Exhibit
10.19


 




 





AGREEMENT AND PLAN
OF MERGER


 


BY AND AMONG


 


CLICK COMMERCE,
INC.


 


REQUISITE
ACQUISITION INC.,


 


THOMAS G. WASHING,


as representative,


 


AND


 


REQUISITE
TECHNOLOGY, INC.


 


Dated as of November 22,
2005


 




 
























 


TABLE OF CONTENTS


 


	
  Article 1

  	
  DEFINITIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  1.1

  	
  Definitions

  	
   

  
	
   

  	
   

  	
   

  
	
  Article 2

  	
  THE MERGER

  	
   

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  The Merger

  	
   

  
	
   

  	
   

  	
   

  
	
  2.2

  	
  Closing

  	
   

  
	
   

  	
   

  	
   

  
	
  2.3

  	
  Conversion of Company
  Preferred Stock

  	
   

  
	
   

  	
   

  	
   

  
	
  2.4

  	
  Mechanics of Exchange

  	
   

  
	
   

  	
   

  	
   

  
	
  2.5

  	
  Escrow Fund

  	
   

  
	
   

  	
   

  	
   

  
	
  2.6

  	
  Dissenting Stockholders

  	
   

  
	
   

  	
   

  	
   

  
	
  2.7

  	
  Dividends

  	
   

  
	
   

  	
   

  	
   

  
	
  2.8

  	
  Withholding Rights

  	
   

  
	
   

  	
   

  	
   

  
	
  2.9

  	
  Additional Action

  	
   

  
	
   

  	
   

  	
   

  
	
  2.10

  	
  No Further Rights of Transfers

  	
   

  
	
   

  	
   

  	
   

  
	
  2.11

  	
  Certificate of Incorporation
  of the Surviving Corporation

  	
   

  
	
   

  	
   

  	
   

  
	
  2.12

  	
  By-laws of the Surviving Corporation

  	
   

  
	
   

  	
   

  	
   

  
	
  2.13

  	
  Directors and Officers of the
  Surviving Corporation

  	
   

  
	
   

  	
   

  	
   

  
	
  2.14

  	
  Working Capital Adjustment

  	
   

  
	
   

  	
   

  	
   

  
	
  Article 3

  	
  REPRESENTATIONS AND
  WARRANTIES OF THE COMPANY

  	
   

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  Due Organization, Good Standing
  and Corporate Power

  	
   

  
	
   

  	
   

  	
   

  
	
  3.2

  	
  Authorization and Validity
  of this Agreement

  	
   

  
	
   

  	
   

  	
   

  
	
  3.3

  	
  Capitalization

  	
   

  
	
   

  	
   

  	
   

  
	
  3.4

  	
  Consents and Approvals; No Violations

  	
   

  
	
   

  	
   

  	
   

  
	
  3.5

  	
  Company Financial Statements

  	
   

  
	
   

  	
   

  	
   

  
	
  3.6

  	
  Absence of Certain Changes or
  Events

  	
   

  
	
   

  	
   

  	
   

  
	
  3.7

  	
  Title to
  Properties; Encumbrances

  	
   

  
	
   

  	
   

  	
   

  
	
  3.8

  	
  Compliance with Laws

  	
   

  
	
   

  	
   

  	
   

  
	
  3.9

  	
  Litigation

  	
   

  
	
   

  	
   

  	
   

  
	
  3.10

  	
  Employee Benefit Plans

  	
   

  
	
   

  	
   

  	
   

  
	
  3.11

  	
  Employment
  Relations and Agreements

  	
   

  
	
   

  	
   

  	
   

  
	
  3.12

  	
  Taxes

  	
   

  
	
   

  	
   

  	
   

  
	
  3.13

  	
  Intellectual Property

  	
   

  



 


i





















 


	
  3.14

  	
  Broker’s or Finder’s Fee

  	
   

  
	
   

  	
   

  	
   

  
	
  3.15

  	
  Certain Contracts
  and Arrangements

  	
   

  
	
   

  	
   

  	
   

  
	
  3.16

  	
  Environmental
  Laws and Regulations

  	
   

  
	
   

  	
   

  	
   

  
	
  3.17

  	
  Insurance

  	
   

  
	
   

  	
   

  	
   

  
	
  3.18

  	
  Working
  Capital; Accounts Receivable

  	
   

  
	
   

  	
   

  	
   

  
	
  3.19

  	
  Inventories

  	
   

  
	
   

  	
   

  	
   

  
	
  3.20

  	
  Suppliers and
  Customers

  	
   

  
	
   

  	
   

  	
   

  
	
  3.21

  	
  Bank Accounts and
  Powers of Attorney

  	
   

  
	
   

  	
   

  	
   

  
	
  3.22

  	
  Disclosure

  	
   

  
	
   

  	
   

  	
   

  
	
  3.23

  	
  Related Party Transactions

  	
   

  
	
   

  	
   

  	
   

  
	
  3.24

  	
  Non-Disclosure Agreements

  	
   

  
	
   

  	
   

  	
   

  
	
  3.25

  	
  Right to Sell and
  Supply Products

  	
   

  
	
   

  	
   

  	
   

  
	
  Article 4

  	
  REPRESENTATIONS
  AND WARRANTIES OF PARENT AND SUB

  	
   

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  Due Organization,
  Good Standing and Corporate Power

  	
   

  
	
   

  	
   

  	
   

  
	
  4.2

  	
  Authorization and
  Validity of Agreements

  	
   

  
	
   

  	
   

  	
   

  
	
  4.3

  	
  Capitalization;
  Issuance of Shares

  	
   

  
	
   

  	
   

  	
   

  
	
  4.4

  	
  Consents and
  Approvals; No Violations

  	
   

  
	
   

  	
   

  	
   

  
	
  4.5

  	
  Commission
  Documents; Securities Law Compliance

  	
   

  
	
   

  	
   

  	
   

  
	
  4.6

  	
  Parent Financials

  	
   

  
	
   

  	
   

  	
   

  
	
  4.7

  	
  Broker’s or Finder’s Fee

  	
   

  
	
   

  	
   

  	
   

  
	
  4.8

  	
  Ownership of
  Sub and Sub’s Operations

  	
   

  
	
   

  	
   

  	
   

  
	
  4.9

  	
  Litigation

  	
   

  
	
   

  	
   

  	
   

  
	
  4.10

  	
  Absence of Certain
  Changes or Events

  	
   

  
	
   

  	
   

  	
   

  
	
  Article 5

  	
  COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
  5.1

  	
  Access to
  Information Concerning Properties and Records

  	
   

  
	
   

  	
   

  	
   

  
	
  5.2

  	
  Conduct of
  the Business of the Company Pending the Closing Date

  	
   

  
	
   

  	
   

  	
   

  
	
  5.3

  	
  Company
  Stockholders’ Approval

  	
   

  
	
   

  	
   

  	
   

  
	
  5.4

  	
  Commercially
  Reasonable Efforts

  	
   

  
	
   

  	
   

  	
   

  
	
  5.5

  	
  Notification of
  Certain Matters

  	
   

  
	
   

  	
   

  	
   

  
	
  5.6

  	
  Stock Option and Other
  Plans

  	
   

  



 


ii





















 


	
  5.7

  	
  Company Warrants

  	
   

  
	
   

  	
   

  	
   

  
	
  5.8

  	
  Public Announcements

  	
   

  
	
   

  	
   

  	
   

  
	
  5.9

  	
  Registration

  	
   

  
	
   

  	
   

  	
   

  
	
  5.10

  	
  Financial Statements

  	
   

  
	
   

  	
   

  	
   

  
	
  5.11

  	
  Employee and
  Employee Benefits Matters

  	
   

  
	
   

  	
   

  	
   

  
	
  5.12

  	
  NASDAQ Listing

  	
   

  
	
   

  	
   

  	
   

  
	
  5.13

  	
  Acquisition Proposals

  	
   

  
	
   

  	
   

  	
   

  
	
  5.14

  	
  COC Incentive Payments

  	
   

  
	
   

  	
   

  	
   

  
	
  Article 6

  	
  CONDITIONS
  PRECEDENT

  	
   

  
	
   

  	
   

  	
   

  
	
  6.1

  	
  Conditions
  Precedent to Each Party’s Obligation to Effect the Merger

  	
   

  
	
   

  	
   

  	
   

  
	
  6.2

  	
  Additional
  Conditions to Obligations of the Company

  	
   

  
	
   

  	
   

  	
   

  
	
  6.3

  	
  Additional
  Conditions to the Obligations of Parent and Sub

  	
   

  
	
   

  	
   

  	
   

  
	
  Article 7

  	
  TERMINATION
  AND ABANDONMENT

  	
   

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  Termination

  	
   

  
	
   

  	
   

  	
   

  
	
  7.2

  	
  Effect of Termination

  	
   

  
	
   

  	
   

  	
   

  
	
  Article 8

  	
  THE REPRESENTATIVE

  	
   

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  Representative
  of the Company Preferred Stockholders and COC Recipients; Power of Attorney

  	
   

  
	
   

  	
   

  	
   

  
	
  8.2

  	
  Actions of the
  Representative

  	
   

  
	
   

  	
   

  	
   

  
	
  Article 9

  	
  INDEMNIFICATION

  	
   

  
	
   

  	
   

  	
   

  
	
  9.1

  	
  Survival

  	
   

  
	
   

  	
   

  	
   

  
	
  9.2

  	
  Indemnification

  	
   

  
	
   

  	
   

  	
   

  
	
  9.3

  	
  Indemnification
  Procedure

  	
   

  
	
   

  	
   

  	
   

  
	
  9.4

  	
  Payment of Claims

  	
   

  
	
   

  	
   

  	
   

  
	
  9.5

  	
  Third-Party Claims

  	
   

  
	
   

  	
   

  	
   

  
	
  9.6

  	
  Limitations of
  Liability

  	
   

  
	
   

  	
   

  	
   

  
	
  9.7

  	
  Indemnification for
  Taxes

  	
   

  
	
   

  	
   

  	
   

  
	
  9.8

  	
  Exclusive Remedy

  	
   

  
	
   

  	
   

  	
   

  
	
  9.9

  	
  Characterization
  of Indemnity Payments

  	
   

  
	
   

  	
   

  	
   

  
	
  Article 10

  	
  MISCELLANEOUS

  	
   

  



 


iii





















 


	
  10.1

  	
  Fees and Expenses

  	
   

  
	
   

  	
   

  	
   

  
	
  10.2

  	
  Representations
  and Warranties

  	
   

  
	
   

  	
   

  	
   

  
	
  10.3

  	
  Extension; Waiver

  	
   

  
	
   

  	
   

  	
   

  
	
  10.4

  	
  Notices

  	
   

  
	
   

  	
   

  	
   

  
	
  10.5

  	
  Entire Agreement

  	
   

  
	
   

  	
   

  	
   

  
	
  10.6

  	
  Binding Effect;
  Benefit; Assignment

  	
   

  
	
   

  	
   

  	
   

  
	
  10.7

  	
  Amendment and Modification

  	
   

  
	
   

  	
   

  	
   

  
	
  10.8

  	
  Further Actions

  	
   

  
	
   

  	
   

  	
   

  
	
  10.9

  	
  Headings

  	
   

  
	
   

  	
   

  	
   

  
	
  10.10

  	
  Counterparts

  	
   

  
	
   

  	
   

  	
   

  
	
  10.11

  	
  Facsimile Signatures

  	
   

  
	
   

  	
   

  	
   

  
	
  10.12

  	
  Applicable Law; Waiver
  of Jury Trial

  	
   

  
	
   

  	
   

  	
   

  
	
  10.13

  	
  Severability

  	
   

  
	
   

  	
   

  	
   

  
	
  10.14

  	
  Interpretation

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibits

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  Form of Escrow Agreement

  	
   

  
	
  Exhibit B

  	
  Form of Opinion of Counsel to Parent

  	
   

  
	
  Exhibit C

  	
  Form of Opinion of Counsel to the
  Company

  	
   

  
	
  Exhibit D

  	
  Form of Stockholders Questionnaire

  	
   

  
	
  Exhibit E

  	
  Cashed Company Preferred Stockholders

  	
   

  
	
  Exhibit F

  	
  COC Stock Payments and COC Cash Payments

  	
   

  



 


iv





















 


AGREEMENT
AND PLAN OF MERGER


 


AGREEMENT AND PLAN OF MERGER, dated as of November 22,
2005 (this “Agreement”), by and among CLICK COMMERCE, INC., a
corporation organized under the laws of Delaware (“Parent”), REQUISITE
ACQUISITION INC., a corporation organized under the laws of Delaware and an
indirect wholly-owned subsidiary of Parent (“Sub”), REQUISITE
TECHNOLOGY, INC., a corporation organized under the laws of Delaware (the “Company”),
and Thomas G. Washing, solely in the capacity of representative of the Company
Stockholders and COC Recipients and not in a personal capacity (the “Representative”).  Parent, Sub, the Company and the
Representative are herein referred to collectively as the “Parties” and
individually as a “Party.”


 


W I  T  N  E  S  S
E  T  H:


 


WHEREAS, the Boards of Directors of Parent, Sub and
the Company have determined that the acquisition of the Company by Parent
pursuant to the Merger (as defined below) and on the terms and conditions set
forth in this Agreement is advisable and in the best interests of their
respective corporations and stockholders and consequently have approved the
Merger and this Agreement, in accordance with the Delaware General Corporation
Law (the “DGCL”); and


 


WHEREAS, in order to effectuate the foregoing, upon
the terms and subject to the conditions of this Agreement the acquisition will
be consummated through a merger of Sub with and into the Company, with the
Company being the surviving corporation (the “Merger”).


 


NOW, THEREFORE, in consideration of the premises and
of the mutual covenants, representations, warranties and agreements herein
contained, the Parties intending to be legally bound, agree as follows:


 


ARTICLE 1



DEFINITIONS


 


1.1           Definitions.  When used in this Agreement, the following
terms have the respective meanings specified below (such meanings to be equally
applicable to both the singular and plural forms of the terms defined).


 


“Accredited Investor” means an “accredited
investor” as defined in Rule 501(a) of Regulation D, as amended,
under the Securities Act.


 


“Acquisition Proposal” has the meaning set
forth in Section 5.13(a).


 


“Adjustment
Amount” has the meaning set forth in Section 2.14(a).


 


“Affiliate”
of any Person means any Person directly or indirectly controlling, controlled
by, or under common control with, such Person; provided, that for the
purposes of this definition, “control” (including with correlative meanings,
the terms “controlled by” and “under common control with”), as used with
respect to any Person, shall mean the possession, directly or


 





















 


indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities or partnership interests, by
contract or otherwise.


 


“Agreement”
has the meaning set forth in the preamble hereto.


 


“Allowed Delay”
has the meaning set forth in Section 5.9(i).


 


“Alternative
Efforts” has the meaning set forth in Section 5.13(a).


 


“Business Day” means any day except a Saturday,
a Sunday or any other day on which commercial banks are required or authorized
to close in Chicago, Illinois.


 


“Balance Sheet Date” has the meaning set forth
in Section 3.5(b).


 


“Cash Escrow Fund” has the meaning set forth in
Section 2.5.


 


“Cash Merger Consideration” means the cash to
be received by the Cashed Company Preferred Stockholders identified on Exhibit E
(which exhibit shall be prepared immediately prior to Closing) as receiving
cash consideration in the Merger.


 


“Cashed Company Preferred Stockholders” means
those Company Preferred Stockholders identified on Exhibit E as
receiving cash consideration in the Merger.


 


“Certificate of Merger” has the meaning set
forth in Section 2.1(a).


 


“Certificates” means the stock certificates representing
the Company Stock.


 


“Claim Notice” has the meaning set forth in Section 9.3.


 


“Closing” has the meaning set forth in Section 2.2.


 


“Closing Date” has the meaning set forth in Section 2.2.


 


“Closing Date Working Capital” means the
working capital of the Company as of the Effective Time determined in
accordance with Section 2.14 and by applying the accounting principles,
policies and practices set forth on Schedule 2.14.


 


“COC Acceptance Form” has the meaning set forth
in Section 5.14.


 


“COC Cash Payments” means the cash payments to
be received by the COC Cash Recipients identified on Exhibit F as
receiving COC Cash Payments.


 


“COC Cash Recipients” means those Company
employees identified on Exhibit F as receiving COC Cash Payments.


 


“COC Incentive Payments” has the meaning set
forth in Section 3.11(b).


 


“COC Recipients” means the COC Cash Recipients
and the COC Stock Recipients.


 


2





















 


“COC Stock Payments” means the number of shares
of Parent Common Stock equal to (a) the dollar value of the stock payments
to be received by the COC Stock Recipients identified on Exhibit F
as receiving COC Stock Payments, (b) divided by the Market Price, rounded
down to the next whole share of Parent Common Stock.


 


“COC Stock Recipients” means those Company
employees identified on Exhibit F as receiving COC Stock Payments.


 


“COC Tax” has the meaning set forth in Section 3.11(b).


 


“Code” means the United States Internal Revenue
Code of 1986, as amended, and the regulations promulgated and the rulings
issued thereunder.


 


“Commission” means the United States Securities
and Exchange Commission.


 


“Company” has the meaning set forth in the
preamble of this Agreement.


 


“Company Charter” means the Company’s
Certificate of Incorporation, as amended and in effect as of the date hereof.


 


“Company COC Tax” has the meaning set forth in Section 3.11(b).


 


“Company COC Withholding” has the meaning set
forth in Section 3.11(b).


 


“Company Common Stock” means the fully paid and
non-assessable shares of common stock, par value $0.001 per share, of the
Company.


 


“Company Disclosure Letter” means that
disclosure letter prepared and delivered by the Company to Parent and Sub prior
to entering into this Agreement.


 


“Company Indemnitees” has the meaning set forth
in Section 9.2(b).


 


“Company Options” mean outstanding stock
options and other rights (other than the Company Warrants) exercisable or
exchangeable for, or convertible into, Company Stock heretofore granted or
issued under any of the Company Option Plans or otherwise.


 


“Company Option Plans” means all incentive
stock option, stock option and stock issuance plans of the Company.


 


“Company Preferred Stock” means the fully paid
and non-assessable shares of Series A Stock, Series B Stock, Series C
Stock, Series D Stock, Series E Stock and Series F Stock.


 


“Company Preferred Stockholders” means the
holders of shares of the Company Preferred Stock.


 


“Company Property” means any real property and
improvements owned (directly, indirectly, or beneficially), leased, used,
operated or occupied by the Company or its Subsidiaries.


 


3





















 


“Company Stock” means, in aggregate, the
Company Common Stock and the Company Preferred Stock.


 


“Company Stockholders” means the holders of
shares of Company Stock.


 


“Company Stockholders’ Meeting” has the meaning
set forth in Section 5.3.


 


“Company Transaction Expenses” means the fees
and expenses of third-party accountants, attorneys and other professionals,
advisors, brokers or finders incurred by the Company and the Company
Stockholders with respect to this Agreement, the due diligence performed with
respect thereto and the transactions contemplated hereby, and which are
included as a liability for purposes of determining the Closing Date Working
Capital under this Agreement, but shall not include any fees and expenses for
auditors incurred by Parent after the Effective Time in connection with any
filings it makes with the Commission, including the Registration Statement or a
Form 8-K filed in connection with the Merger or the Registration
Statement, except to the extent such fees and expenses relate to the re-audit
(or re-review) of previously audited (or reviewed) financial statements of the
Company.


 


“Company Warrants” means the warrants to
purchase Company Stock listed on Section 3.3(a) of the Company
Disclosure Letter.


 


“Confidentiality Agreement” means that certain
Confidentiality Agreement by and between Parent and the Company dated August 3,
2005.


 


“Continuing Employees” has the meaning set
forth in Section 5.11.


 


“Contracts” has the meaning set forth in Section 3.15.


 


“Control” means direct ownership of stock
possessing at least eighty percent (80%) of the total combined voting power of
all classes of stock entitled to vote and at least eighty percent (80%) of the
total number of shares of each other class of stock of any corporation, provided,
that a Person is not considered to own voting stock if a third-party, other
than an agent of such Person, has the right to vote or control the voting of
such stock.


 


“D&O Insurance” means directors’ and
officers’ insurance.


 


“DGCL” means the General Corporation Law of
Delaware.


 


“Disclosed Severance Obligation” means any
severance or similar obligation of the Company disclosed on the Company
Disclosure Letter.


 


“Dissenting Stockholders” has the meaning set
forth in Section 2.6.


 


“Effective Time” has the meaning set forth in Section 2.1(a).


 


“Employee Benefit Plans” has the meaning set
forth in Section 3.10(a).


 


“End Date” has the meaning set forth in Section 7.1(b).


 


4





















 


“Environmental Law” means any Law relating to
the protection of the environment, or to the manufacture, use, transport,
treatment, storage, disposal, release or threatened release of petroleum
products, asbestos, urea formaldehyde insulation, polychlorinated biphenyls or
any substance listed, classified or regulated as hazardous or toxic under such
Environmental Law.


 


“ERISA” has the meaning set forth in Section 3.10(a).


 


“Escrow Agent” means the escrow agent under the
Escrow Agreement.


 


“Escrow Agreement” means the Escrow Agreement
among Parent, the Company, the Representative and the Escrow Agent,
substantially in the form of Exhibit A.


 


“Escrow Fund” has the meaning set forth in Section 2.5.


 


“Escrow Release Date” has the meaning set forth
in Section 2.5.


 


“Exchange Act” means the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated
thereunder.


 


“Excess Claims” has the meaning set forth in Section 9.6(a)(ii).


 


“FY04 Audited Financial Statements” has the
meaning set forth in Section 3.5(a).


 


“GAAP” means generally accepted accounting
principles in the United States of America, as in effect from time to time.


 


“Governmental Entity” means any domestic or
foreign court, arbitral tribunal, administrative agency or commission or other
governmental or regulatory agency or authority or any securities exchange.


 


“Immigration Laws” has the meaning set forth in
Section 3.11.


 


“Indebtedness” means all obligations of the
Company for borrowed money (including any overdraft), any debenture, bond, note
or other similar instrument; any receivable sold or discounted (otherwise than
on a non-recourse basis); the purchase price of any asset or service to the extent
payable by the Company or its Subsidiaries after the time of sale or delivery
to the Company or its Subsidiaries, where the deferred payment is arranged as a
method of raising finance or paid more than six months after the sale or
delivery date; any finance lease, credit sale or conditional sale agreement; or
any guarantee of the foregoing types of indebtedness of any Person.


 


“Indemnified Party” has the meaning set forth
in Section 9.3(a).


 


“Indemnifying Party” has the meaning set forth
in Section 9.3(a).


 


“Intellectual Property” means any U.S. and
non-U.S. (i) patents and patent applications, (ii) registered and
unregistered trademarks, service marks and other indicia of origin, pending
trademark and service mark registration applications, and intent-to-use
registrations or similar


 


5





















 


reservations of marks, (iii) registered
and unregistered copyrights and mask works, and applications for registration
thereof, (iv) internet domain names, applications and reservations
therefor, uniform resource locators and the corresponding Internet sites, (v) software,
including source codes, object codes, computer software programs, databases,
data collections and other similar items, (vi) trade secrets and
proprietary information not otherwise listed in (i) through (v) above,
including unpatented inventions, invention disclosures, moral and economic
rights of authors and inventors (however denominated), confidential
information, technical data, customer lists, corporate and business names,
trade names, trade dress, brand names, know-how, formulae, methods (whether or
not patentable), designs, processes, procedures, technology, and other
proprietary information or material of any type, and all derivatives,
improvements and refinements thereof, howsoever recorded, or unrecorded and (vi) any
goodwill associated with any of the foregoing.


 


“IRS” means the United States Internal Revenue
Service or any successor entity thereof.


 


“Knowledge” means, when referring to
the Company, the actual knowledge of Larry Lenhart, Susan Oakes, Steve Fuhrman,
Dave Bandi, Jim Pachak, Mike Paschal or Neil Hartley, and when referring to
Parent, the actual knowledge of Michael W. Ferro, Jr., Michael W. Nelson,
John Tuhey, Nancy Koenig or Steve Cole.


 


“Law” means any federal, state, local or
foreign law, statute, rule, regulation, ordinance, standard, requirement,
administrative ruling, order or process or administrative interpretation
thereof and any court or arbitrator’s ruling, order or process.


 


“Lien” has the meaning set forth in Section 3.3.


 


“Losses” has the meaning set forth in Section 9.2(a).


 


“Market Price” for purposes of this Agreement means
$23.10427 per share of Parent Common Stock.


