Document:

ex4-2

 

EXHIBIT 4.2

Execution Copy

SUNRISE ASSISTED LIVING, INC.

5 1/4% Convertible Subordinated Notes due February 1, 2009

REGISTRATION RIGHTS AGREEMENT

January 24, 2002

Credit Suisse First Boston Corporation

Robertson Stephens, Inc.

First Union Securities, Inc.

c/o Credit Suisse First Boston Corporation

      Eleven Madison Avenue

      New York, New York 10010-3629

Ladies and Gentlemen:

        Sunrise Assisted Living, Inc., a Delaware corporation (the “Company”),
proposes to issue and sell to Credit Suisse First Boston Corporation, Robertson
Stephens, Inc. and First Union Securities, Inc. (the “Initial Purchasers”),
upon the terms set forth in a purchase agreement dated January 24. 2002 (the
“Purchase Agreement”), up to $125,000,000 aggregate principal amount of its
51/4% Convertible Subordinated Notes due February 1, 2009 (the “Notes”). The
Notes will be issued pursuant to an Indenture, to be dated as of January 30,
2001 (the “Indenture”), between the Company and First Union National Bank, as
trustee (the “Trustee”). As an inducement to the Initial Purchasers to enter
into the Purchase Agreement, the Company agrees with the Initial Purchasers,
for the benefit of (i) the Initial Purchasers as Initial Purchasers and (ii)
the beneficial owners (including the Initial Purchasers) from time to time of
the Notes and of the Underlying Common Stock (as defined herein) issued upon
conversion of the Notes (each of the foregoing, a “Holder” and, collectively,
the “Holders”), as follows:

        1.     Shelf Registration.

        (a)  The Company shall prepare and file with the Securities and Exchange
Commission (the “Commission”) in no event later than 90 days (such 90th day
being a “Filing Deadline”) after the latest date on which the Initial
Purchasers purchase the Notes pursuant to the Purchase Agreement (the “Closing
Date”), a Shelf Registration Statement for an offering to be made on a delayed
or continuous basis pursuant to Rule 415 of the Securities Act of 1933, as
amended (the “Securities Act”) (a “Shelf Registration Statement”), registering
the resale from time to time by Holders thereof (who satisfy certain conditions
relating to the provision of information in connection with the Shelf
Registration Statement) of all of the Registrable Securities (defined herein)
(the “Initial Shelf Registration Statement”); provided, however, that no Holder
(other than an Initial Purchaser) shall be entitled to have the Registrable
Securities (as defined herein) held by it covered by such Shelf Registration
Statement unless such Holder agrees in writing to be bound by all provisions of
this Agreement applicable to such Holder, it being agreed that a Notice and
Questionnaire (as defined herein) signed by a Holder shall suffice for this
purpose. The Initial Shelf Registration Statement shall be on an appropriate
form under the Securities Act permitting registration of such Registrable
Securities for resale by such Holders from time to time in accordance with Rule
415 under the Securities Act and the methods of distribution set forth in the
Initial Shelf Registration Statement (which shall be substantially as set forth
in the Notice and Questionnaire). The Company shall use its commercially
reasonable efforts to cause the Initial Shelf Registration Statement to be
declared effective under the Securities Act as promptly as is practicable but
in any event within one hundred and eighty (180) days after the Closing Date
(the “Effectiveness Deadline Date”),

 

 

and to keep the Initial Shelf Registration Statement (or any Subsequent
Shelf Registration Statement) continuously effective under the Securities Act
to permit the prospectus included therein to be lawfully delivered by the
Holders of the Registrable Securities, for a period of two years (or for such
longer period if extended pursuant to Section 2(h) below) from the date of the
filing of the Shelf Registration Statement or such shorter period that will
terminate when all the Registrable Securities covered by the Shelf Registration
Statement (i) have been sold pursuant thereto or (ii) are, with respect to such
securities held by non-affiliates, eligible to be sold to the public pursuant
to Rule 144(k) under the Securities Act, or any successor rule thereof (such
period, the “Effectiveness Period”). Subject to Section 2(b)(vi) hereof, the
Company shall be deemed not to have used its commercially reasonable efforts to
keep the Shelf Registration Statement effective during the requisite period if
it voluntarily takes any action that would result in Holders of Registrable
Securities covered thereby not being able to offer and sell such Registrable
Securities during that period, unless such action is (i) required by applicable
law or (ii) upon the occurrence of any event contemplated by Section 2(b)(v) or
(vi) below, such action is taken by the Company in good faith and the Company
thereafter complies with the requirements of Section 2(h) hereof. At the time
the Initial Shelf Registration Statement is declared effective, each Holder who
has provided the Company with an appropriately completed Notice and
Questionnaire (as defined herein) on or prior to the date five (5) Business
Days prior to such time of effectiveness and who holds Registrable Securities,
shall be named as a selling securityholder in the Initial Shelf Registration
Statement and the related prospectus in such a manner as to permit such Holder
to deliver such prospectus to purchasers of Registrable Securities in
accordance with applicable law. None of the Company’s securityholders (other
than the Holders of Registrable Securities) shall have the right to include any
of the Company’s securities in the Shelf Registration Statement.

        (b)  If the Initial Shelf Registration Statement or any Subsequent Shelf
Registration Statement (defined below) ceases to be effective for any reason at
any time during the Effectiveness Period (other than because all Registrable
Securities registered thereunder have been resold pursuant thereto or have
otherwise ceased to be Registrable Securities), the Company shall use its
commercially reasonable efforts to obtain the prompt withdrawal of any order
suspending the effectiveness thereof, and in any event shall within thirty (30)
days of such cessation of effectiveness amend the Shelf Registration Statement
in a manner reasonably expected to obtain the withdrawal of the order
suspending the effectiveness thereof, or file an additional Shelf Registration
Statement covering all of the securities that as of the date of such filing are
Registrable Securities (a “Subsequent Shelf Registration Statement”). If a
Subsequent Shelf Registration Statement is filed, the Company shall use its
commercially reasonable efforts to cause the Subsequent Shelf Registration
Statement to become effective as promptly as is practicable after such filing
and to keep such Subsequent Shelf Registration Statement continuously effective
until the end of the Effectiveness Period.

        (c)  The Company shall supplement and amend the Shelf Registration
Statement if required by the rules, regulations or instructions applicable to
the registration form used by the Company for such Shelf Registration
Statement, if required by the Securities Act or as reasonably requested by (i)
any Initial Purchaser in the event that such Initial Purchaser is participating
in the Shelf Registration Statement or (ii) the Trustee on behalf of a majority
in interest of the registered Holders.

        (d)  From and after the date the Initial Shelf Registration Statement is
declared effective, the Company shall, as promptly as practicable after the
date a Notice and Questionnaire is delivered to the Company by a Holder of
Registrable Securities (i) if required by applicable law, file with the
Commission a post-effective amendment to the Shelf Registration Statement or
prepare and, if required by applicable law, file a supplement to the related
prospectus or a supplement or amendment to any document incorporated therein by
reference or file any other document required under the Securities Act so that
the Holder delivering such Notice and Questionnaire is named as a selling
securityholder in the Shelf Registration Statement and the related prospectus
in such a manner as to permit such Holder to deliver such prospectus to
purchasers of the Registrable Securities in accordance with applicable law and,
if the Company shall file a post-effective amendment to the Shelf Registration
Statement, use its commercially reasonable efforts to cause such post-effective
amendment to be declared effective under the Securities Act as promptly as is
practicable; (ii) provide such Holder copies of any documents filed pursuant to
clause (i) of this Section 1(d); and (iii) notify such Holder as promptly as
practicable after the effectiveness under the Securities Act of any
post-effective amendment filed pursuant to clause (i) of this Section 1(d);
provided that if such Notice and Questionnaire is delivered during a Deferral
Period (as defined in Section 2(h)), the Company shall so inform the Holder
delivering such Notice and Questionnaire and shall take the actions set forth
in clauses (i), (ii) and (iii) above

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promptly upon expiration of the Deferral Period in accordance with Section
2(h). Any Holder who, subsequent to the date the Initial Shelf Registration
Statement is declared effective, provides a Notice and Questionnaire pursuant
to the provisions of this Section (whether or not such Holder has supplied the
Notice and Questionnaire at the time the Initial Shelf Registration Statement
was declared effective) shall be named as a selling securityholder in the Shelf
Registration Statement and related prospectus in accordance with the
requirements of this Section 1(d).

        (e)  Notwithstanding any other provisions of this Agreement to the
contrary, the Company shall cause the Shelf Registration Statement and the
related prospectus and any amendment or supplement thereto, as of the effective
date of the Shelf Registration Statement and as of the date of filing any
amendment or supplement, as applicable, (i) to comply in all material respects
with the applicable requirements of the Securities Act and the rules and
regulations of the Commission thereunder and (ii) not to contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading.

        (f)  As used in this Agreement, the following terms shall have the
following meanings:

		
	 	           “Applicable Conversion Price” as of any date of determination means
the Conversion Price in effect as of such date of determination or, if no
Notes are then outstanding, the Conversion Price that would be in effect
were Notes then outstanding.
	 
	 	           “Business Day” means each Monday, Tuesday, Wednesday, Thursday and
Friday that is not a day on which banking institutions in The City of New
York are authorized or obligated by law or executive order to close.
	 
	 	           “Common Stock” means the shares of common stock, $0.01 par value per
share, of the Company and any other shares of common stock as may
constitute “Common Stock” for purposes of the Indenture, including the
Underlying Common Stock.
	 
	 	           “Conversion Price” has the meaning assigned to such term in the
Indenture.
	 
	 	           “Exchange Act” means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated
thereunder.
	 
	 	           “Notice and Questionnaire” means a written notice (in substantially
the form attached as Annex A to the Company’s offering circular dated
January 24, 2002) delivered to the Company by a Holder containing any
information with respect to the Holder necessary to be included in the
Initial Shelf Registration Statement or to amend the Shelf Registration
Statement or supplement the related prospectus with respect to the
intended distribution of Registrable Securities by such Holder.
	 
	 	           “Registrable Securities” means the Notes, until such Notes have been
converted into or exchanged for the Underlying Common Stock and, at all
times subsequent to any such conversion or exchange, the Underlying
Common Stock and any securities into or for which such Underlying Common
Stock have been converted or exchanged, and any security issued with
respect thereto upon any stock dividend, split or similar event until, in
the case of any such security, (A) the earliest of (i) its effective
registration under the Securities Act and resale in accordance with the
Shelf Registration Statement covering it, (ii) expiration of the holding
period that would be applicable thereto under Rule 144(k) under the
Securities Act were it not held by an Affiliate of the Company or (iii)
its sale to the public pursuant to Rule 144, and (B) as a result of the
event or circumstance described in any of the foregoing clauses (i)
through (iii), the legends with respect to transfer restrictions required
under the Indenture are removed or removable in accordance with the terms
of the Indenture or such legend, as the case may be.
	 
	 	           “Underlying Common Stock” means the Common Stock into which the
Notes are convertible or issued upon any such conversion.

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        2.     Registration Procedures. In connection with the Shelf Registration
Statement contemplated by Section 1 hereof, the following provisions shall
apply:

        (a)  The Company shall include the names of the Holders who propose to
sell Registrable Securities pursuant to the Shelf Registration Statement as
selling securityholders.

        (b)  The Company shall give written notice to the Holders (which notice
pursuant to clauses (ii) through (vi) hereof shall be accompanied by an
instruction to suspend the use of the prospectus until the requisite changes
have been made):

		
	 	           (i) when the Shelf Registration Statement or any amendment thereto
has been filed with the Commission and when the Shelf Registration
Statement or any post-effective amendment thereto has become effective;
	 
	 	           (ii) of any request by the Commission for amendments or supplements
to the Shelf Registration Statement or the prospectus included therein or
for additional information;
	 
	 	           (iii) of the issuance by the Commission of any stop order suspending
the effectiveness of the Shelf Registration Statement or the initiation
of any proceedings for that purpose;
	 
	 	           (iv) of the receipt by the Company or its legal counsel of any
notification with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose;
	 
	 	           (v) of the happening of any event that requires the Company to make
changes in the Shelf Registration Statement or the prospectus in order
that the Shelf Registration Statement or the prospectus neither contain
an untrue statement of a material fact nor omit to state a material fact
required to be stated therein or necessary to make the statements therein
(in the case of the prospectus, in light of the circumstances under which
they were made) not misleading; and
	 
	 	           (vi) the occurrence or existence of any pending corporate
development with respect to the Company that the Company believes in good
faith may be material and that, in the good faith determination of the
Company, makes it inadvisable and not in the best interest of the Company
to allow continued availability of the Shelf Registration Statement and
the related prospectus.

        (c)  The Company shall make every commercially reasonable effort to obtain
the withdrawal at the earliest possible time, of any order suspending the
effectiveness of the Shelf Registration Statement or, subject to the proviso in
Section 2(f) below, the lifting of any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction in which they have been qualified for sale.

        (d)  The Company shall furnish to each Holder of Registrable Securities
included within the coverage of the Shelf Registration Statement, without
charge, at least one copy of the Shelf Registration Statement and any
post-effective amendment thereto, including financial statements and schedules,
and, if the Holder so requests in writing, all exhibits thereto (including
those, if any, incorporated by reference).

        (e)  The Company shall, during the Effectiveness Period, deliver to each
Holder of Registrable Securities included within the coverage of the Shelf
Registration Statement, without charge, as many copies of the prospectus
(including each preliminary prospectus) included in the Shelf Registration
Statement and any amendment or supplement thereto as such person may reasonably
request. The Company consents, subject to the provisions of this Agreement, to
the use of the prospectus or any amendment or supplement thereto by each of the
selling Holders of the Registrable Securities in connection with the offering
and sale of the Registrable Securities covered by the prospectus, or any
amendment or supplement thereto, included in the Shelf Registration Statement.

        (f)  Prior to any public offering of the Registrable Securities pursuant
to any Shelf Registration Statement the Company shall register or qualify or
cooperate with the Holders of the Registrable Securities included therein

4

 

and their respective counsel in connection with the registration or
qualification of the Registrable Securities for offer and sale under the
securities or “blue sky” laws of such states of the United States as any Holder
of Registrable Securities reasonably requests in writing and do any and all
other acts or things necessary or advisable to enable the offer and sale in
such jurisdictions of the Registrable Securities covered by such Shelf
Registration Statement; provided, however, that the Company shall not be
required to (i) qualify generally to do business in any jurisdiction where it
is not then so qualified or (ii) take any action which would subject it to
general service of process or to taxation in any jurisdiction where it is not
then so subject.

        (g)  The Company shall cooperate with the Holders of Registrable
Securities to facilitate the timely preparation and delivery of certificates
representing the Registrable Securities sold pursuant to any Shelf Registration
Statement free of any restrictive legends and in such denominations and
registered in such names as the Holders may request a reasonable period of time
after sales of the Registrable Securities pursuant to such Shelf Registration
Statement.

