Document:

Exhibit
10.32

 

 

MERGER AGREEMENT

 

 

dated as of May 12, 2003

 

 

by and among

 

 

NESS TECHNOLOGIES, INC.,

 

NESS ACQUISITION CORP.,

 

APAR HOLDING CORP.,

 

WARBURG, PINCUS EQUITY PARTNERS, L.P.,

 

WARBURG, PINCUS VENTURES INTERNATIONAL, L.P.,

 

WARBURG, PINCUS NETHERLANDS EQUITY PARTNERS I, C.V.,

 

WARBURG, PINCUS NETHERLANDS EQUITY PARTNERS II, C.V.,

 

WARBURG, PINCUS NETHERLANDS EQUITY PARTNERS III, C.V.,

 

APAR INVESTMENTS (SINGAPORE) PRIVATE LTD.,

 

and

 

RAJEEV SRIVASTAVA

 

 

 

 

	
   

  	
  Page

  
	
  ARTICLE
  I  THE MERGER

  	
  2

  
	
  Section 1.1  The Merger

  	
  2

  
	
  Section 1.2  Effective Time

  	
  3

  
	
  Section 1.3  Closing of the Merger

  	
  3

  
	
  Section 1.4  Effects of the Merger

  	
  3

  
	
  Section 1.5  Directors and Officers

  	
  3

  
	
  Section 1.6  Articles of Incorporation and Bylaws

  	
  3

  
	
   

  	
   

  
	
  ARTICLE
  II  CONVERSION OF SECURITIES

  	
  3

  
	
  Section 2.1  Effect on Capital Stock

  	
  3

  
	
  Section 2.2  Fractional Shares

  	
  5

  
	
  Section 2.3  Exchange Procedures

  	
  5

  
	
  Section 2.4  Rights of Former Shareholders of the
  Company

  	
  5

  
	
  Section 2.5  Make-Whole Adjustment

  	
  6

  
	
  Section 2.6  Withholding

  	
  6

  
	
  Section 2.7  Certain Adjustments

  	
  6

  
	
  Section 2.8  Dissenters’ Shares

  	
  7

  
	
  Section 2.9  Stock Options; Warrants

  	
  7

  
	
   

  	
   

  
	
  ARTICLE III  REPRESENTATIONS AND WARRANTIES OF THE COMPANY, APAR INVESTMENTS
  AND SRIVASTAVA

  	
  8

  
	
  Section 3.1  Corporate Organization, Etc

  	
  8

  
	
  Section 3.2  Capitalization of the Company

  	
  9

  
	
  Section 3.3  The Company’s Subsidiaries

  	
  9

  
	
  Section 3.4  Authority Relative to this Agreement;
  Company Action

  	
  9

  
	
  Section 3.5  Consents and Approvals; No Violations

  	
  10

  
	
  Section 3.6  Financial Statements

  	
  10

  
	
  Section 3.7  Absence of Certain Changes

  	
  11

  
	
  Section 3.8  Compliance with Law

  	
  11

  
	
  Section 3.9  Contracts and Commitments

  	
  11

  
	
  Section 3.10  No Undisclosed Liabilities

  	
  11

  
	
  Section 3.11  No Default

  	
  12

  
	
  Section 3.12  Litigation

  	
  12

  
	
  Section 3.13  Taxes

  	
  12

  
	
  Section 3.14  Title to Properties

  	
  13

  
	
  Section 3.15  Patents, Trademarks, Etc.

  	
  13

  
	
  Section 3.16  Insurance

  	
  14

  
	
  Section 3.17  Environmental Matters

  	
  14

  
	
  Section 3.18  Employee and Labor Matters

  	
  14

  
	
  Section 3.19  Employee Plans.

  	
  15

  
	
  Section 3.20  Brokers and Finders

  	
  17

  
	
  Section 3.21  Additional Representations

  	
  17

  
	
  Section 3.22  Shareholder Vote Required

  	
  18

  
	
  Section 3.23  Change of Control Provisions

  	
  19

  
	
  Section 3.24  Reliance

  	
  19

  
	
  Section 3.25  Disclosure

  	
  19

  

 

i

 

	
  ARTICLE
  IV  REPRESENTATIONS AND WARRANTIES OF
  PARENT AND MERGER SUB

  	
  19

  
	
  Section 4.1  Corporate Organization; Etc.

  	
  20

  
	
  Section 4.2  Parent’s Subsidiaries

  	
  20

  
	
  Section 4.3  Authority Relative to this Agreement

  	
  20

  
	
  Section 4.4  Consents and Approvals; No Violations

  	
  21

  
	
  Section 4.5  Financial Statements

  	
  21

  
	
  Section 4.6  Absence of Certain Changes

  	
  21

  
	
  Section 4.7  Compliance with Law

  	
  22

  
	
  Section 4.8  Contracts and Commitments

  	
  22

  
	
  Section 4.9  No Undisclosed Liabilities

  	
  22

  
	
  Section
  4.10  No Default

  	
  22

  
	
  Section
  4.11  Litigation

  	
  23

  
	
  Section
  4.12  Taxes.

  	
  23

  
	
  Section
  4.13  Title to Properties

  	
  23

  
	
  Section
  4.14  Patents, Trademarks, Etc

  	
  24

  
	
  Section
  4.15  Insurance

  	
  24

  
	
  Section
  4.16  Environmental Matters

  	
  24

  
	
  Section
  4.17  Employee and Labor Matters

  	
  24

  
	
  Section
  4.18  Employee Plans.

  	
  25

  
	
  Section
  4.19  Brokers and Finders

  	
  27

  
	
  Section
  4.20  Stockholder Vote Required

  	
  27

  
	
  Section
  4.21  Change of Control Provisions

  	
  27

  
	
  Section
  4.22  Reliance

  	
  27

  
	
  Section
  4.23  Disclosure

  	
  27

  
	
   

  	
   

  
	
  ARTICLE V  COVENANTS

  	
  28

  
	
  Section 5.1  Conduct of the Business of the Company
  Pending the Closing

  	
  28

  
	
  Section 5.2  Conduct of the Business of Parent Pending
  Closing

  	
  29

  
	
  Section 5.3  Access to Information

  	
  30

  
	
  Section 5.4  Disclosure Supplements.

  	
  31

  
	
  Section 5.5  Consents and Approvals

  	
  31

  
	
  Section 5.6  Filings

  	
  31

  
	
  Section 5.7  Further Assurances

  	
  32

  
	
  Section 5.8  Employee Benefit Matters

  	
  32

  
	
   

  	
   

  
	
  ARTICLE VI  ADDITIONAL AGREEMENTS

  	
  32

  
	
  Section 6.1  Shareholders’ Meetings.

  	
  32

  
	
  Section 6.2  Commercially Reasonable Efforts.

  	
  33

  
	
  Section 6.3  Acquisition Proposals.

  	
  34

  
	
  Section 6.4  Public Announcements

  	
  37

  
	
  Section 6.5  Indemnification.

  	
  37

  
	
  Section 6.6  Notification of Certain Matters

  	
  40

  

 

ii

 

	
  Section 6.7  Third Party Consents.

  	
  40

  
	
  Section 6.8  Asserted Objections

  	
  41

  
	
  Section 6.9  Certain Tax Covenants.

  	
  41

  
	
   

  	
   

  
	
  ARTICLE
  VII  CONDITIONS TO CONSUMMATION OF THE
  MERGER

  	
  42

  
	
  Section 7.1  Conditions to Each Party’s Obligations to
  Effect the Merger

  	
  42

  
	
  Section 7.2  Conditions to the Obligations of Parent
  and Merger Sub

  	
  42

  
	
  Section 7.3  Conditions to the Obligations of the
  Company

  	
  44

  
	
   

  	
   

  
	
  ARTICLE
  VIII  TERMINATION; AMENDMENT; WAIVER

  	
  45

  
	
  Section 8.1  Termination by Mutual Agreement

  	
  45

  
	
  Section 8.2  Termination by either Parent or the
  Company

  	
  45

  
	
  Section 8.3  Termination by the Company

  	
  45

  
	
  Section 8.4  Termination by Parent

  	
  46

  
	
  Section 8.5  Effect of Termination and Abandonment

  	
  46

  
	
   

  	
   

  
	
  ARTICLE IX  MISCELLANEOUS

  	
  47

  
	
  Section 9.1  No Survival of Representations and
  Warranties

  	
  47

  
	
  Section 9.2  Entire Agreement; Assignment.

  	
  47

  
	
  Section 9.3  Notices

  	
  47

  
	
  Section 9.4  Governing Law; Consent to Jurisdiction

  	
  48

  
	
  Section 9.5  Expenses

  	
  49

  
	
  Section 9.6  Descriptive Headings

  	
  49

  
	
  Section 9.7  Parties in Interest

  	
  49

  
	
  Section 9.8  Severability

  	
  49

  
	
  Section 9.9  Specific Performance

  	
  50

  
	
  Section 9.10  Counterparts

  	
  50

  
	
  Section 9.11  Further Assurances

  	
  50

  
	
  Section 9.12  Interpretation.

  	
  50

  
	
  Section 9.13  Amendment and Modification; Waiver

  	
  51

  
	
  Section 9.14  Definitions

  	
  51

  

 

iii

 

 

MERGER AGREEMENT

 

THIS MERGER AGREEMENT
(this “Agreement”), dated as of May 12, 2003, is by and among Ness
Technologies, Inc., a Delaware corporation (“Parent”),  Ness Acquisition Corp., a Pennsylvania
corporation and a wholly-owned subsidiary of Parent (“Merger Sub”), Apar
Holding Corp., a Pennsylvania corporation (the “Company”), Warburg, Pincus
Equity Partners, L.P., a Delaware limited partnership (“WPEP”), Warburg, Pincus
Ventures International, L.P., a Bermuda limited partnership (“WPVI”), Warburg,
Pincus Netherlands Equity Partners I, C.V., a Netherlands limited partnership
(“WPNEPI”), Warburg, Pincus Netherlands Equity Partners II, C.V., a Netherlands
limited partnership (“WPNEPII”), Warburg, Pincus Netherlands Equity Partners
III, C.V., a Netherlands limited partnership (“WPNEPIII” and together with
WPEP, WPVI, WPNEPI and WPNEPII, the “Warburg Holders”), Apar Investments
(Singapore) Private Ltd., a Singapore company (“Apar Investments”), and Rajeev
Srivastava (“Srivastava” and together with the Warburg Holders and Apar
Investments, the “APAR Holders”). 
Certain capitalized and non-capitalized terms used herein are defined in
Section 9.14.

 

RECITALS

 

WHEREAS, each of
Parent, Merger Sub and the Company desire Parent to consummate a business
combination with the Company in a transaction whereby, upon the terms and
subject to the conditions set forth in this Agreement, Merger Sub will merge
with and into the Company (the “Merger”), each outstanding share of common
stock, $0.01 par value, of the Company (“Company Common Stock”) (other than
shares cancelled and retired pursuant to Section 2.1(b)), will be converted
into the right to receive the AI Merger Consideration, the RS Merger
Consideration or the Other Parent Stock Consideration, as applicable, and the
Company will be the surviving corporation in the Merger;

 

WHEREAS, the board
of directors of the Company unanimously has determined and resolved that the
Merger and all of the Contemplated Transactions are in the best interest of the
holders of Company Capital Stock and that the Merger is fair and advisable, and
has approved this Agreement in accordance with the Pennsylvania Business
Corporation Law of 1988, as amended (the “PBCL”), and has further resolved
unanimously to recommend to all holders of Company Capital Stock that they vote
affirmatively to adopt this Agreement at a meeting of such holders to be duly
called and convened for such purpose (the “Company Shareholders Meeting”);

 

WHEREAS, the board
of directors of Parent unanimously has determined and resolved that the Merger
and all of the Contemplated Transactions are in the best interest of Parent and
the holders of Parent Capital Stock and has adopted this Agreement in accordance
with the Delaware General Corporation Law, as amended (the “DGCL”), and Parent,
as sole shareholder of Merger Sub, has adopted this Agreement in accordance
with the PBCL;

 

WHEREAS, the board
of directors of Merger Sub unanimously has determined and resolved that the
Merger and all of the Contemplated Transactions are in the best interest of
Merger Sub and the holder of Merger Sub Common Stock and has adopted this
Agreement in accordance with the PBCL;

 

 

WHEREAS, the
Merger is subject to the adoption of this Agreement by the holders of a
majority of the outstanding Company Capital Stock, the approval of the Parent
Amendments by the stockholders of Parent, and satisfaction of certain other
conditions described in this Agreement;

 

WHEREAS, as an inducement
to Parent and Merger Sub to enter into this Agreement, the APAR Holders and
Serving America First, a 501(c)(3) non-profit organization, have previously
entered into the APAR Voting Agreement pursuant to which, among other things,
the APAR Holders have agreed to vote all shares of capital stock of the Company
owned by them in favor of the Merger;

 

WHEREAS, as an
inducement to the Company and the APAR Holders to enter into this Agreement,
the Warburg Holders and Nesstech LLC have previously entered into the Parent
Voting Agreement pursuant to which, among other things, such parties have
agreed to vote all shares of capital stock of Parent owned by them in favor of
the Contemplated Transactions, including, without limitation, the Parent
Amendments;

 

WHEREAS, the
parties hereto intend that the Merger be deemed for purposes of Israeli
generally accepted accounting standards to have economic effect as of April 1,
2003;

 

WHEREAS, the
parties hereto intend that the Merger qualify for U.S. federal income tax
purposes as a reorganization within the meaning of Section 368(a) of the
U.S. Internal Revenue Code of 1986, as amended (together with the rules and
regulations promulgated thereunder, the “Code”); and

 

WHEREAS, the
Company, Parent, Merger Sub and the APAR Holders desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger as set forth in this Agreement.

 

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

 

ARTICLE
I

THE MERGER

 

Section 1.1                                      The
Merger.  At the Effective Time and
upon the terms and subject to the conditions of this Agreement and of the Plan
of Merger attached as Exhibit A hereto (the “Plan”), and in accordance with the
applicable provisions of the PBCL, Merger Sub shall be merged with and into the
Company.  Following the Merger, the Company
shall continue as the surviving corporation (the “Surviving Corporation”) and,
as such, the Company shall continue its corporate existence as a direct,
wholly-owned Subsidiary of Parent under the laws of the Commonwealth of
Pennsylvania, and the separate corporate existence of Merger Sub thereupon
shall cease.  The name of the Surviving
Corporation shall be Ness GSG Inc.  The
address of the principal office of the Surviving Corporation will be 160
Technology Drive, Canonburg, Pennsylvania 15317.

 

2

 

Section 1.2                                      Effective
Time.  Subject to the provisions of
this Agreement and the Plan, the Company and Merger Sub will cause Articles of
Merger and other appropriate documents (the “Articles of Merger”) to be
delivered and properly filed with the Department of State of the Commonwealth
of Pennsylvania (the “Department of State”) in such form as required by, and
executed in accordance with, the relevant provisions of the PBCL, as soon as
practicable on the Closing Date.  The
Merger shall become effective upon the filing of the Articles of Merger (the
“Effective Time”).

 

Section 1.3                                      Closing
of the Merger.  The closing of the
Merger (the “Closing”) will take place at a time and on a date to be specified
by the parties (the “Closing Date”), which shall be no later than the third
business day after satisfaction or waiver of the conditions set forth in
Article VII (other than those conditions that by their nature are to be
satisfied at the Closing, but subject to the fulfillment or waiver of those
conditions), at the offices of Olshan Grundman Frome Rosenzweig & Wolosky
LLP, 505 Park Avenue, New York, New York 10022, or at such other time, date or
place as agreed to in writing by the parties hereto.

 

Section 1.4                                      Effects
of the Merger.  The Merger shall
have the effects set forth in this Agreement, the Articles of Merger and the
applicable provisions of the PBCL. 
Without limiting the generality of the foregoing, and subject thereto,
at the Effective Time, all of the properties, rights, privileges, powers and
franchises of Merger Sub shall vest in the Surviving Corporation, and all
debts, liabilities and duties of Merger Sub shall become the debts, liabilities
and duties of the Surviving Corporation.

 

Section 1.5                                      Directors
and Officers.  The directors of the
Surviving Corporation shall consist of the persons specified on Schedule 1.5
hereto and shall hold office in accordance with the articles of incorporation
and bylaws of the Surviving Corporation until their successors are duly elected
or appointed and qualified or until their earlier death, resignation or
removal.  The officers of the Company at
the Effective Time shall be the initial officers of the Surviving Corporation
and shall hold office in accordance with the articles of incorporation and
bylaws of the Surviving Corporation until their successors are duly elected or
appointed and qualified or until their earlier death, resignation or removal.

 

Section 1.6                                      Articles
of Incorporation and Bylaws.  Effective
immediately following the Merger, the articles of incorporation of the Company,
as in effect immediately prior to the Effective Time, shall be the articles of
incorporation of the Surviving Corporation. 
Effective immediately following the Merger, the bylaws of Merger Sub, as
in effect immediately prior to the Effective Time, shall be the bylaws of the
Surviving Corporation until amended in accordance with applicable Law.

 

ARTICLE
II

CONVERSION OF SECURITIES

 

Section 2.1                                      Effect
on Capital Stock.  At the Effective
Time, by virtue of the Merger and automatically without any action on the part
of any holder of capital stock of Parent, Merger Sub or the Company,
respectively:

 

3

 

(a)                                  Each
then outstanding share of Merger Sub Common Stock shall be converted into and
become one duly authorized, validly issued, fully paid and nonassessable share
of common stock, $0.01 par value, of the Surviving Corporation.

 

(b)                                 Each
share of Company Common Stock then issued and held in the Company’s treasury or
by any of the Company’s Subsidiaries, and each share of Company Common Stock
then owned by Parent, Merger Sub or any other wholly-owned Subsidiary of
Parent, shall be cancelled and retired and shall cease to exist, and no
consideration shall be delivered in exchange therefor.

 

(c)                                  Subject
to the provisions of Section 2.1(f), each then outstanding share of Company
Common Stock held by Apar Investments shall be converted into and become the
right to receive:

 

(i)                                     subject
to Section 2.2, 0.473628 shares of Parent Common Stock (the “AI Parent Stock
Consideration”); and

 

(ii)                                  $1.87889
in cash (the “AI Cash Consideration” and together with the AI Parent Stock
Consideration, the “AI Merger Consideration”).

 

(d)                                 Subject
to the provisions of Section 2.1(f), each then outstanding share of Company
Common Stock held by Srivastava shall be converted into and become the right to
receive:

 

(i)                                     subject
to Section 2.2, 0.55241 shares of Parent Common Stock (the “RS Parent Stock
Consideration”); and

 

(ii)                                  $1.39616
in cash (the “RS Cash Consideration” and together with the RS Parent Stock
Consideration, the “RS Merger Consideration”). 
The AI Cash Consideration and RS Cash Consideration are referred to
together as the “Cash Consideration”; the AI Parent Stock Consideration and the
RS Parent Stock Consideration are referred to together as the “Founder Parent
Stock Consideration”; and the AI Merger Consideration and the RS Merger
Consideration are referred to together as the “Founder Merger Consideration”.