 


“Material Adverse Effect” with respect to any
Person, means any event, change, occurrence, effect, violation or circumstance
that has had, or is reasonably likely to have, a material adverse effect on (i) the
ability of such Person to perform its obligations under this Agreement or any
of the other Transaction Documents or to consummate the transactions
contemplated hereby or thereby on a timely basis or (ii) the assets,
business, liabilities, results of operations or condition (financial or
otherwise) of such Person and its Subsidiaries, taken as a whole, except that
none of the following shall be deemed in themselves to constitute a Material
Adverse Effect (a) any changes in laws, rules or regulations of
general applicability or interpretations thereof by Governmental Entities that
do not disproportionately affect the Person or any of its Subsidiaries, (b) any
changes in general economic conditions that do not disproportionately affect
the Person or any of its Subsidiaries, (c) any changes in the industry in
which the Person operates that do not disproportionately affect the Person or
any of its Subsidiaries, and (d) any changes resulting from the taking of
any actions required by this Agreement; provided, however, that
in determining whether a Material Adverse Effect in respect of the Company has
occurred, the effect of any loss of customers by the Company or its


 


6





















 


Subsidiaries as a result of any
announcement or disclosure of the transactions contemplated hereby will not be
considered.


 


“Material Contracts” has the meaning set forth
in Section 3.15.


 


“Merger” has the meaning set forth in the third
recital of this Agreement.


 


“Merger Consideration” means, upon consummation
of the Merger, the consideration, if any, which a Company Stockholder shall be
entitled to receive pursuant to the terms of Section 2.3.


 


“Most Recent Balance Sheet” has the meaning set
forth in Section 3.5(b).


 


“Multiemployer Plan” means a “multiemployer
pension plan” (as defined in Section 4001(a)(3) of ERISA) or subject
to Section 302 of ERISA.


 


“NLRB” has the meaning set forth in Section 3.11.


 


“Objection Notices” has the meaning set forth
in Section 9.3(b).


 


“Open Source Code” has the meaning set forth in
Section 3.13(i).


 


“Ownership Representations” has the meaning set
forth in Section 9.6(a)(ii).


 


“Parent” has the meaning set forth in the
preamble hereto.


 


“Parent Commission Filings” means any forms,
reports, schedules, statements, registration statements and other documents
filed by Parent or its Subsidiaries pursuant to the federal securities laws and
the Commission’s rules and regulations, including those filed after the
date hereof.


 


“Parent Common Stock” means the common stock,
par value $0.001 per share, of Parent.


 


“Parent Disclosure Letter” means that
disclosure letter prepared and delivered by Parent and Sub to the Company prior
to entering into this Agreement.


 


“Parent Financials” has the meaning set forth
in Section 4.5.


 


“Parent Indemnitees” has the meaning set forth
in Section 9.2(a).


 


“Parent Stockholders” means the holders of Parent
Common Stock.


 


“Participating Company Preferred Stockholders”
means those Company Preferred Stockholders identified on Exhibit E
as receiving stock consideration in the Merger.


 


“Party” and “Parties” have the meanings
set forth in the preamble of this Agreement.


 


“PBGC” means Pension Benefit Guaranty
Corporation.


 


7





















 


“Permit” has the meaning set forth in Section 3.8(b).


 


“Permitted Liens” means (i) Liens for
taxes not yet due and payable, (ii) statutory Liens of landlords, (iii) Liens
of carriers, warehousemen, mechanics, materialmen and repairmen incurred in the
ordinary course of business consistent with past practice and not yet
delinquent and (iv) in the case of real property, zoning, building or
other restrictions, variances, covenants, rights of way, encumbrances,
easements and other minor irregularities in title, none of which, individually
or in the aggregate, (A) interfere in any material respect with the
present use or occupancy of the affected parcel by the Company, (B) have
more than an immaterial effect on the value thereof or its use or (C) would
impair the ability of such parcel to be sold for its present use.


 


“Permitted Transfer” means the transfer of
Parent Common Stock by a Company Stockholder (i) if such Company
Stockholder is a corporation, partnership or limited liability company, to a
director, officer, partner, manager or member thereof, or to an entity
controlling, controlled by or under common control with such Company
Stockholder and (ii) if such Company Stockholder is a natural person, to
such Company Stockholder’s parent, sibling, spouse, or the descendants of any
of them, or to an entity formed by or for the benefit of such Company
Stockholder or such relatives; provided, that the transferee agrees to
be bound by the transfer restrictions contained in Section 2.4(e).


 


“Person” means and includes an individual, a
partnership, a limited liability partnership, a joint venture, a corporation, a
limited liability company, a trust, an unincorporated organization, a group and
a Governmental Entity.


 


“Pre-Closing Period” has the meaning set forth
in Section 3.12(b).


 


“Registrable Holder” has the meaning set forth
in Section 5.9(a).


 


“Registration Statement” has the meaning set
forth in Section 5.9(a).


 


“Representative” has the meaning set forth in
the preamble.


 


“Resolved Claims” has the meaning set forth in Section 9.3(c).


 


“Returns” has the meaning set forth in Section 3.12(a).


 


“Section 5.9 Indemnified Party” has the
meaning set forth in Section 5.9(f).


 


“Section 5.9 Indemnifying Party” has the
meaning set forth in Section 5.9(f).


 


“Securities Act” means the Securities Act of
1933, as amended.


 


“Separate Financial Statements” has the meaning
set forth in Section 3.5(a).


 


“Series A Stock” means the shares of Series A
Preferred Stock, par value $0.001 per share, of the Company.


 


8





















 


“Series B Stock” means the shares of Series B
Preferred Stock, par value $0.001 per share, of the Company.


 


“Series C Stock” means the shares of Series C
Preferred Stock, par value $0.001 per share, of the Company.


 


“Series D Stock” means the shares of Series D
Preferred Stock, par value $0.001 per share, of the Company.


 


“Series E Stock” means the shares of Series E
Preferred Stock, par value $0.001 per share, of the Company.


 


“Series F Stock” means the shares of Series F
Preferred Stock, par value $0.001 per share, of the Company.


 


“Statement of Adjustment Amount” has the
meaning set forth in Section 2.14(b).


 


“Stock Escrow Fund” has the meaning set forth
in Section 2.5.


 


“Stock Merger Consideration” means that number
of shares of Parent Common Stock equal to (a) the Total Transaction
Consideration, less (i) the aggregate of all the COC Cash Payments and (ii) the
Cash Merger Consideration, (b) divided by the Market Price, and, for each
Participating Company Preferred Stockholder or COC Stock Recipient, rounded
down to the next whole share of Parent Common Stock.


 


“Straddle Period” has the meaning set forth in Section 9.7(b).


 


“Stub Unaudited Financial Statements” has the
meaning set forth in Section 3.5(b).


 


“Sub” has the meaning set forth in the preamble
hereto.


 


“Subsidiary,” with respect to any Person, means
and includes (i) any partnership of which such Person or any of its
Subsidiaries is a general partner or (ii) any other entity in which such
Person or any of its Subsidiaries owns or has the power to vote fifty percent
(50%) or more of the equity interests in such entity having general voting
power to participate in the election of the governing body of such entity.


 


“Superior Acquisition Proposal” has the meaning
set forth in Section 5.13(b).


 


“Surviving Corporation” has the meaning set
forth in Section 2.1(b).


 


“Taxes” has the meaning set forth in Section 3.12(a).


 


“Terminated Company Employees” has the meaning
set forth in Section 5.11(a).


 


“Total Transaction Consideration” means,
subject to adjustment pursuant to Section 2.14, $19,500,000.


 


“Transaction Documents” means this Agreement
and the Escrow Agreement.


 


9





















 


“Transfer” has the meaning set forth in Section 2.4(c).


 


“VEBAs” has the meaning set forth in Section 3.10(a).


 


“WARN” has the meaning set forth in Section 3.11.


 


“Working Capital Target Amount” means $6,630,000
calculated in accordance with the accounting principles, policies and practices
set forth on Schedule 2.14.


 


ARTICLE 2



THE MERGER


 


2.1           The Merger.


 


(a)           Upon
the terms and subject to the conditions of this Agreement, at the Closing, a
certificate of merger (the “Certificate of Merger”) shall be duly
prepared, executed and acknowledged by Sub and the Company in accordance with
the DGCL and shall be filed with the Secretary of State of Delaware in
accordance with the provisions of the DGCL. 
The Merger shall become effective upon the filing of the Certificate of
Merger (or at such later time reflected in such Certificate of Merger as shall
be agreed to by Parent and the Company). 
The date and time when the Merger shall become effective is hereinafter
referred to as the “Effective Time.”


 


(b)           Upon
the terms and subject to the conditions set forth in this Agreement and in
accordance with the DGCL, at the Effective Time, Sub shall be merged with and
into the Company, and the separate corporate existence of Sub shall cease, and
the Company shall continue as the surviving corporation under the laws of the
State of Delaware (the “Surviving Corporation”).


 


(c)           From
and after the Effective Time, the Merger shall have the effects set forth in Section 259(a) of
the DGCL.


 


2.2           Closing. 
Unless this Agreement shall have been terminated and the transactions
contemplated hereby shall have been abandoned pursuant to Article 7, and
subject to the satisfaction or waiver of the conditions set forth in Article 6,
the closing of the Merger (the “Closing”) shall take place at 10:00 a.m.
Central Standard Time at the offices of McDermott, Will & Emery LLP,
227 West Monroe Street, Chicago, IL 
60606, on November 22, 2005, or at such other date, time or place
as the Parties shall agree in writing. 
Such date is herein referred to as the “Closing Date”.


 


2.3           Conversion of Company
Preferred Stock.


 


(a)           Subject
to Sections 2.3(f), 2.4, 2.5 and 2.6 at the Effective Time, by virtue of the
Merger and without any further action on the part of Parent, Sub, the Company
or any Company Preferred Stockholder:


 


10





















 


(i)    each
share of Series A Stock outstanding immediately prior to the Effective
Time held by a Participating Company Preferred Stockholder shall be converted
into the right to receive 0.00861 shares of Parent Common Stock.  Ninety percent (90%) of such Stock Merger
Consideration shall be issued to such Stockholder at the Effective Time and the
remaining ten percent (10%) shall be
deposited into the Stock Escrow Fund established pursuant to Section 2.5.  The shares so deposited into the Stock Escrow
Fund shall be paid to such Stockholders,
if and when such Parent Common Stock becomes distributable from the Stock
Escrow Fund to such Stockholders in accordance with the terms of this Agreement
and the Escrow Agreement;


 


(ii)   each
share of Series B Stock outstanding immediately prior to the Effective
Time held by a Participating Company Preferred Stockholder shall be converted
into 0.01155 shares of Parent Common Stock. 
Ninety percent (90%) of such Stock Merger Consideration shall be issued
to such Stockholder at the Effective Time and the remaining ten percent (10%) shall be deposited into the
Stock Escrow Fund established pursuant to Section 2.5.  The shares so deposited into the Stock Escrow
Fund shall be paid to such Stockholders,
if and when such Parent Common Stock becomes distributable from the Stock
Escrow Fund to such Stockholders in accordance with the terms of this Agreement
and the Escrow Agreement;


 


(iii)  each
share of Series C Stock outstanding immediately prior to the Effective
Time held by a Participating Company Preferred Stockholder shall be converted
into 0.01467 shares of Parent Common Stock. 
Ninety percent (90%) of such Stock Merger Consideration shall be issued
to such Stockholder at the Effective Time and the remaining ten percent (10%) shall be deposited into the
Stock Escrow Fund established pursuant to Section 2.5.  The shares so deposited into the Stock Escrow
Fund shall be paid to such Stockholders,
if and when such Parent Common Stock becomes distributable from the Stock
Escrow Fund to such Stockholders in accordance with the terms of this Agreement
and the Escrow Agreement;


 


(iv)  each
share of Series D Stock outstanding immediately prior to the Effective
Time held by a Participating Company Preferred Stockholder shall be converted
into 0.02086 shares of Parent Common Stock. 
Ninety percent (90%) of such Stock Merger Consideration shall be issued
to such Stockholder at the Effective Time and the remaining ten percent (10%) shall be deposited into the
Stock Escrow Fund established pursuant to Section 2.5.  The shares so deposited into the Stock Escrow
Fund shall be paid to such Stockholders,
if and when such Parent Common Stock becomes distributable from the Stock
Escrow Fund to such Stockholders in accordance with the terms of this Agreement
and the Escrow Agreement;


 


(v)   each
share of Series E Stock outstanding immediately prior to the Effective
Time held by a Participating Company Preferred Stockholder shall be converted
into 0.05423 shares of Parent Common Stock. 
Ninety percent (90%) of such Stock Merger Consideration shall be issued
to such Stockholder at the Effective Time and the remaining ten percent (10%) shall be deposited into the
Stock Escrow Fund established pursuant to Section 2.5.  The shares so deposited into the Stock Escrow
Fund shall be paid to such Stockholders,
if and when such Parent Common Stock becomes distributable from the Stock
Escrow Fund to such Stockholders in accordance with the terms of this Agreement
and the Escrow Agreement;


 


11





















 


(vi)  each
share of Series F Stock outstanding immediately prior to the Effective
Time held by a Participating Company Preferred Stockholder shall be converted
into 0.08412 shares of Parent Common Stock. 
Ninety percent (90%) of such Stock Merger Consideration shall be issued
to such Stockholder at the Effective Time and the remaining ten percent (10%) shall be deposited into the
Stock Escrow Fund established pursuant to Section 2.5.  The shares so deposited into the Stock Escrow
Fund shall be paid to such Stockholders,
if and when such Parent Common Stock becomes distributable from the Stock
Escrow Fund to such Stockholders in accordance with the terms of this Agreement
and the Escrow Agreement; and


 


(vii) each share of the Company Preferred Stock issued and outstanding
immediately prior to the Effective Time held by a Cashed Company Preferred
Stockholder shall be converted into cash as follows: Series A Stock,
$0.19900; Series B Stock, $0.26681; Series C Stock, $0.33904, Series D
Stock, $0.48203; Series E Stock, $1.25299; and Series F Stock,
$1.94360.  With respect to each Cashed
Company Preferred Stockholder, ninety percent (90%) of the aggregate
Cash Merger Consideration to which such Cashed Company Preferred Stockholder is
entitled shall be paid to such
Stockholder at the Effective Time and the remaining ten percent (10%) of the aggregate Cash Merger Consideration to
which such Cashed Company Preferred Stockholder is entitled shall be deposited into the Cash Escrow Fund
established pursuant to Section 2.5.  The cash so deposited into the Cash Escrow
Fund shall be paid to such Cashed Company Preferred Stockholders, if and when such cash becomes distributable
from the Cash Escrow Fund to such Cashed Company Preferred Stockholders in
accordance with the terms of this Agreement and the Escrow Agreement.


 


(b)           Cancellation
of Company Common Stock.  Subject to
the provisions of Section 2.6, each share of Company Common Stock issued
and outstanding immediately prior to the Effective Time (other than shares held
by Dissenting Stockholders and shares held in the Company’s treasury), shall be
canceled, retired and cease to exist without payment of any consideration
therefor.


 


(c)           Cancellation
of Company Options and Warrants.  At
the Effective Time, each issued, outstanding and unexercised Company Option to
purchase or otherwise acquire Company Common Stock (whether or not vested)
shall be cancelled and terminated without payment of any consideration therefor
in accordance with Section 5.6, and any unexercised Company Warrants
issued by the Company shall be terminated in accordance with Section 5.7.


 


(d)           Cancellation
of Treasury Stock.  Each share of
Company Stock held in the Company’s treasury immediately prior to the Effective
Time shall be canceled, retired and cease to exist.


 


(e)           Conversion
of Sub Common Stock.  Each share of
common stock of Sub issued and outstanding immediately prior to the Effective
Time shall be converted into and thereafter evidence one fully paid and
non-assessable share of common stock of the Surviving Corporation.


 


(f)            Rounding;
No Fractional Shares.  No
certificates or scrip representing fractional shares of Parent Common Stock
shall be issued to Company Stockholders upon conversion of Company Stock into
shares of Parent Common Stock in the Merger. 
Instead, the


 


12





















 


number of shares of Parent
Common Stock to which a Company Stockholder is entitled pursuant to this
Agreement at the Effective Time and upon each distribution of shares of Parent
Common Stock from the Escrow Fund, if any, shall be aggregated with all shares
of Parent Common Stock to which such Company Stockholder is entitled at such
time and then rounded down to the next whole share of Parent Common Stock.


 


2.4           Mechanics of Exchange.


 


(a)           At
the Effective Time, each Company Preferred Stockholder will be entitled to
receive and, upon surrender to Parent of one or more Certificates representing
the Company Preferred Stock held by such Company Preferred Stockholder and a
duly executed letter of transmittal as described below, Parent shall be
obligated, as soon as reasonably practicable (and in any event no later than
ten (10) Business Days) after receipt of such Certificates and executed
letters of transmittal, to deliver certificates representing that number of
shares of Parent Common Stock into which the shares of Company Preferred Stock
held by such Company Preferred Stockholder are converted pursuant to Section 2.3.  Any shares of Parent Common Stock into which
the shares of Company Preferred Stock convert in the Merger shall be deemed to
have been issued at the Effective Time.


 


(b)           As
soon as reasonably practicable (and in any event no later than two (2) Business
Days) after the Effective Time, Parent shall mail to each holder of record of
Company Stock entitled to receive Merger Consideration hereunder:


 


(i)            a
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss to the Certificates, as appropriate, shall pass, only upon
delivery of such Certificates to Parent and shall contain reasonable
representations as to the Company Preferred Stockholder’s title to the shares
represented by such Certificates), and


 


(ii)           instructions
for use in effecting the surrender of the Certificates, as appropriate, in
exchange for certificates evidencing shares of Parent Common Stock.


 


(c)           In
the event that any Certificate shall have been lost, stolen or destroyed, upon
the making of an affidavit of that fact by the person claiming such Certificate
to be lost, stolen or destroyed, Parent will issue or cause to be issued in
exchange for such lost, stolen or destroyed Certificate the shares of Parent
Common Stock into which the shares of Company Preferred Stock represented by
such Certificate may be converted in accordance with Section 2.3.  When authorizing such issuance in exchange
therefor, Parent may require the owner of such lost, stolen or destroyed
Certificate to give Parent such form of indemnity, as Parent shall reasonably
direct, against any claim that may be made against Parent with respect to the
Certificate alleged to have been lost, stolen or destroyed.


 


(d)           Parent
may, at its option, meet its obligations under this Section 2.4 through
its transfer agent or other bank selected by Parent to act as exchange agent in
connection with the Merger.


 


(e)           By
tendering its shares of Company Preferred Stock and by accepting the
consideration set forth in Section 2.3, each Company Preferred Stockholder
shall be deemed to have agreed: (i) to the appointment of the
Representative as representative of the Company


 


13





















 


Preferred Stockholders in accordance with the terms of Article 8, (ii) to
the indemnification provisions of Article 9, (iii) that, in
accordance with Section 2.5, Parent will place into escrow a portion of
the Stock Merger Consideration deliverable to such Company Preferred
Stockholder subject to and for the purpose of securing the Company Preferred
Stockholders’ indemnity obligations under this Agreement, (iv) that the
Stock Merger Consideration deliverable to such Company Preferred Stockholder
pursuant to this Agreement shall not be sold, transferred, pledged, disposed of
or encumbered (each, a “Transfer”) (except for Permitted Transfers) for
the period beginning on the Closing Date and ending, on the date falling ninety
(90) days after the Effective Time, and (v) that each certificate representing
shares of Parent Common Stock constituting the Stock Merger Consideration shall
bear appropriate legends referring to such restrictions and to any restrictions
on transfer under applicable securities laws.


 


2.5           Escrow Fund.  At the Effective Time, Parent shall deliver
to the Escrow Agent (i) that number of shares of Parent Common Stock
required to be deposited into escrow in accordance with Section 2.3 or Section 5.14
(the shares described in this clause, including all dividends, distributions or
earnings attributable thereto, collectively, the “Stock Escrow Fund”)
and (ii) that amount of cash 
required to be deposited into escrow in accordance with Section 2.3
or Section 5.14 (the “Cash Escrow Fund”, and together with the
Stock Escrow Fund, the “Escrow Fund”) subject to the Escrow Agreement
for the purpose of securing the Company Preferred Stockholders’ and COC
Recipients’ indemnity obligations under this Agreement.  In accordance with the terms of the Escrow
Agreement, on the date that is 12 months after the Closing Date (or, if such
date is not a Business Day, the first Business Day thereafter) (the “Escrow
Release Date”), the Escrow Agent will allocate shares of Parent Common
Stock and cash or other assets remaining in the Escrow Fund, if any, among the
Company Preferred Stockholders and COC Recipients in accordance with Section 2.3
and deliver such shares and cash or other assets to them at the addresses
listed on the Company’s stock records or to an address or account designated by
any such Company Preferred Stockholder, COC Recipient or the Representative to
the Escrow Agent in writing.  Subject to
and in accordance with the terms of the Escrow Agreement, the Escrow Agent
shall withhold from delivery of the Escrow Fund (proportionately as to the Stock
Escrow Fund and the Cash Escrow Fund) the equivalent of any amounts then in
dispute relating to indemnification obligations arising under this Agreement, provided,
that the withheld amount, to the extent not applied in satisfaction of
indemnification obligations, shall be delivered to the Company Preferred
Stockholders and COC Recipients as described above promptly upon resolution of
such dispute.


 


2.6           Dissenting Stockholders.  Notwithstanding anything contained in this
Agreement to the contrary but only to the extent required by the DGCL, shares
of Company Stock that are issued and outstanding immediately prior to the
Effective Time and are held by Company 
Stockholders who comply with all the provisions of the DGCL concerning
the right of Company Stockholders to demand appraisal of their shares of
Company Stock in connection with the Merger (such holders, “Dissenting
Stockholders”) shall not be converted into the right to receive the Merger
Consideration, but shall only become convertible into the right to receive such
consideration as may be determined to be due such Dissenting Stockholder
pursuant to the law of the State of Delaware; provided, however,
that if any Dissenting Stockholder who demands appraisal of such Company
Stockholder’s shares of Company Stock under the DGCL shall effectively withdraw
or lose (through failure to perfect or otherwise) his or her right to
appraisal, then as of the Effective Time, or the occurrence of such event,
whichever occurs later, such


 


14





















 


Company Stockholder’s shares of
Company Stock shall thereupon be deemed to have been converted as of the
Effective Time into the right to receive the Stock Merger Consideration or Cash
Merger Consideration, if any, to which such Company Stockholder would otherwise
be entitled pursuant to Section 2.3, without interest thereon, and such
Company Stockholder shall no longer be a Dissenting Stockholder.  The Company shall give Parent and Sub (x)
prompt notice of any written demands for appraisal, withdrawals of demands for
appraisal and any other related instruments received by the Company after the
date hereof and (y) the opportunity to direct all negotiations and proceedings
with respect to demands for appraisal. 
The Company shall not voluntarily make any payment with respect to any
demands for appraisal and shall not, except with the prior written consent of
Parent, settle or offer to settle any demand. 
Following the Effective Time, the Surviving Corporation shall, and
Parent shall cause the Surviving Corporation to, comply with the DGCL to
satisfy the obligations of the Company with respect to the Dissenting
Stockholders.


 


Notwithstanding anything in this Agreement to the
contrary, all defined terms used with respect to calculating the Merger
Consideration and allocating it among the Company Preferred Shareholders will
be reduced proportionately to reflect any shares held by Dissenting
Stockholders.


 


2.7           Dividends. 
No dividends or other distributions with respect to shares of Parent Common
Stock with a record date on or after the Effective Time shall be paid to the
holder of any unsurrendered Certificate with respect to the Parent Common Stock
represented thereby by reason of the conversion of shares of Company Stock
pursuant to Section 2.3 until such Certificate is surrendered in
accordance with this Agreement or an affidavit of lost Certificate delivered in
accordance with Section 2.4(c). 
Subject to the effect of applicable laws, following surrender of any
such Certificate, there shall be paid, without interest, to the Person in whose
name the shares of Parent Common Stock represented by such Certificate are
registered at the time of such surrender, the proportionate amount of dividends
or other distributions with a record date after the Effective Time theretofore
paid with respect to shares of Parent Common Stock.


 


2.8           Withholding Rights.


 


(a)           Parent
shall be entitled to deduct and withhold from the consideration otherwise
payable to any Person pursuant to Article 2 and Section 5.14 such
amounts as it is required to deduct and withhold with respect to the making of
such payment under any provision of federal, state, local or foreign laws
relating to Taxes.  To the extent that
amounts are so withheld by Parent, such amounts shall be treated for all
purposes of this Agreement as having been paid to such Person in respect of
which such deduction and withholding was made by Parent, and Parent shall remit
such withheld amounts to the appropriate tax authorities.  Such withholding may be made from any
transfer of shares of Parent Common Stock otherwise required to be made
pursuant to Section 2.3.


 


(b)           Prior
to the Closing, the Company shall provide to Parent, as part of Section 3.11(b) of
the Company Disclosure Letter, the Company’s estimate of the aggregate federal,
state, local, foreign or other employment tax (i) required to be withheld
by Parent or the Surviving Corporation from the COC Incentive Payments (“Company
COC Withholding”), and (ii) payable by Parent and the Surviving
Corporation to federal, state, local, or foreign taxing


 


15





















 


authorities with respect to any
COC Incentive Payments, but without regard to amounts withheld (“Company COC
Tax”, and together with the Company COC Withholding, the “COC Tax”).  Parent and the Surviving Corporation shall
pay to the federal, state, local, foreign or other taxing authority all COC
Tax, provided, that to the extent such payment includes Company COC
Withholding with respect to a COC Stock Payment, such withholding shall be made
from any transfer of shares of Parent Common Stock otherwise required to be
made pursuant to Section 5.14.  To
the extent that the aggregate amount of Company COC Tax actually paid by Parent
and the Surviving Corporation (other than amounts erroneously paid by Parent,
the Company or the Surviving Corporation, and other than amounts for which
payment is not required upon the filing of prescribed documentation or other
information) exceeds the aggregate amount set forth on Section 3.11(b) of
the Company Disclosure Letter, such excess shall be treated as a “Loss” for
purposes of Section 9.2(a).