        (h)  Upon the occurrence of any event contemplated by paragraphs (ii)
through (vi) of Section 2(b) above during the period for which the Company is
required to maintain an effective Shelf Registration Statement, the Company
shall promptly prepare and file a post-effective amendment to the Shelf
Registration Statement or a supplement to the related prospectus and any other
required document so that, as thereafter delivered to Holders or purchasers of
Registrable Securities, the prospectus will not contain an untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. If the Company
notifies the Initial Purchasers and the Holders of Registrable Securities in
accordance with paragraphs (ii) through (v) of Section 2(b) above to suspend
the use of the prospectus until the requisite changes to the prospectus have
been made or the Company otherwise notifies the Initial Purchasers and the
Holders of Registrable Securities of its election to suspend the availability
of the Shelf Registration Statement and related prospectus pursuant to Section
2(b)(vi) above, then the Initial Purchasers and the Holders of Registrable
Securities shall suspend use of such prospectus (such period during which the
availability of the Shelf Registration Statement and any related prospectus is
suspended being a “Deferral Period”), and the period of effectiveness of the
Shelf Registration Statement provided for in Section 1(a) above shall be
extended by the number of days from and including the date of the giving of
such notice to and including the date when the Initial Purchasers and the
Holders of Registrable Securities shall have been advised in writing by the
Company that the prospectus may be used or has received such amended or
supplemented prospectus pursuant to this Section 2(h). The Company will use
its commercially reasonable efforts to ensure that the use of the prospectus
may be resumed as promptly as is practicable, except that in the case of
suspension of the availability of the Shelf Registration Statement and related
prospectus pursuant to Section 2(b)(vi) above, the Company shall not be
required to take such action until such time as it shall no longer determine in
good faith that continued availability of the Shelf Registration Statement and
the related prospectus is inadvisable and not in the best interests of the
Company. The Company shall only be entitled to utilize its right under this
Section 2(h) to suspend the availability of the Shelf Registration Statement or
any prospectus, without incurring or accruing any obligation to pay Additional
Interest pursuant to Section 5(a), for one or more periods not to exceed an
aggregate of 45 days in any 90-day period and not to exceed, in the aggregate,
90 days in any 12-month period.

        (i)  Not later than the effective date of the Initial Shelf Registration
Statement, the Company will provide a CUSIP number for the Registrable
Securities and provide the applicable trustee with one or more global notes as
required by the Indenture.

        (j)  The Company shall prepare and file with the Commission such
amendments and post-effective amendments to each Shelf Registration Statement
as may be necessary to keep such Shelf Registration Statement continuously
effective for the applicable period specified in Section 1(a) and shall cause
the related prospectus to be supplemented by any required prospectus supplement
to be filed pursuant to Rule 424 (or any similar provisions then in force)
under the Securities Act. The Company will comply with all rules and
regulations of the Commission to the extent and so long as they are applicable
to the Shelf Registration Statement and will make generally available to its
securityholders (or otherwise provide in accordance with Section 11(a) of the
Securities Act) an earnings statement satisfying the provisions of Section
11(a) of the Securities Act, no later than 45 days after the end of a 12-month
period (or 90 days, if such period is a fiscal year) beginning with the first
month of the Company’s first fiscal quarter

5

 

commencing after the effective date of the Shelf Registration Statement,
which statement shall cover such 12-month period.

        (k)  The Company shall cause the Indenture to be qualified under the Trust
Indenture Act of 1939, as amended, in a timely manner and containing such
changes, if any, as shall be necessary for such qualification. In the event
that such qualification would require the appointment of a new trustee under
the Indenture, the Company shall appoint a new trustee thereunder pursuant to
the applicable provisions of the Indenture.

        (l)  The Company may require each Holder of Registrable Securities to be
sold pursuant to the Shelf Registration Statement to furnish to the Company
such information regarding the Holder and the distribution of the Registrable
Securities as the Company may from time to time reasonably require for
inclusion in the Shelf Registration Statement, and the Company may exclude from
such registration the Registrable Securities of any Holder that unreasonably
fails to furnish such information within a reasonable time after receiving such
request.

        (m)  The Company shall enter into such customary agreements (including, if
requested, an underwriting agreement in customary form) and take all such other
action, if any, as any Holder shall reasonably request in order to facilitate
the disposition of the Registrable Securities pursuant to any Shelf
Registration Statement; provided, however, that the Company shall not be
required to facilitate an underwritten offering pursuant to a Shelf
Registration Statement by any Holders unless the offering relates to at least
$25,000,000 principal amount of Notes or an equivalent number of the Underlying
Common Shares..

        (n)  In the event of an underwritten offering, the Company shall (i) make
available, at reasonable times and in a reasonable manner, for inspection by a
representative of the Holders of Registrable Securities, the underwriter(s)
participating in any disposition pursuant to the Shelf Registration Statement
and any attorney, accountant or other agent retained by the Holders of
Registrable Securities or any such underwriter, all relevant financial and
other records, pertinent corporate documents and properties of the Company as
may be reasonably requested and (ii) cause the Company’s officers, directors,
employees, accountants and auditors to supply all relevant information
reasonably requested by the Holders of Registrable Securities or any such
underwriter, attorney, accountant or agent in connection with the Shelf
Registration Statement, in each case, as shall be necessary to enable such
persons, to conduct a reasonable investigation within the meaning of Section 11
of the Securities Act; provided, however, that the foregoing inspection and
information gathering shall be coordinated on behalf of the Holders and the
other parties by one counsel designated by and on behalf of the Holders and
such other parties; provided, further, however, that the Holders shall maintain
and shall cause each such person to maintain the confidentiality of any
information that is reasonably and in good faith designated by the Company in
writing as confidential at the time of delivery of such information, unless (i)
disclosure of such information is required by court or administrative order or
is necessary to respond to inquiries of regulatory authorities, (ii) disclosure
of such information is required by law, (iii) such information becomes
generally available to the public other than as a result of a disclosure or
failure to safeguard by any such person, (iv) such information was already in
the possession of such person at or before the time it was delivered to such
person by the Company, or (v) such information is developed independently by
such person without violating any obligation of confidentiality owed to the
Company.

        (o)  In the event of an underwritten offering,the Company shall cause (i)
its counsel to deliver an opinion at the closing thereof relating to the
Registrable Securities in customary form addressed to such Holders and the
managing underwriters thereof (it being agreed that the matters to be covered
by such opinion shall include, without limitation, the due incorporation and
good standing of the Company and its significant subsidiaries; the
qualification of the Company and its significant subsidiaries to transact
business as foreign corporations; the due authorization, execution and delivery
of the relevant agreement of the type referred to in Section 2(m) hereof; the
due authorization, execution, authentication and issuance, and the validity and
enforceability, of the applicable Registrable Securities; the absence of
governmental approvals required to be obtained in connection with the Shelf
Registration Statement, the offering and sale of the applicable Registrable
Securities, or any agreement of the type referred to in Section 2(m) hereof;
the compliance as to form of such Shelf Registration Statement and any
documents incorporated by reference therein and of the Indenture with the
requirements of the Securities Act and the Trust Indenture Act, respectively;
and, as of the date of the opinion and as of the effective date of the Shelf
Registration Statement or most recent post-effective amendment thereto, as the
case may be, the absence from such Shelf Registration Statement and the
prospectus included therein, as then amended or supplemented, together with

6

 

any documents incorporated by reference therein, of an untrue statement of
a material fact or the omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading; (ii)
its officers to execute and deliver all customary documents and certificates
and updates thereof requested by any underwriters of the applicable Registrable
Securities and (iii) its independent public accountants (and the independent
accountants with respect to any other entity for which financial information is
provided in the Shelf Registration Statement) to provide to the selling Holders
of the applicable Registrable Securities and any underwriter therefor a comfort
letter in customary form and covering matters of the type customarily covered
in comfort letters in connection with primary underwritten offerings, subject
to receipt of appropriate documentation as contemplated, and only if permitted,
by Statement of Auditing Standards No. 72.

        (p)  The Company will use its commercially reasonable efforts to (a) if
the Notes have been rated prior to the initial sale of such Notes, confirm such
ratings will apply to the Registrable Securities covered by a Shelf
Registration Statement, or (b) if the Notes were not previously rated, cause
the Registrable Securities covered by a Shelf Registration Statement to be
rated with the appropriate rating agencies, if so requested by Holders of a
majority in aggregate principal amount of Registrable Securities covered by
such Shelf Registration Statement, or by the managing underwriters, if any.

        (q)  In the event that any broker-dealer registered under the Exchange Act
shall underwrite any Registrable Securities or participate as a member of an
underwriting syndicate or selling group or “assist in the distribution” (within
the meaning of the Conduct Rules (the “Rules”) of the National Association of
Securities Dealers, Inc. (“NASD”)) thereof, whether as a Holder of such
Registrable Securities or as an underwriter, a placement or sales agent or a
broker or dealer in respect thereof, or otherwise, the Company will assist such
broker-dealer in complying with the requirements of such Rules, including,
without limitation, by (i) if such Rules, including Rule 2720, shall so
require, engaging a “qualified independent underwriter” (as defined in Rule
2720) to participate in the preparation of the Shelf Registration Statement
relating to such Registrable Securities, to exercise usual standards of due
diligence in respect thereto and, if any portion of the offering contemplated
by such Shelf Registration Statement is an underwritten offering or is made
through a placement or sales agent, to recommend the yield of such Registrable
Securities, (ii) indemnifying any such qualified independent underwriter to the
extent of the indemnification of underwriters provided in Section 5 hereof and
(iii) providing such information to such broker-dealer as may be required in
order for such broker-dealer to comply with the requirements of the Rules.

        (r)  The Company shall use its commercially reasonable efforts to take all
other steps necessary to effect the registration of the Registrable Securities
covered by a Shelf Registration Statement contemplated hereby.

        (s)  The Company shall use its commercially reasonable efforts to cause
the Underlying Common Stock to be listed on any securities exchange or any
automated quotation system on which similar securities issued by the Company
are then listed, to the extent the Underlying Common Stock satisfies applicable
listing requirements.

        3.     Registration Expenses.

        (a)  All expenses incident to the Company’s performance of and compliance
with this Agreement will be borne by the Company, regardless of whether a Shelf
Registration Statement is ever filed or becomes effective, including without
limitation:

		
	 	           (i) all registration and filing fees and expenses;
	 
	 	           (ii) all fees and expenses of compliance with federal securities and
state “blue sky” or securities laws;
	 
	 	           (iii) all expenses of printing, messenger and delivery services and
telephone;
	 
	 	           (iv) all fees and disbursements of counsel for the Company;
	 
	 	           (v) all application and filing fees in connection with listing the
Underlying Common Stock on a national securities exchange or automated
quotation system pursuant to the requirements thereof; and

7

 

		
	 	           (vi) all fees and disbursements of independent certified public
accountants of the Company (including the expenses of any special audit
and comfort letters required by or incident to such performance).

The Company will bear its internal expenses (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expenses of any annual audit and the fees and expenses
of any person, including special experts, retained by the Company.

        (b)  In connection with any Shelf Registration Statement required by this
Agreement, the Company will bear or reimburse the Holders of Registrable
Securities for the reasonable fees and disbursements of not more than one firm
of legal counsel, which may be selected by the Holders of a majority in
principal amount of the Registrable Securities covered by the Shelf
Registration Statement (provided that Holders of Registrable Securities in the
form of Underlying Common Stock shall be deemed to be Holders of the aggregate
principal amount of Notes from which such Underlying Common Stock was
converted), to act as counsel for such Holders in connection therewith.

        4.     Indemnification.

        (a)  The Company agrees to indemnify and hold harmless each Holder of
Registrable Securities and each person, if any, who controls such Holder within
the meaning of the Securities Act or the Exchange Act (each Holder and such
controlling persons are referred to collectively as the “Indemnified Parties”)
from and against any losses, claims, damages or liabilities, joint or several,
or any actions in respect thereof (including, but not limited to, any losses,
claims, damages, liabilities or actions relating to purchases and sales of the
Registrable Securities) to which each Indemnified Party may become subject
under the Securities Act, the Exchange Act or otherwise, insofar as such
losses, claims, damages, liabilities or actions arise out of, or are based
upon, any untrue statement or alleged untrue statement of a material fact
contained in a Shelf Registration Statement or prospectus or in any amendment
or supplement thereto or in any preliminary prospectus relating to a Shelf
Registration, or arise out of, or are based upon, the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and shall reimburse,
as incurred, the Indemnified Parties for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action in respect thereof; provided, however, that
(i) the Company shall not be liable in any such case to the extent that such
loss, claim, damage or liability arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in a
Shelf Registration Statement or prospectus or in any amendment or supplement
thereto or in any preliminary prospectus relating to a Shelf Registration in
reliance upon and in conformity with written information pertaining to such
Holder and furnished to the Company by or on behalf of such Holder specifically
for inclusion therein and (ii) with respect to any untrue statement or omission
or alleged untrue statement or omission made in any preliminary prospectus
relating to a Shelf Registration Statement, the indemnity agreement contained
in this subsection (a) shall not inure to the benefit of any Holder from whom
the person asserting any such losses, claims, damages or liabilities purchased
the Registrable Securities concerned, to the extent that a prospectus relating
to such Registrable Securities was required to be delivered by such Holder
under the Securities Act in connection with such purchase and any such loss,
claim, damage or liability of such Holder results from the fact that there was
not sent or given to such person, at or prior to the written confirmation of
the sale of such Registrable Securities to such person, a copy of the final
prospectus if the Company had previously furnished copies thereof to such
Holder; provided further, however, that this indemnity agreement will be in
addition to any liability which the Company may otherwise have to such
Indemnified Party. The Company shall also indemnify any underwriters, their
officers and directors and each person who controls such underwriters within
the meaning of the Securities Act or the Exchange Act to the same extent as
provided above with respect to the indemnification of the Holders if requested
by such Holders.

        (b)  Each Holder of Registrable Securities, severally and not jointly,
will indemnify and hold harmless the Company, its officers and directors and
each person, if any, who controls the Company within the meaning of the
Securities Act or the Exchange Act from and against any losses, claims, damages
or liabilities or any actions in respect thereof, to which the Company, its
officers and directors or any such controlling person may become subject under
the Securities Act, the Exchange Act or otherwise, insofar as such losses,
claims, damages, liabilities or actions arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in

8

 

a Shelf Registration Statement or prospectus or in any amendment or
supplement thereto or in any preliminary prospectus relating to a Shelf
Registration, or arise out of or are based upon the omission or alleged
omission to state therein a material fact necessary to make the statements
therein not misleading, but in each case only to the extent that the untrue
statement or omission or alleged untrue statement or omission was made in
reliance upon and in conformity with written information pertaining to such
Holder and furnished to the Company by or on behalf of such Holder specifically
for inclusion therein; and, subject to the limitation set forth immediately
preceding this clause, shall reimburse, as incurred, the Company for any legal
or other expenses reasonably incurred by the Company or any such controlling
person in connection with investigating or defending any loss, claim, damage,
liability or action in respect thereof. This indemnity agreement will be in
addition to any liability which such Holder may otherwise have to the Company,
its officers and directors or any of its controlling persons.