 

(e)                                  Subject
to the provisions of Section 2.1(f), each then outstanding share of Company
Common Stock held by any person other than Apar Investments or Srivastava
(including, without limitation, all outstanding shares held by the Warburg
Holders) (other than shares cancelled and retired pursuant to Section 2.1(b)
and Dissenting Shares), shall be converted into and become the right to
receive, subject to Section 2.2, 0.780274 shares of Parent Common Stock (the
“Other Parent Stock Consideration” and together with the Founder Merger
Consideration, the “Merger Consideration”).

 

(f)                                    For
purposes of clarity and without limiting the generality of the foregoing,
notwithstanding any other provision of this Agreement, in no event shall (i)
the aggregate amount of Founder Parent Stock Consideration and the Other Parent
Stock Consideration to be issued in the Merger to holders of Company Common
Stock exceed, in the aggregate, 8,649,680 shares of Parent Common Stock plus
any shares of Parent Common Stock

 

4

 

issued pursuant to
Section 2.1(e) as the result of the exercise of any Company Stock Options or
Company Stock Warrants between the date hereof and Closing and any shares of
Parent Common Stock issued as a result of adjustments to the conversion ratios
in accordance with the last sentence of Section 2.5, or (ii) the Cash
Consideration to be paid and delivered to holders of Company Common Stock in
the Merger exceed, in the aggregate, $11,000,000.  Furthermore, it is the intent of the parties that the cash
portion of the consideration not exceed twenty percent (20%) of the total
consideration.  In the event that the
Company believes, acting in good faith, that there has been a material decline
in the consolidated enterprise value of Parent and such decline causes the aggregate
value of the shares of the Founder Parent Stock Consideration and the Other
Parent Stock Consideration to be less than $44,000,000, as determined by a
mutually acceptable third-party valuation, the per share cash amount set forth
in Section 2.1(c)(ii) and 2.1(d)(ii) shall be decreased solely to the extent
necessary to cause the aggregate Cash Consideration not to exceed 20% of the
total consideration; provided, however, that any proposed decrease in the
aggregate Cash Consideration to $10,750,000 or less shall be conclusively
deemed to constitute a Parent Material Adverse Effect for all purposes under
this Agreement, including without limitation the Company’s right to terminate
this Agreement.

 

Section 2.2                                      Fractional
Shares.  No certificates representing
fractional shares of Parent Common Stock shall be issued upon the surrender for
exchange of Company Common Stock, no dividend or distribution by Parent shall
relate to such fractional share interests, and such fractional share interests
shall not entitle the owner thereof to vote or to any rights as a stockholder
of Parent.  In lieu of any such
fractional shares, each holder of Company Common Stock who otherwise would have
been entitled to receive in the Merger a fractional share interest in exchange for
such Company Common Stock shall receive in lieu and stead thereof an amount in
cash equal to the product obtained by multiplying (x) the fractional share
interest to which such holder (after taking into account all shares of Company
Common Stock held by such holder at the Effective Time) otherwise would be
entitled by (y) $13.00.  Payment of such
cash amounts in respect of fractional shares shall be made by, and considered a
payment of Merger Consideration by, Parent.

 

Section 2.3                                      Exchange
Procedures.  At the Closing, each
holder of shares of Company Common Stock issued and outstanding at the
Effective Time shall surrender the certificate or certificates representing
such shares to Parent and shall promptly upon surrender thereof receive in
exchange therefor the consideration provided in Section 2.1(c), 2.1(d) or
2.1(e), as applicable.  The certificate
or certificates of Company Common Stock so surrendered shall be duly endorsed
in blank for transfer or accompanied by separate stock powers duly executed in
blank.

 

Section 2.4                                      Rights
of Former Shareholders of the Company. 
At the Effective Time, the stock transfer book of the Company shall be
closed as to holders of Company Common Stock immediately prior to the Effective
Time and no transfer of Company Common Stock by any such holder shall
thereafter be made or recognized.  Until
surrender for exchange in accordance with the provisions of Section 2.3, each
certificate theretofore representing shares of Company Common Stock shall from
and after the Effective Time represent for all purposes only the right to
receive the consideration provided for in Section 2.1(c), 2.1(d) or 2.1(e), as
applicable, in exchange therefor. 
Whenever a dividend or other distribution is declared by Parent on the
Parent Common Stock, the record date for which is at or after the Effective
Time, the declaration shall include dividends or other distributions on all
Parent Common Stock issuable pursuant to this

 

5

 

Agreement,
but no dividend or distribution payable to the holders of record of Parent
Common Stock as of any time subsequent to the Effective Time shall be delivered
to the holder of any certificate representing shares of Company Common Stock
issued and outstanding at the Effective Time until such holder surrenders such
certificate for exchange as provided in Section 2.3.  However, upon surrender of such certificate, the Parent Common
Stock certificate (together with all such undelivered dividends or other
distributions without interest), any undelivered dividends and cash payments
hereunder (without interest) shall be delivered with respect to each share
represented by such certificate.

 

Section 2.5                                      Make-Whole
Adjustment.  Notwithstanding
anything in this Agreement to the contrary, in the event that, subsequent to
the Closing, Parent issues shares of Parent Common Stock to the
employee-stockholders of Ness U.S.A. Inc. in exchange for their shares of
common stock of Ness U.S.A. Inc., pursuant to the terms and conditions of that
certain Securities Exchange Agreement (the “Securities Exchange Agreement”),
dated as of December 27, 2002, by and among Parent and the persons listed on
Schedule A thereto (each such issuance, a “Ness USA Issuance”), Parent shall
issue to the Persons who were the holders of Company Common Stock immediately
prior to the Effective Time that number of additional shares of Parent Common
Stock (the “Make-Whole Shares”) necessary to restore such Persons to the same
percentage ownership of outstanding Parent Common Stock as such Persons held
immediately prior to such Ness USA Issuance. 
In lieu and stead of fractions of shares of Parent Common Stock that
would be issued as Make-Whole Shares, the Persons receiving the Make-Whole Shares
shall receive an amount in cash calculated in accordance with the formula set
forth in Section 2.2 hereof, in addition to certificates representing the whole
number of Make-Whole Shares to which they are entitled.  If shares of the common stock of Ness U.S.A.
Inc. continue to be exchangeable as of the business day last preceding the
fifth anniversary of the Closing Date, then such shares shall be treated as
having been the subject of a Ness USA Issuance in respect of the full remaining
amount thereof as of such business day and the appropriate number of Make-Whole
Shares shall be issued as of such business day.  If any Ness USA Issuance occurs at or prior to Closing,
adjustments of equivalent effect shall be made to the conversion ratios in
Sections 2.1(c)(i),  2.1(d)(i) and
2.1(e).

 

Section 2.6                                      Withholding.  Merger Sub and Parent shall be entitled to
deduct and withhold from the Merger Consideration otherwise payable pursuant to
this Agreement to any holder of shares of Company Common Stock such taxes and
other amounts as it is required to deduct and withhold with respect to the
making of such payment under the Code and pursuant to applicable provisions of
state, local and foreign tax laws.  To
the extent that amounts are so deducted, withheld and paid to the applicable
taxing authority by the Surviving Corporation, Merger Sub or Parent, as the
case may be, such deducted, withheld and paid amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of the shares of
Company Common Stock in respect of which such deduction, withholding and
payment was made by the Surviving Corporation, Merger Sub or Parent.

 

Section 2.7                                      Certain
Adjustments.  If after the date
hereof and prior to the Effective Time and to the extent permitted by this
Agreement, the outstanding shares of Parent Common Stock or Company Common
Stock shall be changed into a different number, class or series of shares by
reason of any reclassification, recapitalization or combination, forward stock
split, reverse stock split, stock dividend or rights issued in respect of such
stock, or any similar event

 

6

 

shall
occur (any such action an “Adjustment Event”), the Merger Consideration shall
be adjusted correspondingly to provide to the holders of Company Common Stock
the right to receive the same economic value and voting power as contemplated
by this Agreement immediately prior to such Adjustment Event and Parent’s
payment obligations likewise shall be correspondingly adjusted such that it
shall be required to pay and deliver not more, in aggregate economic value and
voting power, than the aggregate Merger Consideration contemplated by this
Agreement.

 

Section 2.8                                      Dissenters’
Shares.  Each outstanding share of
Company Common Stock, the holder of which has timely filed a written notice of
intention to demand appraisal for his shares pursuant to subchapter D of
Chapter 15 of the PBCL is herein called a “Dissenting Share.”  Dissenting Shares, the holders of which have
not effectively withdrawn or lost (for failure to timely file a demand for
appraisal of their shares or otherwise) their dissenters’ rights under the PBCL
(“Perfected Dissenting Shares”), shall not be converted pursuant to Section
2.1, but the holders thereof shall be entitled only to such rights as are
granted by subchapter D of Chapter 15 of the PBCL.  Each holder of Dissenting Shares who becomes entitled to payment
for its Company Common Stock pursuant to the provisions of subchapter D of
Chapter 15 of the PBCL shall receive payment therefor from the Company but only
after the amount thereof shall have been agreed upon or finally determined
pursuant to such provisions.  Each APAR
Holder hereby irrevocably waives and agrees not to exercise the dissenters’
rights provided for in subchapter D of Chapter 15 of the PBCL in connection
with the Contemplated Transactions.

 

Section 2.9                                      Stock
Options; Warrants.  At the Effective
Time, the then outstanding Company Stock Options, whether vested or unvested,
will be assumed by Parent (“Assumed Stock Options”) and the Company Stock
Warrants will either (a) be assumed by Parent (“Assumed Stock Warrants”) at the
Effective Time or (b) at or prior to the Closing (i)  be terminated or (ii) be converted into Company Common Stock.  Section 3.2 of the Company Disclosure Schedule
hereto sets forth a true and complete list as of the date hereof of all holders
of outstanding options to purchase shares of Company Common Stock (“Company
Stock Options”) and the outstanding warrants to purchase shares of Company
Common Stock (“Company Stock Warrants”), including the number of shares of
Company Common Stock subject to each such option and warrant, the exercise or
vesting schedule, the exercise price per share and the term of each such option
or warrant.  On the Closing Date, the
Company shall deliver to Parent an updated Section 3.2 of the Company
Disclosure Schedule hereto current as of such date.  Each such option so assumed by Parent under this Agreement shall
continue to have, and be subject to, the same terms and conditions set forth in
the Company Stock Option Plan (“Company Option Plan”) and any other document
governing such option immediately prior to the Effective Time, except that (a)
such option will be exercisable for that number of whole shares of Parent
Common Stock equal to the product of the number of shares of Company Common
Stock that were issuable upon exercise of such option immediately prior to the
Effective Time multiplied by 0.780274 and rounded down to the nearest whole
number of shares of Parent Common Stock, (b) the per share exercise price for
the shares of Parent Common Stock issuable upon exercise of such assumed option
will be equal to the quotient determined by dividing the exercise price per
share of Company Common Stock at which such option was exercisable immediately
prior to the Effective Time by 0.780274, rounded up to the nearest whole tenth
of a cent and (c) any restriction on the exercisability of such Company Stock
Option shall continue in full force and effect, and the term, exercisability,
vesting schedule and other

 

7

 

provisions
of such Company Stock Option shall remain unchanged.  Consistent with the terms of the Company Option Plan and the
documents governing the outstanding options, the Merger will not terminate any
of the outstanding options under the Company Option Plan or accelerate the
exercisability or vesting of such options or the shares of Parent Common Stock
which will be subject to those options upon Parent’s assumption of the options
in the Merger.  It is the intention of
the parties that the options so assumed by Parent following the Effective Time
will remain incentive stock options as defined in Section 422 of the Code to
the extent such options qualified as incentive stock options prior to the
Effective Time, and the parties hereto shall use their commercially reasonable
efforts to carry out such intention. 
Within 10 business days after the Effective Time, Parent will issue to
each person who, immediately prior to the Effective Time was a holder of an
outstanding option under the Company Option Plan a document in form and
substance reasonably satisfactory to the Company evidencing the foregoing
assumption of such option by Parent. 
Each Assumed Stock Warrant shall be identical to the Company Stock
Warrants except that (a) each such warrant will be exercisable for that number
of whole shares of Parent Common Stock equal to the product of the number of
shares of Company Common Stock that were issuable upon exercise of such option
immediately prior to the Effective Time multiplied by 0.780274 and rounded down
to the nearest whole number of shares of Parent Common Stock, (b) the per share
exercise price for the shares of Parent Common Stock issuable upon exercise of
such assumed warrant will be equal to the quotient determined by dividing the
exercise price per share of Company Common Stock at which such option was
exercisable immediately prior to the Effective Time by 0.780274, rounded up to
the nearest whole tenth of a cent.

 

ARTICLE
III

REPRESENTATIONS AND WARRANTIES OF THE

COMPANY, APAR INVESTMENTS AND SRIVASTAVA

 

Except as set forth in
the Company’s, Apar Investments and Srivastava’s disclosure schedule provided
herewith (the “Company Disclosure Schedule”), the Company, Apar Investments and
Srivastava, jointly and severally, (and, solely with respect to Sections 3.21
and 3.25, each APAR Holder severally and not jointly), hereby represent and
warrant to Parent and the Merger Sub as follows:

 

Section 3.1                                      Corporate
Organization, Etc.  Each of the
Company and its Subsidiaries is a corporation duly organized, validly existing
and, to the extent applicable under the laws of the relevant jurisdiction, in
good standing under the laws of the jurisdiction of its incorporation and has
all requisite corporate power and authority to conduct its business as it is
now being conducted and to own, lease and operate its property and assets,
except where the failure to be so organized, existing and, if applicable, in
good standing or to have such power or authority will not, in the aggregate,
either (i) have a material adverse effect on the business, operations,
assets,  financial condition or results
of operations of the Company and its Subsidiaries taken as a whole or (ii)
materially impair the ability of the APAR Holders to perform any of their
obligations under this Agreement (either of such effects, a “Company Material
Adverse Effect”).  Each of the Company
and its Subsidiaries is qualified or licensed to do business as a foreign
corporation and is in good standing in each jurisdiction in which ownership of
property or the conduct of its business requires such qualification or license,
except where the failure to be so qualified or licensed will not have a Company
Material Adverse Effect.  True and
complete copies of the

 

8

 

organizational
and governing documents of the Company and each of its Subsidiaries as
presently in effect, have been heretofore delivered to Parent.

 

Section 3.2                                      Capitalization
of the Company.  The authorized
share capital of the Company is as set forth in Section 3.2 of the Company
Disclosure Schedule.  The outstanding
shares of the capital stock of the Company as of the date of this Agreement,
and the beneficial and record owners thereof, are as set forth in Section 3.2
of the Company Disclosure Schedule.  All
such shares of the capital stock of the Company are duly authorized, validly
issued, fully paid and non-assessable and, except as set forth in Section 3.2
of the Company Disclosure Schedule, free of any preemptive rights in respect
thereto.  Shares of the Company Series A
Preferred Stock are convertible into Company Common Stock as set forth next to
the names of each holder thereof in Section 3.2 of the Company Disclosure
Schedule, and will have been so converted as of the Closing.  Except as set forth in Section 3.2 of the
Company Disclosure Schedule, there are no outstanding (a) securities
convertible into or exchangeable for the capital stock of the Company, (b)
options, warrants or other rights to purchase or subscribe for capital stock of
the Company or (c) contracts, commitments, agreements, understandings or
arrangements of any kind relating to the issuance of any capital stock of the
Company, any such convertible or exchangeable securities or any such options,
warrants or rights, pursuant to which, in any of the foregoing cases, the
Company is subject or bound.  Except for
the Company Shareholders Agreement and as set forth in Section 3.2 of the
Company Disclosure Schedule, there are no voting trusts, stockholders’
agreements or other similar instruments restricting or relating to the rights
of the holders of shares of Company Capital Stock to vote, transfer or receive
dividends with respect to the shares of Company Capital Stock.  Except as set forth in the Company
Shareholders Agreement, all outstanding shares of Company Capital Stock held by
the APAR Holders are free and clear of all Encumbrances or restrictions on
voting.

 

Section 3.3                                      The
Company’s Subsidiaries.  Section 3.3
of the Company Disclosure Schedule lists each of the Company’s
Subsidiaries.  All issued and
outstanding shares of capital stock of each of the Company’s Subsidiaries are
duly authorized, validly issued, fully paid and nonassessable, and are owned,
directly or indirectly, by the Company, free and clear of all Encumbrances and
any preemptive rights in respect thereto.

 

Section 3.4                                      Authority
Relative to this Agreement; Company Action.  The Company and the APAR Holders have all requisite corporate
authority and power to execute and deliver this Agreement and the APAR Voting
Agreement and to consummate the Contemplated Transactions.  Except for the Company Shareholder Approval,
the execution and delivery of this Agreement and the APAR Voting Agreement and
the consummation of the Contemplated Transactions have been duly and validly
authorized by all required corporate or other action on the part of the Company
and the APAR Holders and no other corporate or other proceedings on the part of
the Company and the APAR Holders are necessary to authorize this Agreement and
the APAR Voting Agreement or to consummate the Contemplated Transactions.  This Agreement and the APAR Voting Agreement
have been duly and validly executed and delivered by the Company and the APAR
Holders and, assuming this Agreement has been duly authorized, executed and
delivered by Parent and Merger Sub, this Agreement and the APAR Voting
Agreement constitute valid and binding agreements of the Company and the APAR
Holders, enforceable against the Company and the APAR Holders in accordance
with their respective terms, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or

 

9

 

other
similar laws now or hereafter in effect relating to or affecting creditors’
rights generally, including the effect of statutory and other laws regarding
fraudulent conveyances and preferential transfers and subject to the
limitations imposed by general equitable principles (regardless whether such
enforceability is considered in a proceeding at law or in equity).  The board of directors of the Company has
(i) duly and validly declared the advisability of, approved and adopted this
Agreement, the APAR Voting Agreement and the Contemplated Transactions,
including the Merger and (ii) recommended that the shareholders of the Company
approve and adopt this Agreement and the Contemplated Transactions.