 


(c)           The
parties agree that Merger Consideration delivered to the Escrow Agent for
deposit into the Escrow Fund shall not be subject to withholding until
subsequent distribution thereof, and that the portion of COC Incentive Payments
to be delivered to the Escrow Agent for deposit into the Escrow Fund shall be
subject to withholding on delivery thereof.


 


2.9           Additional Action.  The Surviving Corporation may, at any time
after the Effective Time, take any action, including executing and delivering
any document, in the name and on behalf of either or both of the Company and
Sub reasonably necessary in order to consummate the transactions contemplated
by this Agreement.


 


2.10         No Further Rights of Transfers.  At and after the Effective Time, each Company
Stockholder shall cease to have any rights as a stockholder of the Company,
except as provided herein or as otherwise required by applicable law.  At the Effective Time, the stock ledger of
the Company shall be closed, and no transfer of shares of Company Stock shall
thereafter be made.


 


2.11         Certificate of
Incorporation of the Surviving Corporation. 
The Certificate of Incorporation of the Company, as in effect
immediately before the Effective Time but to the extent amended by the
Certificate of Merger, shall be the Certificate of Incorporation of the
Surviving Corporation immediately after the Effective Time.


 


2.12         By-laws of the Surviving Corporation.  The By-laws of Sub, as in effect immediately
before the Effective Time, shall be the By-laws of the Surviving Corporation
immediately after the Effective Time.


 


2.13         Directors and Officers of the
Surviving Corporation.  The directors
of Sub immediately before the Effective Time shall be the directors of the
Surviving Corporation from and after the Effective Time, such directors to hold
office subject to the applicable provisions of the Certificate of Incorporation
and By-laws of the Surviving Corporation until their respective successors
shall be duly elected or appointed and qualified.  The officers of Sub immediately before the
Effective Time shall be the officers of the Surviving Corporation from and
after the Effective Time, such officers to hold office subject to the
applicable provisions of the Certificate of Incorporation and By-laws of the
Surviving Corporation until their respective successors shall be duly elected
or appointed and qualified.


 


16





















 


2.14         Working Capital Adjustment. 


 


(a)           The
“Adjustment Amount” means the number obtained, whether positive or
negative, by starting with (a) the Closing Date Working Capital, as
determined pursuant to this Section 2.14, and subtracting (b) the
Working Capital Target Amount.


 


(b)           For
purposes of calculating the Adjustment Amount, within thirty (30) days after
the Closing Date, Parent shall prepare and deliver to the Representative a
statement (the “Statement of Adjustment Amount”) setting forth a
calculation of the Closing Date Working Capital determined by applying the
accounting principles, policies and practices set forth on Schedule 2.14.


 


(c)           The
Closing Date Working Capital shall become final and binding upon the parties on
the thirtieth (30th) day following delivery thereof, unless the Representative
gives written notice to Parent of the Company Stockholders’ disagreement with
the Closing Date Working Capital prior to such date, at which time the Closing
Date Working Capital shall only be final and binding upon the parties on final
resolution of such disagreement.  Any
notice of disagreement given by the Representative shall specify in reasonable
detail the nature of any disagreement so asserted.


 


(d)           If
the Adjustment Amount, calculated based on the Closing Date Working Capital as
finally agreed to by the Representative and Parent or as determined pursuant to
Section 2.14(f), is negative, then the Escrow Fund shall be reduced in
aggregate by the amount that the Working Capital Target Amount exceeds the
Closing Date Working Capital, with (1) shares of Parent Common Stock,
valued at the Market Price, reduced from the Stock Escrow Fund in proportion to
the Total Merger Consideration, (2) cash reduced from the Cash Escrow Fund
in proportion to the Total Merger Consideration, and (3) such cash and
Parent Common Stock shall be returned to Parent.  All reductions of the Stock Escrow Fund and
the Cash Escrow Fund pursuant to this Section 2.14(d) shall be made
on a proportionate basis as to the Company Preferred Stockholders’ and COC
Recipients’ interests therein.


 


(e)           If
the Adjustment Amount, calculated based on the Closing Date Working Capital as
finally agreed to by the Representative and Parent or as determined pursuant to
Section 2.14(f), is positive, then Parent shall deliver shares of Parent
Common Stock, valued at the Market Price, and cash to the Company Preferred
Stockholders and the COC Recipients, with an aggregate value equal to the
amount by which the Closing Date Working Capital exceeds the Working Capital
Target Amount.  In connection with a
distribution pursuant to this Section 2.14(e), a Company Preferred
Stockholder or COC Recipient shall receive the same type of consideration
(either Parent Common Stock or cash) as such Company Preferred Stockholder or
COC Recipient was entitled to at the Effective Time as set forth in Sections 2.3
or 5.14, as applicable, and such distribution of Parent Common Stock or cash to
Company Preferred Stockholders and COC Recipients shall be, in each case, in
proportion to their interest in the Total Merger Consideration at the Effective
Time; provided, however, that any Parent Common Stock or cash
delivered by Parent pursuant to this Section 2.14(e) shall be
delivered ninety percent (90%) to the Company Preferred Stockholders and COC
Recipients, as described above, and ten percent (10%) to the Escrow Agent to
hold in the Escrow Fund pursuant to Section 2.5.


 


17





















 


(f)            If
the Representative and Parent are not able to resolve any dispute relating to
the Statement of Adjustment Amount within sixty (60) days after Representative’s
receipt of the Statement of Adjustment Amount, any remaining disputes shall be
resolved by PricewaterhouseCoopers LLP (the “Accounting Firm”), who
shall, acting as experts and not as arbitrators, determine in accordance with
this Agreement, and only with respect to the remaining differences so
submitted, whether and to what extent, if any, Parent’s determination of the
Closing Date Working Capital requires adjustment.  The Accounting Firm shall be instructed to
resolve such disputes within thirty (30) days after its appointment.  The resolution of disputes by the Accounting
Firm shall be set forth in writing and shall be conclusive and binding upon all
parties and the Statement of Adjustment Amount, as modified by such resolution,
shall become final and binding upon the date of such resolution.  The Escrow Agent (solely to the extent of the
Escrow Fund) and Parent shall each bear fifty percent (50%) of the fees and
costs of the Accounting Firm.


 


ARTICLE 3



REPRESENTATIONS AND WARRANTIES OF THE COMPANY


 


The Company hereby represents and warrants to Parent
and Sub that, except as set forth in the corresponding sections, if applicable,
of the disclosure letter delivered by the Company to Parent and Sub upon or
prior to entering into this Agreement (the “Company Disclosure Letter”),
the statements contained in this Article 3 are true and complete as of the
date hereof and will be true and complete as of the Closing Date:


 


3.1           Due Organization, Good
Standing and Corporate Power.  Set
forth in Section 3.1 of the Company Disclosure Letter is an accurate and
complete list of the Subsidiaries of the Company.  Each of the Company and its Subsidiaries has
been duly organized and is validly existing as a corporation and in good
standing under the laws of the jurisdiction of its incorporation and each such
Person has all requisite corporate or other applicable power and authority to
own, lease and operate its properties and to carry on its business as now being
conducted.  Each of the Company and its
Subsidiaries is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the property owned, leased or operated
by it, or the nature of the business conducted by it makes such qualification
necessary, except in such jurisdictions where the failure to be so qualified or
licensed and in good standing has not had, does not have, and would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company.  The
Company has, prior to the date of this Agreement, made available to Parent
complete and correct copies of the Company Charter and By-laws and the
comparable governing documents of each of its Subsidiaries, in each case as
amended and in full force and effect. 
None of the Company and its Subsidiaries is in violation of its
Certificate of Incorporation or other organizational or governing documents.


 


3.2           Authorization and
Validity of this Agreement.  The
Company has the requisite corporate power and authority to execute and deliver
each of the Transaction Documents, to perform its obligations hereunder and
thereunder and (subject to the approval of the Company Stockholders) to
consummate the transactions contemplated hereby and thereby.  The execution, delivery and performance by
the Company of each of the Transaction Documents, and the consummation by it of
the transactions contemplated hereby and thereby, have been duly


 


18





















 


authorized and approved by its
Board of Directors, and except for the approval of the Company Stockholders, no
other corporate action on the part of the Company is necessary to authorize the
Company’s performance of its obligations hereunder and the consummation of the
transactions contemplated hereby.  This
Agreement has been duly and validly executed and delivered by the Company and
constitutes, and upon the execution and delivery by the Company of the Escrow
Agreement, the Escrow Agreement shall constitute, legal, valid and binding
obligations of the Company enforceable against it in accordance with their
terms, except to the extent that their enforceability may be subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors’ rights generally and to general
equitable principles.


 


3.3           Capitalization.


 


(a)           The
authorized capital stock of the Company immediately prior to the Effective Time
consists of: (i) 100,000,000 shares of Company Common Stock, of which
5,669,781 shares have been issued and are outstanding; and (ii) 20,678,113
shares of Company Preferred Stock, (A) 506,130 shares of which have been
designated as Series A Stock, all of which have been issued and are
outstanding; (B) 4,698,803 shares of which have been designated as Series B
Stock, of which 4,678,179 shares have been issued and are outstanding; (C) 4,432,176
shares of which have been designated as Series C Stock, of which 4,419,135
shares have been issued and are outstanding; (D) 3,250,003 shares of which
have been designated as Series D Stock, all of which have been issued and
are outstanding; (E) 4,411,768 shares of which have been designated as Series E
Stock, all of which have been issued and are outstanding; and (F) 3,412,898
shares of which have been designated as Series F Stock, 3,412,898 of which
have been issued and are outstanding. 
There are (w) 190,000 shares of Company Common Stock held as
treasury shares, (x) 5,276,287 shares of Company Common Stock reserved for
issuance pursuant to the Company Option Plans, (y) 2,486,680 shares of Company
Common Stock subject to issuance upon exercise of outstanding Company Options
(as a result of the acceleration of Company Options pursuant to the terms of
the 1999 Equity Incentive Plan resulting from the Merger), and (z) 65,904
shares of Company Common Stock and 33,669 shares of Company Preferred Stock
subject to issuance upon exercise of outstanding Company Warrants.  Section 3.3(a) of the Company Disclosure
Letter identifies all of the record owners of the issued and outstanding shares
of each class of capital stock of the Company. 
All issued and outstanding shares of capital stock of the Company and
each of its Subsidiaries have been duly authorized and validly issued and are
fully paid and non-assessable, were not issued in violation of any preemptive
rights, and were issued in compliance with all applicable federal and state
securities Laws, including those concerning the issuance of securities.  There are no outstanding or authorized
Company Options or other commitments or claims of any character, contingent or
otherwise, pursuant to which the Company or any of its Subsidiaries is or may
become obligated to issue shares of its capital stock or any securities
convertible into, exchangeable for, or evidencing the right to subscribe for,
any shares of the capital stock of the Company or any of its Subsidiaries.  There are no outstanding contractual
obligations of the Company or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any Company Stock or any shares of capital stock of any
Subsidiary of the Company.  Neither the
Company nor any of its Subsidiaries has authorized or outstanding bonds, debentures,
notes or other indebtedness which entitle the holders to vote (or are
convertible or exercisable for or exchangeable into securities which entitle
the holders to vote) with the


 


19





















 


stockholders of such Person on
any matter.  Neither the Company nor any
of its Subsidiaries owns, directly or indirectly, any capital stock or other
equity, ownership or proprietary interest in any Person (other than any
Subsidiary of the Company).  All of the
outstanding shares of capital stock of each of the Subsidiaries of the Company
are owned, of record and beneficially, by the Company or one or more of its
Subsidiaries free and clear of any liens, security interest, charge or
encumbrance of any kind or nature, other than the right of first refusal set forth
in the Company By-laws (each, a “Lien”). 
Except as provided in the DGCL or the Company Charter, there are no
restrictions of any kind that prevent or restrict the payment of dividends by
the Company or any of its Subsidiaries.


 


(b)           The
stock register of the Company accurately records the name of each Person owning
Company Stock, the certificate number of each certificate evidencing such
Company Stock, the number of shares evidenced by each such certificate and the
date of issuance thereof.


 


(c)           The
number of shares of Company Stock set forth opposite the name of each Company
Stockholder in Section 3.3(a) of the Company Disclosure Letter are
owned beneficially by each such Company Stockholder free and clear of all Liens
imposed by or through the Company.


 


(d)           To
the Knowledge of the Company, there are no voting agreements with respect to
any of the Company Stock or any of the shares of capital stock of any of the
Subsidiaries of the Company.


 


3.4           Consents and Approvals; No
Violations.  The filing of the Certificate
of Merger as required by the DGCL and the requirements of federal and state
securities laws, and assuming approval of this Agreement by the Company
Stockholders, the Company’s execution and delivery of the Transaction Documents
and the consummation of the transactions contemplated hereby and thereby do not
and shall not (w) violate or conflict with any provision of the Company
Charter or its By-Laws or the comparable governing documents of any of its
Subsidiaries, (x) violate or conflict with any statute, ordinance, rule,
regulation, order or decree of any court or of any Governmental Entity
applicable to the Company or any of its Subsidiaries or by which any of their
respective properties or assets is bound, (y) require any filing with, or Permit,
consent or approval of, or the giving of any notice to, any Governmental Entity
or (z) result in a violation or breach of, conflict with, constitute (with or
without due notice or lapse of time or both) a default under or result in the
creation of any Lien upon any of the properties or assets of the Company or any
of its Subsidiaries under, any Material Contract, other than, in the case of
(x), (y) and (z), any such violation, conflict, or other result that could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company or on the Surviving Corporation.


 


3.5           Company Financial Statements.


 


(a)           The
Company has delivered to Parent the audited consolidated balance sheet of the
Company and its Subsidiaries as of December 31, 2004, and the related
audited consolidated statements of operations, stockholders’ equity and cash
flows for the twelve (12) months then ended (the “FY04 Audited Financial
Statements”).  The FY04 Audited
Financial


 


20





















 


Statements have been prepared in accordance with GAAP.  The FY04 Audited Financial Statements are
based upon the information contained in the books and records of the Company
and its Subsidiaries and fairly present the financial condition of the Company
and its Subsidiaries at the date thereof and the results of the operations and
cash flows of the Company and its Subsidiaries and the changes in their
financial condition for the period indicated.


 


(b)           The
Company has delivered to Parent the unaudited consolidated balance sheet of the
Company and its Subsidiaries as of September 30, 2005 (such balance sheet,
the “Most Recent Balance Sheet” and such date, the “Balance Sheet
Date”) and the related unaudited consolidated statements of income for the
nine (9) months then ended (collectively, the “Stub Unaudited Financial
Statements”).  The Stub Unaudited
Financial Statements have been prepared in accordance with GAAP, subject to
customary year-end adjustments and except for the absence of footnote
disclosures.  The Stub Unaudited
Financial Statements are based upon the information contained in the books and
records of the Company and its Subsidiaries and fairly present the financial
condition of the Company and its Subsidiaries at the date thereof and the
results of the operations and cash flows of the Company and its Subsidiaries
and the changes in their financial condition for the periods indicated.


 


(c)           Neither
the Company nor any of its Subsidiaries has outstanding any claims, liabilities
or Indebtedness, contingent or otherwise, of any kind whatsoever (whether
accrued, absolute, contingent or otherwise, and whether or not reflected or
required to be reflected in the Company’s Financial Statements), except for (i) liabilities
reflected or reserved against in the Most Recent Balance Sheet and (ii) liabilities
which have arisen after the date thereof in the ordinary course of
business.  No material claims,
liabilities or Indebtedness, contingent or otherwise, of any kind whatsoever
(whether accrued, absolute, contingent or otherwise, and whether or not
reflected or required to be reflected in the Company’s Financial Statements) of
any of the Company or any of its Subsidiaries has arisen after the date of the
Most Recent Balance Sheet, other than in the ordinary course of business.


 


3.6           Absence of Certain Changes or
Events.  Since December 31,
2004, the Company and its Subsidiaries have conducted their businesses only in
the ordinary course and, since such date, there has not been any Material
Adverse Effect on the Company.  Without
limiting the generality of the foregoing since December 31, 2004:


 


(a)           the
Company has not sold, leased, transferred, or assigned any of its assets,
tangible or intangible, involving more than $100,000 in the aggregate, other
than for a fair consideration in the ordinary course of business;


 


(b)           the
Company has not entered into any agreement, contract, lease, or license (or
series of related agreements, contracts, leases, and licenses) involving more
than $100,000 of expenditures and outside the ordinary course of business;


 


(c)           other
than an agreement, contract, lease or license that has expired pursuant to its
terms, no party (including the Company) has accelerated, terminated, modified,
or canceled any agreement, contract, lease, or license (or series of related
agreements, contracts, leases, and licenses) involving more than $100,000 of
expenditures to which the Company is a party or by which it is bound;


 


21





















 


(d)           the
Company has not imposed upon any of its assets, tangible or intangible, any
mortgage, pledge, lien, encumbrance, charge, or other security interest, other
than (A) mechanic’s, materialmen’s, and similar liens, (B) liens for
Taxes not yet due and payable, (C) purchase money liens and liens securing
rental payments under capital lease arrangements, and (D) other liens
arising in the ordinary course of business and not incurred in connection with
the borrowing of money, in each case that has no Material Adverse Effect on the
Company;


 


(e)           the
Company has not made any capital expenditure (or series of related capital
expenditures) either involving more than $100,000 in the aggregate or outside
the ordinary course of business;


 


(f)            the
Company has not made any capital investment in, any loan to, or any acquisition
of the securities or assets of, any other person (or series of related capital
investments, loans, and acquisitions) either involving more than $20,000 in the
aggregate or outside the ordinary course of business;


 


(g)           the
Company has not issued any note, bond, or other debt security or created,
incurred, assumed, or guaranteed any indebtedness for borrowed money or
capitalized lease obligation either involving more than $20,000 singly or
$100,000 in the aggregate;


 


(h)           the
Company has not materially changed any of its payment policies with its
landlords, vendors, suppliers or other creditors;


 


(i)            the
Company has not delayed or postponed the payment of accounts payable and other
liabilities outside the ordinary course of business;


 


(j)            the
Company has not canceled, compromised, waived, or released any right or claim
(or series of related rights and claims) either involving more than $20,000 in
the aggregate or outside the ordinary course of business;


 


(k)           the
Company has not had any adverse change in its relationships with its material
customers or suppliers, except for changes that, individually or in the
aggregate, have no Material Adverse Effect on the Company;


 


(l)            the
Company has not abandoned any Company Intellectual Property or granted any
right, title or interest in any Company Intellectual Property, or entered into
any agreement not to sue, with respect to any Company Intellectual Property
other than licenses to customers, resellers and service partners in the
ordinary course of its business;


 


(m)          there
has been no change made or authorized in the Company Charter or the Company
By-laws;


 


(n)           the
Company has not issued, sold, or otherwise disposed of any of its capital stock
(other than the issuance of stock from the exercise of stock options), or
granted any options, warrants, or other rights to purchase or obtain (including
upon conversion, exchange, or exercise) any of its capital stock;


 


22





















 


(o)           the
Company has not declared, set aside, or paid any dividend or made any
distribution with respect to its capital stock (whether in cash or in kind) or
redeemed, purchased, or otherwise acquired any of its capital stock;


 


(p)           the
Company has not experienced any material damage, destruction, or loss (whether
or not covered by insurance) to its property;


 


(q)           the
Company has not made any loan to, or entered into any other transaction with,
any of its directors or officers or, outside of the ordinary course of
business, any of its employees;


 


(r)            the
Company has not entered into any employment contract or collective bargaining
agreement, written or oral, or modified the terms of any existing such contract
or agreement;


 


(s)           the
Company has not granted any increase in the base compensation of any of its
directors or officers or employees, outside the ordinary course of business;


 


(t)            the
Company has not adopted, amended, modified, or terminated any bonus,
profit-sharing, incentive, severance, or other plan, contract, or commitment
for the benefit of any of its directors, officers, and employees (or taken any
such action with respect to any other Employee Benefit Plan);


 


(u)           the
Company has not made any other change in employment terms for any of its directors
or officers or employees, outside of the ordinary course of business;


 


(v)           the
Company has not made or pledged to make any charitable or other capital
contribution to any entity in excess of $5,000 in the aggregate;


 


(w)          the
Company has not made any material change in its accounting methods, principles
or practices, except as required by GAAP;


 


(x)            the
Company has not made any Tax (as defined in Section 3.12 hereof) election,
other than in accordance with past practice, or settlement or compromise of any
material Tax liability;


 


(y)           there
has not been any other occurrence, event, incident, action or, where an action
is required by applicable Law or contract, failure to act, or any transaction
outside the ordinary course of business involving the Company, that has
resulted in, or could reasonably be expected to give rise to, a Material
Adverse Effect on the Company; and


 


(z)            the
Company has not legally contracted itself to be bound by any of the foregoing.


 


3.7           Title to Properties;
Encumbrances.  The Company and each
of its Subsidiaries has good and marketable title to, or, in the case of leased
properties and assets, valid leasehold interests in, (a) all of its
material tangible properties and assets (real and personal), including all the
properties and assets reflected in the Most Recent Balance Sheet, and (b) all
the tangible


 


23





















 


properties and assets used by
them or purchased by the Company and any of its Subsidiaries since the Balance
Sheet Date, except for any of such properties and assets which have since been
sold or otherwise disposed of in the ordinary course of business, in each case
subject to no Liens other than Liens reflected or reserved against in the Most
Recent Balance Sheet and Permitted Liens. 
None of the Company or any of its Subsidiaries own any fee interest in
real property.


 


3.8           Compliance with Laws.


 


(a)           Except
where the failure to so comply would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company, the
Company and its Subsidiaries (i) are in compliance with all applicable
Laws and (ii) have not received notification of any asserted present or
past failure to so comply.


 


(b)           The
Company and its Subsidiaries hold all federal, state, local and foreign
permits, approvals, licenses, authorizations, certificates, rights, exemptions
and orders from Governmental Entities (each a “Permit”, and
collectively, the “Permits”) that are necessary for the operation of the
business of the Company and/or its Subsidiaries as now conducted, except to the
extent that any failure to hold a Permit would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on the
Company.  There has not occurred any
suspension, cancellation or default of or under any such Permit, and, to the
Company’s Knowledge, no such suspension, cancellation or default is pending or
threatened, except to the extent that any suspension, cancellation or default
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company.


 


3.9           Litigation.


 


(a)           There
is no action, suit, proceeding at law or in equity, or any arbitration or
administrative or other proceeding by or before (or to the Company’s Knowledge
any inquiry or investigation by) any Governmental Entity, pending, or, to the
Company’s Knowledge, threatened, against the Company or any of its Subsidiaries
or any of their officers, directors or shareholders in their capacity as such.


 


(b)           There
are no suits, actions, claims, proceedings or investigations pending or, to the
Company’s Knowledge, threatened, seeking to prevent, materially delay or
challenge the transactions contemplated by this Agreement.  Neither the Company nor any of its Subsidiaries
is subject to any judgment, order or decree entered in any lawsuit or
proceeding, including any judgment, order or decree that may prevent or
materially delay the consummation of the transactions contemplated by this
Agreement.  To the Company’s Knowledge,
there are no facts, events or occurrences reasonably likely to result in such a
claim.


 


3.10         Employee Benefit Plans.


 


(a)           List
of Plans.  Set forth in Section 3.10(a) of
the Company Disclosure Letter is an accurate and complete list of all domestic and
foreign (i) “employee benefit plans,” within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended, and the rules and
regulations thereunder (“ERISA”), whether qualified or non-qualified,
and whether funded or unfunded; (ii) bonus, stock option, stock purchase,
stock


 


24





















 


appreciation right, restricted stock, incentive, fringe benefit, “voluntary
employees’ beneficiary associations” (“VEBAs”) under Section 501(c)(9) of
the Code, profit-sharing, pension, or retirement, deferred compensation,
medical, life insurance, disability, accident, salary continuation, severance,
accrued leave, vacation, sick pay, sick leave, supplemental retirement and
unemployment benefit plans, programs, arrangements, commitments and/or
practices (whether or not insured); and (iii) employment, consulting,
termination, and severance contracts or agreements; for active, retired or
former employees or directors, whether or not any such plans, programs,
arrangements, commitments, contracts, agreements and/or practices (referred to
in (i), (ii) or (iii) above) are in writing or are otherwise exempt
from the provisions of ERISA; that are maintained or contributed to (or with
respect to which an obligation to contribute has been undertaken) by the
Company or any of its Subsidiaries (including, for this purpose and for the
purpose of all of the representations in this Section 3.10, any
predecessors to the Company or to any of its Subsidiaries and all employers
(whether or not incorporated) that would be treated together with the Company,
any of its Subsidiaries and/or any Company Stockholder as a single employer
within the meaning of Section 414 of the Code or with respect to which the
Company or any of its Subsidiaries has any liability (“Employee Benefit
Plans”).