        (c)  Promptly after receipt by an indemnified party under this Section 4
of notice of the commencement of any action or proceeding (including a
governmental investigation), such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party under this Section 4,
notify the indemnifying party of the commencement thereof; but the omission so
to notify the indemnifying party will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraph (a) or (b) above. In case any
such action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof the
indemnifying party will not be liable to such indemnified party under this
Section 4 for any legal or other expenses, other than reasonable costs of
investigation, subsequently incurred by such indemnified party in connection
with the defense thereof. Notwithstanding the indemnifying party’s election to
assume the defense of the indemnified party in an action, the indemnified party
shall have the right to employ separate counsel (including local counsel) and
the indemnifying party shall bear the reasonable fees, costs and expenses of
such separate counsel (and local counsel) if (i) the use of counsel chosen by
the indemnifying party to represent the indemnified party would present such
counsel with a conflict of interest, (ii) the actual or potential defendants
in, or targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, (iii) the indemnifying party shall not have employed
counsel satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of the institution of such action
or (iv) the indemnifying party shall authorize the indemnified party to employ
separate counsel at the expense of the indemnifying party. No indemnifying
party shall, without the prior written consent of the indemnified party, effect
any settlement of any pending or threatened action in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party unless such settlement includes an
unconditional release of such indemnified party from all liability on any
claims that are the subject matter of such action, and does not include a
statement as to or an admission of fault, culpability or a failure to act by or
on behalf of any indemnified party.

        (d)  If the indemnification provided for in this Section 4 is unavailable
or insufficient to hold harmless an indemnified party under subsections (a) or
(b) above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to in subsection (a) or
(b) above in such proportion as is appropriate to reflect the relative fault of
the indemnifying party or parties on the one hand and the indemnified party on
the other in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities (or actions in respect thereof) as well
as any other relevant equitable considerations. The relative fault of the
parties 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 indemnified party, on the one hand, or by the indemnifying party, on the
other, and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The amount paid
by an indemnified party as a result of the losses, claims, damages or
liabilities referred to in the first sentence of this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any action or
claim which is the subject of this subsection (d). Notwithstanding any other
provision of

9

 

this Section 4(d), the Holders of Registrable Securities shall not be
required to contribute any amount in excess of the amount by which the net
proceeds received by such Holders from the sale of the Registrable Securities
pursuant to a Shelf Registration Statement exceeds the amount of damages which
such Holders have otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this subsection
(d), each person, if any, who controls such indemnified party within the
meaning of the Securities Act or the Exchange Act shall have the same rights to
contribution as such indemnified party and each person, if any, who controls
the Company within the meaning of the Securities Act or the Exchange Act shall
have the same rights to contribution as the Company.

        (e)  The agreements contained in this Section 4 shall survive the sale of
the Registrable Securities pursuant to a Shelf Registration Statement and shall
remain in full force and effect, regardless of any termination or cancellation
of this Agreement or any investigation made by or on behalf of any indemnified
party.

        5.     Additional Interest Under Certain Circumstances.

        (a)  Additional interest (the “Additional Interest”) with respect to the
Registrable Securities shall be assessed as follows if any of the following
events occur (each such event in clauses (i) through (iii) below being herein
called a “Registration Default”):

	 	 	 	 	 
		 	
(i)
	 	the Initial Shelf Registration Statement required by this
Agreement is not filed with the Commission on or prior to the Filing
Deadline;
	 
	 	 	
(ii)
	 	the Initial Shelf Registration Statement required by this
Agreement is not declared effective by the Commission on or prior to
the Effectiveness Deadline Date;
	 
	 	 	
(iii)
	 	any Shelf Registration Statement required by this Agreement
has been declared effective by the Commission but such Shelf
Registration Statement or related prospectus thereafter ceases to be
effective or useable (subject to the Company’s right to suspend the
use of the Shelf Registration Statement and the prospectus as set
forth in Section 2(h)) in accordance with the provisions of this
Agreement and during the periods specified herein and (A) the
Company does not cure the Shelf Registration Statement within five
(5) Business Days (which shall not be deemed to extend the period
when the Company may suspend the availability of the Shelf
Registration and related prospectus without incurrence and accrual
of any obligation to pay Additional Interest beyond the time
provided for in the last sentence of Section 2(h)) after it ceases
to be effective or useable by a post-effective amendment or
additional Shelf Registration Statement being filed and declared
effective or a report filed pursuant to the Exchange Act or (B) if
applicable, the Company does not terminate any Deferral Period
within the time provided for in the last sentence of Section 2(h)

Each of the foregoing will constitute a Registration Default whatever the
reason for any such event and whether it is voluntary or involuntary or is
beyond the control of the Company or pursuant to operation of law or as a
result of any action or inaction by the Commission.

        Additional Interest shall accrue on the Registrable Securities over and
above the interest set forth in the title of the Registrable Securities from
and including the date on which any such Registration Default shall occur to
but excluding the date on which all such Registration Defaults have been cured,
at a rate of 0.50% per annum (the “Additional Interest Rate”) of the aggregate
principal amount of the Notes that are Registrable Securities. In the case of
Notes that have been converted into or exchanged for Underlying Common Stock,
Additional Interest shall accrue at a per annum rate equal to 0.50% of the
Applicable Conversion Price of such shares of Underlying Common Stock that are
Registrable Securities. Any Additional Interest accrued with respect to any
Note or portion thereof called for redemption on a redemption date or converted
into Underlying Common Stock on a conversion date prior to the interest payment
date with respect to the Notes under the Indenture, shall, in any such event,
be paid instead to the Holder who submitted such Note or portion thereof for
redemption or conversion on the applicable redemption date or conversion date,
as the case may be, on such date (or promptly following the conversion date, in
the case of

10

 

conversion). Notwithstanding the foregoing, no Additional Interest shall
accrue as to any Registrable Security from and after the earlier of (x) the
date such security is no longer a Registrable Security and (y) the expiration
of the Effectiveness Period. The rate of accrual of the Additional Interest
with respect to any period shall not exceed the rate provided for in this
paragraph notwithstanding the occurrence of multiple concurrent Registration
Defaults. Following the cure of all Registration Defaults requiring the
payment by the Company of Additional Interest to the Holders of Registrable
Securities pursuant to this Section, the accrual of Additional Interest will
cease (without in any way limiting the effect of any subsequent Registration
Default requiring the payment of Additional Interest by the Company). No other
monetary damages shall be available to the Holders of Registrable Securities
for a Registration Default.

        Subject to the last sentence of the immediately preceding paragraph, the
Trustee shall be entitled, on behalf of Holders of Notes or Underlying Common
Stock, to seek any available remedy for the enforcement of this Agreement,
including for the payment of any Additional Interest.

        All of the Company’s obligations set forth in this Section 5 that are
outstanding with respect to any Registrable Security at the time such security
ceases to be a Registrable Security shall survive until such time as all such
obligations with respect to such security have been satisfied in full.

        (b)  Any amounts of Additional Interest due pursuant to Section 5(a) will
be payable in cash on the regular interest payment dates with respect to the
Registrable Securities. The amount of Additional Interest will be determined
by multiplying the applicable Additional Interest Rate by the principal amount
of the Registrable Securities or the Applicable Conversion Price of the
Registrable Securities converted into shares of Underlying Common Stock, as
applicable, and further multiplied by a fraction, the numerator of which is the
number of days such Additional Interest Rate was applicable during such period
(determined on the basis of a 360-day year comprised of twelve 30-day months),
and the denominator of which is 360. The Registrable Securities entitled to
payment of Additional Interest shall be determined as of the Business Day
immediately preceding the next regular interest payment date with respect to
the Registrable Securities.

        6.     Rules 144 and 144A. The Company shall use its best efforts to file
the reports required to be filed by it under the Securities Act and the
Exchange Act in a timely manner and, if at any time the Company is not required
to file such reports, it will, upon the request of any Holder, make publicly
available other information so long as necessary to permit sales of their
securities pursuant to Rules 144 and 144A. The Company covenants that it will
take such further action as any Holder may reasonably request, all to the
extent required from time to time to enable such Holder to sell Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by Rules 144 and 144A (including the requirements of
Rule 144A(d)(4)). The Company will provide a copy of this Agreement to
prospective purchasers of Notes identified to the Company by the Initial
Purchasers upon request. Upon the request of any Holder of Registrable
Securities, the Company shall deliver to such Holder a written statement as to
whether it has complied with such requirements. Notwithstanding the foregoing,
nothing in this Section 6 shall be deemed to require the Company to register
any of its securities pursuant to the Exchange Act.

        7.     Underwritten Registrations. If any of the Registrable Securities
covered by any Shelf Registration are to be sold in an underwritten offering,
the investment banker or investment bankers and manager or managers that will
administer the offering (“Managing Underwriters”) will be selected by the
Holders of a majority in aggregate principal amount of such Registrable
Securities to be included in such offering (provided that Holders of Common
Stock issued upon conversion of the Notes shall not be deemed holders of Common
Stock, but shall be deemed to be holders of the aggregate principal amount of
Notes from which such Common Stock was converted) and such selection shall be
subject to the Company’s consent, which shall not be unreasonably withheld.

        No person may participate in any underwritten registration hereunder
unless such person (i) agrees to sell such person’s Registrable Securities on
the basis reasonably provided in any underwriting arrangements approved by the
persons entitled hereunder to approve such arrangements and (ii) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements.

11

 

        8.     Miscellaneous.

     (a)  Remedies. The Company acknowledges and agrees that any failure by
the Company to comply with its obligations hereunder may result in material
irreparable injury to the Initial Purchasers or the Holders for which there is
no adequate remedy at law, that it will not be possible to measure damages for
such injuries precisely and that, in the event of any such failure, the Initial
Purchasers or any Holder may obtain such relief as may be required to
specifically enforce the Company’s obligations hereunder. The Company further
agrees to waive the defense in any action for specific performance that a
remedy at law would be adequate.

        (b)  No Inconsistent Agreements. The Company will not on or after the
date of this Agreement enter into any agreement with respect to its securities
that is inconsistent with the rights granted to the Holders in this Agreement
or otherwise conflicts with the provisions hereof. The rights granted to the
Holders hereunder do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Company’s securities under any
agreement in effect on the date hereof.

        (c)  Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, except by the Company and the written
consent of the Holders of a majority in principal amount of the Registrable
Securities affected by such amendment, modification, supplement, waiver or
consents (provided that Holders of Common Stock issued upon conversion of Notes
shall not be deemed holders of Common Stock, but shall be deemed to be holders
of the aggregate principal amount of Notes from which such Common Stock was
converted). Without the consent of each affected Holder of Registrable
Securities, however, no modification may change the provisions relating to the
payment of Additional Interest.

        (d)  Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, first-class
mail, facsimile transmission, or air courier that guarantees overnight
delivery:

                      
    (1)  if to a Holder of the Registrable Securities, at the most current
address given by such Holder to the Company.

                      
    (2)  if to the Initial Purchasers:

	 	Credit Suisse First Boston Corporation

Eleven Madison Avenue

New York, NY 10010-3629

Fax No.: (212) 325-8278

Attention: Transactions Advisory Group

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

	 	Alston & Bird LLP

One Atlantic Center

1201 West Peachtree Street

Atlanta, Georgia 30309

Fax No.: (404) 881-7777

Attention: Nils H. Okeson, Esq.

                      
    (3)    if to the Company, at its address as follows:

	 	Sunrise Assisted Living, Inc.

7902 Westpark Drive

McLean, Virginia 22102

Fax No.: (703) 744-1990

Attention: Julian Myers Benton, Esq.

12

 

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

	 	Hogan & Hartson L.L.P.

555 Thirteenth Street, N.W.

Washington, D.C. 20004

Fax No.: (202) 637-5910

Attention: George P. Barsness, Esq.

        All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; three business
days after being deposited in the mail, postage prepaid, if mailed; when
receipt is acknowledged by recipient’s facsimile machine operator, if sent by
facsimile transmission; and on the day delivered, if sent by overnight air
courier guaranteeing next day delivery.

        (e)  Third-Party Beneficiaries. The Holders shall be third-party
beneficiaries to the agreements made hereunder between the Company, on the one
hand, and the Initial Purchasers, on the other hand, and shall have the right
to enforce such agreements directly to the extent they may deem such
enforcement necessary or advisable to protect their rights or the rights of
Holders hereunder.

        (f)  Successors and Assigns. This Agreement shall be binding upon the
Company and its successors and assigns.

        (g)  Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

        (h)  Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

        (i)  Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAWS.

        By the execution and delivery of this Agreement, the Company submits to
the nonexclusive jurisdiction of any federal or state court in the State of New
York.

        (j)  Severability. If any one or more of the provisions contained herein,
or the application thereof in any circumstance, is held invalid, illegal or
unenforceable, the validity, legality and enforceability of any such provision
in every other respect and of the remaining provisions contained herein shall
not be affected or impaired thereby.

        (k) Securities Held by the Company. Whenever the consent or approval of
Holders of a specified percentage of principal amount of Registrable Securities
is required hereunder, Registrable Securities held by the Company or its
affiliates (other than subsequent Holders of Registrable Securities if such
subsequent Holders are deemed to be affiliates solely by reason of their
holdings of such Registrable Securities) shall not be counted in determining
whether such consent or approval was given by the Holders of such required
percentage.

13

 

        If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Initial Purchasers a counterpart
hereof, whereupon this instrument, along with all counterparts, will become a
binding agreement between the Initial Purchasers and the Company in accordance
with its terms.

	 	Very truly yours,

	 	SUNRISE ASSISTED LIVING, INC.

	 	 	 	 	 
		 	
By:	 /s/ 

	Larry E. Hulse

	 	 	
Name:
	 	Larry E. Hulse
	 	 	
Title:
	 	Senior Vice President and Chief Financial Officer

The foregoing Registration

Rights Agreement is hereby confirmed

and accepted as of the date first

above written.

CREDIT SUISSE FIRST BOSTON CORPORATION

ROBERTSON STEPHENS, INC.

FIRST UNION SECURITIES, INC.

By: CREDIT SUISSE FIRST BOSTON CORPORATION

	 	 	 
	By:	 	
/s/ Joseph D. Fashano

	Name:

Title:	 	
Joseph D. Fashano

Director

14ex10-1

 

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

MOBILEPRO CORP.

NEOREACH ACQUISITION CORP.

And

NEOREACH, INC.