 

Section 3.5                                      Consents
and Approvals; No Violations. 
Neither the execution and delivery of this Agreement or the APAR Voting
Agreement by the Company and the APAR Holders nor the consummation of the
Contemplated Transactions by the Company and the APAR Holders will (a) violate
any provision of the organizational or governing documents of the Company or
the APAR Holders, (b) require any consent, waiver, approval, exemption,
registration, declaration, license, authorization or permit of, or filing with
or notification to, any Federal, state, local or foreign government, executive
official thereof, governmental or regulatory authority, agency or commission,
including courts of competent jurisdiction, domestic or foreign (a
“Governmental Entity”), except for such consents, waivers, approvals,
exemptions, registrations, declarations, licenses, authorizations, permits,
filings or notifications which are listed in Section 3.5 of the Company
Disclosure Schedule (the “APAR Consents”), or which, if not obtained or made,
will not, in the aggregate, have a Company Material Adverse Effect, (c) result
in a violation or breach of, or constitute (with or without notice or lapse of
time or both) a default (or give rise to any right of termination, cancellation
or acceleration or any obligation to repay) under, any of the terms, conditions
or provisions of any indenture, mortgage, note, bond, encumbrance, license,
government registration, contract, lease, franchise, permit, agreement or other
instrument or obligation to which the APAR Holders, the Company or its
Subsidiaries is a party or by which the APAR Holders, the Company or its
Subsidiaries or any of their respective properties or assets may be bound,
except such violations, breaches and defaults which, in the aggregate, will not
have a Company Material Adverse Effect or (d) violate any order, writ,
judgment, injunction, decree, statute, ordinance, rule or regulation of any
Governmental Entity applicable to the APAR Holders, the Company or its
Subsidiaries or by which any of their respective properties or assets may be
bound, except such violations which, in the aggregate, will not have a Company
Material Adverse Effect.

 

Section 3.6                                      Financial
Statements.  Parent has previously
been furnished with and attached to Section 3.6 of the Company Disclosure
Schedule are (i) the audited consolidated balance sheets of the Company and the
related audited consolidated statements of earnings, retained earnings and cash
flows of the Company (including any related notes) for the fiscal year ended
September 30, 2002, together with the report thereon of the independent public
accountant of the Company (the “Annual Financial Statements”), and (ii) the
unaudited consolidated balance sheets of the Company and the related unaudited
consolidated statement of earnings and cash flows of the Company for the three
months ended December 31, 2002 (the “Interim Financial Statements” and,
together with the Annual Financial Statements, the “Company Financial
Statements”).  Each balance sheet
included in the Company Financial Statements, in all material respects, fairly
presents the consolidated financial position of the Company as of its date, and
the other related statements included in the Company Financial Statements, in
all material respects,

 

10

 

fairly
present the consolidated results of operations and changes in consolidated
financial position of Company for the periods presented therein, all in
conformity with GAAP, applied on a consistent basis during the periods
involved, except (a) as otherwise noted therein and (b) the Interim Financial
Statements omit footnotes that would be contained in reviewed financial
statements and are subject to year-end adjustments in a manner consistent with
prior practices.

 

Section 3.7                                      Absence
of Certain Changes.  Since December
31, 2002, except as set forth on Section 3.7 of the Company Disclosure
Schedule, the Company and its Subsidiaries taken as a whole have not (a)
suffered any change in its business, operations or financial position, except
such changes which, in the aggregate, are not reasonably likely to have a Company
Material Adverse Effect, (b) conducted their respective businesses in any
material respect not in the ordinary and usual course consistent with past
practice, (c) declared, set aside for payment or paid any dividend or other
distribution (whether in cash, stock, property or any combination thereof) in
respect of the capital stock of the Company, or redeemed or otherwise acquired
any shares of capital stock of the Company, or (d) except in the ordinary
course of business and consistent with past practice, (i) incurred any
long-term indebtedness or issued any debt securities or assumed, guaranteed or
endorsed the obligations of any other Person, (ii) sold, transferred or
otherwise disposed of, any of their material property or assets, (iii) created
any material Encumbrance on any of their material property or assets, (iv)
increased in any manner the rate or terms of compensation of any of their
directors, officers or other employees, (v) paid or agreed to pay any pension,
retirement allowance or other employee benefit not required by any existing
Plan or other agreement or arrangement to any such director, officer or
employee, whether past or present, or (vi) entered into or amended any
employment, bonus, severance or retirement contract.

 

Section 3.8                                      Compliance
with Law.  The business of the
Company and its Subsidiaries is not being conducted in violation of any
applicable order, writ, judgment, injunction, decree, statute, ordinance, rule
or regulation of any Governmental Entity, except such violations which, in the
aggregate, will not have a Company Material Adverse Effect.

 

Section 3.9                                      Contracts
and Commitments.  Except as set
forth in Section 3.9 of the Company Disclosure Schedule, neither the Company
nor its Subsidiaries is in breach or default and, to the knowledge of the
Company or the APAR Holders, no other party to any of the material contracts of
the Company or any of its Subsidiaries is as of the date of this Agreement in
breach or default (and no event has occurred which with notice or the lapse of time
or both would constitute a default or violation) under any of the material
contracts of the Company, except such defaults which, in the aggregate, will
not have a Company Material Adverse Effect.

 

Section 3.10                                No
Undisclosed Liabilities.  Except as
and to the extent set forth in the Company Financial Statements or in Section
3.10 of the Company Disclosure Schedule, at December 31, 2002, the Company had
no liabilities required by GAAP to be reflected on its consolidated balance
sheet.  Since December 31, 2002, the
Company has not incurred any liabilities (absolute, accrued, contingent or
otherwise) required by GAAP to be reflected on its consolidated balance sheet,
except such liabilities which were incurred in the ordinary course of business
or which, in the aggregate, are not material to the Company and its
Subsidiaries taken as a whole.

 

11

 

Section 3.11                                No
Default.  Except as set forth in
Section 3.11 of the Company Disclosure Schedule, neither the Company nor any of
its Subsidiaries is in default or violation (and no event has occurred which
with notice or the lapse of time or both would constitute a default or
violation) of any term, condition or provision of (i) its organizational or
governing documents or (ii) any order, writ, judgment, injunction, decree,
statute, ordinance, rule or regulation of any Governmental Entity applicable to
the Company and its Subsidiaries, except such defaults and violations which, in
the aggregate, will not have a Company Material Adverse Effect.  The Company and its Subsidiaries have all
governmental permits, licenses and authorizations necessary for the conduct of
their businesses in all material respects as presently conducted (the
“Permits”) and are in compliance with the terms of the Permits, except for such
Permits the absence of which would not have a Company Material Adverse Effect
or any non-compliance which will not have a Company Material Adverse Effect.

 

Section 3.12                                Litigation.  Except as set forth in Section 3.12 of the
Company Disclosure Schedule, as of the date of this Agreement, there is no
action, suit or proceeding pending, or, to the knowledge of the Company and the
APAR Holders, action, suit or proceeding threatened, against the Company or any
of its Subsidiaries or any properties or rights of the Company or its
Subsidiaries, before any Governmental Entity which (a) involves a material
claim or (b) seeks material injunctive relief. 
As of the date of this Agreement, the Company has not received notice
that it is subject to any outstanding injunction, writ, judgment, order or
decree of any Governmental Entity which will have a Company Material Adverse
Effect.

 

Section 3.13                                Taxes.  Except as set forth in Section 3.13 of the
Company Disclosure Schedule,

 

(a)                                  The
Company and each of its Subsidiaries have, within the time and manner
prescribed by law, (i) filed with the appropriate taxing authorities (or joined
in the filing of) all Tax Returns required to be filed by it in respect of any
Taxes other than those Tax Returns the failure of which to file would not have
a Company Material Adverse Effect, and each such Tax Return was complete and
accurate in all material respects and (ii) paid in full all Taxes shown to be
due and payable thereon.

 

(b)                                 No
deficiencies for any Taxes have been asserted in writing or, to the knowledge
of the Company and the APAR Holders, verbally proposed or assessed against the
Company or any of its Subsidiaries which remain unpaid and which in the
aggregate are material to the business or financial condition of the Company
and its Subsidiaries taken as a whole, or which are not being contested in good
faith by appropriate proceedings; and (ii) as of the dates of the Company
Financial Statements, the Company and its Subsidiaries have adequately reserved
for all material Taxes payable by the Company and its Subsidiaries for which no
Tax Return has yet been filed.

 

(c)                                  The
Company has not (i) entered into a closing agreement or other similar agreement
with a taxing authority relating to Taxes of the Company or any of its
Subsidiaries with respect to a taxable period for which the statute of
limitations is still open, or (ii) with respect to United States federal income
Taxes, granted any waiver of any statute of limitations with respect to, or any
extension of a period for the assessment of, any income Tax, in either case,
that is still outstanding. There are no Liens relating to material Taxes upon
the assets of the

 

12

 

Company or any of
its Subsidiaries other than Liens relating to Taxes not yet due and Liens that
would not, individually or in the aggregate, have a Company Material Adverse
Effect.  Neither the Company nor any of
its Subsidiaries is a party to or is bound by any Tax sharing agreement, Tax
indemnity obligation or similar agreement in respect of Taxes (other than with
respect to agreements solely between or among members of the consolidated group
of which the Company is the common parent and agreements and obligations that
would not, individually or in the aggregate, have a Company Material Adverse
Effect).

 

(d)                                 Neither
the Company nor any of the APAR Holders has taken any action or knows of any
fact, agreement, plan or other circumstance that is reasonably likely to
prevent the Merger from qualifying as a reorganization within the meaning of
Section 368(a) of the Code.

 

(e)                                  For
purposes of this Agreement, (i) “Taxes” shall mean all national,  federal, state, local or foreign and other
taxes, assessments, duties and similar charges of any kind imposed by any
taxing authority, including interest, penalties and additions thereto, and (ii)
“Tax Return” shall mean any return, report, information return or other
document (including any related or supporting information) with respect to Taxes.

 

Section 3.14                                Title
to Properties.  The Company and its
Subsidiaries have good and valid title to all of the material assets and
properties (real and personal) which they own and which are reflected on the
Company Financial Statements (except for assets and properties sold, consumed
or otherwise disposed of by them in the ordinary course of business), and such
assets and properties are owned free and clear of all Encumbrances, except for
(i) the Encumbrances listed on Section 3.14 of the Company Disclosure Schedule,
(ii) other Encumbrances to secure indebtedness reflected on the Company
Financial Statements or indebtedness incurred in the ordinary course of
business and consistent with past practice after the date thereof, (iii) other
Encumbrances which have arisen in the ordinary course of business and (iv)
Encumbrances which, in the aggregate, are not reasonably likely to impair, in
any material respect, the continued use of such asset or property.

 

Section 3.15                                Patents,
Trademarks, Etc.

 

(a)                                  Section
3.15 of the Company Disclosure Schedule sets forth a true and complete list of
all Intellectual Property Rights filed by, or issued or registered to, the
Company and its Subsidiaries and all material intellectual property license
agreements to which the Company and its Subsidiaries are a party.  With respect to registered trademarks, such
list sets forth a list of all jurisdictions in which such trademarks are
registered or applied for and all registration and application numbers.

 

(b)                                 (i)
The Company or its Subsidiaries own or possess adequate licenses or other valid
rights to use all patents, trademarks (registered or unregistered), trade
names, service marks, copyrights and applications and registrations therefor,
trade secrets and other intellectual property and proprietary rights, whether
or not subject to statutory registration or protection, which are material to
the conduct of the business of the Company and its Subsidiaries taken as a
whole (the “Intellectual Property Rights”), (ii) as of the date of this
Agreement, the validity of the Intellectual Property Rights and the title or
rights to use thereof of the Company or its

 

13

 

Subsidiaries are
not being questioned in any litigation to which the Company or its Subsidiaries
is a party, nor to the knowledge of the Company and the APAR Holders, is any
such litigation threatened, (iii) as of the date of this Agreement, none of the
Company or its Subsidiaries has received notice that it is a party to any litigation
in connection with which a Person has alleged that the conduct of the business
of the Company or its Subsidiaries infringed or infringes with any valid
patents, trademarks, trade name, service marks or copyrights of others, nor, to
the knowledge of the Company and the APAR Holders, is any such litigation
threatened, and (iv) to the knowledge of the Company and the APAR Holders, (A)
no Person is materially infringing upon or violating any of the Intellectual
Property Rights and (B) no material claim is pending or threatened to that
effect.

 

Section 3.16                                Insurance.  The Company and its Subsidiaries maintain
policies of fire and casualty, liability and other forms of insurance in such
amounts, with such deductibles and against such risks and losses, and with such
reputable insurers, as are currently customary for businesses of a type and
size, and with assets and properties, comparable to those of the business of
the Company and its Subsidiaries as currently conducted.  Set forth on Section 3.16 of the Company
Disclosure Schedule is a description of each policy of fire and casualty,
liability and other forms of insurance purchased by the Company or any of its
Subsidiaries, setting forth the issuers, amounts, deductibles and coverages of
each.  All material insurance policies
(the “Insurance Policies”) with respect to the property, assets, operations and
business of the Company and its Subsidiaries are in full force and effect and
all premiums due and payable thereon have been paid in full, and no notice of cancellation
or termination has been received with respect to any such policy which has not
been replaced on substantially similar terms prior to the date of such
cancellation.  As of the date of this
Agreement, there are no pending material claims under the Insurance Policies by
the Company or its Subsidiaries as to which the insurers have denied
liability.  Neither the Company nor the
APAR Holders make any representation or warranty that such insurance will be
continued or is continuable after the Closing.

 

Section 3.17                                Environmental
Matters.  To the knowledge of the
Company and the APAR Holders, (a) the Company and its Subsidiaries are in
compliance with all applicable Environmental Laws, except where failure to be
in compliance would not have a Company Material Adverse Effect; and (b) there
is no Environmental Claim pending or threatened against the Company or any of
its Subsidiaries which would have a Company Material Adverse Effect.

 

Section 3.18                                Employee
and Labor Matters.  Neither the
Company nor any of its Subsidiaries is a party to any collective bargaining or
other labor union contract applicable to persons employed by them, no
collective bargaining agreement is being negotiated by the Company or any of
its Subsidiaries, and the Company and the APAR Holders do not know of any
activities or proceedings of any labor union to organize any of its
employees.  Except as set forth in
Section 3.18 of the Company Disclosure Schedule, as of the date hereof, (i) the
Company and its Subsidiaries are in compliance in all material respects with
all applicable laws relating to employment and employment practices, wages,
hours, occupational safety, health standards, severance payments, equal
opportunity,  payment of social security,
national insurance and other Taxes, and terms and conditions of employment,
(ii) there are no charges with respect to or relating to the Company or any of
its Subsidiaries pending, or to the knowledge of the Company and the APAR
Holders, threatened before any Governmental Entity responsible for the
prevention of unlawful, unfair labor or discriminatory employment practices,
and (iii) there is no

 

14

 

labor
dispute, strike or work stoppage against the Company or any of its
Subsidiaries, pending or, to the knowledge of the Company and the APAR Holders,
threatened which may interfere with the business activities of the Company and
its Subsidiaries taken as a whole, except where such non-compliance, charge,
dispute, strike or work stoppage would not have a Company Material Adverse
Effect.  To the knowledge of the Company
and the APAR Holders, all sums due for employee compensation and benefits,
including pension and severance benefits, and all vacation time owing to any
employees of the Company or any of its Subsidiaries have been duly and
adequately accrued in all material respects on the accounting records of the
Company.

 

Section 3.19                                Employee
Plans.

 

(a)                                  Section
3.19 of the Company Disclosure Schedule sets forth a true, correct and complete
list of:

 

(i)                                     all
“employee benefit plans,” as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”), with respect to which the
Company or any of its Subsidiaries has any obligation or liability, contingent
or otherwise (the “Company Benefit Plans”);

 

(ii)                                  all
employees, consultants and independent contractors of the Company and its
Subsidiaries; and

 

(iii)                               all
employment, consulting, termination, profit sharing, severance, change of
control, individual compensation or indemnification agreements, and all bonus
or other incentive compensation, deferred compensation, salary continuation,
disability, severance, stock award, stock option, stock purchase, educational
assistance, legal assistance, club membership, employee discount, employee
loan, credit union or vacation agreements, policies or arrangements under which
the Company or any of its Subsidiaries has any obligation or liability
(contingent or otherwise) in respect of any current or former officer,
director, employee, consultant or contractor of the Company or any of its
Subsidiaries, other than Company Benefit Plans (the “Company Employee
Arrangements”).

 

Company Benefit
Plans and Company Employee Arrangements that cover current or former employees,
consultants, contractors, officers, or directors (or their equivalent) of the
Company and its Subsidiaries are separately identified, by the applicable
country, on Section 3.19 of the Company’s Disclosure Schedule.

 

(b)                                 In
respect of each Company Benefit Plan and Company Employee Arrangement, a
complete and correct copy of each of the following documents (if applicable)
has been made available to Parent:  (i)
the most recent plan and related trust documents, and all amendments thereto;
(ii) the most recent summary plan description, and all related summaries of
material modifications thereto; (iii) the most recent Form 5500 (including,
schedules and attachments); (iv) the most recent Internal Revenue Service
(“IRS”) determination, opinion or notification letter; (v) each of the stock
option grant agreements used to make grants under the Company Option Plan, and
all amendments thereto; (vi) each written employment, consulting or individual
severance or other compensation agreement, and all amendments thereto; and
(vii) the

 

15

 

most recent
actuarial reports (including for purposes of Financial Accounting Standards
Board report nos. 87, 106 and 112).

 

(c)                                  None
of the Company Benefit Plans or Company Employee Arrangements is subject to
Title IV of ERISA, constitutes a defined benefit retirement plan or is a
multiemployer plan described in Section 3(37) of ERISA, and neither the Company
nor any of its Subsidiaries has any obligation or liability (contingent or
otherwise) in respect of any such plans. 
The Company is not a member of a group of trades or businesses under
common control or treated as a single employer pursuant to Section 414 of the
Code.

 

(d)                                 The
Company Benefit Plans and their related trusts intended to qualify under Sections
401 and 501(a) of the Code, respectively, have either received a favorable
determination, opinion or notification letter from the IRS with respect to each
such Company Benefit Plan as to its qualified status under the Code, or has
remaining a period of time under applicable U.S. Treasury regulations or IRS
pronouncements in which to apply for such a letter and make any amendments
necessary to obtain a favorable determination as to the qualified status of
each such Company Benefit Plan.  Any
voluntary employee benefit association that provides benefits to current or
former employees of the Company or any of its Subsidiaries, or their
beneficiaries, is and has been qualified under Section 501(c)(9) of the Code.

 

(e)                                  All
contributions or other payments required to have been made by the Company or
any of its Subsidiaries to or under any Company Benefit Plan or Company
Employee Arrangement by applicable Law or the terms of such Company Benefit
Plan or Company Employee Arrangement (or any agreement relating thereto) have
been timely and properly made.

 

(f)                                    The
Company Benefit Plans and Company Employee Arrangements have been maintained
and administered in all material respects in accordance with their terms and
applicable Laws.  In particular, no
individual who has performed services for the Company’s or any of its
Subsidiaries has been improperly excluded from participation in any Company
Benefit Plan or Company Employee Arrangement.

 

(g)                                 There
are no pending or, to the Company’s or the APAR Holders’ knowledge, threatened
actions, claims, or proceedings against or relating to any Company Benefit Plan
or Company Employee Arrangement (other than routine benefit claims by persons
entitled to benefits thereunder), and, to the knowledge of the Company or the
APAR Holders, there are no facts or circumstances which could form the basis
for any of the foregoing.