 


(b)           Status
of Plans.  Each Employee Benefit Plan
(including any related trust or insurance contract) complies in all material
respects in form with the requirements of all applicable laws, including,
without limitation, ERISA, the Code, and foreign tax, labor, securities, data
privacy, currency exchange control and other laws, and has at all times been
maintained and operated in all material respects in substantial compliance with
its terms and the requirements of all applicable laws, including, without
limitation, ERISA and the Code.  All
required reports and descriptions (including, without limitation, annual
reports on IRS Form 5500-series 990, summary annual reports, PBGC 1s, and
summary plan descriptions) have been timely filed and distributed appropriately
with respect to each such Employee Benefit Plan.  Neither the Company nor any of its
Subsidiaries has any commitment, intention or understanding to create, modify
or terminate any Employee Benefit Plan, except to comply with applicable law or
the terms of any applicable collective bargaining agreement.  To the Company’s Knowledge, no condition or
circumstance exists that would prevent the amendment or termination of any
Employee Benefit Plan subject to existing rights of participants therein.  To the Company’s Knowledge, no event has
occurred and no condition or circumstance has existed that could result in a
material increase in the benefits under or the expense of maintaining any
Employee Benefit Plan from the level of benefits or expense incurred for the
most recent fiscal year ended thereof.


 


(c)           Liabilities.


 


(i)            No
Employee Benefit Plan is or was subject to Title IV of ERISA or Section 412
of the Code, and no Employee Benefit Plan is or was a Multiemployer Plan.


 


(ii)           Neither
the Company nor any of its Subsidiaries maintains any Employee Benefit Plan
which is (a) a “group health plan” (as such term is defined in Section 5000(b)(1) of
the Code or Section 607(1) of ERISA) that has not been administered
and operated in all material respects in substantial compliance with the
applicable requirements of Part 6 of Subtitle B of Title I of ERISA and Section 4980B
of the Code or (b) a “group health plan” (as defined in 45 Code of Federal
Regulations Section 160.103) that has not been


 


25





















 


administered and operated in
all material respects in substantial compliance with the applicable
requirements of the Health Insurance Portability and Accountability Act of 1996
and the regulations promulgated thereunder, and, to the Company’s Knowledge,
neither the Company nor any of its Subsidiaries is subject to any liability,
including, without limitation, additional contributions, fines, taxes,
penalties or loss of tax deduction as a result of such administration and
operation.  No Employee Benefit Plan
which is such a group health plan is a “multiple employer welfare arrangement,”
within the meaning of Section 3(40) of ERISA.  Each Employee Benefit Plan that is intended
to meet the requirements of Section 125 of the Code meets such
requirements in all material respects. 
To the Company’s Knowledge, neither the Company nor any of its
Subsidiaries maintains any Employee Benefit Plan which is an “employee welfare
benefit plan” (as such term is defined in Section 3(1) of ERISA) that
has provided any “disqualified benefit” (as such term is defined in Section 4976(b) of
the Code) with respect to which an excise tax could be imposed.


 


(iii)          Except
to the extent required under Part 6 of Subtitle B of Title I of ERISA and Section 4980B
of the Code (or similar provisions of applicable state law), neither the
Company nor any of its Subsidiaries maintains any Employee Benefit Plan
(whether qualified or non-qualified under Section 401(a) of the Code)
providing for post-employment or retiree health, life insurance and/or other
welfare benefits and having unfunded liabilities, and neither the Company nor
any of its Subsidiaries have any obligation to provide any such benefits to any
retired or former employees or active employees following such employees’
retirement or termination of service.


 


(iv)          Neither
the Company nor any of its Subsidiaries has incurred any liability for any tax
or excise tax arising under Title 26, Subtitle D, Chapter 43 of the Code, and
to the Company’s Knowledge no event has occurred and no condition or
circumstance has existed that could reasonably be expected to give rise to any
such liability.


 


(v)           To
the Company’s Knowledge, there are no actions, suits, claims or disputes
pending, or threatened, anticipated or expected to be asserted against or with
respect to any Employee Benefit Plan or the assets of any such plan (other than
routine claims for benefits and appeals of denied routine claims).  To the Company’s Knowledge, no fact or event
exists that could reasonably be expected to give rise to any such action, claim
or proceeding.  Neither the Company nor
any of its Subsidiaries is subject to any penalty or tax with respect to any
Employee Benefit Plan under Section 502(i) of ERISA or Sections 4975
through 4980 of the Code and no action has occurred that could reasonably be
expected to give rise to such a penalty or tax. 
To the Company’s Knowledge, no civil or criminal action brought pursuant
to the provisions of Title I, Subtitle B, Part 5 of ERISA is pending,
threatened, anticipated, or expected to be asserted against the Company or any
of its Subsidiaries or any fiduciary of any Employee Benefit Plan, in any case
with respect to any Employee Benefit Plan. 
To the Company’s Knowledge, no Employee Benefit Plan or any fiduciary
thereof (in such capacity) has been the direct or indirect subject of an audit,
investigation or examination by any governmental or quasi-governmental agency.


 


(d)           Contributions.  Full payment has been timely made of all
amounts which the Company or any of its Subsidiaries is required, under
applicable law or under any Employee Benefit Plan or any agreement relating to
any Employee Benefit Plan to which the Company or


 


26





















 


any of its Subsidiaries is a
party, to have paid as contributions or premiums thereto as of the last day of
the most recent fiscal year of such Employee Benefit Plan ended prior to the
date hereof and such contributions or premiums have been timely deposited into
the appropriate trusts or accounts.


 


(e)           Insurance
Company Investments.  No Employee
Benefit Plan holds as an asset any interest in any annuity contract, guaranteed
investment contract or any other investment or insurance contract, policy or
instrument issued by an insurance company that, to the Knowledge of the
Company, is or may be the subject of bankruptcy, conservatorship, insolvency,
liquidation, rehabilitation or similar proceedings.


 


(f)            Tax
Qualification.  Each Employee Benefit
Plan intended to be qualified under Section 401(a) of the Code has
received a current favorable determination letter or opinion letter from the
IRS.  Each trust established in
connection with any Employee Benefit Plan which is intended to be exempt from
Federal income taxation under Section 501(a) of the Code has received
a current favorable determination letter or opinion letter from the IRS.  Since the date of each most recent
determination referred to in this paragraph (f), to the Company’s Knowledge no
event has occurred and no condition or circumstance has existed that resulted
or is likely to result in the revocation of any such determination or that
could adversely affect the qualified status of any such Employee Benefit Plan or
the exempt status of any such trust or VEBA. 
All tax-qualified Employee Benefit Plans have been amended to comply
with the Economic Growth and Tax Relief Reconciliation Act of 2001.


 


(g)           Triggering
Events.  Neither the execution of
this Agreement nor the consummation of the transactions contemplated hereby
will result in any payment (whether of severance pay or otherwise), “parachute
payment” (as such term is defined in Section 280G of the Code),
acceleration, vesting or increase in benefits to any employee or former
employee or director of the Company or any of its Subsidiaries.  No Employee Benefit Plan provides for the
payment of severance, termination, change in control or similar-type payments
or benefits.  The execution of this
Agreement and the consummation of the transactions contemplated hereby will not
limit Parent’s ability to amend or terminate any of the Employee Benefit Plans
after the Effective Time.


 


(h)           Classification.  The Company and its Subsidiaries have
classified all individuals who perform services for them correctly in all
material respects under each Employee Benefit Plan, ERISA, the Code and other
applicable Law as common law employees, independent contractors or leased
employees.


 


(i)            Documents.  The Company has delivered or caused to be
delivered to Parent true and complete copies of all material documents in
connection with each Employee Benefit Plan, including, without limitation
(where applicable): (i) all plan documents as in effect on the date
hereof, together with all amendments thereto, including, in the case of any
Employee Benefit Plan not set forth in writing, a written description thereof; (ii) all
current summary plan descriptions, summaries of material modifications, and
material communications; (iii) all current trust agreements, declarations
of trust and other documents establishing other funding arrangements (and all
amendments thereto and the latest financial statements thereof); (iv) the
most recent IRS determination or opinion letter, obtained with


 


27





















 


respect to each Employee
Benefit Plan intended to be qualified under Section 401(a) of the
Code or exempt under Section 501(a) or 501(c)(9) of the Code; (v) the
annual report on IRS Form 5500-series or 990 for the most recent year; (vi) the
most recently prepared financial statements; (vii) all minutes with
respect to the meetings of each Employee Benefit Plans’ administrative
committee and/or plan administrator; and (vii) all contracts and
agreements relating to each Employee Benefit Plan, including, without
limitation, service provider agreements, insurance contracts, annuity
contracts, investment management agreements, subscription agreements,
participation agreements, recordkeeping agreements and collective bargaining
agreements.


 


3.11         Employment Relations and
Agreements.


 


(a)           (i) Each
of the Company and its Subsidiaries is in compliance in all material respects
with all federal, foreign, state or other applicable laws respecting employment
and employment practices, terms and conditions of employment and wages and
hours, and has not and is not engaged in any unfair labor practice as
determined by the National Labor Relations Board (“NLRB”), (ii) to
the Company’s Knowledge, no unfair labor practice charge or complaint against
the Company or any of its Subsidiaries is pending before the NLRB or an
equivalent tribunal under applicable state or foreign law, (iii) there is
no labor strike, slowdown, stoppage or material dispute pending or, to the
Company’s Knowledge, threatened against or involving the Company or any of its
Subsidiaries, (iv) no representation question exists respecting the
employees of the Company or any of its Subsidiaries, (v) no collective
bargaining agreement is currently being negotiated by the Company or any of its
Subsidiaries and neither the Company nor any of its Subsidiaries is or has been
a party to a collective bargaining agreement, (vi) neither the Company nor
any of its Subsidiaries is experiencing or has experienced any material labor
difficulty during the last three years, (vii) no grievance or arbitration
proceeding arising out of or under a collective bargaining agreement is pending
and no claim thereunder exists or, to the Company’s Knowledge, is threatened
with respect to the Company’s or its Subsidiaries’ operations, (viii) neither
the Company nor any of its Subsidiaries has any Equal Employment Opportunity
Commission charges or other claims of employment discrimination pending or, to
the Company’s Knowledge, currently threatened against the Company or any such
Subsidiary, (ix) to the Company’s Knowledge, no wage and hour department
investigation has been made of the Company or any of its Subsidiaries, (x)
neither the Company nor any of its Subsidiaries had any occupational health and
safety claims against the Company or any such Subsidiary, (xi) the Company and
each of its Subsidiaries is in compliance in all material respects with the
terms and provisions of the Immigration Reform and Control Act of 1986, as
amended, and all related regulations promulgated thereunder (the “Immigration
Laws”), (xii) there has been no “mass layoff” or “plant closing” by the
Company as defined in the Federal Workers Adjustment Retraining and
Notification Act (“WARN”) or state law equivalent, or any other mass layoff
or plant closing that would trigger notice pursuant to WARN or state law
equivalent, within ninety (90) days prior to the Closing Date, and (xiii) to
the Company’s Knowledge, no executive, key employee, or significant group of
employees plans to terminate employment with any of the Company or any of its
Subsidiaries during the next twelve (12) months other than the Terminated
Company Employees.  To the Company’s
Knowledge, the Company and its Subsidiaries have never been the subject of any
inspection or investigation relating to its compliance with or violation of the
Immigration Laws, nor have they been warned, fined or otherwise penalized by
reason of any such failure to comply with


 


28





















 


the Immigration Laws, nor is
any such proceeding pending or to the Company’s Knowledge, threatened.


 


(b)           Section 3.11(b) of
the Company Disclosure Letter sets forth the full amount due to each individual
under the Company’s Change of Control Incentive Plan (the “COC Incentive
Payments”).


 


3.12         Taxes.


 


(a)           Tax
Returns.  The Company and each of its
Subsidiaries has timely filed or caused to be timely filed or shall timely file
or cause to be timely filed with the appropriate taxing authorities all
returns, statements, forms and reports (including elections, declarations,
disclosures, schedules, estimates and information returns) for Taxes (as
hereinafter defined) (the “Returns”) that are required to be filed by,
or with respect to, the Company and its Subsidiaries on or prior to the Closing
Date.  The Returns, in all material
respects have accurately reflected and shall reflect accurately all liability
for Taxes of the Company and each of its Subsidiaries for the periods covered
thereby.  “Taxes” shall mean all
taxes, and all governmental assessments, charges, duties, fees, levies or other
charges, including all United States federal, state, local, foreign and other
income, franchise, profits, gross receipts, capital gains, capital stock,
transfer, property, sales, use, value-added, occupation, property, excise,
severance, windfall profits, stamp, license, payroll, social security,
withholding and other taxes, assessments, charges, duties, fees, levies or
other governmental charges of any kind whatsoever (whether payable directly or
by withholding and whether or not requiring the filing of a Return), all
estimated taxes, deficiency assessments, additions to tax, penalties and
interest, and shall include any liability for such amounts as a result either
of being a member of a combined, consolidated, unitary or affiliated group, or
of a contractual obligation to indemnify any Person or other entity.


 


(b)           Payment
of Taxes.  All Taxes due and owing by
or with respect to the income, assets or operations of the Company and its
Subsidiaries for all taxable years or other taxable periods that end on or
prior to the Closing Date and, with respect to any taxable year or other
taxable period beginning on or prior to and ending after the Closing Date, the
portion of such taxable year or period ending on and including the Closing Date
(“Pre-Closing Period”), have been timely paid or shall be timely paid in
full on or prior to the Closing Date or with respect to taxable periods ending
on or prior to September 30, 2005 have been accrued and adequately
disclosed and fully provided for on the Financial Statements of the Company and
its Subsidiaries in accordance with GAAP.


 


(c)           Other
Tax Matters.


 


(i)            Neither
the Company nor any of its Subsidiaries has been the subject of any audit or
other examination of Taxes by the tax authorities of any nation, state or
locality, and to the Company’s Knowledge, no such audit or other examination is
contemplated or pending, nor has the Company or any of its Subsidiaries
received any notices from any taxing authority relating to any issue which
could reasonably be expected to materially affect the Tax liability of the
Company or any of its Subsidiaries.


 


29





















 


(ii)           Neither
the Company nor any of its Subsidiaries has been included in any “consolidated,”
“unitary” or “combined” Return (other than Returns which include only the
Company and any Subsidiaries of the Company) provided for under the laws of any
jurisdiction or any state or locality with respect to Taxes, for any taxable
period for which the statute of limitations has not expired.


 


(iii)          All
Taxes which the Company or any of its Subsidiaries is (or was) required by law
to withhold or collect in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder, or other third-party
have been duly withheld or collected, and have been timely paid over to the
proper authorities to the extent due and payable.


 


(iv)          There
are no tax sharing, allocation, indemnification or similar agreements or
arrangements in effect as between the Company, any Subsidiary, or any
predecessor or Affiliate of any of them and any other Person under which
Parent, Sub, the Company or any of its Subsidiaries could be liable for any
Taxes or other claims of any Person.


 


(v)           No
Indebtedness of the Company or any of its Subsidiaries consists of “corporate
acquisition indebtedness” within the meaning of Section 279 of the Code or
bears interest that is otherwise nondeductible pursuant to Section 163 of
the Code.


 


(vi)          Neither
the Company nor any of its Subsidiaries has applied for, been granted, or
agreed to any accounting method change for which it shall be required to take
into account any adjustment under Section 481 of the Code or any similar
provision of the Code or the corresponding tax laws of any nation, state or
locality and the Company and its Subsidiaries have no Knowledge that the IRS or
any other taxing authority has proposed or purported to require any such
adjustment or change in accounting method, and the Company has no Knowledge
that any such adjustment under Section 481 of the Code or the
corresponding tax laws of any nation, state or locality will be required of the
Company or its Subsidiaries upon the completion of, or by reason of, the
transactions contemplated by this Agreement.


 


(vii)         Neither
the Company nor any of its Subsidiaries, as of the Closing Date, (w) has
entered into an agreement or waiver or been requested to enter into an
agreement or waiver extending any statute of limitations relating to the
payment or collection of Taxes of the Company or any of its Subsidiaries, (x)
is presently contesting the Tax liability of the Company or any of its
Subsidiaries before any Governmental Entity, (y) has granted any
power-of-attorney related to Tax matters to any Person, or (z) has applied for
and/or received a ruling or determination from a taxing authority regarding a
past or prospective transaction of the Company or any of its Subsidiaries.


 


(viii)        Neither
the Company nor any of its Subsidiaries has been a “United States real property
holding corporation” within the meaning of Section 897(c)(2) of the
Code at any time during the five-year period ending on the date hereof.


 


(ix)           There
are no material security interests on any of the assets of the Company or any
of its Subsidiaries that arose in connection with any failure (or alleged
failure) to pay any Taxes.


 


30





















 


(x)            Neither
the Company nor any of its Subsidiaries is a party to any agreement that would
require the Company or any of its Subsidiaries, or any of their respective
Affiliates, to make any payment that would constitute an “excess parachute
payment” for purposes of Sections 280G and 4999 of the Code or that would not
be deductible pursuant to Section 162(m) of the Code.


 


(xi)           No
claim has ever been received from any taxing authority in a jurisdiction where
the Company or any of its Subsidiaries does not file Returns that the Company
or any of its Subsidiaries is, or may be, subject to taxation by that
jurisdiction.


 


(xii)          There
are no deferred intercompany transactions between the Company and any of its
Subsidiaries or between its Subsidiaries and there is no excess loss account
(within the meaning of Treasury Regulations Section 1.1502-19 with respect
to the stock of the Company or any of its Subsidiaries), and (ii) there
are no other transactions or facts existing with respect to the Company and/or
its Subsidiaries which by reason of the consummation of the transaction
contemplated by this Agreement will result in the Company and/or its
Subsidiaries recognizing income.


 


3.13         Intellectual Property.


 


(a)           Section 3.13(a) of
the Company Disclosure Letter contains a complete list of all patents, pending
patent applications, trademark and service mark registrations, pending
applications for trademark and service mark registration, and copyright
registrations and pending applications for registration thereof, and other
material Intellectual Property used in the conduct of the business of the
Company or any of its Subsidiaries as currently conducted.  To the extent indicated on such Schedule, the
Intellectual Property owned by the Company, as listed in Section 3.13(a) of
the Company Disclosure Letter, has been duly registered in, filed in or issued
by the United States Patent and Trademark Office, the United States Copyright
Office, a domain name registrar, or the offices of other jurisdictions, and
each such registration, filing and issuance remains in full force and effect.


 


(b)           All
material licenses and agreements of the Company with respect to any
Intellectual Property are set forth in Section 3.13(b) of the Company
Disclosure Letter.  To the extent any
Intellectual Property used by the Company, under license or otherwise, is
necessary to the business of the Company and/or any of its Subsidiaries as
currently conducted, no notice of a default has been sent or received by the
Company or any of its Subsidiaries under any such license which remains
uncured, and the execution, delivery or performance of the Company’s
obligations hereunder shall not result in such a default.


 


(c)           The
Company and/or its Subsidiaries owns or has the right to use all of the
Intellectual Property used in its business, free and clear of any material
Liens (other than, with respect to Intellectual Property not owned by the
Company, those Liens by or through the owner), without obligation to pay any
royalty or any other fees with respect thereto (other than in accordance with
licenses or agreements listed under Section 3.13(c) of the Company
Disclosure Letter), and the operation of the business of the Company and its
Subsidiaries as currently conducted requires no rights under Intellectual
Property other than with respect to the Intellectual Property currently owned
or licensed by Company.  To the Company’s
Knowledge,


 


31





















 


neither the Company’s nor any
of its Subsidiaries’ use of Intellectual Property infringes or misappropriates
any third-party rights.  No material
patent, copyright registration or registered trademark owned by the Company has
been canceled, abandoned or otherwise terminated, and all renewal and
maintenance fees in respect thereof have been duly paid.  There are no actions that must be taken or
payments that must be made within ninety (90) days of the Closing Date relating
to the Company’s Intellectual Property that, if not taken or made, will have a
Material Adverse Effect on the Company. 
Other than in accordance with the license agreements listed in Section 3.13(c) of
the Company Disclosure Letter, the Company and its Subsidiaries have the
exclusive right to file, prosecute and maintain all applications and
registrations with respect to the Intellectual Property that is owned by the
Company or any of its Subsidiaries.


 


(d)           Neither
the Company nor any of its Subsidiaries has received any written notice or
claim, or to the Company’s Knowledge any other notice or claim, from any Person
challenging the right of the Company or any of its Subsidiaries to use any
Intellectual Property that the Company has used or is using.


 


(e)           Neither
the Company nor any of its Subsidiaries has made any claim in writing of a
violation, infringement, misuse or misappropriation by any Person of the
Company’s or any of its Subsidiaries’ rights to, or in connection with, any
Intellectual Property owned by the Company, which claim is still pending.


 


(f)            There
is no pending and there has not been threatened, any proceeding, litigation or
other adverse claim before any Governmental Entity or, to the Company’s
Knowledge, any fact or occurrence reasonably likely to result in such a claim,
by any Person, of an infringement or misappropriation by the Company or any of
its Subsidiaries of any Intellectual Property owned by any Person, or
challenging the validity, enforceability or ownership, as applicable, of any
Intellectual Property owned or claimed to be owned by the Company or any of its
Subsidiaries.


 


(g)           The
Company has not received any notice of and, to the Company’s Knowledge, there
are not any interferences, oppositions, or other contested proceedings, pending
or threatened in the United States Copyright Office, the United States Patent
and Trademark Office, or any Governmental Entity, relating to any pending
application of the Company with respect to any Intellectual Property.


 


(h)           The
Company and each of its Subsidiaries have taken commercially reasonable steps
to protect and preserve the confidentiality of all trade secrets and
confidential proprietary information used or held for use in their respective
businesses.


 


(i)            The
Company represents and warrants that its products, including any enhancements,
extensions, upgrades or new releases, do not include any Open Source Code.  For purposes of this Agreement, “Open
Source Code” shall mean software code that may subject the products, in
whole or in part, to all or part of license terms which seek to require any
products to be licensed to or otherwise shared with any third-party under terms
that require such products to (a) be disclosed or distributed in source
code format; (b) be licensed for the purpose of making derivative works;
or (c) be re-distributable at no charge.


 


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3.14         Broker’s or Finder’s Fee.  No agent, broker, Person or firm acting on
behalf of the Company or, prior the Closing, the Company Stockholders is, or
shall be, entitled to any fee, commission or broker’s or finder’s fees in
connection with this Agreement or any of the transactions contemplated hereby
from any of the Parties or from any Affiliate of any of the Parties.


 


3.15         Certain Contracts and
Arrangements.  Neither the Company
nor any of its Subsidiaries is a party to or bound by any contracts,
agreements, instruments or understandings (“Contracts”) of the following
nature (collectively, the “Material Contracts”):


 


(a)           Contracts
with any current or former employee, director or officer of the Company or any
of its Subsidiaries (other than any such officer who receives or received
(during his or her last year of employment with the Company or any of its
Subsidiaries) less than $100,000 in total annual cash compensation from the
Company or any of its Subsidiaries);


 


(b)           Contracts,
other than contracts entered into in the ordinary course of business, (x) for
the sale of any amount of the material assets of the Company or any of its
Subsidiaries, or (y) for the grant to any Person of any preferential rights to
purchase any amount of its material assets;


 


(c)           Contracts
which restrict the Company or any of its Subsidiaries from competing in any
line of business or with any Person in any geographical area, or which restrict
any other Person from competing with the Company or any of its Subsidiaries in
any line of business or in any geographical area;


 


(d)           Other
than Contracts entered into in the ordinary course of business, Contracts which
restrict the Company or any of its Subsidiaries from disclosing any information
concerning or obtained from any other Person, or which restrict any other
Person from disclosing any information concerning or obtained from the Company
or any of its Subsidiaries;


 


(e)           Any
confidentiality, nondisclosure or similar Contracts which contain any “standstill”
provisions or similar restrictions by any third-party (other than Parent or its
Affiliates);


 


(f)            Contracts
involving (i) the acquisition, merger or purchase of all or substantially
all of the assets or business of a third-party, or (ii) the purchase or
sale of assets, or a series of purchases and sales of assets, involving
aggregate consideration of $100,000 or more;


 


(g)           Contracts
with any Affiliate of the type that would be required to be disclosed under
Item 404 of Regulation S-K under the Securities Act;


 


(h)           Any
current Contracts which contain a provision requiring a third-party’s consent
to, or giving it a termination right following, a change in control of the
Company or any of its Subsidiaries;


 


33





















 


(i)            Contracts,
including mortgages or other grants of security interests, guarantees and
notes, relating to the borrowing of money or the extension of debt;


 


(j)            Contracts
relating to any joint venture, partnership, strategic alliance or similar
arrangement, which has involved, or is reasonably expected to involve, a
sharing of revenues, profits, cash flows, expenses or losses by the Company or
any of its Subsidiaries with any other party;


 


(k)           Contracts
existing on the date hereof involving revenues or payments in excess of
$100,000 per year;


 


(l)            Any
distribution, marketing, sales representative or similar Contract under which
any third-party is authorized to sell, sublicense, lease, distribute, market or
take orders for, any product, service or technology of the Company or any of
its Subsidiaries;


 


(m)          Any
Contract providing for the current or future development of any software,
content, technology or Intellectual Property by or for (or for the benefit or
use of) the Company or any of its Subsidiaries;


 


(n)           Any
Contract, other than standard forms of customer Contracts entered into in the
ordinary course of business, pursuant to which the Company or any of its
Subsidiaries has sold, acquired or licensed any rights in or to any software,
technology or other Intellectual Property to any third-party; and


 


(o)           Any
Contract for or relating to the employment or hiring of services of any
officer, employee, consultant, or independent contractor of the Company or any
of its Subsidiaries or any other type of contract or understanding with any
director, officer, employee or consultant of the Company or any of its
Subsidiaries, in each case, that is not terminable within fifteen (15) days by
the Company or its Subsidiary without cost or other liability, other than with
respect to a payment for services rendered prior to the date of termination.


