewed,
negotiated and adopted this Agreement as the joint agreement and understanding
of the parties, and the language used in this Agreement shall be deemed to be
the language chosen by the parties hereto to express their mutual intent, and
no rule of strict construction construing ambiguities against the draftsperson
shall be applied against any Person.


Section
8.14.          Governing Law.  This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York without
reference to the choice of law principles thereof.


Section
8.15.          Jurisdiction.  Each party to this Agreement hereby
irrevocably and unconditionally agrees that any action, suit or proceeding, at
law or equity, arising out of or relating to this Agreement or any agreements
or transactions contemplated hereby may be brought in any federal court of the
Southern District of New York or any state court located in New York County,
State of New York, and hereby irrevocably and unconditionally expressly submits
to the personal jurisdiction and venue of such courts for the purposes thereof
and hereby irrevocably and unconditionally waives (by way of motion, as a
defense or otherwise) any and all jurisdictional, venue and convenience
objections or defenses that such party may have in such action, suit or
proceeding.  Each party hereby
irrevocably and unconditionally consents to the service of process of any of
the aforementioned courts.  Nothing
herein contained shall be deemed to affect the right of any party to serve
process in any manner permitted by law or commence legal proceedings or
otherwise proceed against any other party in any other jurisdiction to enforce
judgments obtained in any action, suit or proceeding brought pursuant to this Section
8.15.


Section
8.16.          Severability.  The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof.  If any provision of this Agreement, or the
application thereof to any person or entity or any circumstance, is invalid or
unenforceable, (a) a suitable and equitable provision shall be substituted
therefor in order to carry out, so far as may be valid and enforceable, the
intent and purpose of such invalid or unenforceable provision and (b) the
remainder of this Agreement and the application of such provision to other
persons, entities or circumstances shall not be affected by such invalidity or
unenforceability.


Section
8.17.          Jury Trial Waiver.
As a material inducement to each parties’ execution and consummation of this
Agreement, all parties hereto knowingly and intentionally waive all rights to a
trial by jury of any and all disputes, lawsuits, claims or demands arising from
or relating to this Agreement.


Section
8.18.          Bulk Sales Compliance.  Purchaser and Seller hereby waive compliance
with the bulk-transfer provisions of the Uniform Commercial Code (or any
similar law (including, without limitation, the bulk sales laws of the State of
California)) in connection with the transactions contemplated by this
Agreement.


[Remainder of this page intentionally left blank.  Signature page follows.]


 


54
















 


IN WITNESS WHEREOF, this
Agreement has been signed on behalf of each of the parties hereto as of the
date first written above.


	
   

  	
  PARENT:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ARZOON,
  INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Bill Sickler

  	
   

  
	
   

  	
   

  	
  Name:  Bill Sickler

  	
   

  
	
   

  	
   

  	
  Title:  CEO & President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SUBSIDIARY SELLERS:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ARZOON
  ACQUISITION, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Deborah Veneziale

  	
   

  
	
   

  	
   

  	
  Name:  Deborah Veneziale

  	
   

  
	
   

  	
   

  	
  Title:  Vice-President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ARZOON
  ASSET ACQUISITION, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kelyn Brannon-Ahn

  	
   

  
	
   

  	
   

  	
  Name:  Kelyn Brannon-Ahn

  	
   

  
	
   

  	
   

  	
  Title:  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  PURCHASER:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SSA
  GLOBAL TECHNOLOGIES, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kirk J. Isaacson

  	
   

  
	
   

  	
   

  	
  Name:  Kirk J. Isaacson

  	
   

  
	
   

  	
   

  	
  Title:  Executive Vice President & General
  Counsel

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  [SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT]

  
					



 


 


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