March 21, 2002

 

 

TABLE OF CONTENTS

	 	 
	ARTICLE I CERTAIN DEFINITIONS	1

	 	 
	ARTICLE II THE TRANSACTION 	4 

	 	 	 	 	 	 	 
	2.1	 	
The Merger
	 	 	4	 
	2.2	 	
Consideration
	 	 	4	 
	2.3	 	
The Closing
	 	 	5	 
	2.4	 	
Actions at the Closing
	 	 	5	 
	2.5	 	
Effect on Capital Stock
	 	 	6	 
	2.6	 	
Dividends; Liquidation Preferences; and Other Distributions
	 	 	6	 
	2.7	 	
Certificate Legends
	 	 	6	 
	2.8	 	
Certificate of Incorporation
	 	 	7	 
	2.9	 	
Bylaws
	 	 	7	 
	2.10	 	
Directors and Officers
	 	 	7	 
	2.11	 	
Closing of Transfer Books
	 	 	7	 
	2.12	 	
Tax and Accounting Consequences
	 	 	7	 
	2.13	 	
Additional Action
	 	 	7	 
	2.14	 	
Taking of Necessary Action; Further Action
	 	 	7	 
	2.15	 	
Adjustment
	 	 	8	 

	 	 
	ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY 	 8

	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	3.1	 	
Organization, Qualification and Corporate Power
	 	 	8	 
	3.2	 	
Capitalization
	 	 	8	 
	3.3	 	
Authorization of Transaction
	 	 	9	 
	3.4	 	
Noncontravention
	 	 	9	 
	3.5	 	
Subsidiaries
	 	 	10	 
	3.6	 	
Financial Statements
	 	 	10	 
	3.7	 	
Absence of Certain Changes
	 	 	10	 
	3.8	 	
Undisclosed Liabilities
	 	 	10	 
	3.9	 	
Tax Matters
	 	 	11	 
	3.10	 	
Assets
	 	 	11	 
	3.11	 	
Owned Real Property
	 	 	11	 
	3.12	 	
Intellectual Property
	 	 	11	 
	3.13	 	
Real Property Leases
	 	 	12	 
	3.14	 	
Contracts
	 	 	12	 
	3.15	 	
Insurance
	 	 	14	 

 

 

	 	 	 	 	 	 	 
	3.16	 	
Litigation
	 	 	15	 
	3.17	 	
Employees
	 	 	15	 
	3.18	 	
Employee Benefits
	 	 	16	 
	3.19	 	
Permits
	 	 	17	 
	3.20	 	
Brokers’ Fees
	 	 	18	 
	3.21	 	
Books and Records
	 	 	18	 
	3.22	 	
Banking Relationships and Investments
	 	 	18	 
	3.23	 	
Company Action
	 	 	18	 
	3.24	 	
Disclosure
	 	 	18	 

	 	 
	ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE BUYER AND THE 

    MERGER SUB 	 19 

	 	 	 	 	 	 	 
	4.1	 	
Organization
	 	 	19	 
	4.2	 	
Capitalization
	 	 	19	 
	4.3	 	
Authorization of Transaction
	 	 	20	 
	4.4	 	
Noncontravention
	 	 	20	 
	4.5	 	
Reports and Financial Statements
	 	 	21	 
	4.6	 	
Litigation
	 	 	21	 
	4.7	 	
Legal Compliance; Restrictions on Business Activities
	 	 	21	 
	4.8	 	
Merger Shares
	 	 	22	 
	4.9	 	
Business of the Merger Sub
	 	 	22	 
	4.10	 	
Company Action
	 	 	22	 
	4.11	 	
No Knowledge of Misrepresentations
	 	 	22	 
	4.12	 	
Brokers’ Fees
	 	 	22	 
	4.13	 	
Qualification as a Reorganization
	 	 	23	 
	4.14	 	
Disclosure
	 	 	23	 
	4.15	 	
Absence of Plans
	 	 	23	 
	4.16	 	
Tax Matters
	 	 	23	 

	 	 
	ARTICLE V COVENANTS 	24 

	 	 	 	 	 	 	 
	5.1	 	
Best Efforts
	 	 	24	 
	5.2	 	
Securities Laws
	 	 	24	 
	5.3	 	
Reorganization
	 	 	25	 
	5.4	 	
Reasonable Commercial Efforts and Further Assurances
	 	 	25	 

	 	 
	ARTICLE VI CONDITIONS TO CONSUMMATION OF MERGER	26

	 	 	 	 	 	 	 
	6.1	 	
Conditions to Each Party’s Obligations
	 	 	25	 
	6.2	 	
Conditions to Obligations of the Buyer and the Merger Sub
	 	 	26	 

ii

 

	 	 	 	 	 	 	 
	6.3	 	
Conditions to Obligations of the Company
	 	 	27	 
	6.4	 	
Certain Waivers
	 	 	27	 

	 	 
	ARTICLE VII TERMINATION	28

	 	 	 	 	 	 	 
	7.1	 	
Termination of Agreement
	 	 	28	 
	7.2	 	
Effect of Termination
	 	 	28	 
	7.3	 	
Amendment
	 	 	29	 
	7.4	 	
Extension, Waiver
	 	 	29	 

	 	 
	ARTICLE VIII MISCELLANEOUS 	29 

	 	 	 	 	 	 	 
	8.1	 	
No Third Party Beneficiaries
	 	 	29	 
	8.2	 	
Entire Agreement
	 	 	29	 
	8.3	 	
Succession and Assignment
	 	 	29	 
	8.4	 	
Counterparts, Facsimile Signatures
	 	 	30	 
	8.5	 	
Headings
	 	 	30	 
	8.6	 	
Notices
	 	 	30	 
	8.7	 	
Governing Law
	 	 	31	 
	8.8	 	
Severability
	 	 	31	 
	8.9	 	
Expenses; Attorney’s Fees
	 	 	32	 
	8.10	 	
Letter of Intent
	 	 	32	 
	8.11	 	
Disclosure Letters
	 	 	32	 
	8.12	 	
Construction
	 	 	33	 
	8.13	 	
Incorporation of Exhibits and Schedules
	 	 	33	 

iii

 

EXHIBITS AND SCHEDULES

	 	 	 
	Exhibit A	 	
Audited balance sheet and statements of operations, changes in
stockholders’ equity and cash flows for the fiscal year ended
December 31, 2001
	 
	Schedule I	 	
Consideration

 

 

AGREEMENT AND PLAN OF MERGER

     THIS AGREEMENT AND PLAN OF MERGER (this “Agreement”) entered into as of
March 21, 2002, by and among MOBILEPRO CORP., a Delaware corporation (the
“Buyer”), NEOREACH ACQUISITION CORP., a Delaware corporation and a wholly-owned
subsidiary of the Buyer (the “Merger Sub”) and NEOREACH, INC., a Delaware
corporation (the “Company”). The Buyer, the Merger Sub and the Company each,
individually, a “Party” or, collectively, the “Parties.”

RECITALS

     WHEREAS, this Agreement contemplates a merger of the Merger Sub with and
into the Company (the “Merger”) in a transaction that is intended to qualify,
for federal income tax purposes, as a reverse triangular merger under Section
368(a)(2)(E) of the Code (as defined below), in which the stockholders of the
Company will receive capital stock of the Buyer in exchange for their shares of
capital stock of the Company.

     NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, agreements and covenants herein contained, and for good and other
valuable consideration, the receipt and legal sufficiency of which are hereby
acknowledged, the Parties hereto hereby agree as follows:

ARTICLE I

CERTAIN DEFINITIONS

     The following terms undefined in the text of this Agreement shall have the
following meanings:

     “Business Day” shall mean any day, other than a Saturday, Sunday or a day
on which banks located in Washington, D.C. shall be authorized or required by
law to close.

     “Buyer Stock” shall mean common stock, par value $0.001 per share, of the
Buyer. It is understood and agreed that the Merger Shares issued in connection
with the transactions contemplated by this Agreement shall be shares of common
stock of the Buyer that have not been registered under the Securities Act.

     “Closing Documents” shall mean documents, certificates or other
instruments delivered or to be delivered by or on behalf of the Company at the
Closing pursuant to Article VI, the Schedules and Exhibits of this Agreement.

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

 

 

     “Company Shares” shall mean all of the issued and outstanding shares of
capital stock of the Company, consisting of Twelve Million Three Hundred Fifty
Two Thousand One Hundred and Twenty Nine (12,352,129) shares of common stock,
par value $0.01 per share and a total of Two Million Four Hundred Three
Thousand Four Hundred Eighty (2,403,480) option shares of common stock.

     “Employee Benefit Plan” shall mean any “employee pension benefit plan” (as
defined in Section 3(2) of the Employee Retirement Income Security Act of 1974,
as amended), any “employee welfare benefit plan” (as defined in Section 3(1) of
ERISA), and any other written or oral plan, agreement or arrangement involving
direct or indirect compensation, including, without limitation, insurance
coverage, severance benefits, disability benefits, deferred compensation,
bonuses, options, or other forms of incentive compensation or post-retirement
compensation.

     “ERISA Affiliate” shall mean any entity which is a member of (i) a
controlled group of corporations (as defined in Section 414(b) of the Code),
(ii) a group of trades or businesses under common control (as defined in
Section 414(c) of the Code), or (iii) an affiliated service group (as defined
under Section 414(m) of the Code or the regulations under Section 414(o) of the
Code), any of which includes the Company.

     “GAAP” shall mean Generally Accepted Accounting Principles.

     “Governmental Entity” shall mean any court, arbitration tribunal,
administrative agency or commission or other governmental or regulatory
authority or agency.

     “including”, “include”, “includes”, shall be construed as if followed by
the phrase “without limitation”.

     “Intellectual Property” shall mean all intellectual property that the
Company owns or uses in the conduct of its business, as it is currently
conducted, including, but not limited to, (i) all United States and foreign
patents (both issued and applied for) listed on the Company Disclosure
Schedule, (ii) all trademarks, trade names, service marks, copyrights, and all
applications for such trademarks, trade names, service marks and copyrights,
and all patent rights in each case listed on the Company Disclosure Schedule
and (iii) all trade secrets, schematics, technology, know-how, computer
software programs or applications and tangible or intangible proprietary
information or material, and all third-party issued United States and foreign
patents, patent rights and patent applications (excluding packaged commercially
available licensed software programs sold to the public).

     “knowledge” shall mean, (a) when made with reference to the Company, the
actual knowledge of the executive officers of the Company and (b) when made
with reference to the Buyer, the actual knowledge of the executive officers of
the Buyer.

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     “Material Adverse Effect” shall mean, when used with respect to any entity
or group of entities, any event, change or condition that causes a material
adverse effect on the financial
condition, properties, assets (including intangible assets), liabilities,
business, operations or results of operations of such entity or group of
entities; provided, however, that the following will not be considered a
Material Adverse Effect: (i) any adverse effect that primarily results from
the execution, delivery or announcement (where such an announcement is made
pursuant to the terms and conditions of this Agreement) of this Agreement or
any of the transactions contemplated hereby or (ii) any adverse effect that
results from changes in the general economic condition or financial markets of
the United States.

     “Merger Shares” shall mean Twelve Million Three Hundred Fifty Two Thousand
One Hundred Twenty Nine (12,352,129) shares of common stock, par value $0.01
per share and a total of Two Million Four Hundred Three Thousand Four Hundred
and Eighty (2,403,480) option shares of Buyer Stock, as such numbers may be
appropriately adjusted to reflect any recapitalization, reclassification,
subdivision, stock combination, split, reverse split, reorganization or similar
transaction affecting the Buyer or Buyer Stock.

     “Merger Sub Common Stock” shall mean the common stock, par value $0.001
per share, of the Merger Sub.

     “Person” or “person” shall mean any individual, partnership, joint
venture, corporation, limited liability company, limited liability partnership,
trust or incorporated organization.

     “Security Interest” shall mean any mortgage, pledge, security interest,
encumbrance, charge, or other lien (whether arising by contract or by operation
of law), other than (i) mechanic’s, materialmen’s, and similar liens, (ii)
liens arising under worker’s compensation, unemployment insurance, social
security, retirement, and similar legislation, (iii) liens on goods in transit
incurred pursuant to documentary letters of credit, in each case arising in the
ordinary course of business of the Company and not material to the Company and
(iv) liens for current Taxes that are being contested in good faith, as set
forth in Section 3.9 of the Company Disclosure Schedule.

     “Taxes” shall mean all taxes, charges, fees, levies or other similar
assessments or liabilities, including, without limitation, income, gross
receipts, ad valorem, premium, value-added, excise, real property, personal
property, sales, use, transfer, withholding, employment, payroll and franchise
taxes imposed by the United States of America or any state, local or foreign
government, or any agency thereof, or other political subdivision of the United
States or any such government, and any interest, fines, penalties, assessments
or additions to tax resulting from, attributable to or incurred in connection
with any tax or any contest or dispute thereof and any amounts of Taxes of
another person that the Company or any subsidiary of the Corp or the LLC is
liable to pay by law or otherwise.

-3-

 

     “Tax Returns” means all reports, returns, declarations, statements or
other information supplied or required to be supplied to a taxing authority in
connection with Taxes including, without limitation, any schedules, attachments
or amendments thereto.

     “Third Party Intellectual Property Rights” shall mean all material written
licenses, sublicenses and other agreements as to which the Company is a party
and pursuant to which the Company is authorized to use any third party patents,
patent rights, trademarks, service marks, trade secrets or copyrights,
including software which is used in the business of the Company or which form a
part of any existing product or service of the Company, excluding commercially
available licensed software programs sold to the public.

     “Transaction” shall mean: (i) the acquisition of all or substantially all
of the assets of a company; (ii) the acquisition of more than 50% of the
outstanding capital stock of a company; or (iii) any merger, consolidation,
business combination, joint venture, tender offer, share exchange, or similar
transaction, if immediately after such transaction contemplated in this
subsection (iii) either (A) Buyer, or any of its subsidiaries controls the
Board of Directors, or (B) Buyer, or any of its subsidiaries holds a majority
of the voting capital stock of the company immediately after such transaction.

ARTICLE II

THE TRANSACTION

     2.1 The Merger.

     Upon and subject to the terms and conditions of this Agreement, Merger Sub
shall merge with and into the Company (with such merger is referred to herein
as the “Merger”) at the Effective Time. From and after the Effective Time, the
separate corporate existence of the Merger Sub shall cease and the Company
shall continue as the surviving corporation in the Merger (the “Surviving
Corporation”). The Surviving Corporation shall be operated as a wholly-owned
subsidiary of the Buyer. The “Effective Time” shall be the time at which the
Certificate of Merger of the Company and the Merger Sub, prepared and executed
in accordance with the relevant provisions of the Delaware General Corporation
Law (“DGCL”), is filed with and accepted by the Secretary of State of the State
of Delaware (the “Certificate of Merger”). The Merger shall have the effects
specified in this Agreement, the Certificate of Merger and the applicable
provisions of the DGCL. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, all of the property, rights,
privileges, powers and franchises of the Company and the Merger Sub shall vest
in the Surviving Corporation, and all debts, liabilities and duties of the
Company and the Merger Sub shall become the debts, liabilities and duties of
the Surviving Corporation.

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     2.2 Consideration.

     (a)  Within ten (10) days after the Closing Date, the Buyer and the Merger
Sub shall deliver to the stockholders of the Company in connection with the
Merger and in consideration for the Company Shares, stock certificates
representing shares of Buyer Stock issued in the names of such stockholders, in
the amounts set forth in Schedule I.

     (b)  If any of the Merger Shares are to be issued in the name of a person
other than a stockholder of record of the Company, it shall be a condition to
the issuance of such Merger Shares that (A) the request shall be in writing and
properly documented (e.g., assigned, endorsed or accompanied by appropriate
stock powers), (B) such transfer shall otherwise be proper and in accordance
with all applicable federal and state laws, rules, regulations or orders and
(C) the person requesting such transfer shall pay to the Buyer any transfer or
other taxes payable by reason of the foregoing or establish to the satisfaction
of the Buyer that such taxes have been paid or are not required to be paid.
Notwithstanding the foregoing, none of the Buyer, the Merger Sub or any of
their affiliates, subsidiaries, directors, officers, agents and employees shall
be liable to a stockholder for any Merger Shares issuable to such stockholder
pursuant to this Section 2.2(b) that are delivered to a public official
pursuant to applicable abandoned property, escheat or similar laws.

     (c)  In the event any stock certificate representing any Company Shares
shall have been lost, stolen or destroyed, the Board of Directors of the Buyer
may, in its sole discretion and as condition precedent to the issuance of the
Merger Shares issuable in exchange therefor pursuant to this Agreement, require
the owner of such lost, stolen or destroyed stock certificate to submit to the
Buyer an affidavit stating that such stock certificate was lost, stolen or
destroyed and to give the Buyer an indemnity in customary form against any
claim that may be made against the Buyer with respect to the stock certificate
alleged to have been lost, stolen or destroyed.