 


Neither the Company nor any of its Subsidiaries is in
material breach or material default under any Material Contract nor, to the
Company’s Knowledge, is any other party to any Material Contract in material
breach or material default thereunder, and each Material Contract to which the
Company or its Subsidiaries is a party is in full force and effect, and the
consummation of the transactions contemplated by this Agreement will not result
in any material breach or material default thereunder.


 


3.16         Environmental Laws and
Regulations.  (i) The Company
and each of its Subsidiaries are in material compliance with all applicable
Environmental Laws, and have obtained, and are in material compliance with, all
Permits required of them under applicable Environmental Laws, other than those
Permits that the failure to obtain or comply with would not have a Material
Adverse Effect on the Company, (ii) there are no claims or proceedings by
any Governmental Entity or other Person or entity pending or, to the Company’s
Knowledge, threatened against the Company or any of its Subsidiaries under any
Environmental Law, (iii) to the Company’s Knowledge, no present Company
Property is subject to any Lien, or to any restriction on its ownership, use,
occupancy or transferability, under any Environmental Law and (iv) to the
Company’s Knowledge, there are no facts, circumstances or conditions (including
the


 


34





















 


disposal of any wastes,
hazardous substances or other materials, the existence of any contractual
obligations, or any other matters in respect of the past or present business or
operations of the Company or any of its Subsidiaries, or any predecessor of the
Company or any of its Subsidiaries) that could reasonably be expected to give
rise to any claim, proceeding or action against the Company or any of its
Subsidiaries, or to any liability or remedial action on the part of the Company
or any of its Subsidiaries, under any Environmental Law.


 


3.17         Insurance. 
Section 3.17 of the Company Disclosure Letter lists each insurance
policy, and the Company has delivered to Parent prior to the date of this
Agreement, copies of all such insurance policies, which are owned by the
Company or its Subsidiaries or which name the Company or any of its
Subsidiaries as an insured, additional insured, or loss payee, including those
which pertain to the Company’s or any of its Subsidiaries’ assets, employees or
operations.  All such insurance policies
are in full force and effect, are legal, valid and enforceable, and all
premiums due thereunder have been paid. 
None of the Company nor any of its Subsidiaries has received any notice
of cancellation or modification in coverage amounts of any such insurance
policies.  None of the Company or any of
its Subsidiaries are in breach or default under any such insurance
policies.  There are no material claims
by the Company or any of its Subsidiaries under any such insurance policies as
to which any insurance carrier is denying liability or defending under a reservation
of rights clause.  None of the Company
nor any of its Subsidiaries has any self-insurance arrangement.


 


3.18         Working Capital;
Accounts Receivable.  The amount of
all accounts receivable, unbilled invoices and other debts due or recorded in
the respective records and books of account of the Company and its Subsidiaries
as being due to the Company and its Subsidiaries (less the amount of any
provision or reserve therefor made in the respective records and books of
account of the Company and its Subsidiaries) are valid obligations resulting from
bona fide sales; and to the Company’s Knowledge none of such accounts
receivable or other debts is, or at the Closing Date will be, subject to any
refunds, adjustments, counterclaim or set-off or other defenses except to the
extent of any such provision or reserve.


 


3.19         Inventories.  Neither the Company nor any of its
Subsidiaries own, hold title to or are in physical possession of any inventory.


 


3.20         Suppliers and Customers.  Section 3.20 of the Company Disclosure
Letter sets forth each supplier and customer accounting for more than five
percent (5%) of the consolidated purchases or sales, as the case may be, of the
Company and its Subsidiaries, taken as a whole, for each of the twelve-month
period ended December 31, 2004 and the eight-month period ended August 31,
2005.  No supplier or customer identified
on Section 3.20 of the Company Disclosure Letter has canceled or otherwise
terminated, or, to the Company’s Knowledge, threatened to cancel or otherwise
terminate, its relationship with the Company or any of its Subsidiaries.  The Company has not received any written
notice that any such supplier or customer will, and to the Company’s Knowledge,
no such supplier or customer has any plan or intention to, cancel or otherwise
materially and adversely modify its relationship with the Company or any of its
Subsidiaries or limit its services, supplies or materials to the Company or any
of its Subsidiaries, or its usage or purchase of the services and products of
the Company and its Subsidiaries either as a result of the transactions
contemplated hereby or otherwise.


 


35





















 


3.21         Bank Accounts and Powers of
Attorney.  Set forth in Section 3.21
of the Company Disclosure Letter is an accurate and complete list showing (a) the
name and address of each bank in which the Company or any of its Subsidiaries
has an account or safe deposit box, the number of any such account or any such
box and the names of all Persons authorized to draw thereon or to have access
thereto and (b) the names of all Persons, if any, other than corporate
service agents, holding powers of attorney from the Company or any of its
Subsidiaries and a summary statement of the terms thereof.


 


3.22         Disclosure.  None of the Transaction Documents nor the
Company Disclosure Letter contains any untrue statement of a material fact, or
omits any statement of a material fact with respect to the Company necessary to
make the statements contained herein or therein not misleading.  To the Company’s Knowledge, there is no fact
that could reasonably be expected to have a Material Adverse Effect with
respect to the Company which has not been set forth in this Agreement, the
Disclosure Letter, the other Transaction Documents, the Financial Statements or
any Schedule, Exhibit or certificate delivered pursuant to this Agreement.


 


3.23         Related Party Transactions.  No director, officer or employee of the
Company or any of its Subsidiaries or member of his or her immediate family is
currently indebted to the Company, nor is the Company indebted or committed to
make loans or extend or guarantee credit to any of such individuals.  No director, officer or employee of the
Company or any of its Subsidiaries and no member or his or her immediate family
is directly or indirectly interested in any Material Contract.


 


3.24         Non-Disclosure Agreements.  Each employee of the Company and its
Subsidiaries is subject, and upon consummation of the Merger will continue to
be subject, to a valid and enforceable confidential information and intellectual
property assignment agreement by and between the Company and such employee, and
the Company has delivered or made available to Parent a copy of the form of all
such agreements.


 


3.25         Right to Sell and Supply Products.  The Company has the right to sell its
products to any and all third-party customers, directly or indirectly, without (a) limitation,
charge or third-party expense or (b) any violation of any Material
Contract with or other obligation owed to the other party to such Material
Contract.  The Company is not subject to
any Material Contract that (i) would prevent the sale of any of its
products, or create any other contractual restriction (including any
restriction on its use of customer lists, customer or marketing information,
other than as imposed by applicable law), (ii) would prevent the Company
from selling consistent with past practice, or (iii) would (x) cause the
Company to modify its method of sales or marketing activities for its products,
directly or indirectly, through any channel or method, or (y) impose any cost,
royalty, fee or other expense or charge payable to the other party to such
Contract in connection with, the marketing activities of the Company.


 


ARTICLE 4



REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB


 


Each of Parent and Sub hereby represents and warrants
to the Company that, except as set forth in the corresponding sections of the
disclosure letter delivered by Parent and Sub to the


 


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Company upon or prior to
entering into this Agreement the (“Parent Disclosure Letter”), the
statements contained in this Article 4 are true and complete as of this
date hereof and will be true and complete as of the Closing Date:


 


4.1           Due Organization, Good
Standing and Corporate Power.  Each
of Parent and Sub has been duly organized and is validly existing as a
corporation and in good standing under the laws of the State of Delaware and
has all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted.  Each of Parent and its Subsidiaries is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the property owned, leased or operated by it, or the
nature of the business conducted by it makes such qualification necessary,
except in such jurisdictions where the failure to be so qualified or licensed
and in good standing has not had, does not have, and could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect
on Parent.


 


4.2           Authorization and Validity of
Agreements.  Each of Parent and Sub
has the requisite corporate power and authority to execute and deliver each of
the Transaction Documents to which they are a party, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby.  The execution, delivery and
performance by Parent and Sub of each of the Transaction Documents to which
they are a party and the consummation by each of them of the transactions
contemplated hereby and thereby have been duly authorized by the Board of
Directors of each of Parent and Sub, as the case may be, and by Parent, as the
sole shareholder of Sub.  No other corporate
action on the part of either of Parent or Sub is necessary to authorize the
execution, delivery and performance by each of Parent and Sub of each of the
Transaction Documents and the consummation of the transactions contemplated
hereby or thereby.  This Agreement has
been duly and validly executed and delivered by Parent and Sub and constitutes,
and upon the execution and delivery by Parent of the Escrow Agreement, the
Escrow Agreement shall constitute, legal, valid and binding obligations of
Parent and Sub enforceable against each in accordance with their terms, except
to the extent that their enforceability may be subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors’ rights generally and to general
equitable principles.


 


4.3           Capitalization; Issuance of
Shares.


 


(a)           The
authorized capital stock of Parent consists of 80,000,000 shares, divided into
75,000,000 shares of Parent Common Stock and 5,000,000 shares of Preferred
Stock, par value $0.001 per share (“Parent Preferred Stock” and together
with the Parent Common Stock the “Parent Capital Stock”).  As of the date hereof: (i) 11,229,241
shares of Parent Common Stock and no shares of Parent Preferred Stock were
issued and outstanding, all of which were validly issued and are fully paid,
nonassessable and are not subject to preemptive rights, (ii) 210,088
shares of Parent Capital Stock were held in the treasury of Parent or by Parent
Subsidiaries, (iii) 906,717 shares of Parent Common Stock were reserved
for issuance upon exercise of outstanding options to purchase shares of Parent
Common Stock granted under Parent’s Employee Option Plan, as amended (the “Parent
Employee Option Plan”), and an additional 236,390 shares of Parent Common
Stock were reserved for issuance under Parent’s Employee Option Plan, and (iv) 287,258
shares of Parent Common Stock were reserved for


 


37





















 


issuance upon the exercise of
outstanding options to purchase shares of Parent Common Stock granted under
Parent’s Director Option Plan (the “Parent Director Option Plan”), and
an additional 275,825 shares of Parent Common Stock were reserved for issuance
under Parent’s Director Option Plan.  All
issued and outstanding shares of Parent Common Stock were duly authorized and
are validly issued, fully paid and non-assessable.  Except for stock options issued or authorized
under Parent’s Employee Option Plan or Parent’s Director Option Plan there are
no outstanding or authorized parent stock options or other commitments or
claims of any character, contingent or otherwise, pursuant to which Parent or
any of its Subsidiaries is or may become obligated to issue shares of its
capital stock or any securities convertible into, exchangeable for, or
evidencing the right to subscribe for, any shares of the capital stock of
Parent or any of its Subsidiaries.  There
are no outstanding contractual obligations of Parent or any of its Subsidiaries
to repurchase, redeem or otherwise acquire any Parent Capital Stock or any shares
of capital stock of any Subsidiary of Parent. 
Neither Parent nor any of its Subsidiaries has authorized or outstanding
bonds, debentures, notes or other indebtedness that entitle the holders to vote
(or are convertible or exercisable for or exchangeable into securities which
entitle the holders to vote) with the stockholders of such Person on any matter
or which are convertible into or exchangeable for equity securities of Parent
or any of its Subsidiaries.


 


(b)           The
issuance of the shares of Parent Common Stock pursuant to this Agreement as
Merger Consideration (i) has been duly authorized by Parent’s Board of
Directors and (ii) is not subject to any purchase or call option or first
refusal, preemption or subscription right. 
Such shares have been duly reserved for issuance and, when issued as
provided herein, will be validly issued, fully paid and non-assessable and not
subject to any Lien.  The offer,
issuance, sale and delivery of such shares is and will be in full compliance
with all applicable Laws and exempt from the registration requirements of the
Securities Act and all applicable state securities laws.


 


(c)           There
are no voting agreements with respect to any of the Parent Capital Stock or any
of the shares of capital stock of any of the Subsidiaries of Parent to which
Parent is a party or by which Parent is bound.


 


4.4           Consents and Approvals;
No Violations.  Except for the filing
of the Certificate of Merger as required by the DGCL, the execution and
delivery of the Transaction Documents by Parent and Sub and the consummation by
Parent and Sub of the transactions contemplated hereby and thereby do not and
shall not (w) violate or conflict with any provision of the Certificate of
Incorporation or By-laws of Parent or Sub, (x) violate or conflict with any
statute, ordinance, rule, regulation, order or decree of any Governmental
Entity applicable to Parent or Sub or by which any of their respective
properties or assets is bound, (y) except for the filing of the Registration
Statement and any necessary filings required under states securities laws,
require any filing with, or Permit, consent or approval of, or the giving of
any notice to, any Governmental Entity or (z) result in a violation or
breach of, conflict with, constitute (with or without due notice or lapse of
time or both) a default under, or result in the creation of any Lien upon any
of the properties or assets of Parent or Sub under any agreement or other
instrument required to be filed with the Parent Commission Filings, other than,
in the case of (x), (y) and (z), any such violation, conflict, or other result
that could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect on Parent or the Surviving Corporation.


 


38





















 


4.5           Commission Documents;
Securities Law Compliance.  Except as
set forth in Section 4.5 of the Parent Disclosure Letter, Parent has filed
in a timely manner all required Parent Commission Filings with the Commission
since January 1, 2003.  At the time
of their respective filings, the Parent Commission Filings complied in all
material respects with the requirements of the Securities Act or the Exchange
Act, as the case may be, and the rules and regulations of the Commission
promulgated thereunder applicable to such Parent Commission Filings, and none
of the Parent Commission Filings when filed (or, if amended or supplemented by
a subsequent filing, on the date of such subsequent filing) contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.


 


4.6           Parent Financials.


 


(a)           The
financial statements of Parent included in the Parent Commission Filings (the “Parent
Financials”) complied as to form, as of their respective dates of filing
with the Commission, in all material respects with applicable accounting
requirements and the published rules and regulations of the Commission
with respect thereto, have been prepared in accordance with GAAP applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present in all material respects the consolidated
financial position of Parent and its consolidated Subsidiaries as of the dates
thereof and the consolidated results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments).


 


(b)           Neither
Parent nor any of its Subsidiaries has outstanding any claims, liabilities or
Indebtedness, contingent or otherwise, of any kind whatsoever (whether accrued,
absolute, contingent or otherwise, and whether or not reflected or required to
be reflected on Parent’s most recently prepared balance sheet filed with the
Commission), except for (i) liabilities reflected or reserved against in
Parent’s most recently prepared balance sheet filed with the Commission and (ii) liabilities
which have arisen after the date thereof in the ordinary course of
business.  Except as set forth in Section 4.6(b) of
the Parent Disclosure Letter, no material claims, liabilities or Indebtedness,
contingent or otherwise, of any kind whatsoever (whether accrued, absolute, contingent
or otherwise, and whether or not reflected or required to be reflected on
Parent’s most recently prepared balance sheet filed with the Commission) of
either of Parent or Sub has arisen after the date thereof, other than in the
ordinary course of business.


 


4.7           Broker’s or Finder’s Fee.  No agent, broker, Person or firm acting on
behalf of Parent or Sub is or shall be entitled to any fee, commission or
broker’s or finder’s fees in connection with this Agreement or any of the
transactions contemplated hereby from any of the Parties, or from any Affiliate
of the Parties.


 


4.8           Ownership of Sub and Sub’s
Operations.  All of the issued and
outstanding shares of capital stock of Sub are owned of record and beneficially
by Parent free and clear of any Liens. 
Sub was formed solely for the purpose of engaging in the transactions
contemplated by the Transaction Documents and has not engaged in any business
activities or conducted any operations other than in connection with such
transactions.


 


39





















 


4.9           Litigation.


 


(a)           Except
as disclosed in the Parent Commission Filings filed to the date hereof or in Section 4.9
of the Parent Disclosure Letter, there is no action, suit, proceeding at law or
in equity, or any arbitration or administrative or other proceeding by or
before (or to Parent’s Knowledge any inquiry or investigation by) any
Governmental Entity, pending, or, to Parent’s Knowledge, threatened, against
Parent or any of its Subsidiaries or any of their officers, directors or
shareholders in their capacity as such that has had, or could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect
on Parent.


 


(b)           There
are no suits, actions, claims, proceedings or investigations pending or, to
Parent’s Knowledge, threatened, seeking to prevent, materially delay or
challenge the transactions contemplated by this Agreement.  Neither Parent nor any of its Subsidiaries is
subject to any judgment, order or decree entered in any lawsuit or proceeding,
including any judgment, order or decree that may prevent or materially delay
the consummation of the transactions contemplated by this Agreement.  To Parent’s Knowledge, there are no facts,
events or occurrences reasonably likely to result in such a claim.


 


4.10         Absence of Certain Changes or
Events.  Except as disclosed in the
Parent Commission Filings filed to the date hereof, since June 30, 2005 to
the date of this Agreement, there has not occurred (i) any Material
Adverse Effect with respect to Parent, (ii) any amendment to Parent’s
certificate of incorporation or by-laws, (iii) any material change in
accounting methods or practices by Parent, or (iv) any declaration,
setting aside, or payment of a dividend or other distribution with respect to
the Parent Common Stock, or direct or indirect redemption, purchase or other
acquisition (or agreement or resolution to effect the same) by Parent of any of
its capital stock (other than in connection with the exercises of stock
options).


 


ARTICLE 5



COVENANTS


 


5.1           Access to Information
Concerning Properties and Records. 
During the period commencing on the date hereof and ending on the
earlier of (a) the Closing Date and (b) the date on which this
Agreement is terminated pursuant to Section 7.1, the Company shall afford,
and shall cause each of its Subsidiaries to afford, upon reasonable notice,
Parent and Sub and their respective employees, counsel, accountants,
consultants and other authorized representatives, reasonable access during
normal business hours to the officers, directors, employees, accountants,
properties, books and records of the Company and its Subsidiaries in order that
they may have the opportunity to make such investigations as they shall desire
of the affairs of the Company and its Subsidiaries.  The Company shall furnish promptly to Parent
and Sub all information concerning its or its Subsidiaries’ business,
properties and personnel as Parent or Sub may reasonably request.  The Company agrees to cause its officers and
employees to furnish such additional financial and operating data and other
information and respond to such inquiries as Parent or Sub shall from time to
time reasonably request.


 


5.2           Conduct of the Business
of the Company Pending the Closing Date. 
Except as set forth in the corresponding subsections of Section 5.2(b) of
the Company Disclosure Letter, the


 


40





















 


Company agrees that, except as
expressly permitted or required by this Agreement or with the prior written
consent of Parent, during the period commencing on the date hereof and ending
at the earlier of (x) the Effective Time and (y) termination of this Agreement
pursuant to Section 7.1:


 


(a)           the
Company and each of its Subsidiaries shall conduct their respective operations
only according to their ordinary and usual course of business consistent with
past practice and shall use their commercially reasonable efforts to preserve
intact their respective business organization, keep available the services of
their officers and employees who are employed by the Company on the date
hereof, maintain satisfactory relationships with licensors, suppliers,
distributors, clients, customers and others having significant business
relationships with them, maintain their Intellectual Property, and preserve and
keep confidential their trade secrets;


 


(b)           neither
the Company nor any of its Subsidiaries shall:


 


(i)            make
any change in or amendment to its Certificate of Incorporation or its By-laws
(or comparable governing documents);


 


(ii)           issue
or sell, or authorize to issue or sell, any shares of its capital stock or any
other securities, or issue or sell, or authorize to issue or sell, any
securities convertible into or exchangeable for, or options, warrants or rights
to purchase or subscribe for, or enter into any arrangement or contract with
respect to the issuance or sale of, any shares of its capital stock or any
other securities, or make any other changes in its capital structure;


 


(iii)          sell,
pledge or dispose of or agree to sell, pledge or dispose of any stock or other
equity interest owned by it in any other Person;


 


(iv)          declare,
pay or set aside any dividend or other distribution or payment with respect to,
or split, combine, redeem or reclassify, or purchase or otherwise acquire, any shares
of its capital stock or its other securities;


 


(v)           enter
into any contract or commitment with respect to capital expenditures with a
value in excess of, or requiring expenditures by the Company and its
Subsidiaries in excess of, $50,000, individually, or enter into contracts or
commitments with respect to capital expenditures with a value in excess of, or
requiring expenditures by the Company and its Subsidiaries in excess of,
$50,000, in the aggregate;


 


(vi)          acquire,
by merging or consolidating with, by purchasing an equity interest in or a
portion of the assets of, or by any other manner, any business or any Person,
or otherwise acquire any assets of any Person (other than the purchase of
assets in the ordinary course of business and consistent with past practice);


 


(vii)         except
to the extent required under existing employee and director benefit plans,
agreements or arrangements in effect on the date of this Agreement and set
forth in Section 5.2(b)(vii) of the Company Disclosure Letter,
increase the compensation or fringe benefits of any of its directors, officers
or employees, or grant any severance or termination pay not currently required
to be paid as part of the COC Incentive Payments, or enter into any


 


41





















 


employment, consulting or
severance agreement or arrangement with any present or former director, officer
or other employee of the Company or any of its Subsidiaries, or, except to
comply with this Agreement, applicable law or Section 280G of the Code,
establish, adopt, enter into or amend or terminate any collective bargaining,
bonus, profit sharing, thrift, compensation, stock option, restricted stock,
pension, retirement, deferred compensation, employment, termination, severance
or other plan, agreement, trust, fund, policy or arrangement for the benefit of
any directors, officers or employees;


 


(viii)        transfer,
lease, license, guarantee, sell, mortgage, pledge, dispose of, subject to any
Lien (other than a Lien permitted hereby) or otherwise encumber any assets, or
incur or modify any Indebtedness or other liability, other than in the ordinary
course of business consistent with past practice, or issue any debt securities
or assume, guarantee or endorse or otherwise as an accommodation become responsible
for the obligations of any Person or make any loan or other extension of
credit;


 


(ix)           other
than in the ordinary course of business, enter into any agreement for the
acquisition by or license to the Company or any of Subsidiaries of any software
or technology of any third-party;


 


(x)            except
with regard to any customer account receivable settled in the ordinary course
of business (but in no event in excess of $20,000), agree to the settlement of
or waive any claim or litigation;


 


(xi)           except
as required by applicable law or GAAP, make any change in its method of
accounting;


 


(xii)          adopt
or enter into a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of the
Company or any of its Subsidiaries (other than the Merger);


 


(xiii)         (x)
incur, assume or prepay any Indebtedness or guarantee any such Indebtedness of
another Person, other than intercompany indebtedness or guarantees of
intercompany indebtedness among the Company and any direct or indirect
wholly-owned Subsidiary of the Company, or (y) make any loans, extensions of
credit or advances to any other Person, other than to the Company or to any
direct or indirect wholly-owned Subsidiary of the Company;


 


(xiv)        other
than pursuant to arrangements in effect on the date hereof and as set forth in Section 5.2(b)(xiv)
of the Company Disclosure Letter, accelerate the payment, right to payment or
vesting of any bonus, severance, profit sharing, retirement, deferred
compensation, stock option, insurance or other compensation or benefits;


 


(xv)         pay,
discharge or satisfy any material claims, liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent or otherwise);


 


(xvi)        enter
into, materially modify, amend or terminate any Material Contract or waive any
of its material rights or claims;


 


42





















 


(xvii)       enter
into any agreement or arrangement that materially limits or otherwise restricts
the Company, any of its Subsidiaries, or any successor thereto, or that would,
after the Effective Time, limit or restrict the Surviving Corporation and its
affiliates (including Parent) or any successor thereto, from engaging or
competing in any line of business or in any geographic area; or


 


(xviii)      other
than pursuant to arrangements set forth in Section 5.2(b)(xviii) of the
Company Disclosure Letter, plan, announce, implement or effect any reduction in
force, lay-off, early retirement program, severance program or other program or
effort concerning the termination of employment of employees of the Company or
its Subsidiaries;


 


(xix)         take
any action, engage in any transaction or enter into any agreement which would
cause any of the representations or warranties set forth in Article 3 that
are subject to, or qualified by, a “Material Adverse Effect,” “material adverse
change” or other materiality qualification to be untrue as of the Effective
Time, or any such representations and warranties that are not so qualified to
be untrue in any material respect;


 


(xx)          other
than pursuant to arrangements set forth in Section 5.2(b)(xx) of the
Company Disclosure Letter, purchase or acquire, or offer to purchase or
acquire, any shares of Company Stock;


 


(xxi)         take
any action, including the adoption of any stockholder-rights plan or amendments
to its Certificate of Incorporation or By-laws (or comparable governing
documents), which would, directly or indirectly, restrict or impair the ability
of Parent to vote or otherwise to exercise the rights and receive the benefits
of a stockholder with respect to securities of the Company that may be acquired
or controlled by Parent or Sub, or which would permit any stockholder to
acquire securities of the Company on a basis not available to Parent or Sub in
the event that Parent or Sub were to acquire any shares of Company Stock;


 


(xxii)        (v) file
or cause to be filed any amended Returns or claims for refund of Taxes, (w)
prepare any Return in a manner which is inconsistent with the past practices of
the Company or a Subsidiary, as the case may be, with respect to the treatment
of items on such Returns; (x) make any Tax election in a manner which is
inconsistent with the past practices of the Company or a Subsidiary; (y) incur
any liability for Taxes other than in the ordinary course of business or as
required by this Agreement; (z) enter into any settlement or closing agreement
with a taxing authority;


 


(xxiii)       fail
to maintain with financially responsible insurance companies insurance on its
tangible assets and its businesses in such amounts and against such risks and
losses as are consistent with past practice; or


 


(xxiv)       agree,
in writing or otherwise, or commit to take any of the foregoing actions.