 

(h)                                 Neither
the Company nor any of its Subsidiaries has any obligation or liability
(contingent or otherwise) to provide post-retirement life insurance or health
benefits coverage for current or former officers, directors, employees,
consultants or contractors of the Company or any of its Subsidiaries except (i)
as may be required under Part 6 of Title I of ERISA, (ii) a medical expense
reimbursement account plan pursuant to Section 125 of the Code, or (iii)
through the last day of the calendar month in which the participant terminates
employment with the Company or any of its Subsidiaries.

 

16

 

(i)                                     None
of the assets of any Company Benefit Plan is stock of the Company or any of its
affiliates, or property leased to or jointly owned by the Company or any of its
affiliates.

 

(j)                                     Neither
the execution and delivery of this Agreement nor the consummation of the Contemplated
Transactions will (i) result in any payment becoming due to any employee,
consultant or contractor (current, former, or retired) of the Company or any of
its Subsidiaries, (ii) increase any benefits under any Company Benefit Plan or
Company Employee Arrangement or (iii) result in the acceleration of the time of
payment of, vesting of, or other rights in respect of any such benefits (except
as which may be required by the partial or full termination of any Benefit Plan
intended to be qualified under Section 401 of the Code).

 

(k)                                  The
Company has delivered to Parent a true and correct list of the following for
each employee, consultant and contractor of the Company and each of its
Subsidiaries:  base salary, any bonus
obligations, immigration status, hire date, time-off balance, an indication of
the existence of a signed assignment of invention agreement for each employee
and including effective date and term for the contract, pay rate, termination
provisions and indication of a signed assignment of invention agreement for
each consultant and contractor.

 

(l)                                     To
the knowledge of the Company, all employees of the Company and each of its
Subsidiaries who are not U.S. citizens but who are assigned to the U.S.
operations of the Company or any of its Subsidiaries or otherwise travel, from
time to time, to the United States on behalf of the Company or any of its
Subsidiaries, possess all applicable passports, visas and other authorizations
required by the Laws of the United States and have otherwise complied with all
applicable immigration and similar Laws of the United States.

 

(m) To the Company’s
knowledge, all employees of the Company or any of its Subsidiaries assigned to
work outside the United States possess all applicable passports, visas and
other authorizations required by the Laws of the respective countries to which
they are assigned.

 

Section 3.20                                Brokers
and Finders.  Neither the APAR
Holders nor the Company or any of their respective Representatives has employed
any broker or finder or incurred any liability for any investment banking fees,
brokerage fees, commissions or finders’ fees in connection with the
Contemplated Transactions.

 

Section 3.21                                Additional
Representations.  Each APAR Holder
acknowledges (i) that the Parent Common Stock has not been registered under the
Securities Act nor qualified under any United States securities laws, (ii) that
the Parent Common Stock being offered and sold in the Merger is being done so
pursuant to an exemption from the Securities Act, and (iii) that Parent will
rely upon such APAR Holder’s representatives in this Section 3.21 in order to
qualify for such exemption. 
Accordingly, each APAR Holder hereby represents and warrants as follows:

 

(a)                                  Offering
Exemption.  Such APAR Holder
understands that the Parent Common Stock has not been registered under the
Securities Act, nor qualified under any state securities laws, and that they
are being offered and sold pursuant to an exemption from such registration and
qualification based in part upon their representations contained herein.  Such

 

17

 

APAR Holder is an
“accredited investor” as defined under Rule 501 promulgated under the
Securities Act.

 

(b)                                 Knowledge
of Offerees.  Such APAR Holder has
participated in, or has had made available to him or it the conclusions of, the
Company’s business, financial and legal due diligence in respect of Parent,
which due diligence has been conducted in a manner customary for arm’s length
merger transactions between sophisticated business parties.

 

(c)                                  Knowledge
and Experience; Ability to Bear Economic Risks.  Such APAR Holder has such knowledge and experience in financial
and business matters that he or it is capable of evaluating the merits and
risks of the investment contemplated by this Agreement; and he or it is able to
bear the economic risk of this investment in Parent (including a complete loss
of this investment).

 

(d)                                 Limitations
on Disposition.  Such APAR Holder
recognizes that no public market exists for Parent Common Stock, and none is
expected to exist in the foreseeable future. 
Such APAR Holder understands that he or it must bear the economic risk
of this investment indefinitely unless the Parent Common Stock is registered
pursuant to the Securities Act or an exemption from such registration is
available, and unless the disposition of such Parent Common Stock is qualified
under applicable state securities laws or an exemption from such qualification
is available, and that Parent has no obligation (except as set forth in the
Amended Registration Rights Agreement) or present intention of so registering
the Parent Common Stock.  Such APAR
Holder further understands that there is no assurance that any exemption from
the Securities Act will be available, or, if available, that such exemption
will allow such APAR Holder to Transfer any or all the Parent Common Stock, in
the amounts, or at the times such APAR Holder might propose.  Such APAR Holder understands at the present
time Rule 144 promulgated under the Securities Act by the Securities and
Exchange Commission (“Rule 144”) is not applicable to sales of the Parent
Common Stock because it is not registered under Section 12 of the Exchange Act
and there is not publicly available the information concerning Parent specified
in Rule 144.  Such APAR Holder further
acknowledges that, except as specified in the Registration Rights Agreement,
Parent is not presently under any obligation to register under Section 12 of
the Exchange Act or to make publicly available the information specified in
Rule 144 and that it may never be required to do so.

 

(e)                                  Investment
Purpose.  Such APAR Holder is
acquiring the Parent Common Stock solely for such APAR Holder’s own account for
investment and not with a view toward the resale, Transfer, or distribution
thereof, nor with any present intention of distributing the Parent Common
Stock.  No other Person has any right
with respect to or interest in the Parent Common Stock to be purchased by such
APAR Holder, excluding indirect interests of the equity holders of an APAR
Holder solely by virtue of such equity ownership, nor has such APAR Holder
agreed to give any Person any such interest or right in the future.

 

Section 3.22                                Shareholder
Vote Required.  The following are
the only votes of the holders of any class or series of securities of the
Company necessary to approve and adopt the Merger, this Agreement and the
Contemplated Transactions:  (a) the
affirmative vote of the holders of a majority of the votes represented by the
outstanding shares of the Company Common Stock, the Company Series A Preferred
Stock and (if any outstanding) the Company

 

18

 

Series
S Preferred Stock, voting together as a single class, (b) the affirmative vote
of a majority of the votes represented by the outstanding shares of the Company
Series A Preferred Stock and (c) if any shares are outstanding through exercise
of the Company Stock Warrants, the holders of a majority of the votes
represented by the outstanding shares of Company Series S Preferred Stock.

 

Section 3.23                                Change
of Control Provisions.  Except as
set forth in Section 3.23 of the Company Disclosure Schedule, none of the
arrangements, agreements or understandings set forth in this Agreement and none
of the Company’s (or any of its Subsidiary’s) employee benefit plans, programs
or arrangements contain any provision that would become operative as a result
of a change of control of the Company or that will become operative as a result
of the consummation of the Merger or the Contemplated Transactions.

 

Section 3.24                                Reliance.  The foregoing representations and warranties
are made by the Company, Apar Investments and Srivastava (and in the case of
Section 3.21, the APAR Holders), with the knowledge and expectation that Parent
is relying upon them.  Parent
acknowledges that neither the APAR Holders nor any of their Representatives
have made any warranties, express or implied, except for those expressly set
forth in this Agreement.

 

Section 3.25                                Disclosure.  To the knowledge of the Company and the APAR
Holders, all factual information (taken as a whole) heretofore or
contemporaneously furnished by or on behalf of the Company or the APAR Holders
in writing to Parent, Merger Sub or their representatives for purposes of or in
connection with this Agreement or the Contemplated Transactions has been true
and accurate in all material respects on the date as of which such information
is dated and not incomplete by omitting to state any material fact necessary to
make such information not misleading at such time in light of the circumstances
under which such information was provided. 
Parent acknowledges that the Warburg Holders did not prepare or furnish
any information in writing (including schedules) to Parent, Merger Sub or their
representatives for purposes of or in connection with this Agreement or the
Contemplated Transactions.

 

ARTICLE
IV

REPRESENTATIONS AND WARRANTIES OF

PARENT AND MERGER SUB

 

Except as set forth in
Parent’s and Merger Sub’s disclosure schedule provided herewith (the “Parent
Disclosure Schedule”), Parent and Merger Sub, jointly and severally, represent
and warrant to the Company and the APAR Holders as follows:

 

Section 4.1                                      Corporate
Organization; Etc.  Each of Parent
and Merger Sub is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority to conduct its business as it is now
being conducted and to own, lease and operate its property and assets except where
the failure to be so organized, existing and in good standing or to have such
power or authority will not, in the aggregate, either (i) have a material
adverse effect on the business, operations, assets, financial condition or
results of operations of Parent and Merger Sub taken as a whole or (ii) impair,
hinder or adversely affect the ability of Parent and Merger Sub to perform

 

19

 

any of
its obligations under this Agreement or to consummate the Contemplated
Transactions (either of such effects, a “Parent Material Adverse Effect”).  Each of Parent and its Subsidiaries is
qualified or licensed to do business as a foreign corporation and is in good
standing in each jurisdiction in which ownership of property or the conduct of
its business requires such qualification or license, except where the failure
to be so qualified or licensed will not have a Parent Material Adverse
Effect.  True and complete copies of the
organizational and governing documents of Parent and Merger Sub as presently in
effect, have been heretofore delivered to the Company.

 

(a)                                  Capitalization
of Parent.  The authorized and
issued share capital of Parent is as set forth in Section 4.2 of the Parent
Disclosure Schedule.  All of the outstanding
shares of Parent capital stock are, and at the Effective Time, the shares of
Parent Common Stock to be issued pursuant to Section 2.1 will be duly
authorized, validly issued, fully paid and non-assessable and free of any
preemptive rights in respect thereto. 
Except as set forth in Section 4.2 of the Parent Disclosure Schedule,
there are no outstanding (a) securities convertible into or exchangeable for
the capital stock of Parent, (b) options, warrants or other rights to purchase
or subscribe for capital stock of Parent (as of September 30, 2002) or (c)
contracts, commitments, agreements, understandings or arrangements of any kind
relating to the issuance of any capital stock of Parent, any such convertible
or exchangeable securities or any such options, warrants or rights, pursuant to
which, in any of the foregoing cases, Parent is subject or bound.  Except as set forth in Section 4.2 of the
Parent Disclosure Schedule, there are no voting trusts, stockholders’ agreements
or other similar instruments restricting or relating to the rights of the
holders of Parent capital stock to vote, transfer or receive dividends with
respect to the shares of Parent capital stock. 
Except as provided in this Agreement and the related agreements to be
executed and delivered at Closing in connection herewith, the shares of Parent
Common Stock included in the Merger Consideration will be issued free and clear
of any Encumbrances other than Encumbrances created by the recipients thereof.

 

Section 4.2                                      Parent’s
Subsidiaries.  Section 4.3 of the
Parent Disclosure Schedule lists each of Parent’s Subsidiaries.  Each of Parent’s Subsidiaries (with the
exception of Ness U.S.A. Inc. as set forth in Schedule 4.3 of the Parent
Disclosure Schedule) are 100% owned, directly or indirectly, by Parent.

 

Section 4.3                                      Authority
Relative to this Agreement.  Each of
Parent and Merger Sub has all requisite corporate authority and power to
execute and deliver this Agreement and to consummate the Contemplated
Transactions.  Except for the Parent Stockholder
Agreement, the execution and delivery of this Agreement and the consummation of
the Contemplated Transactions have been duly and validly authorized by all
required corporate action on the part of Parent and Merger Sub and no other
corporate proceedings on the part of Parent and Merger Sub are necessary to
authorize this Agreement or to consummate the Contemplated Transactions.  This Agreement has been duly and validly
executed and delivered by Parent and Merger Sub and, assuming this Agreement
has been duly authorized, executed and delivered by each of the other Parties
hereto, this Agreement constitutes a valid and binding agreement of each of
Parent and Merger Sub, enforceable against each of them in accordance with its
terms, except as limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to or
affecting creditors’ rights generally, including the effect of statutory and
other laws regarding fraudulent conveyances and preferential transfers and
subject

 

20

 

to the
limitations imposed by general equitable principles (regardless whether such
enforceability is considered in a proceeding at law or in equity).  The board of directors of Parent has (i)
duly and validly declared the advisability of, approved and adopted this
Agreement, the Parent Voting Agreement and the Contemplated Transactions,
including the Merger and the Parent Amendments, and (ii) recommended that the
stockholders of Parent approve and adopt the Parent Amendments.

 

Section 4.4                                      Consents
and Approvals; No Violations. 
Neither the execution and delivery of this Agreement by Parent and
Merger Sub nor the consummation of the Contemplated Transactions by Parent and
Merger Sub will (a) violate any provision of the certificate or articles of
incorporation, as the case may be, or by-laws of either Parent or Merger Sub,
(b) require any consent, waiver, approval, exemption, registration,
declaration, license, authorization or permit of, or filing with or
notification to, any Governmental Entity, except for such consents, waivers,
approvals, exemptions, registrations, declarations, licenses, authorizations,
permits, filings or notifications which are listed in Section 4.5 of the Parent
Disclosure Schedule (the “Parent Consents”), or which, if not obtained or made,
will not, in the aggregate, have a Parent Material Adverse Effect, (c) result
in a violation or breach of, or constitute (with or without notice or lapse of
time or both) a default (or give rise to any right of termination, cancellation
or acceleration or any obligation to repay) under, any of the terms, conditions
or provisions of any indenture, mortgage, note, bond, encumbrance, license,
government registration, contract, lease, franchise, permit, agreement or other
instrument or obligation to which either Parent or Merger Sub is a party or by
which either Parent or Merger Sub or any of their respective properties or
assets may be bound, except such violations, breaches and defaults which, in
the aggregate, will not have a Parent Material Adverse Effect or (d) violate
any order, writ, judgment, injunction, decree, statute, ordinance, rule or
regulation of any Governmental Entity applicable to either Parent or Merger Sub
or by which any of their respective properties or assets may be bound, except
such violations which, in the aggregate, will not have a Parent Material
Adverse Effect.

 

Section 4.5                                      Financial
Statements.  The Company has
previously been furnished with and attached to Section 4.6 of the Parent
Disclosure Schedule are (i) the audited consolidated balance sheets of Parent
and the related audited consolidated statements of earnings, retained earnings
and cash flows of Parent (including any related notes) for the fiscal year
ended December 31, 2002, together with the report thereon of the independent
public accountants of Parent (the “Parent Financial Statements”). The balance
sheet included in the Parent Financial Statements, in all material respects,
fairly presents the consolidated financial position of Parent as of its date,
and the other related statements included in the Parent Financial Statements,
in all material respects, fairly present the consolidated results of operations
and changes in consolidated financial position of Parent for the periods
presented therein, all in conformity with GAAP, applied on a consistent basis
during the periods involved, except as otherwise noted therein.

 

Section 4.6                                      Absence
of Certain Changes.  Since December
31, 2002, Parent and its Subsidiaries taken as a whole have not (a) suffered
any change in its business, operations or financial position, except such
changes which, in the aggregate, are not reasonably likely to have a Parent
Material Adverse Effect, (b) conducted their respective businesses in any
material respect not in the ordinary and usual course consistent with past
practice, (c) declared, set aside

 

21

 

for
payment or paid any dividend or other distribution (whether in cash, stock,
property or any combination thereof) in respect of the capital stock of Parent,
or redeemed or otherwise acquired any shares of capital stock of Parent, or (d)
except in the ordinary course of business and consistent with past practice (i)
incurred any long-term indebtedness or issued any debt securities or assumed,
guaranteed or endorsed the obligations of any other Person, (ii) sold,
transferred or otherwise disposed of, any of their material property or assets,
(iii) created any material Encumbrance on any of their material property or
assets, (iv) increased in any manner the rate or terms of compensation of any
of their directors, officers or other employees, (v) paid or agreed to pay any
pension, retirement allowance or other employee benefit not required by any
existing Plan or other agreement or arrangement to any such director, officer
or employee, whether past or present, or (vi) entered into or amended any
employment, bonus, severance or retirement contract.

 

Section 4.7                                      Compliance
with Law.  The business of Parent
and its Subsidiaries is not being conducted in violation of any applicable
order, writ, judgment, injunction, decree, statute, ordinance, rule or
regulation of any Governmental Entity, except such violations which, in the
aggregate, will not have a Parent Material Adverse Effect.

 

Section 4.8                                      Contracts
and Commitments.  Neither Parent nor
its Subsidiaries is in breach or default and, to the knowledge of Parent, no
other party to any of the material contracts of Parent is as of the date of
this Agreement in breach or default (and no event has occurred which with
notice or the lapse of time or both would constitute a default or violation)
under any of the material contracts of Parent, except such defaults which, in
the aggregate, will not have a Parent Material Adverse Effect.

 

Section 4.9                                      No
Undisclosed Liabilities.  Except as
and to the extent set forth in the Parent Financial Statements, at December 31,
2002, Parent had no liabilities required by GAAP to be reflected on its
consolidated balance sheet.  Since
December 31, 2002, Parent has not incurred any liabilities (absolute, accrued,
contingent or otherwise) required by GAAP to be reflected on its consolidated
balance sheet, except such liabilities which were incurred in the ordinary
course of business or which, in the aggregate, are not material to Parent and
its Subsidiaries taken as a whole.

 

Section 4.10                                No
Default.  Neither Parent nor any of
its Subsidiaries is in default or violation (and no event has occurred which
with notice or the lapse of time or both would constitute a default or
violation) of any term, condition or provision of (i) its organizational or
governing documents or (ii) any order, writ, judgment, injunction, decree,
statute, ordinance, rule or regulation of any Governmental Entity applicable to
Parent and its Subsidiaries, except such defaults and violations which, in the
aggregate, will not have a Parent Material Adverse Effect.  Parent and its Subsidiaries have all
governmental permits, licenses and authorizations necessary for the conduct of
their businesses in all material respects as presently conducted (the “Parent
Permits”) and are in compliance with the terms of the Parent Permits, except
for such Parent Permits the absence of which would not have a Parent Material
Adverse Effect or any non-compliance which will not have a Parent Material
Adverse Effect.

 

Section 4.11                                Litigation.  As of the date of this Agreement, there is
no action, suit or proceeding pending, or, to the knowledge of Parent, action,
suit or proceeding threatened, against

 

22

 

Parent
or its Subsidiaries or any properties or rights of Parent or its Subsidiaries,
before any Governmental Entity which (a) involves a material claim or (b) seeks
material injunctive relief.  As of the
date of this Agreement, Parent has not received notice that it is subject to
any outstanding injunction, writ, judgment, order or decree of any Governmental
Entity which will have a Parent Material Adverse Effect.

 

Section 4.12                                Taxes.

 

(a)                                  Parent
and its Subsidiaries have, within the time and manner prescribed by law, (i)
filed with the appropriate taxing authorities (or joined in the filing of) all
Tax Returns required to be filed by it in respect of any Taxes other than those
Tax Returns the failure of which to file would not have a Parent Material
Adverse Effect, and each such Tax Return was complete and accurate in all
material respects and (ii) paid in full all Taxes shown to be due and payable
thereon.