     2.3 The Closing.

     The closing of the transactions contemplated by this Agreement (the
“Closing”) shall take place at the Washington, DC offices of Piper Marbury
Rudnick & Wolfe LLP, on or before March 21, 2002 or, if all of the conditions
to the obligations of the Parties to consummate the transactions contemplated
hereby have not been satisfied or waived by such date, on the third Business
Day after the satisfaction or waiver of all conditions to the obligations of
the Parties to consummate the transactions contemplated hereby (other than
those conditions which by their terms can only be satisfied on the date of the
Closing) (the “Closing Date”); provided, however, that the Closing shall take
place no later than March 31, 2002. If the Closing is consummated, the Buyer,
the Merger Sub and the Company will be deemed to have waived any of the
conditions set forth in Article VI to the extent not satisfied at or prior to
the Closing.

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     2.4 Actions at the Closing.

     (a)  The Company shall deliver the following to the Buyer: (i)
certificates representing the Company Shares, accompanied by stock powers duly
executed in blank or duly executed instruments of transfer and any other
documents that are necessary to transfer to the Buyer good and valid title to
the Company Shares free and clear of all liens and (ii) the various
certificates, instruments and documents referred to in Section 6.2 to be
delivered by the Company.

     (b)  The Buyer shall deliver the following to the Company: (i) the Merger
Shares in accordance with Section 2.3 and (ii) the various certificates,
instruments and documents referred to in Sections 6.1 and 6.3 to be delivered
by the Buyer or the Merger Sub.

     2.5 Effect on Capital Stock.

     (a)  At the Effective Time, the Company Shares shall, by virtue of the
Merger and without any action on the part of any Party or the holder thereof,
automatically be canceled and extinguished and converted into the right to
receive Merger Shares.

     (b)  At the Effective Time, each share of the Merger Sub Common Stock
issued and outstanding immediately prior to the Effective Time shall be
converted into and exchanged for one validly issued, fully paid and
nonassessable share of common stock, par value $0.01 per share, of the
Surviving Corporation.

     (c)  Notwithstanding the foregoing, no fractional shares of Buyer Stock
shall be issued. All shares of Buyer Stock issued to the holders of the
Company Shares at the Effective Time pursuant to this Section 2.5 shall be
rounded up to the next whole number.

     2.6 Dividends; Liquidation Preferences; and Other Distributions.

     No dividends or other distributions that are, or may be, payable to the
holders of record of Company Shares as of a date on or after the Closing Date
shall be paid to any such holder by reason of the Merger.

     2.7 Certificate Legends.

     The Merger Shares to be issued pursuant to this Article II shall not have
been registered and shall be characterized as “restricted securities” under the
federal securities laws, and under such laws such shares may be resold without
registration under the Securities Act only in certain limited circumstances.
Each certificate evidencing Merger Shares to be issued pursuant to this Article
II shall bear the following legend:

 

 
	 	
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933. SUCH SHARES MAY NOT BE

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SOLD OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION WITHOUT AN EXEMPTION UNDER THE
SECURITIES ACT OR AN OPINION OF LEGAL COUNSEL REASONABLY
ACCEPTABLE TO MOBILEPRO CORP. THAT SUCH REGISTRATION IS NOT
REQUIRED.

	

     2.8 Certificate of Incorporation.

     At the Effective Time, the Certificate of Incorporation of the Company, as
in effect immediately prior to the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation until hereafter amended as provided
by the DGCL.

     2.9 Bylaws.

     The Bylaws of the Surviving Corporation shall be the same as the Bylaws of
the Company immediately prior to the Effective Time.

     2.10 Directors and Officers.

     The directors of the Company shall become the directors of the Surviving
Corporation after the Effective Time. The officers of the Company shall become
the officers of the Surviving Corporation after the Effective Time, retaining
their respective positions.

     2.11 Closing of Transfer Books.

     Upon execution of this Agreement, the stock transfer books of the Company
shall be closed and no transfer of Company Shares shall thereafter be made
except as may be required by this Agreement.

     2.12 Tax and Accounting Consequences.

     It is intended by the parties hereto that the Merger shall constitute a
reverse triangular merger reorganization within the meaning of Section
368(a)(2)(E) of the Code.

     2.13 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 the Company, necessary to consummate the Merger and confirm the
effectiveness of the Merger, so long as such action is not inconsistent with
this Agreement.

     2.14 Taking of Necessary Action; Further Action.

     If, at any time after the Effective Time, any further action is necessary
or desirable to carry out the purposes of this Agreement and to vest the
Surviving Corporation with full right,

-7-

 

title and possession to all assets,
property, rights, privileges, powers and franchises of the Company and the
Merger Sub, the officers and directors of the Company and the Merger Sub are
fully authorized in the name of their respective corporations or otherwise to
take, and will take, all such lawful and necessary action, so long as such
action is not inconsistent with this Agreement.

     2.15 Adjustment.

     In the event that, subsequent to the execution of this Agreement but prior
to the Effective Time, the Buyer or the Company shall effect a stock split,
reverse stock split, stock dividend, subdivision, reclassification,
combination, merger, exchange, recapitalization or other similar transaction
(or a record date shall have been set for such purpose), the provisions of this
Article II shall be appropriately adjusted.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     The Company hereby represents and warrants to the Buyer and the Merger Sub
that, as of the date hereof, the statements contained in this Article III are
true and correct, except as set forth in the schedule provided by the Company
to the Buyer and the Merger Sub (the “Company Disclosure Schedule”).

     3.1 Organization, Qualification and Corporate Power.

     The Company is a corporation duly organized, validly existing and in
corporate good standing under the laws of the State of Delaware. The Company
is duly qualified to conduct business and is in corporate good standing under
the laws of each jurisdiction in which the nature of its businesses or the
ownership or leasing of its properties requires such qualification, except
where the failure to be so qualified or in good standing would not have a
Material Adverse Effect on the Company. The Company has the corporate power
and authority to carry on the businesses in which it is engaged and to own and
use the properties owned and used by it. The Company has furnished or made
available to the Buyer true and complete copies of its Certificate of
Incorporation and, Bylaws, each as amended and as in effect on the date hereof
(hereinafter the “Company Charter” and “Bylaws”, respectively). The Company is
not in default under or in violation of any provision of the Company Charter or
Bylaws.

     3.2 Capitalization.

     The authorized capitalization of the Company consists of 20,000,000 shares
of capital stock, consisting of 20,000,000 shares of common stock, $0.01 par
value per share (“Common Stock”), 12,352,129 shares of which are issued and
outstanding. Section 3.2 of the Company Disclosure Schedule sets forth a
complete and accurate list of all stockholders of the Company, indicating the
number of Company Shares held by each stockholder and their

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respective
addresses. All of the issued and outstanding Company Shares are duly
authorized, validly issued, fully paid and nonassessable. All of the issued and
outstanding Company Shares are free and clear of any liens, pledges,
encumbrances, charges, agreements adversely effecting title to such shares or
claims (other than those created by virtue of this Agreement or by the Buyer),
and the certificates evidencing the ownership of such shares are in proper form
for the enforcement of the rights and limitations of rights pertaining to said
shares which are set forth in the Company Charter and Bylaws. There are no
declared or accrued but unpaid dividends with
regard to any issued and outstanding Company Shares. Except as disclosed
in Section 3.2 of the Company Disclosure Schedule, there are no outstanding or
authorized options, warrants, rights, calls, convertible instruments,
agreements or commitments to which the Company is a party or which are binding
upon the Company providing for the issuance, disposition or repurchase,
redemption or acquisition of any of the Company Shares. There are no
outstanding or authorized appreciation rights, phantom rights or similar rights
with respect to the Company. There are no agreements, voting trusts, proxies,
or understandings with respect to the voting, or registration under the
Securities Act, of any Company Shares between or among the Company and any of
its stockholders. All of the issued and outstanding Company Shares were issued
in compliance with applicable federal and state securities laws.

     3.3 Authorization of Transaction.

     Subject to the Requisite Stockholder Approval of the Merger and this
Agreement, the Company has the corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder. The execution
and delivery of this Agreement and, subject to the adoption of this Agreement
and the approval of the Merger by a majority of the votes represented by the
outstanding Company Shares entitled to vote on this Agreement and the Merger,
voting in accordance with the corporate laws of the State of Delaware and the
Company Charter (the “Requisite Stockholder Approval”), the performance by the
Company of this Agreement and the consummation by the Company of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action on the part of the Company. This Agreement has been
duly and validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by the Buyer and the Merger Sub,
constitutes a valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms, except as enforcement may be limited
by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws affecting the enforcement of creditors’ rights
generally, and except that the availability of equitable remedies, including
specific performance, is subject to the discretion of the court before which
any proceeding therefor may be brought.

     3.4 Noncontravention.

     Subject to receipt of the Requisite Stockholders Approval, compliance with
the applicable requirements of the Securities Act and any applicable state
securities laws and the filing of the Certificate of Merger as required by the
State of Delaware, neither the execution and delivery of this Agreement by the
Company, nor the consummation by the Company of the

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transactions contemplated
hereby, will: (a) conflict with or violate any provision of the Company Charter
or the Bylaws; (b) require on the part of the Company any filing with, or any
permit, authorization, consent or approval of, any Governmental Entity, other
than (i) those required solely by reason of the Buyer’s or the Merger Sub’s
participation in the transactions contemplated hereby, (ii) those required to
be made by the Buyer or the Merger Sub and (iii) any filing, permit,
authorization, consent or approval which if not made or obtained would not have
a Material Adverse Effect on the Company; (c) conflict with, result in a breach
of, constitute (with or without due notice or lapse of time or both) a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify
or cancel, or require any notice, consent or waiver under, any contract listed
in Section 3.4 of the Company Disclosure Schedule, except for any conflict,
breach, default, acceleration, right to accelerate, termination, modification,
cancellation, notice, consent or waiver that would not reasonably be expected
to have a Material Adverse Effect on the Company; (d) result in the imposition
of any Security Interest upon any assets of the Company; or (e) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to the
Company, any of its properties or assets, other than such conflicts,
violations, defaults, breaches, cancellations or accelerations referred to in
clauses (a) through (e) (inclusive) hereof which would not have a Material
Adverse Effect on the Company.

     3.5 Subsidiaries.

     The Company does not have any direct or indirect subsidiaries or any
equity interest in any other firm, corporation, membership, joint venture,
association or other business organization.

     3.6 Financial Statements.

     Attached as Exhibit A is the audited balance sheet and statements of
operations, changes in total stockholders’ equity and cash flows for the fiscal
year ended December 31, 2001. Such financial statements (collectively, the
“Financial Statements”) have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby, fairly and accurately
present the financial condition, results of operations and cash flows of the
Company as of the respective dates thereof and for the periods referred to
therein and are consistent with the books and records of the Company; provided,
however, that the Financial Statements referred to above are subject to normal
recurring year-end adjustments (which will not in the aggregate be material)
and do not include footnotes.

     3.7 Absence of Certain Changes.

     Since December 31, 2001, the Company has conducted its business as
ordinarily conducted consistent with past practice and there has not occurred
any change, event or condition (whether or not covered by insurance) that has
resulted in, or would reasonably be expected to result in any Material Adverse
Effect on the Company.

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     3.8 Undisclosed Liabilities.

     The Company has no liability (whether known or unknown, whether absolute
or contingent, whether liquidated or unliquidated and whether due or to become
due), except for (a) liabilities accrued, reflected, reserved against on the
Financial Statements, (b) liabilities which have arisen since December 31,
2001, in the ordinary course of business, (c) contractual or statutory
liabilities incurred in the ordinary course of business and (d) liabilities
which would not have a Material Adverse Effect on the Company.

     3.9 Tax Matters.

     The Company has timely (taking into account extensions of time to file)
filed all Tax Returns that it was required to file and all such Tax Returns
were correct and complete in all material respects. All Taxes that the Company
is or was required by law to withhold or collect have been duly withheld or
collected and, to the extent required, have been paid to the proper
Governmental Entity or deposited in accordance with the law.

     3.10 Assets.

     The Company has good and valid title to or, in the case of leased assets,
a valid leasehold interest in, all tangible assets necessary for the conduct of
its businesses as presently conducted. Each such tangible asset is suitable
for the purposes for which it presently is used. No asset of the Company
(tangible or intangible) is subject to any Security Interest.

     3.11 Owned Real Property.

     The Company does not own any real property.

     3.12 Intellectual Property.

     Section 3.12 of the Company Disclosure Schedule is a true and complete
list of (i) all Intellectual Property presently owned or held by the Company
and (ii) any license agreements under which Company has access to any
confidential information used by the Company in its business (such licenses and
agreements, collectively, the “Intellectual Property Rights”) necessary for the
conduct of the Company’s business as conducted and as currently proposed to be
conducted by the Company. The Company owns, or has the right to use, free and
clear of all Security Interests, all of the Intellectual Property and the
Intellectual Property Rights. There are no outstanding options, licenses or
agreements of any kind relating to the Intellectual Property and the
Intellectual Property Rights, nor is the Company bound by or a party to any
options, licenses or agreements of any kind with respect to any of the
Intellectual Property, the Intellectual Property Rights and the patents,
trademarks, service marks, trade names, copyrights, trade secrets, licenses,
information and other proprietary rights and processes of any other person or
entity other than such licenses or agreements arising from the purchase of “off
the shelf” or standard products. The Company has not received any
communications alleging that the Company has violated or, by conducting its
business as conducted and as currently proposed to

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be conducted by the Company,
violates any Third Party Intellectual Property Rights and to the Company’s
knowledge, the business as conducted and as currently proposed to be conducted
by the Company will not cause the Company to infringe or violate any Third
Party Intellectual Property Rights. There is no defect in the title to any of
the Intellectual Property or, to the extent that the Company has title to
Intellectual Property Rights to any Intellectual Property Rights. To the
Company’s knowledge, no officer, employee or director is obligated under any
contract (including any license, covenant or commitment of any nature) or other
agreement, or subject to any judgment, decree or order of any court or
administrative agency, that would conflict or interfere with the performance of
such person’s duties as an officer, employee or director of the
Company, the use of such person’s best efforts to promote the interests of
the Company or the Company’s business as conducted or as currently proposed to
be conducted by the Company. No prior employer of any current or former
employee of the Company has any right, title or interest in the Intellectual
Property and to the Company’s knowledge, no person or entity has any right,
title or interest in any Intellectual Property. It is not and will not be with
respect to the business as currently proposed to be conducted necessary for the
Company to use any inventions of any of its employees made prior to their
employment by the Company.

     3.13 Real Property Leases.

     Section 3.13 of the Company Disclosure Schedule lists all real property
leased or subleased to the Company. The Company has delivered or made
available to the Buyer correct and complete copies of the leases and subleases
(as amended to date) listed in Section 3.13 of the Company Disclosure Schedule.
With respect to each lease and sublease listed in Section 3.13 of the Company
Disclosure Schedule:

     (a)  the lease or sublease is legal, valid, binding, enforceable and in
full force and effect with respect to the Company and, to the Company’s
knowledge, is legal, valid, binding, enforceable and in full force and effect
with respect to each other party thereto, and will continue to be so following
the Closing in accordance with the terms thereof as in effect prior to the
Closing (in each case except as enforceability may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other similar
laws affecting the enforcement of creditor’s rights generally, and except that
the availability of equitable remedies, including specific performance, is
subject to the discretion of the court before which any proceeding therefor may
be brought);

     (b)  the Company is not in breach or default under any such lease or
sublease and, to the Company’s knowledge, no other party to the lease or
sublease is in breach or default, and, no event has occurred which, with notice
or lapse of time, would constitute a breach or default or permit termination,
modification, or acceleration thereunder;

     (c)  there are no oral agreements or forbearance programs in effect as to
the lease or sublease;

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     (d)  the Company has not received any written notice of any dispute with
regards to any lease or sublease; and

     (e)  the Company has not assigned, transferred, conveyed, mortgaged, deeded
in trust or encumbered any interest in the leasehold or subleasehold.