 


5.3           Company Stockholders’
Approval.  The Company shall cause a
special meeting of its stockholders to be duly called and held as soon as
practicable after the date hereof (“Company Stockholders’ Meeting”), or
take action by written consent, for the purpose of


 


43





















 


approving the Merger, the
Transaction Documents and the transactions contemplated thereby which require
the approval of Company Stockholders and shall, with the assistance of Parent,
prepare such information documents to solicit the proxies or written consents of
such stockholders as are reasonably necessary to obtain the stockholder
approvals necessary.  The Company will,
through its Board of Directors, recommend to its stockholders approval of the
transactions contemplated by the Transaction Documents and will not, unless it
receives a Superior Acquisition Proposal, rescind such recommendation; provided,
however, that no officer or director of the Company shall be required to
violate any fiduciary duty in connection therewith.  The Company will provide to Parent drafts of
any materials to be mailed to the Company Stockholders and, prior to mailing
such materials, shall accept reasonable comments from Parent.


 


5.4           Commercially Reasonable Efforts.  Subject to the terms and conditions provided
herein, each of the Company, Parent and Sub shall, and the Company shall cause
each of its Subsidiaries to, cooperate and use their commercially reasonable
efforts to take, or cause to be taken, all appropriate action, and do, or cause
to be done, and assist and cooperate with the other parties in doing, all
things necessary, proper or advisable to consummate and make effective, in the
most expeditious manner practicable, the Merger and the other transactions
contemplated hereby, including the satisfaction of the respective conditions
set forth in Article 6, and to make, or cause to be made, all filings
necessary, proper or advisable under applicable Laws to consummate and make
effective the transactions contemplated by this Agreement, including their
commercially reasonable efforts to obtain, prior to the Closing Date, all
licenses, Permits, consents, approvals, authorizations, qualifications and
orders of Governmental Entities and parties to contracts with the Company and
its Subsidiaries as are necessary for consummation of the transactions
contemplated by this Agreement and to fulfill the conditions to the Merger; provided,
however, that no loan agreement or contract for borrowed money shall be
repaid, in whole or in part, except as currently required by its terms, and no
Contract shall be amended to increase the amount payable by the Company or its
Subsidiaries thereunder or otherwise to be more burdensome to the Company or
any of its Subsidiaries in order to obtain any such consent, approval or
authorization without first obtaining the approval of Parent.


 


5.5           Notification of Certain
Matters.  The Company shall promptly
notify Parent of the occurrence or non-occurrence of any fact or event which,
to the Knowledge of the Company, has caused or would reasonably likely cause (i) any
representation or warranty made by it in this Agreement to be untrue or
inaccurate in any material respect at any time from the date hereof to the
Effective Time or (ii) any covenant, condition or agreement under this
Agreement not to be complied with or satisfied by it in any material respect; provided,
however, that no such notification shall modify the representations and
warranties of the Company or the conditions to the obligations of the Company
or Parent hereunder.  The Company shall
give prompt notice to Parent of any notice or other communication from any
third-party alleging that the consent of such third-party is or may be required
in connection with the transactions contemplated by this Agreement.


 


5.6           Stock Option and Other Plans.  At or prior to the Effective Time, the
Company shall cancel each outstanding Company Option under the Company Option
Plans, whether vested or unvested, for no consideration.


 


44





















 


5.7           Company Warrants.  At or prior to the Effective Time, the
Company shall use commercially reasonable efforts to ensure that each Company
Warrant shall either be exercised and converted into Company Stock or cancelled
and terminated for no consideration and be of no further force or effect.


 


5.8           Public Announcements.  Parent and the Company shall consult with
each other before issuing any press release or otherwise making any public
statements with respect to the transactions contemplated by this Agreement and
shall not issue any such press release or make any such public statement prior
to such consultation and review by the other party of such release or
statement, or without the prior written consent of the other party, which shall
not be unreasonably withheld; provided, however, that Parent may,
without the prior written consent of the other party, issue such press release
or make such public statement as may be required by law or by any listing
agreement with a national securities exchange or automated quotation system to
which Parent or any Affiliate of Parent is a party, if it has attempted to
consult with the Company and to obtain the Company’s consent, but has been
unable to do so in a timely manner.


 


5.9           Registration


 


(a)           Parent,
at its cost and expense, shall use its commercially reasonable efforts to (A) prepare
and file with the Commission a registration statement with respect to the
shares of Parent Common Stock issued as Merger Consideration hereunder (the “Registration
Statement”) by December 12, 2005, (B) cause the Registration Statement
to become effective as soon as reasonably possible thereafter, and (C) maintain
the effectiveness of the Registration Statement on a continuous basis pursuant
to Rule 415 under the Securities Act until the earlier of (x) the
disposition of all such registered shares by the Company Preferred Stockholders
and the COC Stock Recipients (collectively, the “Registrable Holders”)
or (y) the Registrable Holders being able to dispose of all such shares
pursuant to Rule 144(k).  Without
limiting the generality of the foregoing, Parent shall:


 


(i)            Prepare
and file with the Commission such amendments and supplements to the
Registration Statement and the prospectus used in connection with the
Registration Statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by the
Registration Statement.


 


(ii)           Furnish
to Registrable Holders registering shares of Parent Common Stock such numbers
of copies of a prospectus, including a preliminary prospectus, in conformity
with the requirements of the Securities Act, and such other documents as they
may reasonably request in order to facilitate the disposition of Parent Common
Stock owned by them.


 


(iii)          Notify
each holder of Parent Common Stock covered by the Registration Statement at any
time when a prospectus relating thereto is required to be delivered under the
Securities Act of the happening of any event as a result of which the
prospectus included in the Registration Statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing or causing the
suspension of the effectiveness of the Registration Statement or sales of such
Parent Common Stock thereunder.


 


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(iv)          Cause all such Parent Common Stock
registered pursuant hereto to be listed on each securities exchange on which
similar securities issued by Parent are then listed, which shall be effective
on or before the effective date of the Registration Statement.


 


(v)           Provide a transfer agent and
registrar for all Parent Common Stock registered pursuant hereto and a CUSIP
number for all such Parent Common Stock, in each case not later than the
effective date of such registration.


 


(b)           If upon advice of counsel, the filing
of a Registration Statement (or permitting such Registration Statement to
become effective) in the near future would be reasonably likely to cause a
violation of any federal or state securities Laws and result in a potential
material liability to Parent, then Parent shall have the right to defer such
filing (or effectiveness), provided, that Parent shall not defer its
obligation in this manner for more than forty-five (45) days or an aggregate of
ninety (90) days during any 12-month period.


 


(c)           If the Registration Statement has not
been declared effective by the Commission on or before the six-month
anniversary of the Closing, then, until such time as the Registration Statement
is declared effective, Parent shall pay to the Representative (on behalf of all
Registrable Holders) an aggregate penalty in immediately available funds of
$50,000 in cash within three Business Days of such six-month anniversary and an
additional $50,000 for each subsequent thirty-day period after the six-month
anniversary, within three Business Days of the expiration of each subsequent
thirty-day period, during which such Registration Statement has not become
effective or does not remain effective; provided, however, that
no such penalty shall become due and payable, and the six-month deadline
contemplated by this Section 5.9(c) shall be tolled, if and to the
extent that Parent’s inability to cause such Registration Statement to become
or remain effective has been caused by any action or inaction of the
Representative, any Company Preferred Stockholder, COC Stock Recipient, the
Company’s current or former auditors or any officer, director, employee, agent,
attorney or other representative of any of the foregoing.


 


(d)           Parent shall bear all of its expenses
reasonably incurred in connection with the registration and qualification of
the shares registered pursuant to this Section 5.9 and up to $20,000 of expenses reasonably incurred by the Registrable
Holders, including one counsel for the Registrable Holders (which
counsel shall be selected by the Representative and shall be reasonably
acceptable to Parent), and the Registrable Holders shall pay all other fees and
expenses of counsel to the Registrable Holders .  Each Registrable Holders  shall cooperate with Parent in the preparation,
filing and process of securing the effectiveness of the Registration Statement
and shall furnish to Parent such information relating to it and such further
and supplemental information as may be necessary or as may be reasonably
requested by Parent for use in the Registration Statement and any amendments or
supplements thereto.  Parent will advise
the Registrable Holders  of the
effectiveness of the Registration Statement, of the issuance of any stop order
with respect to the effectiveness thereof, of the suspension of the
qualification of the Parent Common Stock for offering or sale in any
jurisdiction, or of the initiation or threat of any proceeding for any such
purpose.  In the event that, either
before or after the effectiveness of the Registration Statement, any
Registrable Holder  shall distribute
Merger Shares to its partners, such Registrable Holder shall so advise Parent
and provide such information as shall be necessary to permit an amendment to
the Registration Statement to


 


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provide information with respect to such partners, as selling
securityholders.  Promptly following
receipt of such information, Parent shall file an appropriate amendment to the
Registration Statement reflecting the information so provided; provided,
however, that all reasonable expenses of Parent resulting from such
amendment shall be borne by such Registrable Holder.


 


(e)           With a view to making available to
the Registrable Holders the benefits of Rule 144(k) promulgated under the
Securities Act and any other rule or regulation of the Commission that may
at any time permit a Registrable Holder to sell securities of Parent to the
public without registration, Parent shall use its commercially reasonable
efforts to:


 


(i)            make and keep public information
available, as those terms are understood and defined in Commission Rule 144,
at all times so long as Parent remains subject to the periodic reporting
requirements under Sections 13 or 15(d) of the Exchange Act;


 


(ii)           file with the Commission in a timely
manner all reports and other documents required of Parent under the Securities
Act and the Exchange Act; and


 


(iii)          furnish to any Registrable Holders ,
so long as the Registrable Holders  owns
any Parent Common Stock, forthwith upon request (1) a written statement by
Parent that it has complied with the reporting requirements of Commission Rule 144,
the Securities Act and the Exchange Act, (2) a copy of the most recent
annual or quarterly report of Parent and such other reports and documents so
filed by Parent, and (3) such other information as may be reasonably
requested in availing any Registrable Holders of any rule or regulation of
the Commission which permits the selling of any such securities without
registration.


 


(f)            To the extent permitted by
applicable Law, Parent will indemnify each Registrable Holder, each of its
officers, directors, members, managers, trustees and partners, and each person
controlling each Registrable Holder 
within the meaning of Section 15 of the Securities Act, with
respect to any registration effected pursuant this Section 5.9, against
all claims, losses, damages and liabilities (or actions in respect thereof)
arising out of or based on any untrue statement (or alleged untrue statement)
of a material fact contained in any prospectus, offering circular or other
document (including any related registration statement, notification or the
like) made in such registration, qualification or compliance, or based on any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
any violation by Parent of the Securities Act or the Exchange Act or any rule or
regulation thereunder applicable to Parent or the rules and regulations of
any applicable stock exchange or quotation system where Parent’s equity
securities are listed and relating to action or inaction required of Parent in
connection with any such registration, qualification or compliance, and will
reimburse each of the Registrable Holders, each of its officers, directors and
partners, and each person controlling each of the Registrable Holders, for any
legal and any other expenses reasonably incurred in connection with
investigating and defending any such claim, loss, damage, liability or action, provided,
that Parent will not be liable in any such case to the extent that any such
claim, loss, damage, liability or expense arises out of or is based on any
untrue statement or omission based upon written information furnished to Parent
by any Registrable Holder.


 


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(g)           To the extent permitted by applicable
Law, each Registrable Holder will severally, but not jointly, indemnify Parent,
each of its directors and officers, and each person who controls Parent within
the meaning of Section 15 of the Securities Act, each other Registrable
Holder and each of their officers, directors, members, managers and partners,
and each person controlling such other Registrable Holder against all claims,
losses, damages and liabilities (or actions in respect thereof) arising out of
or based on any untrue statement (or alleged untrue statement) of a material
fact made by such Registrable Holders contained in the Registration Statement,
or any prospectus, offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated by
such Registrable Holder therein or necessary to make the statements by such
Registrable Holder therein not misleading, and will reimburse Parent and each
other Registrable Holder, and their respective directors, officers, partners,
persons or control persons for any legal or any other expenses reasonably
incurred in connection with investigating or defending any such claim, loss,
damage, liability or action.


 


(h)           Each party entitled to
indemnification under this Section 5.9 (the “Section 5.9
Indemnified Party”) shall give notice to the party required to provide
indemnification (the “Section 5.9 Indemnifying Party”)
promptly after such Section 5.9 Indemnified Party has actual knowledge of
any claim as to which indemnity may be sought, and shall permit the Section 5.9
Indemnifying Party to assume the defense of any such claim or any litigation
resulting therefrom; provided, that counsel for the Section 5.9
Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Section 5.9
Indemnified Party (whose approval shall not unreasonably be withheld,
conditioned or delayed) and the Section 5.9 Indemnified Party may
participate in such defense at such party’s expense (unless the Section 5.9
Indemnified Party shall have reasonably concluded that there may exist a
material conflict of interest between the Section 5.9 Indemnifying Party
and the Section 5.9 Indemnified Party in such action, in which case the
fees and expenses of counsel shall be at the expense of the Section 5.9
Indemnifying Party), and provided, further, that the failure of any Section 5.9
Indemnified Party to give notice as provided herein shall not relieve the Section 5.9
Indemnifying Party of its obligations hereunder except to the extent that the Section 5.9
Indemnifying Party is materially prejudiced thereby.  No Section 5.9 Indemnifying Party in the
defense of any such claim or litigation shall, except with the consent of each Section 5.9
Indemnified Party (which consent shall not be unreasonably withheld,
conditioned or delayed), consent to entry of any judgment or enter into any settlement
that does not release such Section 5.9 Indemnified Party from all
liability in respect to such claim or litigation.  Each Section 5.9 Indemnified Party shall
furnish such information regarding itself or the claim in question and such
other support as any Section 5.9 Indemnifying Party may reasonably request
in writing and as shall be reasonably required in connection with the defense
of such claim and litigation resulting therefrom.


 


(i)            If the indemnification provided for
in this Section 5.9 is held by a court of competent jurisdiction to be
unavailable to a Section 5.9 Indemnified Party with respect to any loss,
liability, claim, damage or expense referred to herein, then the Section 5.9
Indemnifying Party, in lieu of indemnifying such Section 5.9 Indemnified
Party hereunder, shall contribute to the amount paid or payable to such Section 5.9
Indemnified Party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of the Section 5.9
Indemnifying Party on the one hand and of the Section 5.9


 


48





















 


Indemnified Party on the other in connection with the statements or
omissions which resulted in such loss, liability, claim, damage or expense, as
well as any other relevant equitable considerations.  The relative fault of the Section 5.9
Indemnifying Party and of the Section 5.9 Indemnified Party shall be
determined by reference to, among other things, whether the untrue (or alleged
untrue) statement of a material fact or the omission (or alleged omission) to
state a material fact relates to information supplied by the Section 5.9
Indemnifying Party or by the Section 5.9 Indemnified Party and the parties’
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.


 


(j)            For not more than forty-five (45)
consecutive days or for a total of not more than ninety (90) days in any twelve
(12) month period, Parent may delay the disclosure of material non-public
information concerning Parent, by suspending the use of any prospectus,
offering circular or other document (including any related registration
statement, notification or the like) prepared in connection with any
registration to be effected pursuant this Section 5.9 containing such
information, if, upon advice of counsel, such action is reasonably necessary to
avoid a violation of any federal or state securities Laws and cause a potential
material liability to Parent (an “Allowed Delay”); provided, that
Parent shall promptly (1) notify the Registrable Holders in writing of the
existence of material non-public information giving rise to an Allowed Delay, (2) advise
the Registrable Holders in writing to cease all sales under the Registration
Statement until the end of the Allowed Delay and (3) use commercially
reasonable efforts to terminate an Allowed Delay as promptly as
practicable.  If the Allowed Delay
exceeds ninety (90) days in any twelve (12) month period, Parent shall pay to
the Representative (on behalf of all Registrable Holders) an aggregate penalty
in immediately available funds of $50,000 in cash within three (3) Business
Days of such ninetieth (90th) day and an additional $50,000 for each
subsequent thirty-day period after the ninetieth (90th) day, within
three (3) Business Days of the expiration of each subsequent thirty-day
period, that such Allowed Delay continues; provided, however,
that no such penalty shall become due and payable, and the deadline
contemplated by this Section 5.9 shall be tolled, if and to the extent
that Parent’s inability to permit the use of such Registration Statement has
been caused by any action or inaction of the Representative, any Company
Preferred Stockholder, COC Stock Recipient, the Company’s current or former
auditors or any officer, director, employee, agent, attorney or other
representative of any of the foregoing.


 


5.10         Financial
Statements.  If requested by Parent,
the Company shall take all reasonable actions necessary to assist Parent in preparing
a pro forma consolidated balance sheet and pro forma consolidated statements of
income in compliance with, and for the periods required by, the rules and
regulations promulgated by the Commission, including Regulation S-X under the
Securities Act.


 


5.11         Employee and Employee
Benefits Matters.


 


(a)           Other than the employees of the
Company indicated in writing by Parent at least ten (10) Business Days
prior to the Closing (the “Continuing Employees”), the Company shall
terminate all employees of the Company immediately prior to the Closing (the “Terminated
Company Employees”).  The name of
each Terminated Company Employee shall be specified on Section 5.11 of the
Parent Disclosure Letter and, unless another later date is specified thereon,
the termination date for each Terminated Company Employee shall be the


 


49





















 


Closing Date immediately prior
to the Effective Time.  The Company shall
pay, or after the Effective Time, the Parent shall cause the Surviving Corporation
to pay, the Terminated Company Employees for their accrued salary and wages
through the termination date plus unused paid time off, in each case, as
required by applicable Law.  The Company
shall pay, or after the Effective Time, the Parent shall cause the Surviving
Corporation to pay, to Terminated Company Employees any amount to which they
are entitled as described in Section 5.2(b)(xiv) of the Company Disclosure
Letter in accordance with the Company’s contractual obligations.


 


(b)           In addition to any obligations
imposed by applicable Laws and the terms of any employment agreements and
Employee Benefit Plans, Parent will, or will cause the Surviving Corporation,
to: (i) continue to employ Continuing Employees at the same wage level, or
higher, as in effect at the Closing for a period of not less than one (1) year
after the Closing Date; (ii) maintain the Company group medical and dental
plans and Code section 125 plans through the end of the calendar year in
which the Closing occurs, and the Continuing Employees shall continue their
participation in such plans without interruption and without any diminution of
benefits according to the terms and conditions of the plans; (iii) provide
the Continuing Employees with employee benefits, including, but not limited to,
medical and dental (subject to (ii) hereof), disability, life insurance
and 401(k) plan benefits, substantially similar in the aggregate to those
provided by the Company as of the Closing Date; and (iv) treat the service
of the Continuing Employees with the Company prior to the Closing Date as
service with the Surviving Corporation and its Affiliates for eligibility and
vesting purposes (but not for purposes of benefit accrual) under the employee
benefit plans, programs policies and arrangements of the Surviving Corporation
and its Affiliates.  No pre-existing
conditions limitation or exclusion shall apply to participation or coverage for
Continuing Employees and their dependents under a Parent or Surviving
Corporation plan that is a group health plan. 
The Parent or the Surviving Corporation shall cause the trustee of the
Parent 401(k) Plan to accept rollovers of the account balances and any
promissory notes evidencing outstanding loans of the Continuing Employees from
the 2004 Company 401(k) Plan.  The
Surviving Corporation shall credit the Continuing Employees with their accrued
paid time off as of the Closing. 
Immediately following the Closing, the Continuing Employees shall be
covered under Parent or Surviving Corporation severance policy, if any, with
full credit for all of their service with the Company and its predecessors.


 


(c)           Subject to the terms of any written
employment agreements set forth on Section 3.10(a) of the Company
Disclosure letter, any Employee Benefit Plans, and applicable Laws, except as
set forth in this Section 5.11, nothing contained in this Section 5.11
will preclude Parent or the Surviving Corporation from changing the terms and
conditions or terminating the employment of any Continuing Employee, or from
amending or terminating any Employee Benefit Plan; provided, however,
that the Surviving Corporation shall bear all costs incurred as a result of any
such change, amendment, or termination.


 


(d)           Surviving Corporation shall have the
responsibility to provide COBRA or state law continuation coverage for all
Continuing Employees and their covered dependents and for any individuals who
have COBRA or state law continuation coverage under the Company group health
plan at the time of Closing, including the Terminated Company Employees.  If Surviving Corporation terminates the
Company group health plan, the individuals whose COBRA or state law
continuation coverage has not expired shall have the


 


50





















 


right to elect coverage under a
Parent or Surviving Corporation group health plan that provides substantially
similar coverage.


 


5.12         NASDAQ
Listing.  On or before the Effective
Time, Parent shall cause the shares of Parent Common Stock issuable pursuant to
this Agreement to be listed for quotation on the Nasdaq National Market under
applicable law.


 


5.13         Acquisition
Proposals.


 


(a)           From and after the date of this
Agreement until the earlier to occur of the Closing or termination of this
Agreement pursuant to its terms, the Company will not, and the Company will
instruct its directors, officers, and employees not to, directly or indirectly (i) solicit,
initiate, entertain or encourage submission of any Acquisition Proposal by any
person, entity or group (other than Parent and its affiliates, agents, and
representatives) or (ii) participate in any discussions or negotiations
with, or disclose any non-public information concerning the Company to, or
afford access to the properties, books or records of the Company, or otherwise
assist or facilitate, or enter into any agreement or understanding with, any
person, entity or group (other than Parent and its affiliates, agents, and
representatives) in connection with any Acquisition Proposal with respect to
the Company ((i) and (ii) are collectively referred to as “Alternative
Efforts”).  For purposes of this
Agreement, an “Acquisition Proposal” means any proposal or offer
relating to (1) any merger, consolidation, sale or license of all or
substantially all of the assets or similar transactions involving the Company
(other than licenses granted by the Company in the ordinary course of
business), (2) dissolution of the Company, or (3) sales by the
Company of any capital stock (including by way of a tender offer or an exchange
offer) or rights thereto or debt instruments of the Company.  The Company will promptly (x) notify Parent
if, after the date of this Agreement, either the Company receives any written
proposal or written inquiry or written request for information in connection
with an Acquisition Proposal or potential Acquisition Proposal and (y) notify
Parent of the significant terms and conditions of any such Acquisition
Proposal.  In addition, from and after
the date of this Agreement until the Closing the Company will not, and will
instruct its directors, officers, and employees not to, directly or indirectly,
make or authorize any public statement, recommendation or solicitation in
support of any Acquisition Proposal made by any person, entity or group other
than Parent.