 

(b)                                 No
deficiencies for any Taxes have been asserted in writing or, to the knowledge
of Parent, verbally proposed or assessed against Parent or any of its
Subsidiaries which remain unpaid and which in the aggregate are material to the
business or financial condition of Parent and its Subsidiaries taken as a
whole, or which are not being contested in good faith by appropriate
proceedings; and (ii) as of the dates of the Parent Financial Statements,
Parent and its Subsidiaries have adequately reserved for all material Taxes
payable by Parent and its Subsidiaries for which no Tax Return has yet been
filed.

 

(c)                                  Neither
the Parent nor its Subsidiaries have (i) entered into a closing agreement or
other similar agreement with a taxing authority relating to Taxes of Parent and
or any of its Subsidiaries with respect to a taxable period for which the
statute of limitations is still open, or (ii) with respect to United States
federal income Taxes, granted any waiver of any statute of limitations with
respect to, or any extension of a period for the assessment of, any income Tax,
in either case, that is still outstanding. 
There are no Liens relating to material Taxes upon the assets of Parent
or any of its Subsidiaries other than Liens relating to Taxes not yet due and
Liens that would not, individually or in the aggregate, have a Parent Material
Adverse Effect.  Neither Parent nor any
of its Subsidiaries is a party to or is bound by any Tax sharing agreement, Tax
indemnity obligation or similar agreement in respect of Taxes (other than with
respect to agreements solely between or among members of the consolidated group
of which Parent is the common parent and agreements and obligations that would
not, individually or in the aggregate, have a Parent Material Adverse Effect).

 

(d)                                 Neither
the Parent nor any of its Subsidiaries has taken any action or knows of any
fact, agreement, plan or circumstance that is reasonably likely to prevent the
Merger from qualifying as a reorganization within the meaning of Section 368(a)
of the Code.

 

Section 4.13                                Title
to Properties.  Parent and its
Subsidiaries have good and valid title to all of the material assets and
properties (real and personal) which they own and which are reflected on the
Parent Financial Statements (except for assets and properties sold, consumed or
otherwise disposed of by them in the ordinary course of business), and such
assets and properties are owned free and clear of all Encumbrances, except for
(i) Encumbrances to secure indebtedness reflected on the Parent Financial
Statements or indebtedness incurred in the

 

23

 

ordinary
course of business and consistent with past practice after the date thereof,
(ii) other Encumbrances which have arisen in the ordinary course of business
and (iii) Encumbrances which, in the aggregate, are not reasonably likely to
impair, in any material respect, the continued use of such asset or property.

 

Section 4.14                                Patents,
Trademarks, Etc.  (i)  Parent or its Subsidiaries owns or possesses
adequate licenses or other valid rights to use all patents, trademarks
(registered or unregistered), trade names, service marks, copyrights and
applications and registrations therefor, trade secrets and other intellectual
property and proprietary rights, whether or not subject to statutory
registration or protection, which are material to the conduct of the business
of Parent and its Subsidiaries taken as a whole (the “Parent Intellectual
Property Rights”), (ii) as of the date of this Agreement, the validity of the
Parent Intellectual Property Rights and the title or rights to use thereof of
Parent or its Subsidiaries are not being questioned in any litigation to which
Parent or its Subsidiaries is a party, nor to the knowledge of Parent, is any
such litigation threatened, (iii) as of the date of this Agreement, none of
Parent or its Subsidiaries has received notice that is a party to any
litigation in connection with which a Person has alleged that the conduct of
the business of Parent or its Subsidiaries infringed or infringes with any
valid patents, trademarks, trade name, service marks or copyrights of others,
nor, to the knowledge of Parent, is any such litigation threatened, and (iv) to
the knowledge of Parent, (A) no Person is materially infringing upon or
violating any of the Parent Intellectual Property Rights and (B) no material
claim is pending or threatened to that effect.

 

Section 4.15                                Insurance.  Parent and its Subsidiaries maintain
policies of fire and casualty, liability and other forms of insurance in such
amounts, with such deductibles and against such risks and losses, and with such
reputable insurers, as are currently customary for businesses of a type and
size, and with assets and properties, comparable to those of the business of
Parent and its Subsidiaries as currently conducted.  Set forth on Section 4.15 of the Parent Disclosure Schedule is a
description of each policy of fire and casualty, liability and other forms of
insurance purchased by Parent or any of its Subsidiaries, setting forth the
issuers, amounts, deductibles and coverages of each.  All material insurance policies (the “Parent Insurance Policies”)
with respect to the property, assets, operations and business of Parent and its
Subsidiaries are in full force and effect and all premiums due and payable
thereon have been paid in full, and no notice of cancellation or termination
has been received with respect to any such policy which has not been replaced
on substantially similar terms prior to the date of such cancellation.  As of the date of this Agreement, there are
no pending material claims under the Parent Insurance Policies by Parent or its
Subsidiaries as to which the insurers have denied liability.  Parent make no representation or warranty
that such insurance will be continued or is continuable after the Closing.

 

Section 4.16                                Environmental
Matters.  To the knowledge of Parent
(a) Parent and its Subsidiaries are in compliance with all applicable
Environmental Laws, except where failure to be in compliance would not have a
Parent Material Adverse Effect; and (b) there is no Environmental Claim pending
or threatened against Parent or any of its Subsidiaries which would have a
Parent Material Adverse Effect.

 

Section 4.17                                Employee
and Labor Matters.  Neither Parent
nor any of its Subsidiaries is a party to any collective bargaining or other
labor union contract applicable to persons employed

 

24

 

by
them, no collective bargaining agreement is being negotiated by Parent or any of
its Subsidiaries, and Parent does not know of any activities or proceedings of
any labor union to organize any of its employees.  As of the date hereof, (i) Parent and its Subsidiaries are in
compliance in all material respects with all applicable Laws relating to
employment and employment practices, wages, hours, occupational safety, health
standards, severance payments, equal opportunity, payment of social security,
national insurance and other Taxes, and terms and conditions of employment,
(ii) there are no charges with respect to or relating to Parent or any of its
Subsidiaries pending, or to the knowledge of Parent, threatened, before any
Governmental Entity responsible for the prevention of unlawful, unfair labor or
discriminatory employment practices, and (iii) there is no labor dispute,
strike or work stoppage against Parent or its Subsidiaries, pending or, to the
knowledge of Parent, threatened which may interfere with the business
activities of Parent and its Subsidiaries taken as a whole, except where such
non-compliance, charge, dispute, strike or work stoppage would not have a
Parent Material Adverse Effect.  All
sums due for employee compensation and benefits, including pension and
severance benefits, and all vacation time owing to any employees of Parent or
any of its Subsidiaries have been duly and adequately accrued in all material
respects on the accounting records of Parent.

 

Section 4.18                                Employee
Plans.

 

(a)                                  Section
4.18 of the Parent Disclosure Schedule sets forth a true, correct and complete
list of:

 

(i)                                     all
“employee benefit plans,” as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”), with respect to which the
Parent or any of its Subsidiaries has any obligation or liability, contingent
or otherwise (the “Parent Benefit Plans”).

 

Parent Benefit Plans that
cover current or former employees, consultants, contractors, officers, or
directors (or their equivalent) of the Parent and its Subsidiaries are
separately identified, by the applicable country, on Section 4.19 of the Parent
Disclosure Schedule.

 

(b)                                 In
respect of each Parent Benefit Plan, a complete and correct copy of each of the
following documents (if applicable) has been made available to the Company and
the APAR Holders:  (i) the most recent
plan and related trust documents, and all amendments thereto; (ii) the most
recent summary plan description, and all related summaries of material
modifications thereto, (iii) the most recent Form 5500 (including, schedules
and attachments); (iv) the most recent Internal Revenue Service (“IRS”)
determination, opinion or notification letter; and (v) the most recent
actuarial reports (including for purposes of Financial Accounting Standards
Board report nos. 87, 106 and 112).

 

(c)                                  None
of the Parent Benefit Plans or Parent Employee Arrangements is subject to Title
IV of ERISA, constitutes a defined benefit retirement plan or is a
multiemployer plan described in Section 3(37) of ERISA, and neither the Parent
nor any of its Subsidiaries has any obligation or liability (contingent or
otherwise) in respect of any such plans.

 

(d)                                 The
Parent Benefit Plans and their related trusts intended to qualify under Section
401 and 501(a) of the code, respectively, have either received a favorable
determination,

 

25

 

opinion or
notification letter from the IRS with respect to each such Parent Benefit Plan
as to its qualified status under the Code, or has remaining a period of time
under applicable U.S. Treasury regulations or IRS pronouncements in which to
apply for such a letter and make any amendments necessary to obtain a favorable
determination as to the qualified status of each such Parent Benefit Plan.  Any voluntary employee benefit association
that provides benefits to current or former employees of Parent or any of its
Subsidiaries, or their beneficiaries, is and has been qualified under Section
501(c)(9) of the Code.

 

(e)                                  All
contributions or other payments required to have been made by Parent or any of
its Subsidiaries to or under any Parent Benefit Plan or Parent Employee
Arrangement by applicable Law or the terms of such Parent Benefit Plan or
Parent Employee Arrangement (or any agreement relating thereto) have been
timely and properly made.

 

(f)                                    The
Parent Benefit Plans and Parent Employee Arrangements have been maintained and
administered in all material respects in accordance with their terms and
applicable Laws.  In particular, no
individual who has performed services for Parent or any of its Subsidiaries has
been improperly excluded from participation in any Parent Benefit Plan or
Parent Employee Arrangement.

 

(g)                                 There
are no pending or, to Parent’s knowledge, threatened actions, claims, or
proceedings against or relating to any Parent Benefit Plan or Parent Employee
Arrangement (other than routine benefit claims by persons entitled to benefits
thereunder) and, to the knowledge of Parent, there are no facts or
circumstances which could form the basis for any of the foregoing.

 

(h)                                 Neither
Parent nor any of its Subsidiaries has any obligation or liability (contingent
or otherwise) to provide post-retirement life insurance or health benefits
coverage for current or former officers, directors, employees, consultants or
contractors of Parent or any of its Subsidiaries except (i) as may be required
under Part 6 of Title I of ERISA, (ii) a medical expense reimbursement account
plan pursuant to Section 125 of the Code, or (iii) through the last day of the
calendar month in which the participant terminates employment with Parent or
any of its Subsidiaries.

 

(i)                                     None
of the assets of any Parent Benefit Plan is stock of Parent or any of its
affiliates, or property leased to or jointly owned by Parent or any of its
affiliates.

 

(j)                                     Neither
the execution and delivery of this Agreement nor the consummation of the
Contemplated Transactions will (i) result in any payment becoming due to any
employee, consultant or contractor (current, former, or retired) of Parent or
any of its Subsidiaries, (ii) increase any benefits under any Parent Benefit
Plan or Parent Employee Arrangement or (iii) result in the acceleration of the
time of payment of vesting of, or other rights in respect of any such benefits
(except as which may be required by the partial or full termination of any Parent
Benefit Plan intended to be qualified under Section 401 of the Code).

 

(k)                                  To
the knowledge of Parent, all employees of the Parent and each of its
Subsidiaries who are not United States citizens but who are assigned to the
United States operations of Parent or any of its Subsidiaries or otherwise
travel, from time to time, to the

 

26

 

United States on
behalf of Parent or any of its Subsidiaries, possess all applicable passports,
visas and other authorizations required by the Laws of the United States and
have otherwise complied with all applicable immigration and similar Laws of the
United States.

 

(l)            To the knowledge of Parent, all
employees of Parent or any of its Subsidiaries assigned to work outside the
United States possess all applicable passports, visas and other authorizations
required by the Laws of the respective countries to which they are assigned.

 

Section 4.19           Brokers
and Finders.  None of Parent, Merger
Sub or any of their respective Representatives has employed any investment
banker, broker or finder or incurred any liability for any investment banking
fees, brokerage fees, commissions or finders’ fees in connection with the
Contemplated Transactions.

 

Section 4.20           Stockholder
Vote Required.  The following are
the only votes of the holders of any class or series of securities of Parent
necessary to approve and adopt the Parent Amendments (a) the affirmative vote
of the holders of at least a majority of the votes represented by the
outstanding shares of Parent Common Stock and Parent Class B Preferred Stock,
voting together as a single class, and (b) in respect of preemptive rights, the
waiver by G.L.Y. High-Tech Investments Inc. of its preemptive rights in respect
of the Founder Parent Stock Consideration and the Other Parent Stock
Consideration.

 

Section 4.21           Change
of Control Provisions.  Except as
set forth in Section 4.21 of the Parent Disclosure Schedule, none of the
arrangements, agreements or understandings set forth in this Agreement and none
of Parent’s employee benefit plans, programs or arrangements contain any
provision that would become operative as a result of the consummation of the
Merger, the Parent Amendments or the Contemplated Transactions.

 

Section 4.22           Reliance.  The foregoing representations and warranties
are made by Parent and Merger Sub with the knowledge and expectation that the
Company is relying upon them.  The
Company acknowledges that neither Parent, Merger Sub nor any of their
respective Representatives has made any representations or warranties, express
or implied, except for those expressly set forth in this Agreement.

 

Section 4.23           Disclosure.  To Parent’s and Merger Sub’s knowledge, all
factual information (taken as a whole) heretofore or contemporaneously furnished
by or on behalf of the Parent or Merger Sub in writing to the Company, the APAR
Holders or their representatives for purposes of or in connection with this
Agreement or the Contemplated Transactions has been true and accurate in all
material respects on the date as of which such information is dated and not
incomplete by omitting to state any material fact necessary to make such
information not misleading at such time in light of the circumstances under
which such information was provided.

 

27

ARTICLE
V

COVENANTS

 

Section 5.1                                      Conduct
of the Business of the Company Pending the Closing.  Except as contemplated by this Agreement, as
set forth in Section 5.1 of the Company Disclosure Schedule or with the prior
written consent of Parent, during the period between the date of this Agreement
and the Effective Time, the Company and each of its Subsidiaries will conduct
their respective businesses and operations in, and only in, their ordinary and
usual course of business, in substantially the same manner as heretofore
conducted, and will use all reasonable efforts consistent therewith to preserve
intact the Company’s and each of its Subsidiaries’ properties, assets and
business organizations, to keep available the services of the Company’s and its
Subsidiaries’ officers and employees and to maintain satisfactory relationships
with customers, suppliers, distributors and others having commercially
beneficial business relationships with the Company and/or any of its
Subsidiaries, in each case in the ordinary course of business consistent with
past practice.  Neither the Company nor
any of its Subsidiaries will take any action with the purpose of causing any of
the conditions to Parent’s obligations set forth in Article VII hereof to not
be satisfied.  Except as set forth in
Section 5.1 of the Company Disclosure Schedule, without limiting the generality
of the foregoing, and except as otherwise provided in or expressly contemplated
by this Agreement, neither the Company nor any of its Subsidiaries will, prior to
the Effective Time, without the prior written consent of Parent:

 

(a)                                  issue,
sell or pledge, or authorize or propose the issuance, sale or pledge of (i)
additional shares in the share capital of the Company or any of its
Subsidiaries, or securities convertible into or exchangeable for any such
shares, or any rights, warrants or options to acquire any such shares or other
convertible securities or (ii) any other securities in respect of, in lieu of,
or in substitution for, shares of Company Common Stock outstanding on the date
hereof;

 

(b)                                 declare
or pay any dividend or distribution on any shares in the share capital of the
Company or any of its Subsidiaries;

 

(c)                                  redeem,
purchase or otherwise acquire any outstanding shares in the share capital of
the Company or any of its Subsidiaries;

 

(d)                                 propose
or adopt any amendment to the organizational or governing documents of the
Company or its Subsidiaries;

 

(e)                                  except
in the ordinary course of business consistent with past practice, incur any
long-term indebtedness or issue any debt securities or assume, guarantee or
endorse the obligations of any other Person;

 

(f)                                    (i)
increase in any manner the rate or terms of compensation or benefits of any of
its directors, officers or other employees, except as may be allowed under
existing employment agreements, Company Benefit Plans and Company Employee
Arrangements or such increases as are granted in the ordinary course of
business consistent with past practice, or such increases as may be required by
applicable law, or (ii) pay or agree to pay any pension, retirement allowance
or other employee benefit not required or permitted by any existing Company
Benefit Plan, Company Employee Arrangement, other agreement or arrangement or

 

28

 

applicable Law to
any such director, officer or employee, whether past or present, or (iii) enter
into or amend any employment, bonus, severance or retirement contract or adopt
any employee benefit plan, except to the extent required by applicable Law;

 

(g)                                 take
any action that will jeopardize the qualification of the Merger as a
reorganization within the meaning of Section 368(a) of the Code; or

 

(h)                                 agree
in writing to take any of the foregoing actions.

 

Section 5.2                                      Conduct
of the Business of Parent Pending Closing. 
Except as contemplated by this Agreement, as set forth in Section 5.2 of
the Parent Disclosure Schedule or with the prior written consent of the
Company, during the period between the date of this Agreement and the Effective
Time, Parent and each of its Subsidiaries will conduct their respective
businesses and operations in, and only in, their ordinary and usual course of
business, in substantially the same manner as heretofore conducted, and will
use all reasonable efforts consistent therewith to preserve intact Parent’s and
each of its Subsidiaries’ properties, assets and business organizations, to
keep available the services of Parent’s and each of its Subsidiaries’ officers
and employees and to maintain satisfactory relationships with customers,
suppliers, distributors and others having commercially beneficial business
relationships with Parent and/or any of its Subsidiaries, in each case in the
ordinary course of business consistent with past practice.  Neither Parent nor any of its Subsidiaries
will take any action with the purpose of causing any of the conditions to the
Company’s obligations set forth in Article VII hereof to not be satisfied.  Except as set forth in Section 5.2 of the Parent
Disclosure Schedule, without limiting the generality of the foregoing and
except as otherwise provided in or expressly contemplated by this Agreement,
neither Parent nor any of its Subsidiaries will, prior to the Effective Time,
without the prior written consent of the Company:

 

(a)                                  issue,
sell or pledge, or authorize or propose the issuance, sale or pledge of (i)
additional shares in the share capital of Parent or any of its Subsidiaries, or
securities convertible into or exchangeable for any such shares, or any rights,
warrants or options to acquire any such shares or other convertible securities
or (ii) any other securities in respect of, in lieu of, or in substitution for,
shares of Parent Common Stock outstanding on the date hereof;

 

(b)                                 declare
or pay any dividend or distribution on any shares in the share capital of
Parent, or any of its Subsidiaries;

 

(c)                                  redeem,
purchase or otherwise acquire any outstanding shares in the share capital of
Parent or any of its Subsidiaries;

 

(d)                                 propose
or adopt any amendment to the organizational or governing documents of Parent
or any of its Subsidiaries; provided, however, that Parent shall
seek and use commercially reasonable efforts to obtain requisite stockholder
approval of each Parent Amendment (including, without limitation, an amendment
to Parent’s certificate of incorporation increasing the authorized capital of
Parent in order that Parent shall have a sufficient number of shares of Parent
Common Stock to issue as Merger Consideration upon the Closing).