     3.14 Contracts.

     Section 3.14 of the Company Disclosure Schedule lists the following
written arrangements (including, without limitation, written agreements) to
which the Company is a party:

     (a)  any written arrangement (or group of related written arrangements) for
the lease of personal property from or to third parties providing for lease
payments in excess of $25,000 per annum including such lease arrangements with
purchase commitments or similar obligations known to the Company other than
those listed pursuant to Section 3.14 in excess of $25,000;

     (b)  any written arrangement (or group other than Reseller Agreements) of
related written arrangements) for the licensing or distribution of software,
products or other personal property or for the furnishing or receipt of
services, (i) which involves more than the sum of $25,000 per annum, (ii) in
which the Company has granted rights to license, sublicense or copy, “most
favored nation” pricing provisions or exclusive marketing or distribution
rights relating to any products or territory or has agreed to purchase a
minimum quantity of goods or services or has agreed to purchase goods or
services exclusively from a certain party and (iii) which calls for performance
by the Company that as of the date hereof has not been fully completed;

     (c)  any written arrangement establishing a partnership or joint venture;

     (d)  any written arrangement (or group of related written arrangements)
under which it has created, incurred, assumed or guaranteed (or may create,
incur, assume or guarantee) indebtedness (including capitalized lease
obligations) involving more than $25,000 or under which it has imposed (or may
impose) a Security Interest on any of its assets, tangible or intangible;

     (e)  a list of all parties to any written arrangement concerning
confidentiality, non-disclosure or noncompetition;

     (f)  any written arrangement involving any of the stockholders of the
Company or their affiliates, as defined in Rule 12b-2 under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) (“Affiliates”);

     (g)  any written arrangement under which the consequences of a default or
termination could have a Material Adverse Effect on the Company;

-13-

 

     (h)  any other written arrangement (or group of related written
arrangements) either (i) involving (A) more than $25,000 and (B) performance by
the Company that as of the date hereof has not been fully completed, or (ii)
not entered into in the ordinary course of business;

     (i)  any written arrangement under which the Company provides maintenance
or support services to any third party with regard to the Company’s products
and any written arrangement containing a commitment by the Company to provide
support for any such products for more than one year from the date of this
Agreement involving, in each case, more than $25,000 (other than arrangements
which by their terms permit the customer to extend such services after the
expiration of the initial one year term or Reseller Agreements);

     (j)  any written arrangement by which the Company has agreed to make
available any consulting, enablement consulting, or education services (i)
having a value in excess of $25,000
and (ii) providing for performance by the Company that as of the date
hereof has not been fully completed; and

     (k)  any other material contract or agreement as such terms are defined in
Regulation S-K promulgated under the Securities Act, to which the Company is a
party.

     The Company has delivered to or made available to the Buyer a correct and
complete copy of each written arrangement. With respect to each such written
arrangement so listed: (i) the written arrangement is legal, valid, binding and
enforceable and in full force and effect with respect to the Company and, to
the Company’s knowledge, the written arrangement is legal, valid, binding and
is enforceable and in full force and effect with respect to each other party
thereto (in each case except as enforceability may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other similar
laws affecting the enforcement of creditor’s rights generally, and except that
the availability of equitable remedies, including specific performance, is
subject to the discretion of the court before which any proceeding therefor may
be brought); (ii) the written arrangement will continue to be legal, valid,
binding and enforceable and in full force and effect against the Company, and
to the Company’s knowledge against each other party thereto, immediately
following the Closing in accordance with the terms thereof (in each case except
as enforceability may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws affecting the
enforcement of creditor’s rights generally, and except that the availability of
equitable remedies, including specific performance, is subject to the
discretion of the court before which any proceeding therefor may be brought) as
in effect prior to the Closing; and (iii) the Company is not in breach or
default, and, to the Company’s knowledge, no other party thereto is in breach
or default, and no event has occurred which with notice or lapse of time would
constitute a breach or default or permit termination, modification, or
acceleration, under the written arrangement; except, in each case, for
breaches, defaults and events that would not have a Material Adverse Effect on
the Company. The Company is not a party to any oral contract, agreement or
other arrangement which, if reduced to written form, would be required to be
listed in Section 3.14 of the Company Disclosure Schedule under the terms of
this Section 3.14.

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     3.15 Insurance.

     Section 3.15 of the Company Disclosure Schedule lists each insurance
policy (including fire, theft, casualty, general liability, director and
officer, workers compensation, business interruption, environmental, product
liability and automobile insurance policies and bond and surety arrangements)
to which the Company is a party, a named insured, or otherwise the beneficiary
of coverage at any time within the past year. Section 3.15 of the Company
Disclosure Schedule lists each person or entity required to be listed as an
additional insured under each such policy. Each such policy is in full force
and effect and by its terms and with the payment of the requisite premiums
thereon will continue to be in full force and effect following the Closing.

     The Company is not in breach or default, and does not anticipate being in
breach or default after Closing (including with respect to the payment of
premiums or the giving of notices)
under any such policy, and no event has occurred which, with notice or the
lapse of time, would constitute such a breach or default or permit termination,
modification or acceleration, under such policy; except for any breach,
default, event, termination, modification or acceleration that would not have a
Material Adverse Effect on the Company; and the Company has not received any
written notice or to the Company’s knowledge, oral notice, from the insurer
disclaiming coverage or reserving rights with respect to a particular claim or
such policy in general. The Company has not incurred any material loss,
damage, expense or liability covered by any such insurance policy for which it
has not properly asserted a claim under such policy.

     3.16 Litigation.

     (a)  There are no: (i) unsatisfied judgments, orders, decrees,
stipulations or injunctions; or (ii) claims, complaints, actions, suits,
proceedings or hearings or, to the Company’s knowledge, investigations in or
before any Governmental Entity or any arbitrator or to the Company’s knowledge
expected to be before any Governmental Entity or any arbitrator; to which the
Company, any officer, director, employee or agent of the Company (in such
person’s capacity as an officer, director, employee or agent of the Company and
not personally) is or was (for the two years prior to and including the date
hereof) a party or, to the knowledge of the Company, is threatened to be made a
party.

     (b)  There are no material agreements or other documents or instruments
settling any claim, complaint, action, suit or other proceeding against the
Company.

     3.17 Employees.

     (a)  A written list of all employees of the Company, along with the
position and the current annual salary rate of each such person, as of the date
of this Agreement, is attached hereto as Section 3.17 of the Company Disclosure
Schedule. To the Company’s knowledge, no employee has any plans to terminate
employment with the Company within six months of the date hereof. The Company
is not a party to or bound by any collective bargaining agreement,

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nor has it
experienced any material strikes, grievances, claims of unfair labor practices
or other collective bargaining disputes. The Company has no knowledge of any
organizational effort made or threatened, either currently or within the past
two years, by or on behalf of any labor union with respect to employees of the
Company. The Company is in compliance in all material respects with all
currently applicable laws and regulations respecting wages, hours, occupational
safety, or health, fair employment practices, and discrimination in employment
terms and conditions, and is not engaged in any unfair labor practice except,
in each case, where such practice or failure to comply would not reasonably be
expected to have a Material Adverse Effect. There are no pending claims
against the Company under any workers compensation plan or policy or for long
term disability. There are no proceedings pending or, to the Company’s
knowledge, threatened, between the Company and its employees, which proceedings
have or would reasonably be expected to have a Material Adverse Effect on the
Company.

     (b)  Section 3.17 of the Company Disclosure Schedule contains a list of
employees whose employment has been terminated by the Company in the ninety
(90) days prior to Closing; including the name, address, date and reason for
such termination.

     3.18 Employee Benefits.

     (a)  Section 3.18(a) of the Company Disclosure Schedule contains a complete
and accurate list of all Employee Benefit Plans maintained, or contributed to,
by the Company, or any ERISA Affiliate. Complete and accurate copies of (i)
all such Employee Benefit Plans which have been reduced to writing, (ii)
written summaries of all such unwritten Employee Benefit Plans, (iii) all
related trust agreements, insurance contracts and summary plan descriptions and
(iv) all annual reports filed on IRS Form 5500, 5500C or 5500R for the last
three plan years (or such shorter period with respect to which the Company or
any ERISA Affiliate has an obligation file Form 5500) for each Employee Benefit
Plan, have been delivered or made available to the Buyer. Each Employee
Benefit Plan has been administered in all material respects in accordance with
its terms and each of the Company, and the ERISA Affiliates has met its
obligations in all material respects with respect to such Employee Benefit Plan
and has made all required contributions thereto within the time frames as
prescribed by ERISA and the Code. The Company and all Employee Benefit Plans
are in material compliance with the currently applicable provisions of ERISA
and the Code and the regulations thereunder.

     (b)  To the Company’s knowledge, there are no investigations by any
Governmental Entity, termination proceedings or other claims (except claims for
benefits payable in the normal operation of the Employee Benefit Plans and
proceedings with respect to qualified domestic relations orders), suits or
proceedings against or involving any Employee Benefit Plan or asserting any
rights or claims to benefits under any Employee Benefit Plan that could give
rise to any material liability.

     (c)  All the Employee Benefit Plans that are intended to be qualified under
Section 401(a) of the Code have received determination letters from the
Internal Revenue Service to the effect that such Employee Benefit Plans are
qualified and the plans and the trusts related thereto

-16-

 

are exempt from federal
income taxes under Sections 401(a) and 501(a), respectively, of the Code, or
the remedial amendment period for requesting such determination has not yet
expired, no such determination letter has been revoked and revocation has not
been threatened, and no such Employee Benefit Plan has been amended since the
date of its most recent determination letter or application therefor in any
respect, and no act or omission has occurred, that would adversely affect its
qualification.

     (d)  Neither the Company nor any ERISA Affiliate has ever maintained an
Employee Benefit Plan subject to Section 412 of the Code or Title IV of ERISA.

     (e)  At no time has the Company or any ERISA Affiliate been obligated to
contribute to any “multi-employer plan” (as defined in Section 4001(a)(3) of
ERISA).

     (f)  There are no unfunded obligations under any Employee Benefit Plan
providing benefits after termination of employment to any employee of the
Company (or to any beneficiary of any such employee), including but not limited
to retiree health coverage and deferred compensation, but excluding
continuation of health coverage required to be continued under Section 4980B of
the Code and insurance conversion privileges under federal or state law.

     (g)  No act or omission has occurred and no condition exists with respect
to any Employee Benefit Plan maintained by the Company or any ERISA Affiliate
that would subject the Company or any ERISA Affiliate to any material fine,
penalty, tax or liability of any kind imposed under ERISA or the Code.

     (h)  No Employee Benefit Plan is funded by, associated with, or related to
a “voluntary employee’s beneficiary association” within the meaning of Section
501(c)(9) of the Code.

     (i)  No Employee Benefit Plan, plan documentation or agreement, summary
plan description or other written communication distributed generally to
employees by its terms prohibits the Company from amending or terminating any
such Employee Benefit Plan.

     (j)  Section 3.18(j) of the Company Disclosure Schedule discloses each: (i)
agreement with any director, executive officer or other key employee of the
Company (A) the benefits of which are contingent, or the terms of which are
altered, upon the occurrence of a transaction involving the Company of the
nature of any of the transactions contemplated by this Agreement, (B) providing
any term of employment or compensation guarantee or (C) providing severance
benefits or other benefits after the termination of employment of such
director, executive officer or key employee; (ii) agreement, plan or
arrangement under which any person may receive payments from the Company that
may be subject to the tax imposed by Section 4999 of the Code or included in
the determination of such person’s “parachute payment” under Section 280G of
the Code; and (iii) agreement or plan binding the Company, including, without
limitation, any option plan, stock appreciation right plan, restricted stock
plan, stock purchase plan, severance benefit plan, or any Employee Benefit
Plan, any of the benefits of which will be increased, or the

-17-

 

vesting of the
benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the value of any of the benefits
of which will be calculated on the basis of any of the transactions
contemplated by this Agreement.

     3.19 Permits.

     Section 3.19 of the Company Disclosure Schedule sets forth a list of all
material permits, licenses, registrations, certificates, orders or approvals
from any Governmental Entity (including, without limitation, those issued or
required under applicable export laws or regulations) (“Permits”) issued to or
held by the Company. Such listed Permits are the only Permits that are
required for the Company to conduct its business as presently conducted, except
for those the absence of which would not have a Material Adverse Effect on the
Company. Each such Permit is in full force and effect and to the Company’s
knowledge, no suspension or cancellation of such Permit is threatened and there
is no basis for believing that such Permit will not be renewable upon
expiration. Each such Permit will continue in full force and effect following
the Closing.

     3.20 Brokers’ Fees.

     Except as provided in Section 20 of the Company Disclosure Schedule, the
Company has no liability or obligation to pay any fees or commissions to any
broker, investment banking firm, finder or agent with respect to the
transactions contemplated by this Agreement.

     3.21 Books and Records.

     The minute books and other similar records of the Company contain true and
complete records of all material actions taken at any meetings of the Board of
Directors or any committee thereof and of all written consents executed in lieu
of the holding of any such meetings.

     3.22 Banking Relationships and Investments.

     Section 3.22 of the Company Disclosure Schedule sets forth an accurate,
correct and complete list of all banks and financial institutions in which the
Company has an account, deposit, safe-deposit box or borrowing relationship,
factoring arrangement or other loan facility or relationship, including the
names of all persons authorized to draw on those accounts or deposits, or to
borrow under loan facilities, or to obtain access to such boxes. The Company
Disclosure Schedule sets forth an accurate, correct and complete list of all
certificates of deposit, debt or equity securities and other investments owned,
beneficially or of record, by the Company (the “Investments”). The Company has
good and legal title to all Investments.

     3.23 Company Action.

     The Board of Directors of the Company has (i) determined that the Merger
is fair and in the best interests of the Company and its stockholders, (ii)
adopted this Agreement in accordance with the provisions of the corporate laws
of the State of Delaware, as applicable, and (iii) directed that this Agreement
and the Merger be submitted to the stockholders for their adoption

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and approval
and resolved to recommend that the stockholders vote in favor of the adoption
of this Agreement and the approval of the Merger.

     3.24 Disclosure.

     No representation or warranty by the Company contained in this Agreement,
including any statement contained in the Company Disclosure Schedule or any
Closing Document contains any untrue statement of a material fact or omits to
state any material fact necessary, in light of the circumstances under which it
was made, in order to make the statements herein not misleading.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE BUYER

AND THE MERGER SUB

     Each of the Buyer and the Merger Sub, jointly and severally, represents
and warrants to the Company that, as of the date hereof, the statements
contained in this Article IV are true and correct, except as set forth in the
schedule provided by the Buyer and the Merger Sub to the Company and attached
hereto (the “Buyer Disclosure Schedule”):

     4.1 Organization.

     Each of the Buyer and the Merger Sub is a corporation duly organized,
validly existing and in good standing under the laws of the state of its
incorporation. Each of the Buyer and the Merger Sub is duly qualified to
conduct business and is in corporate good standing under the laws of each
jurisdiction in which the nature of its businesses or the ownership or leasing
of its properties requires such qualification, except where the failure to be
so qualified or in good standing would not have a Material Adverse Effect on
the Buyer or the Merger Sub. Each of the Buyer and the Merger Sub has the
corporate power and authority to carry on the business in which it is engaged
and to own and use the properties owned and used by it. The Buyer and the
Merger Sub have each furnished or made available to the Company true and
complete copies of its Certificates of Incorporation and Bylaws, each as
amended and as in effect on the date hereof. Neither the Buyer nor the Merger
Sub is in default under or in violation of any provision of its Certificate of
Incorporation or Bylaws, as amended.