 


(b)           Notwithstanding Section 5.13(a) above,
if a Superior Acquisition Proposal is made to the Company and not withdrawn and
the Board of Directors of the Company determines in good faith, after
consultation with outside counsel, that, in light of such Superior Acquisition
Proposal, it is necessary to conduct Alternative Efforts with respect to the
person or group making the Superior Acquisition Proposal in order to fulfill
its fiduciary duties to the Company Stockholders under applicable Law, the
Board of Directors of the Company shall conduct such Alternative Efforts
following receipt of the Superior Acquisition Proposal, but only after the
fifth Business Day following Parent’s receipt of written notice advising Parent
that the Board of Directors of the Company intends to conduct such Alternative
Efforts.  During such five-day period, if
requested by Parent, the Company and its advisors shall negotiate in good faith
with Parent to make such adjustments in the terms and conditions of this Agreement
so that as adjusted the proposal of Parent would be superior to the Superior
Acquisition Proposal, in light of all of the facts and circumstances, so that
in the reasonable judgment of the


 


51





















 


Board of Directors of the
Company the Board of Directors would recommend that the Company proceed with
the transactions proposed by Parent on such adjusted terms.  For purposes of this Agreement, “Superior
Acquisition Proposal” shall mean an unsolicited, bona fide offer made by a
third-party to consummate any of the following transactions: (x) a sale or
other disposition by the Company of all or substantially all of its assets or
(y) the acquisition by any person or group (including by merger, exchange offer
or issuance by the Company) directly or indirectly, of beneficial ownership or
a right to acquire beneficial ownership of shares representing a majority of
the voting power of the then outstanding shares of Company Stock, on terms that
the Board of Directors of the Company determines in good faith to be more
favorable to the Company Stockholders than the terms of the Merger; provided,
however, that any such offer may be deemed to be a Superior Acquisition
Proposal only if any financing required to consummate the transaction
contemplated by such offer is committed.


 


5.14         COC
Incentive Payments.  Within three (3) Business
Days after the Closing, Parent shall cause the Surviving Corporation to make
the COC Cash Payments and COC Stock Payments as set forth on Exhibit F (which
Exhibit shall be prepared and delivered one day prior to Closing).  Ninety percent (90%) of such COC Cash
Payments and COC Stock Payments shall be paid to COC Cash Recipients and COC
Stock Recipients, respectively, at the Effective Time and the remaining ten
percent (10%) of such COC Cash Payments and COC Stock Payments shall be
deposited into the Cash Escrow Fund and Stock Escrow Fund, respectively,
established pursuant to Section 2.5. 
The shares so deposited into the Stock Escrow Fund, and the cash so
deposited into the Cash Escrow Fund, shall be paid to such COC Cash Recipients
and COC Stock Recipients, if and when such cash or Parent Common Stock becomes
distributable from the Cash Escrow Fund or Stock Escrow Fund to such COC
Recipients in accordance with the terms of this Agreement and the Escrow
Agreement.  All amounts of stock and cash
shall be payable under this Section shall be subject to reduction for any
and all amounts required to be deducted and withheld from such payments under
any applicable provision of federal, state, local or foreign laws, as provided
in Section 2.8.  The payment of  such COC Cash Payments or COC Stock Payments
shall be contingent upon each COC Recipient providing to Parent: (1) a
release, in form and substance acceptable to Parent, from any and all claims
that such COC Recipient may have had under the Company’s Change of Control
Incentive Plan or with respect to the COC Cash Payment and/or COC Stock Payment
that he or she is to receive thereunder and (2) an instrument (the “COC
Acceptance Form”) in which he or she shall have agreed: (i) to the
appointment of the Representative as representative of the COC Recipients in
accordance with the terms of Article 8, (ii) to the indemnification
provisions of Article 9, (iii) that, in accordance with this Section,
Parent will place into escrow a portion of the COC Cash Payments or COC Stock
Payments deliverable to such COC Recipient subject to and for the purpose of
securing the COC Recipients’ indemnity obligations under this Agreement, (iv) that
the Stock COC Payments deliverable to such COC Recipient pursuant to this
Agreement shall not be sold, transferred, pledged, disposed of or encumbered
(each, a “Transfer”) (except for Permitted Transfers) for the period
beginning on the Closing Date and ending, on the date falling ninety (90) days
after the Effective Time, and (v) that each certificate representing
shares of Parent Common Stock constituting the COC Stock Payments shall bear
appropriate legends referring to such restrictions and to any restrictions on
transfer under applicable securities laws.


 


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ARTICLE 6



CONDITIONS PRECEDENT


 


6.1           Conditions Precedent to
Each Party’s Obligation to Effect the Merger.  The respective obligations of each party to
effect the Merger are subject to the satisfaction or waiver (subject to
applicable law), at or prior to the Effective Time, of each of the following
conditions:


 


(a)           Injunction.  No temporary restraining order, preliminary
or permanent injunction or other order shall have been issued by any federal,
state or foreign court or by any federal, state or foreign Governmental Entity,
and no other legal restraint or prohibition preventing the consummation of the
Merger shall be in effect.


 


(b)           Statutes.  No federal, state or foreign statute, rule,
regulation, executive order, decree or order of any kind shall have been
enacted, entered, promulgated or enforced by any court or Governmental Entity
which prohibits, restrains, restricts or enjoins the consummation of the Merger
or has the effect of making the Merger illegal.


 


(c)           Execution of Escrow Agreement.  The Escrow Agent shall have executed the
Escrow Agreement and delivered it to Parent and the Company.


 


(d)           Approval of Company Stockholders.  This Agreement shall have been adopted and
approved by the Company Stockholders in the manner required by the DGCL.


 


6.2           Additional Conditions to
Obligations of the Company.  The
obligations of the Company to consummate the Merger and the transactions
contemplated by this Agreement shall be subject to the satisfaction at or prior
to the Closing of each of the following conditions, any of which may be waived,
in writing, exclusively by the Company:


 


(a)           Representations and Warranties.  The representations and warranties of Parent
and Sub contained in this Agreement, the other Transaction Documents and all
other documents delivered pursuant hereto or thereto shall have been true and
correct in all material respects when made and shall be true and correct in all
material respects on and as of the Closing Date except for representations and
warranties which address matters only as of a particular date (which shall
remain true and correct in all material respects as of such date) and except to
the extent that such representations and warranties contain a materiality or
Material Adverse Effect qualifier, in which case such representations and
warranties shall be true and correct in all respects.  The Company shall have received a certificate
with respect to each of the foregoing signed on behalf of each of Parent and
Sub by a duly authorized officer of each of Parent and Sub.


 


(b)           Agreements and Covenants.  Parent and Sub shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by them on or prior to the
Effective Time, and the Company shall have received a certificate to such
effect signed by a duly authorized officer of Parent.


 


53





















 


(c)           Legal Opinion.  The Company’s Stockholders shall have
received a legal opinion from Parent’s external legal counsel in form and
substance reasonably satisfactory to the Representative with respect to the
matters set forth on Exhibit B.


 


(d)           Escrow Agreement.  The Representative shall have received the
Escrow Agreement duly executed by Parent.


 


(e)           Secretary’s Certificate.  Parent shall have delivered to the
Representative a copy of (i) the text of the resolutions adopted by the
Boards of Directors of Parent and Sub authorizing the execution, delivery and
performance of the Transaction Documents and the consummation of the
transactions contemplated by this Agreement, (ii) the text of the
resolutions adopted by the stockholder of Sub approving and adopting the
Merger, this Agreement and the transactions contemplated hereby and (iii) the
Certificate of Incorporation and Bylaws of Parent and Sub, along with a
certificate executed on behalf of Parent, the stockholder of Sub, and Sub by
their respective corporate secretaries certifying to the Representative that
such copies are true, correct and complete copies of such resolutions,
Certificate of Incorporation and Bylaws, respectively, and that such
resolutions, Certificate of Incorporation and Bylaws were duly adopted and have
not been amended or rescinded.


 


(f)            No Material Adverse Effect.  Since the date of this Agreement, there shall
not have been any circumstance, event or occurrence that, individually, or in
the aggregate, has resulted, or could be reasonably expected to result, in a
Material Adverse Effect with respect to Parent. 
The Company shall have received a certificate with respect to the
foregoing signed on behalf of Parent by a duly authorized officer of Parent.


 


(g)           Additional Documents.  Parent and Sub shall have delivered such
other documents as the Company shall have reasonably requested.


 


6.3           Additional Conditions to
the Obligations of Parent and Sub. 
The obligations of Parent and Sub to consummate the Merger and the
transactions contemplated by this Agreement shall be subject to the
satisfaction at or prior to the Closing of each of the following conditions,
any of which may be waived, in writing, exclusively by Parent:


 


(a)           Representations and Warranties.  The representations and warranties of the
Company contained in this Agreement and all other documents delivered pursuant
hereto to which it is a party shall have been true and correct in all material
respects when made and shall be true and correct in all material respects on
and as of the Closing Date, except for representations and warranties which
address matters only as of a particular date (which shall remain true and
correct in all material respects as of such date) and except to the extent that
such representations and warranties contain a materiality or Material Adverse
Effect qualifier, in which case such representations and warranties shall be
true and correct in all respects.  Parent shall have received a
certificate with respect to each of the foregoing signed on behalf of the
Company by a duly authorized officer of the Company.


 


(b)           Agreements and Covenants.  The Company shall have performed or complied
in all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by it on or prior to the Effective Time,
and Parent and Sub


 


54





















 


shall have received a
certificate to such effect signed by a duly authorized officer of the Company.


 


(c)           Fees.  Parent shall have received invoices for all
Company Transaction Expenses incurred by the Company, and, effective upon
payment of such fees, a full release from the obligees of such indebtedness or
fees and in form and substance satisfactory to Parent.


 


(d)           No Material Adverse Effect.  Since the date of this Agreement, there shall
not have been any circumstance, event or occurrence that, individually, or in
the aggregate, has resulted, or could be reasonably expected to result, in a
Material Adverse Effect with respect to the Company.  Parent shall have received a certificate with
respect to the foregoing signed on behalf of the Company by a duly authorized
officer of the Company.


 


(e)           Secretary’s Certificate.  The Company shall have delivered to Parent a
copy of (i) the text of the resolutions adopted by the Board of Directors
of the Company authorizing the execution, delivery and performance of this
Agreement, the other Transaction Documents, and the consummation of all of the
transactions contemplated by this Agreement, (ii) the text of the
resolutions adopted by the stockholders of the Company approving and adopting
the Merger, this Agreement and the transactions contemplated hereby and (iii) the
Certificate of Incorporation and Bylaws of the Company, along with a
certificate executed on behalf of the Company by its corporate secretary
certifying to Parent that (1) such copies are true, correct and complete
copies of such resolutions, Certificate of Incorporation and Bylaws,
respectively, and that such resolutions, Certificate of Incorporation and
Bylaws were duly adopted and have not been amended or rescinded and (2) that
the Company Stockholders have approved and adopted the Merger, this Agreement
and the transactions contemplated hereby.


 


(f)            Legal Opinion.  Parent and Sub shall have received a legal
opinion from the Company’s external legal counsel in form and substance
reasonably satisfactory to Parent with respect to the matters set forth on Exhibit C.


 


(g)           Escrow Agreement.  Parent shall have received the Escrow
Agreement duly executed by the Representative.


 


(h)           Third-Party Consents.  The Company shall have delivered to Parent
all necessary consents, waivers and approvals of (i) any Governmental
Entity and (ii) those parties to any Contract set forth in Section 3.15
of the Company Disclosure Letter.


 


(i)            Cancellation of Certain
Agreements.  The Company shall have
delivered evidence satisfactory to Parent of the cancellation of agreements
identified on Section 3.3(d) of the Company Disclosure Letter, or
such agreements shall be cancelled pursuant to their terms upon the Effective
Time.


 


(j)            Certificate of Good Standing.  Parent shall have received a long-form
certificate of good standing with respect to the Company, dated within three (3) days
prior to Closing, from the Secretary of State of the State of Delaware.


 


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(k)           Cancellation of all Company
Options and Company Warrants.  Parent
shall have received evidence satisfactory to Parent of the exercise or
cancellation of all of the Company Options and the Company Warrants.


 


(l)            Dissenting Stockholders.  Less than five percent (5%) of the shares of
Company Preferred Stock and less than thirty percent (30%) of the shares of
Company Common Stock, that are issued and outstanding immediately prior to the
Effective Time, shall be held by Dissenting Stockholders.


 


(m)          Stockholders’ Questionnaires.  Parent shall have received from Company
Preferred Stockholders holding at least ninety-five percent (95%) of the
Company Preferred Stock a stockholders’ questionnaire in the form of Exhibit D
attached hereto indicating that as of the Effective Time such holder is an
Accredited Investor.


 


(n)           Non-USRPHC Certificate.  Company Stockholders shall furnish to Parent
on or before the Closing Date a certificate stating that the Company is not a “United
States real property holding corporation” within the meaning of Section 897(c)(2) of
the Code.


 


(o)           Business Partner Consent.  The Company shall furnish to Parent on or
before the Closing Date a letter, in form and substance reasonably satisfactory
to Parent, from each entity listed by Parent in Section 6.3(o) of the
Parent Disclosure Letter indicating that such entity either (1) does not
have such a right as a result of the transaction contemplated hereby or has
irrevocably waived its right to so terminate such business relationship, or (2) providing
such entity’s consent to the Merger.


 


(p)           Additional Documents.  The Company shall have delivered such other
documents as Parent shall have reasonably requested.


 


ARTICLE 7



TERMINATION AND ABANDONMENT


 


7.1           Termination.  Except as provided in Section 7.2 below,
this Agreement may be terminated and the Merger abandoned at any time prior to
the Effective Time:


 


(a)           by mutual consent of the Company and
Parent;


 


(b)           by Parent or the Company if: (i) the
Closing has not occurred before 5:00 p.m. (Central time) on November 30,
2005 (the “End Date”); provided, that the right to terminate this
Agreement under this Section 7.1(b)(i) shall not be available to the
party whose failure to fulfill any obligation hereunder has been the cause of,
or resulted in, the initial failure of the Closing to occur on or before such
date; and provided, further, that in the event that a party has given
written notice to the other party pursuant to Section 7.1(c) or (d) of
an inaccuracy in the other party’s representations or warranties or breach by
the other party of any representation, warranty, covenant or agreement set
forth in this Agreement, which inaccuracy or breach is curable as provided in Section 7.1(c) or
(d), then the End Date shall be deemed extended for so long as the other party
continues to exercise its commercially reasonable efforts to cure such
inaccuracy or breach, but in any event no longer than December 15, 2005; (ii) there


 


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shall be a final nonappealable
Law promulgated or issued by a Governmental Entity court in effect preventing
consummation of the Merger; or (iii) there shall be any Law enacted,
promulgated or issued or deemed applicable to the Merger by any Governmental
Entity that would make consummation of the Merger illegal;


 


(c)           by Parent, upon a material breach of
any representation, warranty, covenant or agreement on the part of the Company
set forth in this Agreement, or if any material representation or warranty of
the Company shall have become untrue in any material respect, provided,
that Parent shall provide written notice to the Company of such inaccuracy in
the Company’s representations and warranties or breach by the Company and if
such inaccuracy or breach is curable by the Company within fifteen (15) days
through the exercise of its commercially reasonable efforts, then for so long
as the Company continues to exercise such efforts, Parent may not terminate
this Agreement under this Section 7.1(c) unless such breach is not
cured within fifteen (15) days (it being understood that Parent may not
terminate this Agreement pursuant to this Section 7.1(c) if it or Sub
shall have at such time independently materially breached this Agreement); and


 


(d)           by the Company, upon a material
breach of any representation, warranty, covenant or agreement on the part of
Parent or Sub set forth in this Agreement, or if any material representation or
warranty of Parent or Sub shall have become untrue in any material respect, provided,
that the Company shall provide written notice to Parent of such inaccuracy in
Parent’s or Sub’s representations and warranties or breach by Parent or Sub and
if such inaccuracy or breach is curable by Parent or Sub, respectively, within
fifteen (15) days through the exercise of its commercially reasonable efforts,
then for so long as Parent or Sub continues to exercise such efforts, the
Company may not terminate this agreement under this Section 7.1(d) unless
such breach is not cured within fifteen (15) days (it being understood that the
Company may not terminate this Agreement pursuant to this Section 7.1(d) if
it shall have at such time independently materially breached this Agreement);
and


 


(e)           by the Company or Parent by written
notice to the other, if the Company accepts a Superior Acquisition Proposal.


 


7.2           Effect
of Termination.  In the event of
termination of this Agreement by either Parent or the Company as provided
above, the provisions of this Agreement shall immediately become void and of no
further force and effect (other than this Section 7.2 which shall survive
the termination of this Agreement), and, except as provided in this Section 7.2,
there shall be no liability on the part of Parent, Sub or the Company, or any
of their respective directors, officers, employees or stockholders, to one
another.


 


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ARTICLE 8



THE REPRESENTATIVE


 


8.1           Representative of the
Company Preferred Stockholders and COC Recipients; Power of Attorney.


 


(a)           The Company hereby appoints the
Representative as agent and attorney-in-fact for the Company and each Company
Preferred Stockholder and COC Recipient, for and on behalf of such Stockholders
and COC Recipients, to give and receive notices and communications, to
authorize delivery to Parent of shares from the Escrow Fund in satisfaction of
claims by Parent, to object to such deliveries, to agree to, negotiate, enter
into settlements and compromises of, and demand arbitration and comply with
orders of courts and awards of arbitrators with respect to such claims, and to
take all actions necessary or appropriate in the judgment of the Representative
for the accomplishment of the foregoing, and (i) the approval and adoption
of this Agreement by the Company Preferred Stockholders shall constitute the
Company Preferred Stockholders’ ratification of such appointment, and (ii) the
execution by each COC Recipient of a COC Acceptance Form shall constitute
the COC Recipient’s ratification of such appointment.  The Representative shall furnish on behalf of
the Company Preferred Stockholders and COC Recipients such certificates and
other documents as may from time to time be requested by the Escrow Agent.  The Representative may be changed by the
Company Preferred Stockholders and COC Recipients, by vote or consent of an
aggregate of a majority in interest of the Escrow Fund from time to time upon
not less than thirty (30) days’ prior written notice to Parent.  Any vacancy in the position of Representative
may be filled by approval of the Company Preferred Stockholders and COC
Recipients holding a majority in interest of the Escrow Fund.  No bond shall be required of the
Representative, and the Representative shall not receive compensation for its
services.  Notices or communications to
or from the Representative shall constitute notice to or from each of the
Company Preferred Stockholders and COC Recipients.


 


(b)           The Representative shall not be
liable for any act done or omitted hereunder as Representative while acting in
good faith and in the exercise of reasonable judgment.  The Company Preferred Stockholders and COC
Recipients having an interest in the Escrow Fund shall severally indemnify the
Representative and hold the Representative harmless against any loss, liability
or expense incurred without gross negligence, bad faith or intentional
misconduct on the part of the Representative and arising out of or in
connection with the acceptance or administration of the Representative’s duties
hereunder, including the reasonable fees and expenses of any legal counsel
retained by the Representative.


 


(c)           In order to induce the Representative
to act in such capacity, the Representative:


 


(i)            shall not be under any duty to give
greater consideration to the interest of any Company Preferred Stockholder(s)
or COC Recipient(s) than to that of any other such Person(s);


 


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(ii)           may act in reliance upon any
statement (oral or written), instrument or signature believed by the
Representative to be genuine and may assume that any such statement, instrument
or signature purportedly given by any Company Preferred Stockholder or COC
Recipient in connection with this Agreement has been given by such Company
Preferred Stockholder or COC Recipient;


 


(iii)          shall not be liable to the Company
Preferred Stockholders or COC Recipients for any mistake of fact or error in
judgment or for any acts of omission of any kind unless by the Representative’s
own gross negligence, bad faith or willful misconduct;


 


(iv)          shall not be required to make any
representation as to the validity, value or genuineness of any document or
instrument held by the Representative or delivered by the Representative;


 


(v)           shall not be obligated to risk its
own funds in the course of performing as Representative; and


 


(vi)          shall not have any duties or
responsibilities except those expressly set forth in this Agreement or any
Transaction Document to which the Representative is a party and no implied
covenants, functions, responsibilities, duties, obligations or liabilities
shall be read into this Agreement or shall otherwise exist against the
Representative.


 


8.2           Actions of the Representative.  A decision, act, consent or instruction of
the Representative, including, but not limited to, an amendment, extension or
waiver of this Agreement, shall constitute a decision of all the Company
Preferred Stockholders and COC Recipients, as the case may be, and shall be
final, binding and conclusive upon each of such Company Preferred Stockholders
and COC Recipients, and the Escrow Agent and Parent may rely upon any such
decision, act, consent or instruction of the Representative as being the
decision, act, consent or instruction of each and every such Company Preferred
Stockholder and COC Recipient.  The
Escrow Agent and Parent are hereby relieved from any liability to any person
for any acts done by them in accordance with such decision, act, consent or
instruction of the Representative.


 


ARTICLE 9



INDEMNIFICATION


 


9.1           Survival.  The representations and warranties of the
Parties contained in this Agreement (including without limitation obligations
with respect to indemnification under this Article 9), the other
Transaction Documents and in any certificate delivered pursuant hereto or
thereto, shall survive the Closing until the date that is twelve (12) months
after the Closing Date; provided, that if an Indemnified Party delivers,
within such survival period, a Claim Notice, then such representation and
warranty shall survive with respect to the Claim specified in the Claim Notice
through the date such Claim is conclusively resolved.


 


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9.2           Indemnification


 


(a)           By the Company, the Company
Preferred Stockholders and the COC Recipients.  Subject to Section 9.6, (i) prior
to the Effective Time, the Company, and (ii) on and after the Effective
Time, (X) each COC Recipient, severally and pro rata based upon each Recipient’s
proportionate share of the aggregate COC Incentive Payments received by it, and
(Y) each Company Preferred Stockholder, severally and pro rata based upon each
Company Preferred Stockholder’s proportionate share of the aggregate Merger
Consideration received by it, shall indemnify, defend and hold harmless Parent,
Sub and the Surviving Corporation, and their respective directors, officers and
other employees, agents, advisors, successors and assigns (“Parent
Indemnitees”) from and against any and all liabilities, obligations,
losses, damages, deficiencies, demands, claims, fines, penalties, interest,
assessments, judgments, actions, proceedings and suits of whatever kind and
nature and all costs and expenses relating thereto (including without
limitation reasonable attorneys’ fees incurred in connection with the
investigation, defense and/or prosecution thereof) (“Losses”) to the
extent such Losses arise out of the circumstances described in clauses (i) through
(ix) below; provided, however, that in the case of
indemnification pursuant to clause (ii) below, the indemnification
obligation shall be borne solely by the breaching Company Preferred
Stockholder, and in the case of fraud, the indemnification obligation shall be
borne solely by the defrauding Company Preferred Stockholder; and further
provided, however, that in the case of indemnification pursuant
to clause (iii) below, the indemnification obligation shall be borne
solely by the breaching COC Recipient, and in the case of fraud, the
indemnification obligation shall be borne solely by the defrauding COC
Recipient; and further  provided, however, that in the case
of indemnification pursuant to clause (ix) below, if any liability of
Parent or Surviving Corporation results in a benefit to a Company Preferred
Stockholder or COC Recipient or a group of Company Preferred Stockholders or
COC Recipients, but not to all of the Company Preferred Stockholders or COC
Recipients, the indemnification obligation shall be borne solely by the Company
Preferred Stockholder(s) or COC Recipient(s) receiving such benefit:


 


(i)            any material breach of any
representation or warranty made by the Company herein or in any certificate
delivered pursuant to this Agreement;


 


(ii)           any material breach of any
representation or warranty made by a Company Preferred Stockholder in a letter
of transmittal delivered by such Company Preferred Stockholder in accordance
with Section 2.4(b)(i) or a stockholders’ questionnaire delivered by
such Company Preferred Stockholder in accordance with Section 6.3(n) or
any other document delivered by a Company Preferred Stockholder pursuant to this
Agreement or in connection with the transactions contemplated hereby;


 


(iii)          any material breach of any
representation or warranty made by a COC Recipient in a document delivered by
such COC Recipient pursuant to this Agreement or in connection with the transactions
contemplated hereby;


 


(iv)          any failure of the Company to perform
or comply with any of the Company’s obligations under any Transaction Document;


 


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(v)           to the extent the payment is made by
the Company (but not including any loss of the deduction), any
“excess parachute payment,” as such term is defined in Section 280G of the
Code, determined without regard to any payments resulting from plans, programs,
or arrangements entered into between any officer, director, stockholder or
employee of the Company and Parent, Sub or, after the Effective Time, the
Surviving Corporation;


 


(vi)          any claims by (x) any holder of any
capital stock of the Company, or any option or warrant to purchase any capital
stock of the Company or (y) any current or former employee of the Company, with
respect to the sufficiency and/or allocation of the Merger Consideration or the
COC Incentive Payments, including any claims by Dissenting Stockholders;


 


(vii)         any claim for severance or unpaid
compensation by a Terminated Company Employee, other than (A) compensation
accrued on the Most Recent Balance Sheet, (B) any commission earned under
the Company’s North American and EMEA sales commissions plans, or (C) any
Disclosed Severance Obligation; provided, however, that to the
extent Parent determines to reduce the Company’s workforce in the United
Kingdom or France, Parent is fully responsible for any obligations or
liabilities in excess of those set forth on Section 3.15(a) of the
Company Disclosure Letter, and understands and agrees that it cannot make
claims against the Escrow Fund for any such amounts, unless such amounts arise
from actions (x) taken by the Company prior to the Closing and (y) not
specifically authorized by the Parent;


 


(viii)        to the extent in excess of the Company
Transaction Expenses paid at Closing, any Company Transaction Expenses paid by
the Surviving Corporation after the Effective Time; and


 


(ix)           any liability of Parent or the
Surviving Corporation under Section 2.8(b).