 

29

 

(e)                                  except
in the ordinary course of business consistent with past practice, incur any
long-term indebtedness or issue any debt securities or assume, guarantee or
endorse the obligations of any other Person;

 

(f)                                    increase
in any manner the rate or terms of compensation or benefits of any of its
directors, officers or other employees, except as may be allowed under existing
employment agreements, Parent Benefit Plans and Parent Employee Arrangements or
such increases as are granted in the ordinary course of business consistent
with past practice or such increases as may be required by applicable Law, or
(ii) pay or agree to pay any pension, retirement allowance or other employee
benefit not required or permitted by any existing Parent Benefit Plan or Parent
Employee Arrangement, other agreement or arrangement or applicable Law to any
such director, officer or employee, whether past or present, or (iii) enter
into or amend any employment, bonus, severance or retirement contract or adopt
any employee benefit plan, except to the extent required by applicable Law;

 

(g)                                 take
any action that will jeopardize the qualification of the Merger as a
reorganization within the meaning of Section 368(a) of the Code; or

 

(h)                                 agree
in writing to take any of the foregoing actions.

 

Section 5.3                                      Access
to Information.  (a)  From the date of this Agreement to the
Effective Time, the Company will, and will cause each of its Subsidiaries to,
(i) give Parent and its authorized Representatives reasonable access to all
personnel, books, records, offices and other facilities and properties of the
Company and its Subsidiaries, (ii) permit Parent to make such inspections
thereof as Parent may reasonably request and (iii) cause its officers to
furnish Parent with such financial and operating data and other information
with respect to the business and properties of the Company and its Subsidiaries
as Parent may from time to time reasonably request; provided, however,
that any such access shall be conducted at a reasonable time and in such a  manner
as not to interfere unreasonably with the operation of the business of the
Company and its Subsidiaries; provided, further, that Parent and
its authorized Representatives shall not contact or hold discussions with
customers, suppliers or non-management employees of the Company and/or its
Subsidiaries without the prior written consent of the Company.  All such information and access shall be
subject to the terms and conditions of the non disclosure agreement dated June
21, 2002  between
Parent and the Company (the “Confidentiality Agreement”).  Notwithstanding anything to the contrary in
this Agreement, none of the APAR Holders, the Company or any of its
Subsidiaries shall be required to disclose any information if doing so could
violate any agreement or Federal, state, local or foreign law, rule or
regulation to which any of them is a party or to which any of them is subject.

 

(b)                                 From
the date of this Agreement to the Effective Time, Parent will, and will cause
each of its Subsidiaries to, (i) give the Company and its authorized
Representatives reasonable access to all personnel, books, records, offices and
other facilities and properties of Parent and its Subsidiaries,
(ii) permit the Company to make such inspections thereof as the Company
may reasonably request and (iii) cause its officers to furnish the Company
with such financial and operating data and other information with respect to
the business and properties of Parent and its Subsidiaries as the Company may
from time to time reasonably request; provided, however, that any
such access shall be conducted at a reasonable time and in such a manner as 

 

30

 

not to interfere
unreasonably with the operation of the business of Parent and its Subsidiaries;
provided, further, that the Company and its authorized
Representatives shall not contact or hold discussions with customers, suppliers
or non-management employees of Parent and/or its Subsidiaries without the prior
written consent of Parent.  All such
information and access shall be subject to the terms and conditions of the
Confidentiality Agreement. 
Notwithstanding anything to the contrary in this Agreement, neither
Parent nor any of its Subsidiaries shall be required to disclose any
information if doing so could violate any agreement or Federal, state, local or
foreign law, rule or regulation to which any of them is a party or to which any
of them is subject.

 

Section 5.4                                      Disclosure
Supplements.

 

(a)                                  From
time to time prior to the Effective Time, the Company and the APAR Holders will
supplement or amend the Company Disclosure Schedule with respect to any matter
hereafter arising which, if existing or occurring at or prior to the date of
this Agreement, would have been required to be set forth or described in the
Company Disclosure Schedule or which is necessary to complete or correct any
information in the Company Disclosure Schedule or in any representation or
warranty which has been rendered inaccurate thereby.

 

(b)                                 From
time to time prior to the Effective Time, Parent and Merger Sub will supplement
or amend the Parent Disclosure Schedule with respect to any matter hereafter
arising which, if existing or occurring at or prior to the date of this
Agreement, would have been required to be set forth or described in the Parent
Disclosure Schedule or which is necessary to complete or correct any
information in the Parent Disclosure Schedule or in any representation or
warranty which has been rendered inaccurate thereby.

 

(c)                                  No
such supplement or amendment shall be given effect for purposes of determining
the satisfaction of the conditions set forth in Article VII hereof, except as
explicitly set forth herein including as set forth in Article VII hereof.

 

Section 5.5                                      Consents
and Approvals.  Each of the parties
hereto shall use its commercially reasonable efforts to (i) obtain as promptly
as practicable all consents, waivers, approvals, exemptions, licenses and
authorizations required in connection with the consummation of the Contemplated
Transactions under any Federal, state, local or foreign law or regulation, (ii)
lift or rescind any injunction or restraining order or other order adversely
affecting the ability of the parties hereto to consummate the Contemplated
Transactions and (iii) effect all necessary registrations and filings.  The parties hereto further covenant and
agree, with respect to any threatened or pending preliminary or permanent
injunction or other order, decree or ruling or statute, rule, regulation or
executive order that would adversely affect the ability of the parties hereto
to consummate the Contemplated Transactions, to respectively use their
commercially reasonable efforts to prevent the entry, enactment or promulgation
thereof, as the case may be.

 

Section 5.6                                      Filings.  Promptly after the execution of this
Agreement, each of the parties hereto shall prepare and make or cause to be
made any required filings, submissions and notifications under the laws of any
domestic or foreign jurisdiction to the extent that such filings are necessary
to consummate the Contemplated Transactions and will use its commercially

 

31

 

reasonable
efforts to take all other actions necessary to consummate the Contemplated
Transactions in a manner consistent with applicable law.  Each of the parties hereto will furnish to
the other parties hereto such necessary information and reasonable assistance
as such other parties hereto may reasonably request in connection with the
foregoing.

 

Section 5.7                                      Further
Assurances.  Upon the terms and
subject to the conditions herein provided, each of the parties hereto agrees to
use its commercially reasonable efforts to take or cause to be taken all
action, to do or cause to be done, and to assist and cooperate with the other
parties hereto in doing, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective, in the most
expeditious manner practicable, the Contemplated Transactions, including, but
not limited to, (i) the satisfaction of the conditions precedent to the
obligations of any of the parties hereto; (ii) the defending of any lawsuits or
other legal proceedings, whether judicial or administrative, challenging this
Agreement or the performance of the obligations hereunder; and (iii) the
execution and delivery of such instruments, and the taking of such other
actions as the other parties hereto may reasonably require in order to carry
out the intent of this Agreement.

 

Section 5.8                                      Employee
Benefit Matters.  From and after the
Effective Time, Parent and its Subsidiaries shall provide, in all material
respects, the employees of the Company and its Subsidiaries and their
dependents with the same employee benefits as those provided by Parent and its
Subsidiaries to similarly situated employees of Parent and its Subsidiaries or,
if more favorable to such employees, the employee benefits currently provided
by the Company and its Subsidiaries to its employees.  Parent and its Subsidiaries shall use their respective best efforts
to cause all employee benefit plans, practices, arrangements and programs
sponsored by Parent or its Subsidiaries to give each employee of the Company
and its Subsidiaries credit for his or her service with the Company and its
Subsidiaries prior to the Effective Time for all purposes thereunder.  Parent and its Subsidiaries shall use their
respective best efforts cause all employee benefit plans, practices,
arrangements and programs that provide health care benefits (including, without
limitation, dental and vision care benefits) sponsored by Parent or its
Subsidiaries to apply any expenses incurred by employees of the Company or its
Subsidiaries prior to the Effective Time to any deductible or copayment
requirements under such plans.

 

ARTICLE
VI

ADDITIONAL AGREEMENTS

 

Section 6.1                                      Shareholders’
Meetings.

 

(a)                                  The
Company shall take all action necessary under all applicable Laws to call, give
notice of and hold the Company Shareholders’ Meeting.  The Company Shareholders’ Meeting shall be held (on a date selected
by the Company in consultation with Parent) as promptly as practicable after
the date of this Agreement.  The Company
shall ensure that all proxies solicited in connection with the Company
Shareholders’ Meeting are solicited in compliance with all applicable Laws.

 

(b)                                 (i)
The board of directors of the Company shall recommend that the Company’s
shareholders vote to adopt this Agreement at the Company Shareholders’ Meeting
(the recommendation of the Company’s board of directors that the Company’s shareholders
vote

 

32

 

to adopt this
Agreement being referred to as the “Company Board Recommendation”); and (ii)
the Company Board Recommendation shall not be withdrawn or modified in a manner
adverse to Parent or Merger Sub, and no resolution by the board of directors of
the Company or any committee thereof to withdraw or modify the Company Board
Recommendation in a manner adverse to Parent or Merger Sub shall be adopted or
proposed except as permitted by Section 6.3(a) hereof and subject to the
Company’s payment obligations set forth therein

 

(c)                                  Parent
shall take all action necessary under all applicable Laws to call, give notice
of and hold the Parent Stockholders’ Meeting. 
The Parent Stockholders’ Meeting shall be held as promptly as
practicable after the date of this Agreement. 
Parent shall ensure that all proxies solicited in connection with the
Parent Stockholders’ Meeting are solicited in compliance with all applicable
Laws.

 

(d)                                 (i)
The board of directors of Parent shall recommend that Parent’s stockholders
vote to approve the Parent Amendments at the Parent Stockholders’ Meeting (the
recommendation of Parent’s board of directors that Parent’s stockholders vote
to approve the Parent Amendments being referred to as the “Parent Board
Recommendation”); and (ii) the Parent Board Recommendation shall not be
withdrawn or modified in a manner adverse to the Company or the APAR Holders,
and no resolution by the board of directors of Parent or any committee thereof
to withdraw or modify the Parent Board Recommendation in a manner adverse to
the Company or the APAR Holders shall be adopted or proposed, except as
permitted by Section 6.3(b) hereof and subject to Parent’s payment obligations
set forth therein.

 

Section 6.2                                      Commercially
Reasonable Efforts.

 

(a)                                  Subject
to the terms and conditions of this Agreement, each party will use commercially
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable under applicable
Laws to consummate the Merger and the other Contemplated Transactions. Neither
the Company, Parent Merger Sub nor any of the APAR Holders will take, agree to
take or knowingly permit to be taken any action or do or knowingly permit to be
done anything in the conduct of the business of the companies, or otherwise,
which would be contrary to or in breach of any of the terms or provisions of
this Agreement.

 

(b)                                 The
parties hereto shall use commercially reasonable efforts to resolve such
objections if any, as may be asserted by a Governmental Entity or other person
in respect of the Contemplated Transactions, including, without limitation,
under any antitrust or other Law, or by any shareholder in respect of
Dissenting Shares.  In connection with
the foregoing, if any administrative or judicial action or proceeding,
including any proceeding by a private party, is instituted (or threatened to be
instituted) challenging any Contemplated Transaction, each of Parent, Merger
Sub and the Company shall cooperate in all respects with each other and use its
respective commercially reasonable efforts to contest and resist any such
action or proceeding and to have vacated, lifted, reversed or overturned any
decree, judgment, injunction, or other order, whether temporary, preliminary or
permanent, that is in effect and that prohibits, prevents or restricts
consummation of the Contemplated Transactions. 
Notwithstanding the foregoing or any other provision of this Agreement,
nothing in this Section 6.2(b) shall limit a party’s right to

 

33

 

terminate this
Agreement pursuant to Section 8.2 so long as such party has up to then complied
in all material respects with its obligations under this Section 6.2(b).

 

(c)                                  The
Company, Parent and Merger Sub agree that in connection with any litigation
that may be brought against the Company or its directors, Parent or its
directors or Merger Sub or its directors relating to the Contemplated
Transactions, the party subject to such litigation will keep the others, and
any counsel which the others may retain at their own expense, informed of the
course of such litigation, to the extent the others are not also party
thereto.  The parties agree that they
will consult with each other prior to entering into any settlement or
compromise of any such litigation, and that no such settlement or compromise
will be entered into by any party without the prior written consent of the
other parties, which consent shall not be unreasonably withheld.

 

Section 6.3                                      Acquisition
Proposals.

 

(a)                                  Restrictions
on the Company.

 

(i)                                     The
Company and each of its Subsidiaries will not, nor will they authorize or
permit any officer, director, employee, consultant or contractor of or any
investment banker, attorney, accountant or other advisor or representative of,
the Company or any of its Subsidiaries to, directly or indirectly,
(A) solicit, initiate or encourage the submission of any Company
Acquisition Proposal (as hereinafter defined) or (B) participate in any
discussions or negotiations regarding, or furnish to any person any information
in respect of, or take any other action to facilitate, any Company Acquisition
Proposal or any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any Company Acquisition Proposal.  Notwithstanding the foregoing, in the event
that the Company receives an unsolicited Company Acquisition Proposal, prior to
the adoption of this Agreement by the Company Shareholder Approval, this
Section 6.3(a) shall not prohibit the Company from furnishing nonpublic
information regarding the Company to, or entering into discussions with, any
Person in response to a bona fide Company Acquisition Proposal that can
reasonably be expected to lead to a Superior Proposal that is submitted to the
Company by such Person (and not withdrawn) if (1) neither the Company, any
of its Subsidiaries nor any representative of any of the Company or its
Subsidiaries shall have violated any of the restrictions set forth in this
Section 6.3(a), (2) the board of directors of the Company concludes in
good faith, after having taken into account the advice of its outside legal
counsel, that failure to take such action would be inconsistent with fiduciary
duties of the board of directors of the Company to the Company’s shareholders,
(3) at least three business days prior to furnishing any such nonpublic
information to, or entering into discussions with, such Person, the Company
gives Parent written notice of the identity of such Person and of the Company’s
intention to furnish nonpublic information to, or enter into discussions with,
such Person, and the Company receives from such Person an executed
confidentiality agreement containing customary limitations on the use and
disclosure of all nonpublic written and oral information furnished to such
Person by or on behalf of the Company, and (4) at least two business days prior
to furnishing any such nonpublic information to such Person, the Company
furnishes such nonpublic information to Parent (to the extent such nonpublic
information has not been previously furnished by the Company to Parent).  Immediately after the execution and delivery
of this Agreement, the Company and each of its Subsidiaries will, and will use
their commercially reasonable efforts to cause their affiliates, and

 

34

 

their respective
officers, directors, employees, consultants, contractors, investment bankers,
attorneys, accountants and other agents and representatives to, cease and
terminate any existing activities, discussions or negotiations with any parties
conducted heretofore in respect of any possible Company Acquisition Proposal
and shall immediately inform Parent of the receipt by the Company of any
subsequent Company Acquisition Proposal. 
The Company and its Subsidiaries shall take all necessary steps to
promptly inform the individuals or entities referred to in the first sentence
of this Section 6.3(a) of the obligations undertaken in this Section
6.3(a).  “Company Acquisition Proposal”
means an inquiry, offer or proposal regarding any of the following (other than
the Contemplated Transactions) involving the Company: (w) any merger,
consolidation, share exchange, recapitalization, business combination or other
similar transaction; (x) any sale of shares of capital stock of the
Company after which shareholders of the Company immediately prior to such sale
would hold less than a majority of the issued and outstanding capital stock of
the Company, (y) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition of all or substantially all the assets of the Company in a
single transaction or series of related transactions; or (z) any public
announcement of a proposal, plan or intention to do any of the foregoing or any
agreement to engage in any of the foregoing. “Company Superior Proposal” shall
mean an unsolicited, bona fide written offer made by a third party to purchase
all of the outstanding Company Common Stock on terms that the board of
directors of the Company determines, in its reasonable judgment, to be more
favorable to the Company and its shareholders (taking into account, among other
things, all legal, financial, regulatory and other aspects of the proposal and
identity of the offeror) as compared to the Contemplated Transactions and which
is reasonably capable of being consummated; provided, however,
that any such offer shall not be deemed to be a Company Superior Proposal if
any financing required to consummate the transaction contemplated by such offer
is not committed and is not reasonably capable of being obtained by such third
party.

 

(ii)                                  The
Company board of directors will not withdraw or modify, or propose to withdraw
or modify, in a manner adverse to Parent or Merger Sub, its approval or
recommendation of this Agreement or the Merger unless the Company board of
directors, after consultation with independent legal counsel, determines in
good faith that such action is necessary to avoid a breach by the Company board
of directors of its fiduciary duties to the Company’s shareholders.  Nothing contained in this Section 6.3(a)
shall prohibit the Company from making any disclosure to the Company’s
shareholders which, in the good faith reasonable judgment of the Company board
of directors, after consultation with independent legal counsel, is required
under applicable Law; provided, that except as otherwise permitted in
this Section 6.3(a), the Company may not withdraw or modify, or propose to
withdraw or modify, its position with respect to the Merger or approve or
recommend, or propose to approve or recommend, a Company Acquisition Proposal.
Nothing in this Section 6.3(a) shall (A) permit the Company to terminate this
Agreement or (B) affect any other obligations of the Company under this
Agreement.

 

(iii)                               In
the event that (a) the Company’s board of directors withdraws or modifies, in a
manner adverse to Parent or Merger Sub, its approval or recommendation of this
Agreement or the Merger, and (b) this Agreement is terminated by Parent
pursuant to any of Sections 8.2(a), 8.2(c) or 8.4(b), then the Company shall,
within five business days of such

 

35

 

termination,
deliver to Parent a cash payment of $250,000 by wire transfer of immediately
available funds to an account of Parent’s designation.

 

(b)                                 Restrictions
on Parent

 

(i)                                     Parent
and each of its Subsidiaries will not, nor will they authorize or permit any
officer, director, employee, consultant or contractor of or any investment
banker, attorney, accountant or other advisor or representative of, Parent or
any of its Subsidiaries to, directly or indirectly, (A) solicit, initiate or
encourage the submission of any Parent Acquisition Proposal (as hereinafter
defined) or (B) participate in any discussions or negotiations regarding, or
furnish to any person any information in respect of, or take any other action
to facilitate, any Parent Acquisition Proposal or any inquiries or the making
of any proposal that constitutes, or may reasonably be expected to lead to, any
Parent Acquisition Proposal, other than in compliance with Section 6.3(b).