     4.2 Capitalization.

     As of the Closing Date, the authorized capital stock of the Buyer consists
of 50,000,000 shares of Buyer Stock, 3,296,733 shares of which are issued and
outstanding and 5,000,000 shares of preferred stock, par value $0.001 per
value, 35,425 shares of which have been designated as Series A Preferred Stock
and all of which are issued and outstanding. As of the

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Closing Date, all of
the issued and outstanding shares of Buyer Stock are duly authorized, validly
issued, fully paid, nonassessable and free of all preemptive rights. The
authorized capital stock of the Merger Sub consists of one (1) share of common
stock, par value $0.001 per share, all of which are issued and outstanding.
All of the issued and outstanding shares of capital stock of Merger Sub are
duly authorized and validly issued, and fully paid and nonassessable, and were
issued in compliance with all applicable laws. There are no outstanding or
authorized options, warrants, rights, calls, convertible instruments,
agreements or commitments to which the Buyer or the Merger Sub is a party or
which are binding upon the Buyer or the Merger Sub providing for the issuance,
disposition or repurchase, redemption or acquisition of any of the Buyer’s or
the Merger Sub’s shares of capital stock. All of the Merger Shares will be,
when issued in
accordance with this Agreement, duly authorized, validly issued, fully
paid, nonassessable and free of all preemptive rights.

     4.3 Authorization of Transaction.

     Each of the Buyer and the Merger Sub has all corporate requisite power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder and thereunder. The execution and delivery of this Agreement and the
performance of this Agreement and the consummation of the transactions
contemplated hereby and thereby by the Buyer and the Merger Sub (including the
Merger) have been duly and validly authorized by all necessary corporate action
on the part of the Buyer and the Merger Sub (including the sole stockholder of
Merger Sub). This Agreement has been duly and validly executed and delivered
by the Buyer and the Merger Sub and, assuming the due authorization, execution
and delivery by the Company, constitutes a valid and binding obligation of the
Buyer and the Merger Sub, enforceable against them in accordance with its
terms, except as enforcement may be limited by bankruptcy, insolvency or other
similar laws affecting the enforcement of creditors’ rights generally, and
except that the availability of equitable remedies, including specific
performance, is subject to the discretion of the court before which any
proceeding therefor may be brought.

     4.4 Noncontravention.

     Subject to compliance with the applicable requirements of the Securities
Act and any applicable state securities laws, the Exchange Act and the filing
of the Certificate of Merger as required by the DGCL, neither the execution and
delivery of this Agreement, nor the consummation by the Buyer or the Merger Sub
of the transactions contemplated hereby or thereby, will: (a) conflict with or
violate any provision of the Certificate of Incorporation or Bylaws of the
Buyer or the Merger Sub; (b) require on the part of the Buyer or the Merger Sub
any filing with, or any permit, authorization, consent or approval of, any
Governmental Entity, other than those (i) required solely by reason of the
Company’s participation in the transactions contemplated hereby or (ii) to be
made by the Company or (iii) any filing, permit, authorization, consent or
approval which, if not made or obtained, would not have a Material Adverse
Effect on the Buyer; (c) conflict with, result in breach of, constitute (with
or without due notice or lapse of time or both) a default under, result in the
acceleration of, create in any party any right to accelerate, terminate, modify
or cancel, or require any notice, consent or waiver under, any

-20-

 

contract, lease,
sublease, license, sublicense, franchise, permit, indenture, agreement or
mortgage for borrowed money, instrument of indebtedness, Security Interest or
other arrangement to which the Buyer or the Merger Sub is a party or by which
either is bound or to which any of their assets are subject, except for any
conflict, breach, default, acceleration, right to accelerate, termination,
modification, cancellation, notice, consent or waiver that would not reasonably
be expected to have a Material Adverse Effect on the Buyer or the Merger Sub;
(d) result in the imposition of any Security Interest upon any assets of the
Buyer or the Merger Sub; or (e) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Buyer or the Merger Sub or any of
their properties or assets, except for any violation that would not have a
Material Adverse Effect on the Buyer or the Merger Sub.

     4.5 Reports and Financial Statements.

     The Buyer has filed all forms, reports, schedules, registration
statements, proxy statements and other documents (including any document
required to be filed as an exhibit thereto) required to be filed by the Buyer
with the SEC on a timely basis, and has made available to the Company such
forms, reports and documents in the form filed with the SEC. All such required
forms, reports, schedules, registration statements, proxy statements and other
documents (including those that the Buyer may file subsequent to the date
hereof) are referred to herein as the “SEC Reports.” As of their respective
dates, the SEC Reports (including, without limitation, any financial statements
or schedules included or incorporated by reference therein) (i) were prepared
in accordance with the requirements of the Securities Act or the Exchange Act,
as the case may be, and the rules and regulations of the SEC thereunder
applicable to such SEC Reports and (ii) did not at the time they were filed (or
if amended or superseded by a filing prior to the date of this Agreement, then
on the date of such filing) contain any untrue statement of a material fact or
omit 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. Except as disclosed in the Buyer Disclosure
Schedule, the SEC Reports filed by the Buyer and publicly available prior to
the date of this Agreement, as of the date hereof, there has not been any
Material Adverse Effect with respect to the Buyer that would require disclosure
under the Securities Act.

     4.6 Litigation.

     There are no suits, arbitrations, actions, claims, complaints, grievances,
or to the Buyer’s knowledge, investigations or proceedings pending or, to the
Buyer’s knowledge, threatened against Buyer or its subsidiaries that, if
resolved against Buyer or its subsidiaries could be reasonably expected to have
a Material Adverse Effect on the Buyer, or the Buyer’s or the Merger Sub’s
ability to consummate the transactions contemplated by this Agreement.

     4.7 Legal Compliance; Restrictions on Business Activities.

     The Buyer and the conduct and operations of its business are in material
compliance with each law (including rules, regulations and requirements
thereunder) of any federal, state, local or

-21-

 

foreign government or any
Governmental Entity which (a) affects or relates to this Agreement or the
transactions contemplated hereby or (b) is applicable to the Buyer or the
Merger Sub or their respective businesses, except, in each case, where such
non-compliance would not reasonably be expected to have a Material Adverse
Effect on the Buyer or the Merger Sub. There is no agreement, judgment,
injunction, order or decree binding upon the Buyer or the Merger Sub which has
or would reasonably be expected to have the effect of prohibiting or materially
impairing any current or future business practice of the Buyer or the Merger
Sub, as currently contemplated by the Buyer or the Merger Sub, and any
acquisition of property of the Buyer or the Merger Sub or the conduct of
business by the Buyer and the Merger Sub as currently conducted or proposed to
be conducted.

     4.8 Merger Shares.

     The Merger Shares have been duly authorized and when issued in exchange
for the Company Shares pursuant to the terms hereof, will be validly issued,
fully paid and non-assessable, and not subject to any liens, pledges, charges,
encumbrances, restrictions of any kind, preemptive rights or any other rights
or interests of third parties or any other encumbrances, except for applicable
securities law restrictions on transfer, including those imposed by Regulation
D or Section 4(2) of the Securities Act and Rule 144 promulgated under the
Securities Act and under applicable “blue sky” state securities laws. The offer
and sale of the Merger Shares under this Agreement will be exempt from the
registration requirements of the Securities Act and in compliance with all
federal and state securities laws.

     4.9 Business of the Merger Sub.

     The Merger Sub is not and has never been a party to any material
agreements and has not conducted any activities other than in connection with
the organization of the Merger Sub, the issuance of the Merger Sub Common
Stock, the negotiation and execution of this Agreement and the consummation of
the transactions contemplated hereby. The Merger Sub has not incurred or
assumed any expenses or liabilities prior to the Closing.

     4.10 Company Action.

     The Board of Directors and the stockholders of the Buyer and the Merger
Sub, (a) have determined that the Merger is fair and in the best interests of
the Buyer and the Merger Sub, and each of their stockholders, and (b) have
adopted this Agreement in accordance with the provisions of the Certificate of
Incorporation and the Bylaws of each of the Merger Sub and the Buyer, as the
case may be, and the corporate laws of the State of Delaware. No other
corporate action (including stockholder action) is required to be taken by the
Buyer or the Merger Sub in connection with the consummation of the Merger and
the transactions contemplated by this Agreement.

-22-

 

     4.11 No Knowledge of Misrepresentations.

     The Buyer and the Merger Sub are acquiring the Company based on the
independent judgment of the Buyer and the Merger Sub as to the future prospects
of the Company and not based on any projections or forecasts obtained from the
Company, the stockholders of the Company or any of their respective affiliates,
employees, agents, directors, officers or representatives.

     4.12 Brokers’ Fees.

     Neither the Buyer nor the Merger Sub has any liability or obligation to
pay any fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement.

     4.13 Qualification as a Reorganization.

     Neither the Buyer nor the Merger Sub has any plan or intention to both (a)
discontinue (or cause the Surviving Corporation to discontinue) the historic
business of the Surviving Corporation (assuming that the business of the
Company as of the date of the Merger is the Surviving Corporation’s historic
business) and (b) cease (or cause the Surviving Corporation to cease) to use a
significant portion of the Surviving Corporation’s historic business assets in
a trade or business (assuming that the assets of the Company as of the date of
the Merger constitute the Surviving Corporation’s historic business assets).
Neither the Buyer nor the Merger Sub has any plan or intention to cause the
Surviving Corporation to dispose of assets following the Merger such that after
the Merger the Surviving Corporation will no longer continue to hold (as such
term is used in Code Section 368(a)(2)(E)(i)) substantially all of its assets
and the assets of the Merger Sub. For purposes of the foregoing, the term
“substantially all” means at least 90 percent of the fair market value of the
net assets and at least 70 percent of the fair market value of the gross assets
of the Merger Sub and the Surviving Corporation.

     4.14 Disclosure.

     No representation or warranty by the Buyer or the Merger Sub contained in
this Agreement, including any statement contained in the Buyer Disclosure
Schedule, or any Closing Document contains any untrue statement of a material
fact or omits to state any material fact necessary, in light of the
circumstances under which it was made, in order to make the statements herein
not misleading.

     4.15 Absence of Plans.

     Since December 31, 2001, the Board of Directors of the Buyer has not
authorized any recapitalization, reclassification, spinoff, stock split, stock
combination, stock or extraordinary cash dividend, or reverse split with
respect to the Buyer Stock.

-23-

 

     4.16 Tax Matters.

     (a)  The Buyer (and any consolidated group for tax purposes of which the
Buyer has been a member) has timely (taking into account extensions of time to
file) filed all Tax Returns that it was required to file. All such Tax Returns
were correct and complete in all material respects. All Taxes owed by the
Buyer, or for which the Buyer may be liable (whether or not shown on any Tax
Return), have been or will be timely paid. The Buyer is not currently the
beneficiary of any extension of time within which to file any Tax Return. No
claim has ever been made by an authority in a jurisdiction where the Buyer does
not file Tax Returns that it is or may be subject to taxation by that
jurisdiction. There are no Security Interests on any of the assets of the
Buyer that arose in connection with any failure (or alleged failure) to pay any
Tax.

     (b)  The Buyer has withheld or collected and paid or deposited in
accordance with law all Taxes required to have been withheld or collected and
paid or deposited by the Buyer in
connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder, or other third party.

     (c)  There is no dispute or claim concerning any Tax liability of the Buyer
either (i) claimed or raised by any authority in writing or (ii) as to which
the Buyer has knowledge.

     (d)  The Buyer has not waived any statute of limitations in respect of
Taxes or agreed to any extension of time nor has any such waiver or extension
been required with respect to a Tax assessment or deficiency.

     (e)  Buyer is in control of Merger Sub within the meaning of Section 368(c)
of the Code.

     (f)  Merger Sub is a newly-formed corporation and does not (nor has it ever
had) any assets.

ARTICLE V

COVENANTS

     5.1 Best Efforts.

     Each of the Parties shall use its best efforts, to the extent commercially
reasonable, to take all actions and to do all things necessary, proper or
advisable to consummate the transactions contemplated by this Agreement.

-24-

 

     5.2 Securities Laws.

     (a)  Prior to the Closing, the Company shall not take any action that would
cause the number of its stockholders who are not “accredited investors”
pursuant to Regulation D promulgated under the Securities Act to increase to
more than thirty-five (35) during the term of this Agreement or that would
cause any person who does not meet the standards of Regulation D required for
“purchasers” under Regulation D to become a stockholder; provided, however,
that the Company will not be precluded from issuing Company Shares upon the
exercise of options or warrants.

     (b)  The Buyer, the Merger Sub, and the Surviving Corporation shall take
such steps as may be necessary to comply with the securities and blue sky laws
of all jurisdictions which are applicable to the issuance of the Buyer Stock in
connection with the Merger. The Company shall use its best efforts, to the
extent commercially reasonable, to assist the Buyer as may be necessary to
comply with such securities and blue sky laws.

     (c)  So long as the Buyer or any successor entity has securities registered
under Securities Act of 1933, as amended (including the rules and regulations
promulgated thereunder, the “Securities Act”), or the Exchange Act, the Buyer
or such successor entity shall file all reports required to be filed by it
under the Securities Act and the Exchange Act, all to the extent required
pursuant to Rule 144 to enable stockholders who exchange Company Shares for
Buyer Stock pursuant to the terms of this Agreement to sell Buyer Stock
pursuant to Rule 144 adopted by the Securities and Exchange Commission under
the Securities Act (as such rule may be amended from time to time) or any
similar rule or regulation hereafter adopted by the Securities and Exchange
Commission.

     (d)  If at any time after the Effective Time, the Buyer takes or fails to
comply with its obligations under the immediately preceding paragraph (c), or
if the Rule 144 is not available to the stockholders who exchange Company
Shares for Buyer Stock pursuant to the terms of this Agreement as a result of
any action taken or not taken by the Buyer, then the Buyer shall enter into a
registration rights agreement with each such stockholder in form and substance
reasonably acceptable to the Buyer and such stockholder.

     5.3 Reorganization.

     Except for the transactions contemplated by this Agreement neither the
Buyer nor the Merger Sub will take any action, or cause the Surviving
Corporation to take any action, which would have the result of disqualifying
the Merger as a reorganization pursuant to Section 368(a)(2)(E) of the Code.
In addition, neither the Buyer nor the Merger Sub will adopt any position (or
cause the Surviving Corporation to adopt any position) which is inconsistent
with the treatment of the Merger as a tax-free reorganization.

-25-

 

     5.4 Reasonable Commercial Efforts and Further Assurances.

     Each Party, at the reasonable request of another Party, and as soon as
practicable, shall execute and deliver at the requesting Party’s expense such
other instruments and do and perform such other acts and things as may be
necessary or desirable for effecting completely the consummation of this
Agreement and the transactions contemplated hereby.