 


(b)           By Parent.  Subject to Section 9.6, Parent and Sub,
jointly and severally, shall indemnify, defend and hold harmless the Company
and its respective current and (following the Effective Time) former
stockholders (including the Company Preferred Stockholders), directors,
officers and other employees (including, without limitation, the COC
Recipients), agents, advisors, successors and assigns (the “Company
Indemnitees”) from and against any and all Losses to the extent such Losses
are based upon, arise out of or relate to:


 


(i)            any breach of any representation or
warranty made by Parent or Sub herein or in any certificate delivered pursuant
to this Agreement; and


 


(ii)           any failure by either Parent or Sub
to perform or comply with any of its obligations under any Transaction
Document.


 


9.3           Indemnification Procedure.  Within a reasonable period of time after the
incurrence of any Losses by any Person entitled to indemnification pursuant to Section 9.2
(an “Indemnified Party”), including any legal proceeding or any claim by
a third-party described in Section 9.5 which might give rise to
indemnification hereunder, such Indemnified Party (and in the case of any
Company Preferred Stockholder or COC Recipient, the Representative) shall
provide notice in writing (“Claim Notice”) of such claim (a “Claim”)
to the party from which indemnification is sought (the “Indemnifying Party”)
and, in the case of a claim made by a


 


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Parent Indemnitee, to the
Escrow Agent; provided, that in the case of any Company Preferred
Stockholder or COC Recipient as the Indemnifying Party, the Claim Notice shall
be provided to the Representative; provided, further, that after the
Escrow Fund is exhausted or no longer available to satisfy Claims pursuant to
the indemnification provided for in Section 9.2(a), as limited by Section 9.6,
any Parent Indemnitee shall provide the Claim Notice solely to the
Representative.  The Claim Notice shall
set forth in reasonable detail the nature of the Claim for which
indemnification is sought, the factual basis of such Claim and a good faith
estimate of the dollar value of the Losses for which indemnification is
sought.  No such estimate shall have any
effect on the extent to which the Indemnifying Parties shall have an obligation
to indemnify an Indemnified Party.  All
Claims made against and paid out of the Escrow Fund to the Parent Indemnitees
shall be made and paid in accordance herewith and with the terms of the Escrow
Agreement.


 


(b)           In the event that the Indemnifying
Party shall object to the indemnification of an Indemnified Party in respect of
any claim or claims specified in any Claim Notice, the Indemnifying Party
shall, within forty-five (45) days after receipt by the Indemnifying Party of
such Claim Notice, deliver to the Indemnified Party a notice to such effect (an
“Objection Notice”), and the Indemnifying Party and the Indemnified
Party shall, within the thirty (30) day period beginning on the date of receipt
by the Indemnified Party of such Objection Notice, attempt in good faith to
agree upon the rights of the respective parties with respect to each of such
Claims to which the Indemnifying Party shall have so objected.  If the Indemnified Party and the Indemnifying
Party shall succeed in reaching agreement on their respective rights with
respect to any of such Claims, the Indemnified Party, and the Indemnifying
Party shall promptly prepare and sign a memorandum setting forth such
agreement.  Should the Indemnified Party
and the Indemnifying Party be unable to agree as to any particular item or
items or amount or amounts, then the Indemnified Party and the Indemnifying
Party shall submit such dispute to a court of competent jurisdiction.  The party which receives a final,
non-appealable judgment in such dispute shall be indemnified and held harmless
for all reasonable attorney and consultant’s fees or expenses by the other
party.


 


(c)           Claims for Losses specified in any
Claim Notice to which an Indemnifying Party shall not object in writing within
forty-five (45) days of receipt of such Claim Notice, Claims covered by a
memorandum of agreement of the nature described in Section 9.3(b), Claims
the validity and amount of which have been the subject of judicial
determination as described in Section 9.3(b), are hereinafter referred to,
collectively, as “Resolved Claims”. 
While the Escrow Fund remains available to satisfy Claims pursuant to
the indemnification provided for in Section 9.2(a), as limited by Section 9.6,
promptly after a claim becoming a Resolved Claim, Parent and the Representative
shall prepare and deliver to the Escrow Agent joint written instructions
stating the Claim has become a Resolved Claim and the amount of the Loss
related thereto.


 


9.4           Payment
of Claims.  Whenever a Claim becomes
a Resolved Claim in favor of any Company Indemnitees or, whenever an Excess
Claim becomes a Resolved Claim in favor of any Parent Indemnitees, then within
ten (10) days of the determination of the amount of any such Resolved
Claims, the Indemnifying Party shall, subject to Section 9.6, pay to the
Indemnified Party an amount equal to the Resolved Claim by wire transfer in
immediately available funds to the bank account or accounts designated by the
Indemnified Party in a notice to the Indemnifying


 


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Party not less than two (2) business
days prior to such payment; provided, however, in the case of any
payment relating to an Excess Claim, such payment shall be reduced by the
amount, if any, that was satisfied out of the Escrow Fund.  In the event the Indemnified Party is Parent,
Parent shall satisfy the Resolved Claim proportionately from the Stock Escrow
Fund and the Cash Escrow Fund in accordance with the terms of the Escrow
Agreement.


 


9.5           Third-Party
Claims.  If a claim by a third-party
is made against any Indemnified Party, and if such Indemnified Party intends to
seek indemnity with respect thereto under Section 9.2, such Indemnified
Party shall promptly provide a Claim Notice to the Indemnifying Party of such
claims; provided, that the failure to so notify shall not relieve the
Indemnifying Party of its obligations hereunder, except to the extent that the
Indemnifying Party is actually and materially prejudiced thereby.  The Indemnifying Party shall have thirty (30)
days after receipt of such notice to assume the conduct and control, through
counsel reasonably acceptable to the Indemnified Party at the expense of the
Indemnifying Party, of the settlement or defense thereof and the Indemnified
Party shall cooperate with it in connection therewith; provided, that (a) the
Indemnifying Party shall permit the Indemnified Party to participate in such
settlement or defense through counsel chosen by such Indemnified Party, provided,
that the fees and expenses of such counsel shall be borne by such Indemnified
Party and (b) the Indemnifying Party shall promptly be entitled to assume
the defense of such action only to the extent the Indemnifying Party
acknowledges its indemnity obligation and assumes and holds such Indemnified
Party harmless from and against the full amount of any Loss resulting
therefrom.  So long as the Indemnifying
Party is reasonably contesting any such claim in good faith, the Indemnified
Party shall not pay or settle any such claim without the prior written consent
of the Indemnifying Party. 
Notwithstanding the foregoing, the Indemnified Party shall have the
right to pay or settle any such claim, provided, that in such event it
shall waive any right to indemnity therefor by the Indemnifying Party for such
claim unless the Indemnifying Party shall have consented to such payment or
settlement.  If the Indemnifying Party
does not notify the Indemnified Party within thirty (30) days after the receipt
of the Indemnified Party’s notice of a claim of indemnity hereunder that it
elects to undertake the defense thereof, the Indemnified Party shall have the
right to contest, settle or compromise the claim and shall not thereby waive
any right to indemnity therefor pursuant to this Agreement; provided, however,
that the Indemnified Party shall reasonably contest such claim with the good
faith intent to minimize, to the extent reasonably possible, the ultimate
liability, cost and expense to the Indemnifying Party and/or against the Escrow
Fund.  The Indemnifying Party shall not,
except with the consent of the Indemnified Party, enter into any settlement
that is not entirely indemnifiable by the Indemnifying Party pursuant to this Article 9
and does not include as an unconditional term thereof the giving by the Person
or Persons asserting such claim to all Indemnified Parties of an unconditional
release from all liability with respect to such claim or consent to entry of
any judgment.  The Indemnifying Party and
the Indemnified Party shall cooperate with each other in all reasonable
respects in connection with the defense of any claim, including making
available records relating to such claim and furnishing, without expense to the
Indemnifying Party and/or its counsel, such employees of the Indemnified Party
as may be reasonably necessary for the preparation of the defense of any such
claim or for testimony as witnesses in any proceeding relating to such claim.


 


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9.6           Limitations of Liability.


 


(a)           Deductible and Limits on Liability


 


(i)            No amount shall be payable by an
Indemnifying Party (or if such Indemnifying Party is the Company Preferred
Stockholders or COC Recipient, all of the Company Preferred Stockholders and
COC Recipients collectively) to an Indemnified Party (which shall include the
Parent Indemnitees in the case of Section 9.7) with respect to any claims
for indemnification pursuant to Sections 2.8, 9.2(a) or 9.7 unless
and until the aggregate amount of such claims required to be indemnified by the
Indemnifying Party pursuant hereto exceeds one hundred thousand dollars
($100,000), in which case the Indemnifying Party shall be liable to the
Indemnified Party for only the amount of all indemnified claims in excess of
$100,000, subject to the other provisions of this Section 9.6; provided,
however, that any indemnification claim arising under Section 2.8
or clause (vi) of Section 9.2(a) shall neither be limited by
such deductible or be included in the claims aggregated to determine the
satisfaction thereof.


 


(ii)           (A) Except for
Excess Claims, recourse to the Escrow Fund shall provide the sole and exclusive
remedy for Claims for Losses under Sections 9.2(a) and 9.7.


 


(B) Claims
arising out of or relating to (1) a breach by the Company of its
representations and warranties in Section 3.3, (2) a breach by any
Company Preferred Stockholder in a letter of transmittal delivered by such
Company Preferred Stockholder in accordance with Section 2.4(b)(i) with
respect to such Company Preferred Stockholder’s ownership of any Company Stock
(“Ownership Representations”), (3) fraud, or (4) claims
arising under clause (vi) of Section 9.2(a) (“9.2(a)(vi) Claims”,
and together with claims under clauses (1), (2) and (3) of this Section 9.6(a)(ii)(B),
“Excess Claims”) shall not be limited to the Escrow Fund and the
aggregate liability of the Company and the Company Preferred Stockholders and
COC Recipients to the Parent Indemnitees for any Excess Claim shall not exceed
the Total Transaction Consideration; provided, however, notwithstanding
the foregoing, that any Company Preferred Stockholder’s (or COC Recipient’s)
individual liability with respect to any specific Loss shall not exceed such
Company Preferred Stockholder’s (or COC Recipient’s) pro rata share (determined
by comparing the aggregate consideration received by such Company Preferred
Stockholder (or COC Recipient) to the Total Transaction Consideration) of such
Loss unless the Loss relates to a breach of the Ownership Representation by
such Company Preferred Stockholder, in which case such Company Preferred
Stockholder’s individual liability shall be limited to the Merger Consideration
received by such Company Preferred Stockholder; provided, further,
that the Company Preferred Stockholders’ and COC Recipients’ liability for any
9.2(a)(vi) Claims shall be limited to $300,000 in excess of the amounts
available from the Escrow Fund and only after such 9.2(a)(vi) Claims (x)
exceed both $250,000 in the aggregate and (y) otherwise exceed all amounts
available from the Escrow Fund; provided, further, that nothing
in the foregoing proviso shall limit any 9.2(a)(vi) Claim that can be
satisfied from the Escrow Fund.


 


(C) Except in
the case of fraud, Claims arising out of or relating to a breach by Parent of
its representations and warranties shall be limited to the Total Transaction
Consideration, and the aggregate liability of the Parent and the Surviving
Corporation to the Company Preferred Stockholders and COC Recipients shall not
exceed the Total Transaction Consideration.


 


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(b)           Duty to Mitigate Losses.  Nothing herein shall be deemed to relieve any
Indemnified Party hereto from any duty to mitigate any Losses under applicable
law.


 


(c)           No Double Recovery.  No Indemnified Party shall be entitled to be
indemnified more than once under this Agreement for the same claim.


 


(d)           Net Damages.  Notwithstanding anything contained herein to
the contrary, the amount of any Losses incurred or suffered by an Indemnified
Party under Section 9.2 shall be calculated after giving effect to any
proceeds, benefits or recoveries obtained by the Indemnified Party (or any of
its Affiliates) from any other third-party, including any proceeds from
insurance policies covering the event or claim giving rise to the
indemnification obligation (but net of any increase in insurance premiums as a
result of the event or claim giving rise to the indemnification obligation ).


 


9.7           Indemnification for Taxes.


 


(a)           Notwithstanding any provision to the
contrary contained in this Agreement, and without duplicating any obligation
under any other provision of this Article 9, until the expiration of the
applicable statute of limitations and subject to the limitation set forth in Section 9.6,
the Company Preferred Stockholders and COC Recipients agree to indemnify,
defend and hold harmless the Parent Indemnitees on an after-tax basis against (i) all
Taxes, losses, claims and expenses resulting from, arising out of, or incurred
with respect to, any claims that may be asserted by any party based upon,
attributable to, or resulting from the failure of any representation or
warranty made pursuant to Section 3.12 (Taxes) of this Agreement to be
true and correct as of the Closing Date; (ii) all Taxes imposed on or
asserted against the properties, income or operations of the Company or its
Subsidiaries, or for which the Company or any of its Subsidiaries may otherwise
be liable, for all Pre-Closing Periods to the extent such Taxes are not
reflected in the Closing Date Working Capital, are not attributable to
compensation payable by reason of the actions described in Section 5.11,
are not attributable to any amendment to any Return filed, or other change
made, by Parent or the Surviving Corporation following the Closing Date, or are
not taken into account in determining the Adjustment Amount; (iii) all
Taxes of any member of an affiliated, consolidated, combined or unitary group (“Group”)
of which Company or any of its Subsidiaries (or any predecessor of any of the
foregoing) is or was a member on or prior to the Closing Date imposed on the
Company or any of its Subsidiaries as a result of the provisions of Treasury
Regulations Section 1.1502-6 or the analogous provisions of any state,
local or foreign law.


 


(b)           In the case of any taxable period
that includes but does not end on the Closing Date (a “Straddle Period”),
the amount of any Taxes based on or measured by income or receipts of the
Company and its Subsidiaries for the Pre-Closing Period shall be determined
based on an interim closing of the books as of the close of business on the
Closing Date and the amount of other Taxes of the Company and its Subsidiaries
that relate to the Pre-Closing Period shall be deemed to be the amount of such
Tax for the entire taxable period multiplied by a fraction the numerator of
which is the number of days in the taxable period ending on the Closing Date
and the denominator of which is the number of days in such Straddle Period.


 


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(c)           Parent shall prepare or cause to be
prepared and file or cause to be filed all Returns for the Company and its
Subsidiaries that are filed after the Closing Date.  Any such Returns that include periods
beginning prior to the Closing Date shall be prepared, to the extent permitted
by applicable law, on the same basis as the last previous such Returns or on as
near to the same basis as possible, unless there is no reasonable basis for
such position.  Parent shall permit
Representative (or an advisor appointed by Representative) to review and
comment on each such Return prior to filing and shall make such revisions to
such Returns as are reasonably requested by Representative.


 


9.8           Exclusive Remedy.  Following the Closing, the rights of any
Indemnified Party under Article 9,
including the rights of the Parent Indemnitees under Section 9.7, shall be
the exclusive remedy of such Indemnified Party with respect to claims based
upon a breach or alleged breach of the representations, warranties and
covenants of another Party contained in this Agreement, any other Transaction
Document, any exhibit or schedule hereto or thereto or any certificate or
writing delivered in connection therewith or in any other manner relating to
the transactions contemplated hereby or thereby, regardless of the cause of
action, except in the case of fraud, in which case, the foregoing limitation
shall not apply.


 


9.9           Characterization of
Indemnity Payments.  Any indemnity
payments made pursuant to this Article 9 shall be treated as an adjustment
to the Merger Consideration to the maximum extent possible.


 


ARTICLE 10


 


MISCELLANEOUS


 


10.1         Fees
and Expenses.  Each Party will bear
its respective fees and expenses incurred with respect to this Agreement.


 


10.2         Representations and Warranties.  Parent acknowledges that except as set forth
in this Agreement or in the other Transaction Documents and in any certificates
or other documents expressly required to be delivered at or prior to Closing by
this Agreement, the Company is not making any other representations and warranties
and such representations and warranties are the only representations and
warranties on which Parent has in making its investment hereunder.


 


10.3         Extension;
Waiver.  At any time prior to the
Effective Time, the Parties, by action taken by or on behalf of the Boards of
Directors of the Company, Parent or Sub, may (i) extend the time for the
performance of any of the obligations or other acts of the other Parties, (ii) waive
any inaccuracies in the representations and warranties contained herein by any
other applicable party or in any document, certificate or writing delivered
pursuant hereto by any other applicable party or (iii) waive compliance
with any of the agreements or conditions contained herein.  Any agreement on the part of any party to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.


 


10.4         Notices.  All notices, requests, demands, waivers and
other communications required or permitted to be given under this Agreement
shall be in writing and shall be deemed


 


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to have been duly given if
delivered in person or mailed, certified or registered mail with postage
prepaid, or sent by facsimile (upon confirmation of receipt), as follows:


 


(a)           if to the Company prior to the
Closing, to it at:


 


Requisite Technology, Inc.


10155 Westmoor Drive, Suite 225


Westminster, Colorado 
80021


Attention: 
Susan L. Oakes, Chief Legal Officer


Fax:  303-474-8191


 


If to the
Representative before or after the Closing, to him at:


 


Thomas G. Washing


Sequel Venture
Partners


4430 Arapahoe
Avenue, Suite 220


Boulder, CO  80303


Fax:  (303) 546-9728


 


in each case with
a copy (which shall not constitute notice) to:


 


Holme Roberts &
Owen LLP


1700 Lincoln Street


Suite 4100


Denver, CO  80203-4541


Attention: Richard
R. Plumridge


Fax: (303) 866-0200


 


(b)           if to either Parent or Sub, to it at:


 


Click Commerce, Inc.


233 North Michigan Avenue


Chicago, IL  60601


Attention: General Counsel


Fax: (312) 482-8557


 


with a copy (which
shall not constitute notice) to:


 


McDermott Will & Emery LLP

227 West Monroe Street

Chicago, IL 60606

Attention: Mark A. Harris

Fax: (312) 984-3669


 


or to such other Person or address as any Party shall specify by notice
in writing to each of the other parties. 
All such notices, requests, demands, waivers and communications shall be
deemed to have been received on the date of delivery unless if mailed, in which
case on the third (3rd)


 


67





















 


Business Day after the mailing thereof, except for a notice of a change
of address, which shall be effective only upon receipt thereof.


 


10.5         Entire
Agreement.  This Agreement and the
other Transaction Documents contain the entire understanding of the Parties
with respect to the subject matter contained herein and supersede all prior
agreements and understandings, oral and written, with respect thereto, other
than the Confidentiality Agreement.


 


10.6         Binding Effect; Benefit;
Assignment.  This Agreement shall
inure to the benefit of and be binding upon the Parties and, with respect to
the provisions of Article 9, shall inure to the benefit of the Persons or
entities benefiting from the provisions thereof who are intended to be
third-party beneficiaries thereof and with respect to the provisions of
Sections 2.4(e) and 2.5 and Article 8 and Article 9, shall be
binding upon the Company Preferred Stockholders to the extent provided
therein.  Neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any of
the Parties without the prior written consent of each of the other Parties,
except that Sub may assign and transfer its right and obligations hereunder to
any of its Affiliates.  Except as
provided in the first sentence of this Section 10.6, nothing in this
Agreement, expressed or implied, is intended to confer on any Person (including
any current or former employees of the Company), other than the Parties, any
rights or remedies.


 


10.7         Amendment
and Modification.  Subject to applicable
law, this Agreement may be amended, modified and supplemented in writing by the
Parties in any and all respects before the Effective Time (notwithstanding any
stockholder approval), by action authorized by the respective Boards of
Directors of Parent, Sub and the Company or, in the case of Parent or Sub, by
the respective officers authorized by their respective Board of Directors; provided,
however, that after any such stockholder approval, no amendment shall be
made which by law requires further approval by such stockholders without such
further approval.


 


10.8         Further
Actions.  Each of the Parties agrees
that, subject to its legal obligations, it shall use its commercially
reasonable efforts to fulfill all conditions precedent specified herein, to the
extent that such conditions are within its control, and to do all things
reasonably necessary to consummate the transactions contemplated hereby.


 


10.9         Headings.  The descriptive headings of the several
Articles and Sections of this Agreement are inserted for convenience only, do
not constitute a part of this Agreement and shall not affect in any way the
meaning or interpretation of this Agreement.


 


10.10       Counterparts.  This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, and all of which
together shall be deemed to be one and the same instrument.


 


10.11       Facsimile
Signatures.  Any signature page delivered
pursuant to this Agreement or any other document related hereto via facsimile
shall be binding to the same extent as an original signature.  Any Party who delivers such a signature page agrees
to later deliver an original counterpart to any Party that requests it.


 


68





















 


10.12       Applicable
Law; Waiver of Jury Trial.


 


(a)           This Agreement shall be deemed to be
made in and in all respects shall be interpreted, construed and governed by and
in accordance with the law of the State of Delaware without regard to conflict
of law principles.


 


(b)           EACH PARTY ACKNOWLEDGES AND AGREES
THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO
INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT
OF OR RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT.  EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH
SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH
SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH SUCH PARTY HAS
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.12(b).


 


10.13       Severability.  In the event that any provision of this
Agreement, or the application of such provision to any Person or set of
circumstances, shall be determined to be invalid, unlawful, void or
unenforceable to any extent, the remainder of this Agreement, and the
application of such provision to Persons or circumstances other than those as
to which it is determined to be invalid, unlawful, void or unenforceable, shall
not be affected and shall continue to be valid and enforceable to the fullest
extent permitted by law.


 


10.14       Interpretation.  When a reference is made in this Agreement to
a Section, such reference shall be to a Section of this Agreement unless
otherwise indicated.  The table of
contents and headings contained in this Agreement are for convenience of
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. 
Whenever the words “include”, “includes” or “including” are used in this
Agreement, they shall be deemed to be followed by the words “without
limitation.”


 


*   *  
*   *   *


 


69





















 


IN WITNESS WHEREOF, each of Parent, Sub, the Company
and the Representative have caused this Agreement to be executed by their
respective officers thereunto duly authorized, all as of the date first above
written.


 


	
   

  	
  REQUISITE
  TECHNOLOGY, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Larry Lenhart

  	
   

  
	
   

  	
   

  	
  Name: Larry Lenhart

  
	
   

  	
   

  	
  Title: President and CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  REQUISITE ACQUISITION INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ John M. Tuhey

  	
   

  
	
   

  	
   

  	
  Name: John. M. Tuhey

  
	
   

  	
   

  	
  Title: Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CLICK COMMERCE, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Michale W. Ferro, Jr.

  	
   

  
	
   

  	
   

  	
  Name: Michael W. Ferro, Jr.

  
	
   

  	
   

  	
  Title: Chairman and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  REPRESENTATIVE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Thomas G. Washing

  	
   

  
	
   

  	
   

  	
  Name: Thomas G. Washing

  



 


70





















 


Schedule 2.14


 


Calculation of Working Capital Target Amount


 


The Working Capital Target Amount has been
prepared in conformity with the accounting principles, policies and practices
used in preparation of the FY04 Audited Financial Statements and the Stub
Unaudited Financial Statements, and consists of the following estimated Company
assets and includes deductions for the following estimated Company liabilities
at the Effective Time:


 


a)             Cash
and cash equivalents;


 


b)            Restricted
cash;


 


c)             Accounts
receivable, net of any allowances for doubtful accounts;


 


d)            Other
current assets;


 


less deductions for:


 


e)             Accounts
payable;


 


f)             Accrued
liabilities;


 


g)            Current
portion of deferred revenues; and


 


h)            Liabilities
related to this transaction, including but not limited to Company Transaction
Expenses, all expenses incurred prior to the Effective Time in connection with
the preparation work to be done with respect to obtaining auditors’ consents,
all Disclosed Severance Obligations for Terminated Company Employees, and all
expenses related to a three year tail for the Company’s D&O Insurance to be
purchased by the Company.


 


Company assets that are excluded from the
calculation of the Working Capital Target Amount (and shall be excluded from
the calculation of the Closing Date Working Capital) are property, plant and
equipment and other non-current assets not identified above.  Company liabilities excluded from the
calculation of the Working Capital Target Amount (and shall be excluded from
the calculation of the Closing Date Working Capital) are the non-current
portion of deferred revenues.


 


If there is a conflict between the Company’s
accounting principles and GAAP, then GAAP shall prevail, provided, however,
that the preparation of the Working Capital Target Amount and the Closing Date
Working Capital reflect the principles specified in this Schedule 2.14,
regardless of whether such principles conflict with the Company’s accounting
principles or GAAP.


 


For the avoidance of doubt and based on the
foregoing, the Working Capital Target Amount is $6,630,000, the calculation of
which is set forth in the table below. 
Further, the COC


 


71





















 


Incentive Payments have been
excluded from the calculation of the Working Capital Target Amount, and shall
be excluded from the calculation of Closing Date Working Capital.


 


72