 

(ii)                                  If
Parent receives an unsolicited Parent Acquisition Proposal, Parent shall
provide written notice of such proposal and the terms thereof to the Company
within three business days of such receipt, and shall update the Company as to
the progress of such discussions with comparable promptness during the pendancy
thereof.  Upon execution and delivery of
any definitive agreement in respect of such a Parent Acquisition Proposal (a
“Parent Acquisition Agreement”), Parent shall deliver a true and complete copy
thereof (including all schedules, exhibits and side agreements) to the
Company.  Parent shall not agree to any
Parent Acquisition Agreement that does not (a) provide for the APAR Holders to
receive such consideration as they would have been entitled to had the
Contemplated Transactions been consummated prior to the record date for the
transactions contemplated by the Parent Acquisition Agreement and (b) provide
that no amendments of the Parent Acquisition Agreement affecting such
consideration or the economic effect of the transactions contemplated by the
Parent Acquisition Agreement upon any APAR Holder shall be effective without
the prior written consent of all APAR Holders. 
Upon execution and delivery by Parent of a Parent Acquisition Agreement,
the Company shall then have the option, exercisable by written notice to Parent
at any time within three business days of the delivery to the Company, to
terminate this Agreement and receive the payment described in Section
6.3(b)(iii) below.  “Parent Acquisition
Proposal” means an inquiry, offer or proposal regarding any of the following
(other than the Contemplated Transactions) involving Parent:  (v) any merger, consolidation, share
exchange (other than the share exchange provided for in the Securities Exchange
Agreement), recapitalization, business combination or other similar
transaction; (w) any sale of shares of capital stock of Parent after which stockholders
of Parent immediately prior to such sale would hold less than a majority of the
outstanding capital stock of Parent; (x) any sale, lease, exchange, mortgage,
pledge, transfer or other disposition of all or substantially all the assets of
Parent in a single transaction or series of related transactions; or (y) any
public announcement of a proposal, plan or intention to do any of the foregoing
or any agreement to engage in any of the foregoing.

 

(iii)                               In
the event that the Company terminates this Agreement pursuant to the preceding
Section 6.3(b)(ii), then Parent shall, within five business days of such
termination, deliver to the Company a cash payment of $250,000 by wire transfer
of immediately available funds to an account of the Company’s designation.

 

36

 

Section 6.4                                      Public
Announcements.  Each of Parent,
Merger Sub and the Company will consult with one another before issuing any
press release or otherwise making any public statements in respect of the
Contemplated Transactions, including, the Merger, and shall not issue any such
press release or make any such public statement prior to such consultation,
except as may be required by applicable Law, a copy of which shall be sent
simultaneously to the other parties upon such release.

 

Section 6.5                                      Indemnification.

 

(a)                                  Indemnification
by  the
APAR Holders.

 

(i)                                     The
APAR Holders shall severally defend, indemnify and hold Parent, for its own
account and that of Merger Sub and the respective Affiliates of Parent and
Merger Sub, harmless from and against and in respect of any and all actual
losses, liabilities, damages, judgments, settlements and expenses, including
reasonable attorneys’ fees, incurred directly by Parent, Merger Sub and their
Affiliates (hereinafter “Parent Losses”) which arise out of any breach of any
of the representations and warranties contained in Sections 3.1, 3.2, 3.3, 3.4,
3.6, 3.10, 3.13, 3.20 and 3.21 hereof. 
Parent shall give the APAR Holders prompt written notice of any third
party claim which may give rise to any indemnity obligation under this Section
6.5(a), together with the estimated amount of such claim, and the APAR Holders
shall have the right to assume the defense of any such claim through counsel of
their own choosing, by so notifying Parent within 60 days of receipt of
Parent’s written notice; provided, however, that APAR Holders’
counsel shall be reasonably satisfactory to Parent.  Failure to give prompt notice shall not affect the
indemnification obligations hereunder in the absence of actual prejudice.  If Parent desires to participate in any such
defense assumed by the APAR Holders, it may do so at its sole cost and
expense.  If the APAR Holders decline to
assume any such defense, they shall be liable for all reasonable costs and
expenses of defending such claim incurred by Parent, including reasonable fees
and disbursements of counsel.  Neither
party shall, without the prior written consent of the other party, which shall
not be unreasonably withheld, settle, compromise or offer to settle or
compromise any such claim or demand on a basis which would result in the
imposition of a consent order, injunction or decree which would restrict the
future activity or conduct of the other party or any Subsidiary or Affiliate thereof
or if such settlement or compromise does not include an unconditional release
of the other party for any liability arising out of such claim or demand or any
related claim or demand.

 

(ii)                                  The
foregoing obligation to indemnify Parent, Merger Sub and their respective
Affiliates set forth in this Section 6.5(a) shall be subject to each of the
following limitations:

 

(1)                                  The
APAR Holders’ indemnification obligation for any breach of the representations
and warranties described in (A) Sections 3.1, 3.2, 3.3, 3.4 and 3.21 of this
Agreement shall survive from the Effective Time until the end of time, (B)
Sections 3.6 and 3.10 shall survive for only a period of 9 months after the
Effective Time, (C) Section 3.20 of this Agreement shall survive for only a
period of eighteen (18) months after the Effective Time, and (D) Section 3.13
of this Agreement shall survive until the expiration of the applicable statute
of limitations; after the expiration of the respective survival period, all
such representations and warranties of the APAR Holders under this Agreement
shall be extinguished.  No claim for the

 

37

 

recovery of such
Parent Losses may be asserted by Parent after such 9-month, 18-month or
statutory period other than those that survive hereof until the end of time; provided,
however, that claims first asserted in writing with specificity within
such period shall not thereafter be barred.

 

(2)                                  No
reimbursement for Parent Losses asserted against the APAR Holders under this
Section 6.5(a) shall be required unless and until the cumulative aggregate
amount of such Parent Losses equals or exceeds $1.25 million (the “APAR HoldersThreshold”) and then only to the extent that the cumulative aggregate
amount of Parent Losses, as finally determined, exceeds said APAR Holders
Threshold up to a maximum of $10 million; provided that in calculating
such APAR Holders Threshold any Parent Losses which individually total less
than $100,000 each (“De Minimis Ness Losses”) shall be excluded in their
entirety and the APAR Holders in any event shall have no liability hereunder to
Parent, Merger Sub and their respective Affiliates for any such De Minimis Ness
Losses.

 

(3)                                  The
liability of the APAR Holders to Parent, Merger Sub and their respective
Affiliates under this Section 6.5(a) shall be limited to the surrender by such
APAR Holders to Parent of some or all of those shares of Parent Common Stock
received by them pursuant to this Agreement, and shall in no event extend to
the surrender or payment of other property or consideration.  An APAR Holder’s liability for Parent Losses
in excess of the APAR Holders Threshold shall not exceed the total number of
shares of Parent Common Stock received by such APAR Holder at the Closing.  Solely for purposes of determining the
number of shares of Parent Common Stock to be surrendered pursuant to this
Section 6.5(a), each share of Parent Common Stock shall be deemed to have a
value of $13.00.

 

(4)                                  For
purposes of this Section 6.5(a), “severally” shall mean that in no event shall
the liability of any APAR Holder in respect of any Parent Loss exceed such APAR
Holder’s pro rata share of such Parent Loss, as determined by such APAR
Holder’s proportionate ownership of the Company Common Stock held by all APAR
Holders as of the Closing.

 

(iii)                               The
indemnities provided in this Section 6.5(a) shall survive the Closing, subject
to the limitations on survival set forth in Section 6.5(a)(ii).  The indemnity provided in this Section
6.5(a) shall be the sole and exclusive remedy of the indemnified party against
the indemnifying party at law or equity for any matter covered by paragraphs
(a)(i) and (ii).

 

(iv)                              In
no event shall the APAR Holders or their Affiliates be liable to Parent, Merger
Sub or their respective Affiliates for special, indirect, incidental,
consequential or punitive damages.

 

(b)                                 Indemnification
by Parent.

 

(i)                                     Parent
shall defend, indemnify and hold the APAR Holders harmless from and against and
in respect of any and all actual losses, liabilities, damages, judgments,
settlements and expenses, including reasonable attorney fees, incurred directly
by the APAR Holders (hereinafter “APAR Holders Losses”) arising out of any
breach of any of the

 

38

 

representations
and warranties contained in Sections 4.1, 4.2, 4.3, 4.4, 4.6, 4.10 and 4.13
hereof.  The APAR Holders shall give
Parent prompt written notice of any third party claim which may give rise to
any indemnity obligation under this Section 6.5(b), together with the estimated
amount of such claim, and Parent shall have the right to assume the defense of
any such claim through counsel of its own choosing, by so notifying the APAR
Holders within 60 days of receipt of Parent’s written notice; provided, however,
that Parent’s counsel shall be reasonably satisfactory to the APAR
Holders.  Failure to give prompt notice
shall not affect the indemnification obligations hereunder in the absence of
actual prejudice.  If any APAR Holder
desires to participate in any such defense assumed by Parent such APAR Holder
may do so at their own individual sole cost and expense.  If Parent declines to assume any such
defense, it shall be liable for all costs and expenses of defending such claim
incurred by the APAR Holders, including reasonable fees and disbursements of
counsel.  Neither party shall, without
the prior written consent of the other party, which shall not be unreasonably
withheld, settle, compromise or offer to settle or compromise any such claim or
demand on a basis which would result in the imposition of a consent order,
injunction or decree which would restrict the future activity or conduct of the
other party or any Subsidiary or Affiliate thereof or if such settlement or
compromise does not include an unconditional release of the other party for any
liability arising out of such claim or demand.

 

(ii)                                  The
foregoing obligation to indemnify the APAR Holders set forth in this Section
6.5(b) shall be subject to each of the following limitations:

 

(1)                                  Parent’s
indemnification obligation for any breach of the representations and warranties
described in (A) Sections 4.1, 4.2, 4.3 and 4.4 of this Agreement shall survive
from the Effective Time until the end of time, (B) in Sections 4.6 and 4.10
shall survive for only a period of nine (9) months from the Effective Time, (C)
Section 4.20 of this Agreement shall survive for only a period of eighteen (18)
months or statutory after the Effective Time and (D) Section 4.13 shall survive
until the expiration of the relevant statute of limitations; after the
expiration of the respective survival period, such representations and
warranties of Parent and Merger Sub under this Agreement shall be
extinguished.  No claim for the recovery
of such APAR Holders Losses may be asserted after such 9-month, 18-month or
statutory period other than those that survive hereof until the end of time; provided,
however, that claims first asserted in writing with specificity within
such period shall not be thereafter barred.

 

(2)                                  No
reimbursement for the APAR Holders Losses asserted against Parent under this
Section 6.5(b) shall be required unless and until the cumulative aggregate
amount of such APAR Holders Losses equals or exceeds $1.25 million (the “Parent
Threshold”) and then only to the extent that the cumulative aggregate amount of
the APAR Holders Losses, as finally determined, exceeds said Parent Threshold
up to a maximum of $10 million; provided that in calculating the Parent
Threshold, any Parent Losses which individually total less than $100,000 each
(“De Minimis APAR Holders Losses”) shall be excluded in their entirety and
Parent and its Affiliates in any event shall have no liability hereunder to the
APAR Holders and its Affiliates for any such De Minimis APAR Holders Losses.

 

(3)                                  Parent’s
liability to the APAR Holders under this Section 6.5(b) for APAR Holders Losses
in excess of the Parent Threshold shall be limited to the issuance of
additional shares of Parent Common Stock to the APAR Holders.    Solely for

 

39

 

purposes of
determining the number of additional shares of Parent Common Stock to be issued
to the APAR Holders pursuant to this Section 6.5(b), each share of Parent
Common Stock shall be deemed to have a value of $13.00.

 

(iii)                               The
indemnities provided in this Section 6.5(b) shall survive the Closing, subject
to the limitations on survival set forth in Section 6.5(b)(ii).  The indemnity provided in this Section
6.5(b) shall be the sole and exclusive remedy of the indemnified party against
the indemnifying party at law or equity for any matter covered by paragraphs
(b)(i) and (ii).

 

(iv)                              In
no event shall Parent be liable to the APAR Holders for special, indirect,
incidental, consequential or punitive damages.

 

Section 6.6                                      Notification
of Certain Matters.  The Company
shall give prompt notice to Parent and Merger Sub, and Parent and Merger Sub
shall give prompt notice to the Company, of (a) the occurrence or
nonoccurrence of any event the occurrence or nonoccurrence of which would be likely
to cause any representation or warranty contained in this Agreement to be
untrue or inaccurate in any material respect at or prior to the Effective Time,
(b) any material failure of the Company, Parent or Merger Sub, as the case
may be, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder, (c) any notice or other
communication from any third party alleging that the consent of such third
party is or may be required in connection with the Contemplated Transactions,
or (d) any facts or circumstances that could reasonably be expected to
result in a Parent Material Adverse Effect or a Company Material Adverse
Effect; provided, however, that the delivery of any notice pursuant to
this Section 6.6 shall not cure such breach or non-compliance or limit or
otherwise affect the rights, obligations or remedies available hereunder to the
party receiving such notice.

 

Section 6.7                                      Third
Party Consents.

 

(a)                                  Each
of Parent, Merger Sub, the Company and each of the APAR Holders shall use his
or its commercially reasonable efforts to obtain at the earliest practicable
date all consents of third parties and Governmental Entities necessary to the
consummation of the Contemplated Transactions (the “Third Party Consents”) and
will provide to the other parties hereto copies of each such Third Party
Consent promptly after it is obtained. 
Each of Parent, Merger Sub, the Company and each of the APAR Holders
agrees to cooperate fully with the other parties hereto in connection with the
obtaining of the Third Party Consents; provided, however, that no
party shall be required to pay any additional sums to secure such Third Party
Consents of the other parties hereto.

 

(b)                                 The
Company and Parent, and any APAR Holder subject to the HSR Act, shall take all
reasonable actions necessary to file as soon as practicable notifications under
the HSR Act and to respond as promptly as practicable to any inquiries received
from the Federal Trade Commission and the Antitrust Division of the Department
of Justice for additional information or documentation and to respond as soon
as practicable to all inquiries and requests received from any Governmental
Entity in connection with antitrust matters. 
Notwithstanding anything to the contrary herein (including the other
provisions of this Section 6.7), Parent and its Subsidiaries shall not be
required to divest, or agree to any restrictions with respect to, any of its

 

40

 

businesses or
assets or the businesses or assets to be acquired in connection with the
Contemplated Transactions.  Nothing
herein shall prevent Parent, on not more than one occasion, from withdrawing a
notification under the HSR Act if Parent intends to refile such notification
thereafter in accordance with the terms hereof.

 

(c)                                  In
furtherance and not in limitation of the covenants of the parties contained in
Section 6.7(a) and Section 6.7(b), if any administrative or judicial action or
proceeding, including any proceeding by a private party, is instituted (or
threatened to be instituted) challenging any Contemplated Transaction, each of
Parent, Merger Sub, the Company and each of the APAR Holders shall cooperate in
all respects with each other and use his or its respective commercially
reasonable efforts to contest and resist any such action or proceeding and to
have vacated, lifted, reversed or overturned any decree, judgement, injunction
or other order, whether temporary, preliminary or permanent, that is in effect
and that prohibits, prevents or restricts consummation of the Contemplated
Transactions.

 

Section 6.8                                      Asserted
Objections.  If any objections are
asserted with respect to the Contemplated Transactions or if any suit is
instituted by any Governmental Entity or any private party challenging any of
the Contemplated Transactions as violative of any regulatory Law, each of
Parent, Merger Sub, the Company and each of the APAR Holders shall use his or
its commercially reasonable efforts to resolve any such objections or challenge
as such Governmental Entity or private party may have to such transactions
under such regulatory Law so as to permit consummation of the Contemplated
Transactions.

 

Section 6.9                                      Certain
Tax Covenants.

 

(a)                                  Following
the Contemplated Transactions, (i) Parent will cause the Company to continue
the historic business of the Company (and its Subsidiaries) or use a
significant portion of the Company’s (and its Subsidiaries’) historic business
assets in a business and (ii) Parent will take no action, and will not permit
or cause Parent’s Subsidiaries, the Company or the Company’s Subsidiaries to
take any action, that will jeopardize the characterization of the Merger as a
tax-free reorganization within the meaning of Section 368(a) of the Code.

 

(b)                                 Parent
shall file, and shall cause the Company to file, as part of their respective
Tax Returns for the taxable year that includes the Closing Date a complete
statement of the Contemplated Transactions in accordance with Treasury
Regulation Section 1.368-3(a).  Unless
otherwise required by law, each party to this transaction shall treat the
Contemplated Transactions as a reorganization for federal and state income tax
purposes, and no party shall take any position inconsistent therewith.  Parent shall keep and maintain permanent
records in accordance with Treasury Regulation Section 1.368-3(c).

 

(c)                                  Parent
and the Company shall each use its best efforts to cause the Merger to be
treated as a reorganization within the meaning of Section 368(a) of the Code.

 

41

 

ARTICLE VII

CONDITIONS
TO CONSUMMATION OF THE MERGER

 

Section 7.1                                      Conditions
to Each Party’s Obligations to Effect the Merger.  The respective obligations of each party to consummate the
Contemplated Transactions are subject to the fulfillment at or prior to the
Effective Time of each of the following conditions, any or all of which may be
waived in whole or in part by the party being benefited thereby, to the extent
permitted by applicable Law:

 

(a)                                  This
Agreement shall have been approved and adopted by the Company Shareholder
Approval.

 

(b)                                 The
Parent Amendments shall have been approved and adopted by the Parent
Stockholder Approval.

 

(c)                                  All
holders of securities of Parent that have preemptive rights which are triggered
as a result of the Merger or the Contemplated Transactions shall have waived
such rights prior to the Closing Date.

 

(d)                                 The
Company, Parent, Merger Sub and the Warburg Holders shall have timely obtained
from each Governmental Entity all approvals, waivers and consents, if any,
necessary for consummation of or in connection with the Contemplated
Transactions, including such approvals, waivers and consents as may be required
under the HSR Act, Securities Act and under blue sky laws, if any, except for
such authorizations, consents or approvals, the failure of which to have been
made or obtained does not and could not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect or a Parent
Material Adverse Effect.

 

(e)                                  There
shall not be in effect any Law of any Governmental Entity of competent
jurisdiction restraining, enjoining or otherwise preventing consummation of the
Contemplated Transactions and no Governmental Entity shall have instituted or
threatened to institute any proceeding which continues to be pending seeking
any such Law.

 

(f)                                    The
employment agreements between Parent and each of Kushal Desai and Rajeev
Srivastava, entered into concurrent with the execution of this Agreement in the
forms attached hereto as Exhibits B and C, respectively, shall be in full
force and effect.

 

Section 7.2                                      Conditions
to the Obligations of Parent and Merger Sub.  The respective obligations of Parent and Merger Sub to consummate
the Contemplated Transactions are subject to the fulfillment at or prior to the
Effective Time of each of the following additional conditions, any or all of
which may be waived in whole or part by Parent and Merger Sub to the extent
permitted by applicable Law:

 

(a)                                  The
representations and warranties of the Company and the APAR Holders contained
herein qualified as to materiality shall be true and correct and those not so
qualified shall be true and correct in all material respects as of the date
hereof and at and as of the Closing Date as though such representations and
warranties were made at and as of such

 

42

 

date. (except for
representations and warranties made as of a specified date, which shall speak
only as of the specified date), except for such representations and warranties
that could be reasonably anticipated to cease to be true between the date
hereof and Closing as a result of matters properly disclosed in the Company
Disclosure Schedule.