ARTICLE VI

CONDITIONS TO CONSUMMATION OF MERGER

     6.1 Conditions to Each Party’s Obligations.

     The respective obligations of each Party to consummate the Merger and the
other transactions contemplated hereby are subject to the satisfaction of the
following conditions:

     (a)  this Agreement and the Merger shall have received the Requisite
Stockholder Approval;

     (b)  the Buyer and the Company shall be satisfied that the issuances of
Buyer Stock in the transaction shall be exempt under Regulation D of the
Securities Act and Section 4(2) of the Securities Act;

     (c)  no temporary restraining order, preliminary or permanent injunction or
other order issued by any court of competent jurisdiction or other legal or
regulatory restraint or prohibition preventing the consummation of the Merger
shall have been issued, nor shall any proceeding brought by any Governmental
Entity, seeking any of the foregoing be pending; nor shall there be any action
taken, or any statute, rule, regulation or order enacted, entered, enforced or
deemed applicable to the Merger which makes the consummation of the Merger
illegal; and

     (d)  no proceeding in which the Company, the Buyer or the Merger Sub shall
be a debtor, defendant or party seeking an order for its own relief or
reorganization shall have been brought or be pending by or against the Company,
the Buyer or the Merger Sub under any United States or state bankruptcy or
insolvency law.

     6.2 Conditions to Obligations of the Buyer and the Merger Sub.

     The obligation of each of the Buyer and the Merger Sub to consummate the
Merger is subject to the satisfaction of the following additional conditions:

     (a)  this Agreement and the Merger shall have been approved and adopted by
the Requisite Stockholder Approval;

     (b)  the Company shall have obtained all of the waivers, permits, consents,
assignments, approvals or other authorizations, and effected all of the
registrations, filings and

-26-

 

notices, referred to in the Company Disclosure
Schedule, except for any which if not obtained or effected would not have a
Material Adverse Effect on the Company or on the ability of the Parties to
consummate the transactions contemplated by this Agreement;

     (c)  the representations and warranties of the Company set forth in Article
III shall be true and correct as of the Closing Date, except for
representations and warranties made as of a specified date, which shall be true
and correct as of such date;

     (d)  the Company shall have performed or complied with, in all material
respects, its agreements and covenants required to be performed or complied
with under this Agreement as of or prior to the Effective Time;

     (e)  the Buyer and the Merger Sub shall have received from the Secretary of
the Company a certificate (i) certifying the Company Charter, (ii) certifying
the Bylaws of the Company, (iii) certifying the resolutions of the Board of
Directors of the Company, (vi) certifying the resolutions of the stockholders
of the Company and (v) attesting to the incumbency of the officers of the
Company; and

     (f)  all actions to be taken by the Company in connection with the
consummation of the transactions contemplated hereby, and all certificates,
opinions, instruments and other documents required to effect the transactions
contemplated hereby shall be reasonably satisfactory in form and substance to
the Buyer and the Merger Sub.

     6.3 Conditions to Obligations of the Company.

     The obligation of the Company to consummate the Merger is subject to the
satisfaction of the following additional conditions:

     (a)  the Buyer and the Merger Sub shall have obtained all of the waivers,
permits, consents, approvals or other authorizations, and effected all of the
registrations, filings and notices, except for any which if not obtained or
effected would not have a Material Adverse Effect on the Buyer or the Merger
Sub or on the ability of the Parties to consummate the transactions
contemplated by this Agreement;

     (b)  each of the Buyer and the Merger Sub shall have performed or complied
with in all material respects its agreements and covenants required to be
performed or complied with under this Agreement as of or prior to the Effective
Time;

     (c)  the representations and warranties of the Buyer and the Merger Sub set
forth in Article IV shall be true and correct as of the Closing Date, except
for representations and warranties made as of a specified date, which shall be
true and correct as of such date;

     (d)  the Company shall have received from the Secretary of the Buyer a
certificate (i) certifying the Certificate of Incorporation of the Buyer,
(ii) certifying the Bylaws of the Buyer,

-27-

 

(iii) certifying the resolutions of the
Board of Directors of the Buyer and (iv) attesting to the incumbency of the
officers of the Buyer;

(e)  the Company shall have received from the Secretary of the Merger Sub a
certificate (i) certifying the Certificate of Incorporation of the Merger Sub,
(ii) certifying the Bylaws of the Merger Sub, (iii) certifying the resolutions
of the Board of Directors and the sole stockholder of the Merger Sub and (iv)
attesting to the incumbency of the officers of the Merger Sub; and

     (f)  all certificates, opinions, instruments and other documents required
to effect the transactions contemplated hereby shall be reasonably satisfactory
in form and substance to the Company.

     6.4 Certain Waivers.

     The Parties acknowledge and agree that if a Party has knowledge of any
breach by any other Party of any representation, warranty, agreement or
covenant contained in this Agreement, and such Party proceeds with the Closing,
such Party shall be deemed to have irrevocably waived such breach for that
particular breach only and such Party and its successors and assigns shall not
be entitled to assert any right or to seek any remedy for any damages
arising from any matters relating to such breach, notwithstanding anything to
the contrary contained herein or in any certificate delivered pursuant hereto.

ARTICLE VII

TERMINATION

     7.1 Termination of Agreement.

     The Parties may terminate this Agreement prior to the Effective Time as
provided below:

     (a)  the Parties may terminate this Agreement by mutual written consent;

     (b)  any Party may terminate this Agreement by giving written notice to the
other Parties at any time after the Company’s stockholders have voted on
whether to approve this Agreement and the Merger, in the event that this
Agreement or the Merger failed to receive the Requisite Stockholder Approval;

     (c)  any Party may terminate this Agreement by giving written notice to the
other Parties upon the entry of any permanent injunction or other order of a
court or other competent authority preventing the consummation of the Merger
that has become final and nonappealable;

     (d)  the Buyer and the Merger Sub may terminate this Agreement by giving
written notice to the Company if the Closing shall not have occurred on or
before March      , 2002, by reason of the failure of any condition precedent
under Section 6.1 or 6.2 hereof (unless the failure

-28-

 

results primarily from a
breach by the Buyer or the Merger Sub of any representation, warranty,
agreement or covenant contained in this Agreement); and

     (e)  the Company may terminate this Agreement by giving written notice to
the Buyer and the Merger Sub if the Closing shall not have occurred on or
before March      , 2002, by reason of the failure of any condition precedent
under Section 6.1 or 6.3 hereof (unless the failure results primarily from a
breach by the Company of any representation, warranty, agreement or covenant
contained in this Agreement).

     7.2 Effect of Termination.

     If any party terminates this Agreement pursuant to Section 7.1, all
obligations of the Parties hereunder shall terminate without any liability of
any Party to any other Party, including the directors, officers, employees,
agents, consultants, representatives, advisors, stockholders, members or
Affiliates of any Party. Notwithstanding the foregoing, the following
obligations shall survive termination of this Agreement: (i) the liability of
any Party for any breach of this Agreement; (ii) press releases and
announcements, as provided in Section 8.1; and (iii) each Party’s obligation to
bear its own fees and expenses incurred in connection with the preparation
and negotiation of this Agreement and the transactions contemplated herein
as provided in Section 8.10.

     7.3 Amendment.

     Subject to applicable law, the Parties may cause this Agreement to be
amended at any time by execution of an instrument in writing signed on behalf
of each of the Parties.

     7.4 Extension, Waiver.

     At any time prior the Effective Time, any Party may, to the extent legally
allowed (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 made to such Party contained herein or in any
document delivered pursuant hereto and (iii) waive compliance with any of the
agreements or conditions for the benefit of such Party contained herein. Any
agreement on the part of a 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.

ARTICLE VIII

MISCELLANEOUS

     8.1 No Third Party Beneficiaries.

     This Agreement shall not confer any rights or remedies upon any person
other than the Parties and their respective successors and permitted assigns.

-29-

 

     8.2 Entire Agreement.

     This Agreement, the Company Disclosure Schedule, the Buyer Disclosure
Schedule, the Schedules, the Exhibits, the documents and instruments and other
agreements among the parties referred to herein constitute the entire agreement
among the Parties and supersedes any prior understandings, agreements or
representations by or among the Parties, written or oral, with respect to the
subject matter hereof.

     8.3 Succession and Assignment.

     This Agreement shall be binding upon and inure to the benefit of the
Parties named herein and their respective successors, heirs, legal
representatives and permitted assigns. No Party may assign either this
Agreement or any of its rights, interests, or obligations hereunder without the
prior written approval of the other Parties.

     8.4 Counterparts, Facsimile Signatures.

     This Agreement may be executed with counterpart signature pages or in two
or more counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument. This Agreement
may be executed by facsimile signatures.

     8.5 Headings.

     The section headings contained in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or interpretation
of this Agreement.

     8.6 Notices.

     All notices, requests, demands, claims, and other communications hereunder
(each a “Notice”) shall be in writing. Any Notice shall be (a) sent by
registered or certified mail, return receipt requested, postage prepaid, (b)
sent via a reputable nationwide overnight courier service, charges prepaid or
(c) sent via facsimile (with acknowledgment of complete transmission) with a
confirmation copy by registered or certified mail or overnight courier as
aforesaid, in each case to the intended recipient as set forth below:

     If to the Company:

	 
	NEOREACH, INC
	3204 Tower Oaks Blvd., Suite 350
	Rockville, Maryland 20852
	Attention: President
	Facsimile: 301-230-9126

     Copies to:

-30-

 

	 
	Piper Marbury Rudnick & Wolfe LLP
	1200 Nineteenth Street, N.W
	Washington, DC 20036
	Attention: Ernest Stern, Esq
	Facsimile: 202-223-2085

     If to the Buyer:

	 
	MOBILEPRO CORP
	3204 Tower Oaks Blvd., Suite 350
	Rockville, Maryland 20852
	Attention: President
	Facsimile: 301-230-9126

     Copy to:

	 
	Piper Marbury Rudnick & Wolfe LLP
	1200 Nineteenth Street, NW
	Washington, DC 20036
	Attention: Ernest Stern, Esq
	Facsimile: 202-223-2085

     If to the Merger Sub:

	 
	NEOREACH ACQUISITION CORP
	3204 Tower Oaks Blvd., Suite 350
	Rockville, Maryland 20852
	Attention: President
	Facsimile: 301-230-9126

     Copy to:

	 
	Piper Marbury Rudnick & Wolfe LLP
	1200 Nineteenth Street, NW
	Washington, DC 20036
	Attention: Ernest Stern, Esq
	Facsimile: 202-223-2085

     Each Notice shall be deemed to have been given and effective upon receipt
(or refusal of receipt). Any Party may change the address to which Notices
hereunder are to be delivered by giving the other Parties notice in the manner
herein set forth.

-31-

 

     8.7 Governing Law.

     This Agreement shall be governed by and construed in accordance with the
internal laws (and not the law of conflicts) of the State of Delaware. In
addition, each of the Parties hereto (a) consents to submit itself to the
personal jurisdiction of the any federal court or state court located in the
State of Maryland in the event any dispute arises out of this Agreement or any
of the transactions contemplated by this Agreement, (b) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other request
for leave from any such court and (c) agrees that it will not bring any action
relating to this Agreement or any of the transactions contemplated hereby in
any court other than a federal court or a state court located in the State of
Maryland.

     8.8 Severability.

     Any term or provision of this Agreement that is invalid or unenforceable
in any situation in any jurisdiction shall not affect the validity or
enforceability of the remaining terms and provisions hereof or the validity or
enforceability of the offending term or provision in any other situation or in
any other jurisdiction. If the final judgment of a court of competent
jurisdiction
declares that any term or provision hereof is invalid or unenforceable, the
Parties agree that the court making the determination of invalidity or
unenforceability shall have the power to reduce the scope, duration, or area of
the term or provision, to delete specific words or phrases, or to replace any
invalid or unenforceable term or provision with a term or provision that is
valid and enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision, and this Agreement shall be
enforceable as so modified after the expiration of the time within which the
judgment may be appealed, provided that this Agreement shall not then
substantially deprive either Party of the bargained-for performance of the
other Party.

     8.9 Expenses; Attorney’s Fees.

     All fees and expenses (including all legal and accounting fees and
expenses and all other expenses) incurred by the Buyer and the Merger Sub in
connection with this Agreement and the transactions contemplated hereby shall
be paid by the Buyer and the Merger Sub, as the case may be, whether or not the
Merger is consummated. All fees and expenses incurred by the Company in
connection with this Agreement and the transactions contemplated hereby shall
be paid by the Company, whether or not the Merger is consummated.
Notwithstanding the foregoing, if any Party hereto initiates any legal action
arising out of or in connection with this Agreement, the prevailing party in
such legal action shall be entitled to recover from the other Party all
reasonable attorney’s fees, expert witness fees and expenses incurred by the
prevailing party in connection therewith.

     8.10 Letter of Intent.

     This Agreement shall supercede the Letter of Intent entered into by the Parties in its entirety.

-32-

 

     8.11 Disclosure Letters.

     The Company Disclosure Schedule shall be arranged in separate parts
corresponding to the numbered and lettered sections contained in this
Agreement, and the information disclosed in any numbered or lettered part shall
qualify only (a) the corresponding section of this Agreement and (b) other
sections of Article III to the extent it is clear (notwithstanding the absence
of a specific cross reference) from a reading of the disclosure that such
disclosure is applicable to such other sections. The Buyer Disclosure Schedule
shall be arranged in separate parts corresponding to the numbered and lettered
sections contained in this Agreement, and the information disclosed in any
numbered or lettered part shall qualify only (c) the corresponding section of
this Agreement, and (d) other sections of Article IV to the extent it is clear
(notwithstanding the absence of a specific cross reference) from a reading of
the disclosure that such disclosure is applicable to such other sections. The
inclusion of any information in the Company Disclosure Schedule or the Buyer
Disclosure Schedule shall not be deemed to be an admission or acknowledgment
that such information is required to be included herein, is material, has or
would have a Material Adverse Effect, or is outside the ordinary course of
business.

     8.12 Construction.

     The Parties agree that they have been represented by counsel during the
negotiation, preparation and execution of this Agreement and, therefore, waive
the application of any law, regulation, holding or rule of construction
providing that ambiguities in an agreement or other document will be construed
against the party drafting such agreement or document. Any reference to any
federal, state, local, or foreign statute or law shall be deemed also to refer
to all rules and regulations promulgated thereunder, unless the context
requires otherwise.

     8.13 Incorporation of Exhibits and Schedules.

     The Exhibits, the Schedules, the Buyer Disclosure Schedule and Company
Disclosure Schedule identified in this Agreement are incorporated herein by
reference and made a part hereof.

[Signatures begin on following page]

-33-

 

     IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.

	 	 	 
	BUYER:	 	
MOBILEPRO CORP.
	 
	 	 	
By: /s/ Daniel Lozinsky                        

Name:  Daniel Lozinsky

Title:  President and CEO
	 
	MERGER SUB:	 	
NEOREACH ACQUISITION CORP.
	 
	 	 	
By: /s/ Daniel Lozinsky                        

Name:  Daniel Lozinsky

Title: President and CEO
	 
	COMPANY:	 	
NEOREACH, INC.
	 
	 	 	
By:/s/ Arne Dunhem                              

Name:  Arne Dunhem

Title:  President

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