 

(b)                                 The
Company and the APAR Holders shall have performed or complied in all material
respects with all agreements, covenants and conditions contained herein
required to be performed or complied with by them prior to or at the time of
the Closing.

 

(c)                                  Since
the date of this Agreement, no change, event or effect shall have occurred or
been threatened which has or which would reasonably be expected to have a
Company Material Adverse Effect.

 

(d)                                 The
Company and the APAR Holders shall have delivered to Parent a certificate,
dated the date of the Closing, signed by the President of the Company and each
of the APAR Holders, certifying as to the fulfillment of the conditions
specified in Section 7.2(a) and Section 7.2(b).

 

(e)                                  (i)
All holders of shares of Company Preferred Stock shall have converted such
shares into shares of Company Common Stock prior to the Closing Date and (ii)
(a) all holders of the Company Stock Warrants shall have either converted such
warrants into shares of Company Common Stock or terminated such warrants prior
to the Closing Date or (b) the Company Stock Warrants shall have been assumed
by Parent in accordance with Section 2.9 hereof.

 

(f)                                    The
Company Shareholders’ Agreement and any agreement relating to registration
rights from the Company shall have been terminated prior to the Closing Date.

 

(g)                                 All
of the APAR Consents shall have obtained.

 

(h)                                 Each
of the parties hereto shall have executed the Amended Registration Rights
Agreement substantially in the form attached hereto as Exhibit D.

 

(i)                                     The
Company shall have at least $13,778,000 million cash on hand at Closing, less
the amounts set forth on Schedule 7.2(i).

 

(j)                                     Each
of the APAR Holders shall have executed the Amended Stockholders’ Agreement of
Parent substantially in the form attached hereto as Exhibit E.

 

(k)                                  There
shall be no Dissenting Shares.

 

(l)                                     There
shall have been no action or proceeding instituted, pending, threatened or
taken, or any statute, regulation, judgment, order or injunction promulgated,
entered, enforced, enacted, issued or decreed applicable to the Merger by any
domestic of foreign federal or state government regulatory or administrative
agency or authority or court or legislative body or commission that directly or
indirectly (i) prohibits or seeks to prohibit, or imposes or seeks to
impose, any material limitations on, Parent’s ownership, conduct or operation
(or that of any of its Subsidiaries) of all or a material portion of their or
the Company’s

 

43

 

businesses or
assets, (ii) otherwise materially adversely affects the consolidated
financial condition or results of operations of the Company and its
Subsidiaries, taken as a whole or (iii) prohibits, or makes illegal, the
consummation of the Merger or the Contemplated Transactions.

 

Section 7.3                                      Conditions
to the Obligations of the Company. 
The obligations of the Company to consummate the Contemplated
Transactions are subject to the fulfillment at or prior to the Effective Time
of each of the following conditions, any or all of which may be waived in whole
or in part by the Company to the extent permitted by applicable Law:

 

(a)                                  The
representations and warranties of Parent and Merger Sub contained herein
qualified as to materiality shall be true and correct and those not so
qualified shall be true and correct in all material respects as of the date
hereof and at and as of the Closing Date as though such representations and
warranties were made at and as of such date (except for representations and
warranties made as of a specified date, which shall speak only as of the specified
date), except for such representations and warranties that could be reasonably
anticipated to cease to be true between the date hereof and Closing as a result
of matters properly disclosed in the Parent Disclosure Schedule.

 

(b)                                 Parent
and Merger Sub shall have performed or complied in all material respects with
all agreements, covenants and conditions contained herein required to be
performed or complied with by them prior to or at the time of the Closing.

 

(c)                                  Parent
shall have delivered to the Company a certificate, dated the date of the
Closing, signed by an executive officer of Parent, certifying as to the
fulfillment of the conditions specified in Section 7.3(a) and Section 7.3(b).

 

(d)                                 Since
the date of this Agreement, no change, event or effect shall have occurred or
been threatened which has or which would reasonably be expected to have a
Parent Material Adverse Effect.

 

(e)                                  Parent
and stockholders of Parent party thereto required to amend the Parent
Stockholders Agreement and the Registration Rights Agreement other than the
Warburg Holders party thereto shall have executed and delivered to the APAR
Holders the Amended Stockholders’ Agreement and the Amended Registration Rights
Agreement.

 

(f)                                    All
of the Parent Consents shall have been obtained.

 

(g)                                 The
Merger shall continue to qualify as a reorganization within the meaning of
Section 368(a) of the Code; provided, however, that this condition shall be
deemed to have been satisfied unless both (a) outside legal counsel to the
Company shall have provided to the Company a written opinion to the effect that
such counsel cannot opine that the Merger will so qualify and (b) no action on
the part of the Company, or any APAR Holder shall have caused the Merger to no
longer so qualify.

 

44

 

ARTICLE VIII

TERMINATION;
AMENDMENT; WAIVER

 

Section 8.1                                      Termination
by Mutual Agreement.  This Agreement
may be terminated and the Merger may be abandoned at any time prior to the
Effective Time, whether before or after the approval of the Merger by the
Company Shareholder Approval referred to in Section 7.1(a), by mutual written
consent of the Company and Parent by action of their respective boards of
directors.

 

Section 8.2                                      Termination
by either Parent or the Company. 
This Agreement may be terminated and the Merger may be abandoned at any
time prior to the Effective Time by action of the board of directors of either
Parent or the Company if:

 

(a)                                  the
Merger shall not have been consummated by August 12, 2003, whether such date is
before or after the date of approval of the Merger by the Company Shareholder
Approval or the date of approval of the Parent Amendments by the Parent
Stockholders’ Meeting (the “Termination Date”); provided, however, that if the
Merger shall not have been consummated by August 12, 2003 because of objections
to the Contemplated Transactions by any Governmental Entity, including the U.S.
Department of Justice, then the Termination Date shall be extended to November
12, 2003;

 

(b)                                 after
the Company convenes and holds the Company Shareholders’ Meeting and certifies
the vote with respect to the Merger, the Company Shareholder Approval shall not
have been obtained;

 

(c)                                  after
Parent convenes and holds Parent Stockholders’ Meeting and certifies the vote
with respect to the Parent Amendments, the Parent Stockholder Approval shall
not have been obtained; or

 

(d)                                 any
Law permanently restraining, enjoining or otherwise prohibiting consummation of
the Merger shall become final and non-appealable (whether before or after the
approval of the Merger by the Company Shareholder Approval or the date of
approval of the Parent Amendments by the Parent Stockholder’s Meeting);

 

provided, however, that the
right to terminate this Agreement pursuant to this Section 8.2 shall not be
available to any party that has breached in any material respect its
obligations under this Agreement in any manner that shall have proximately
contributed to the occurrence of the failure of the Merger to be consummated; provided,
further, that the right to terminate this Agreement pursuant to this
Section 8.2 shall not be available (a) to the Company in the event that any of
its shareholders who are party to the APAR Voting Agreement have breached their
obligations thereunder or (b) to Parent in the event that any of its
stockholders who are party to the Parent Voting Agreement have breached their
obligations thereunder.

 

Section 8.3                                      Termination
by the Company.  This Agreement may
be terminated and the Merger may be abandoned at any time prior to the
Effective Time, whether before or after the approval of the Merger by the
Company Shareholder Approval or the date of approval of the

 

45

 

Parent
Amendments by the Parent Stockholders’ Meeting, by action of the board of
directors of the Company, if:

 

(a)                                  (i)
any of Parent’s or Merger Sub’s representations and warranties shall have been
inaccurate as of the date of this Agreement, such that the condition set forth
in Section 7.3 would not be satisfied, or (ii) if (A) any of Parent’s
representations and warranties become inaccurate  as of a date subsequent to
the date of this Agreement (as if made on such subsequent date), such that the
condition set forth in Section 7.3 would not be satisfied and (B) such inaccuracy
has not been cured by Parent within ten business days after its receipt of
written notice thereof and remains uncured at the time notice of termination is
given, or (iii) any of Parent’s covenants contained in this Agreement shall
have been breached, such that the condition set forth in Section 7.3 would not
be satisfied; or

 

(b)                                 in
accordance with Section 6.3(b); or

 

(c)                                  if,
since the date of this Agreement, there shall have occurred any Parent Material
Adverse Effect.

 

Section 8.4                                      Termination
by Parent.  This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, whether before or after the approval of the Merger by the Company
Shareholder Approval or the date of approval of the Parent Amendments by the
Parent Stockholders’ Meeting, by action of the board of directors of Parent,
if:

 

(a)                                  (i)
any of the Company’s or the APAR Holders’ representations and warranties shall
have been inaccurate as of the date of this Agreement, such that the condition
set forth in Section 7.2 would not be satisfied, or (ii) if (A) any of the
Company’s or the APAR Holders’ representations and warranties become inaccurate  as
of a date subsequent to the date of this Agreement (as if made on such
subsequent date), such that the condition set forth in Section 7.2 would not be
satisfied and (B) such inaccuracy has not been cured by the Company or the APAR
Holders’ within ten business days after its receipt of written notice thereof
and remains uncured at the time notice of termination is given, or (iii) any of
the Company’s or the APAR Holders covenants contained in this Agreement shall
have been breached, such that the condition set forth in Section 7.2 would not
be satisfied; or

 

(b)                                 the
board of directors of the Company shall have withdrawn its recommendation of
this Agreement or modified the recommendation in a manner adverse to Parent or
shall have resolved to do the foregoing; or

 

(c)                                  if,
since the date of this Agreement, there shall have occurred any Company
Material Adverse Effect.

 

Section 8.5                                      Effect
of Termination and Abandonment.  In
the event of termination of this Agreement and the abandonment of the Merger
pursuant to this Article VIII, this Agreement (other than this Section 8.5, the
second sentence of Section 5.3(a) and Section 9.5) shall become void and of no
effect with no liability on the part of any party hereto (or of any of its
directors, officers, employees, consultants, contractors, agents, legal and
financial advisors, or other

 

46

 

representatives);
provided, however, that except as otherwise provided herein, no such
termination shall relieve any party hereto of any liability or damages
resulting from any willful breach of this Agreement.

 

ARTICLE
IX

MISCELLANEOUS

 

Section 9.1                                      No
Survival of Representations and Warranties.  Except as provided for in and solely for the purposes of Sections
6.5(a) and 6.5(b) of this Agreement, none of the representations and warranties
in this Agreement or in any instrument, schedule or other document delivered
pursuant to this Agreement shall survive the Effective Time.  The indemnities expressly provided for in
Section 6.5 shall be the sole and exclusive remedies of the parties after the
Closing for any inaccuracy of any representation or warranty of any party
hereto made in this Agreement or in any instrument, schedule or other document
delivered pursuant to this Agreement.

 

Section 9.2                                      Entire
Agreement; Assignment.

 

(a)                                  This
Agreement (including the exhibits hereto, the Parent Disclosure Schedule and
the Company Disclosure Schedule) the APAR Voting Agreement, the Parent Voting
Agreement and the Confidentiality Agreement constitute the entire agreement
among the parties hereto in respect of the subject matter hereof and supersede
all other prior agreements and understandings, both written and oral, between
the parties in respect of the subject matter hereof.

 

(b)                                 Neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by operation of Law (including, by merger or consolidation) or
otherwise.  Any assignment in violation
of the preceding sentence shall be void. 
Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of, and be enforceable by, the parties and their
respective successors and permitted assigns.

 

Section 9.3                                      Notices.  All notices, requests, demands, instructions
or other documents or communications to be given under this Agreement shall be
in writing and shall be deemed given, (a) five business days following
sending by registered or certified mail, postage prepaid, (b) when sent if
sent by facsimile; provided, however, that the facsimile is
promptly confirmed by telephone confirmation thereof by the intended recipient,
(c) when delivered, if delivered personally to the intended recipient, and
(d) one business day following sending by overnight delivery via a
national courier service, and in each case, addressed to a party at the
following address for such party:

 

47

 

	
  if to Parent or

  	
   

  	
   

  
	
  Merger Sub, to:

  	
   

  	
  Ness Technologies, Inc.

  
	
   

  	
   

  	
  Ness Tower

  
	
   

  	
   

  	
  Atidim, Bldg. 4

  
	
   

  	
   

  	
  P.O. Box 58152

  
	
   

  	
   

  	
  Tel-Aviv 61580

  
	
   

  	
   

  	
  Israel

  
	
   

  	
   

  	
  Attention: Raviv Zoller

  
	
   

  	
   

  	
  Facsimile:  972-3-7666809

  
	
   

  	
   

  	
   

  
	
  with copies to:

  	
   

  	
  Olshan Grundman Frome Rosenzweig

  
	
   

  	
   

  	
  & Wolosky LLP

  
	
   

  	
   

  	
  505 Park Avenue

  
	
   

  	
   

  	
  New York, New York  10022

  
	
   

  	
   

  	
  Attention:  Steven Wolosky,
  Esq.

  
	
   

  	
   

  	
  Facsimile:  (212) 755-1467

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  and

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Ephraim Abramson & Co.

  
	
   

  	
   

  	
  16B King George Street

  
	
   

  	
   

  	
  Jerusalem

  
	
   

  	
   

  	
  Israel

  
	
   

  	
   

  	
  Attention:  Ilan Rotem, Adv.

  
	
   

  	
   

  	
  Facsimile:  972-2-6259264

  
	
   

  	
   

  	
   

  
	
  if to the Company, to:

  	
   

  	
  APAR Holding Corp.

  
	
   

  	
   

  	
  c/o Apar Infotech Corporation

  
	
   

  	
   

  	
  160 Technology Drive

  
	
   

  	
   

  	
  Canonsburg, PA 15317

  
	
   

  	
   

  	
  Attention:  President

  
	
   

  	
   

  	
  Facsimile:  (724) 745-6494

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
  Kirkpatrick & Lockhart LLP

  
	
   

  	
   

  	
  535 Smithfield Street

  
	
   

  	
   

  	
  Pittsburgh, PA 15220-2312

  
	
   

  	
   

  	
  Attention:  J. Stephen Barge,
  Esq.

  
	
   

  	
   

  	
  Facsimile:  (412) 355-6501

  

 

if to the APAR Holders, to their addresses set forth
below their names on the signature pages hereto,

 

or to such other address or facsimile number as the
person to whom notice is given may have previously furnished to the other in
writing in the manner set forth above.

 

Section 9.4                                      Governing
Law; Consent to Jurisdiction.  This
Agreement shall be governed by and construed in accordance with the Laws of the
State of Delaware, without giving

 

48

 

effect
to the choice of Law principles thereof to the extent that the application of
the laws of another jurisdiction would be required thereby.  Each of the parties hereto irrevocably and
unconditionally consents to submit to the exclusive jurisdiction of the courts
of the State of Delaware and of the United States of America located in the
State of Delaware (the “Delaware Courts”) in any action or proceeding arising
out of or relating to this Agreement, any other agreement executed in
connection with this Agreement or the Contemplated Transactions (and agrees not
to commence any litigation relating thereto except in such courts), waives any
objection to the laying of venue of any such litigation in the Delaware Courts
and agrees not to plead or claim in any Delaware Court that such litigation
brought therein has been brought in an inconvenient forum.  Final judgment in any suit, action or
proceeding brought in any such court shall be conclusive and binding upon each
party duly served with process therein and may be enforced in the courts of the
jurisdiction of which either party or any of their property is subject, by a
suit upon such judgment.  EACH PARTY
HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT
MAY LEGALLY AND EFFECTIVELY DO SO, TRIAL BY JURY IN ANY SUIT, ACTION OR
PROCEEDING ARISING HEREUNDER.

 

Section 9.5                                      Expenses.  Except as contemplated by this Agreement,
including this Section 9.5, all costs and expenses incurred in connection with
this Agreement and the consummation of the Contemplated Transactions shall be
paid by the party incurring such expenses; provided, however, that Merger Sub
and the Company shall each pay one-half of the filing fee in connection with
any filing by Parent and the Company under the HSR Act which relates to the
Merger and the Warburg Holders shall pay the filing fee in connection with any
filing by any of them under the HSR Act which relates to the Merger.

 

Section 9.6                                      Descriptive
Headings.  The descriptive headings
herein are inserted for convenience of reference only and are not intended to
be part of or to affect the meaning or interpretation of this Agreement.

 

Section 9.7                                      Parties
in Interest.  This Agreement shall
be binding upon and inure solely to the benefit of each party hereto and its
successors and permitted assigns, and, except as provided in Section 6.5,
nothing in this Agreement, express or implied, is intended to or shall confer
upon any other person any rights, benefits or remedies of any nature whatsoever
under or by reason of this Agreement.

 

Section 9.8                                      Severability.  The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof.  If any provision of this Agreement, or the
application thereof to any person or any circumstance, is invalid or
unenforceable, (a) a suitable and equitable provision shall be substituted
therefor in order to carry out, so far as may be valid and enforceable, the
intent and purpose of such invalid or unenforceable provision and (b) the
remainder of this Agreement and the application of such provision to other
persons or circumstances shall not be affected by such invalidity or
unenforceability, nor shall such invalidity or unenforceability affect the
validity or enforceability of such provision, or the application thereof, in
any other jurisdiction.

 

49

 

Section 9.9                                      Specific
Performance.  The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their specific
terms or were otherwise breached.  It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any Delaware Court, this being in
addition to any other remedy to which they are entitled at Law or in equity.

 

Section 9.10                                Counterparts.  This Agreement may be executed in multiple
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
of the parties and delivered to the other parties.

 

Section 9.11                                Further
Assurances.  Each party to this
Agreement agrees (a) to furnish upon request to the other party such further
information, (b) to execute and deliver to the other party such other documents
and (c) to do such other acts and things as the other party reasonably requests
for the purpose of carrying out the intent of this Agreement and the documents
and instruments referred to herein including, without limitation, providing
information necessary for preparation of any filings needed to obtain the
regulatory approvals required to consummate the Merger.

 

Section 9.12                                Interpretation.

 

(a)                                  The
words “hereof,” “herein,” “herewith” and words of similar import shall, unless
otherwise stated, be construed to refer to this Agreement as a whole and not to
any particular provision of this Agreement, and article, section, paragraph,
exhibit, and schedule references are to the articles, sections, paragraphs,
exhibits, and schedules of this Agreement unless otherwise specified.  Whenever the words “include,” “includes,” or
“including” are used in this Agreement, they shall be deemed to be followed by
the words “without limitation.”  All
terms defined in this Agreement shall have the defined meanings contained
herein when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.  The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.  Any agreement, instrument, or statute defined or referred to
herein or in any agreement or instrument that is referred to herein means such
agreement, instrument, or statute as from time to time, amended, qualified or
supplemented, including (in the case of agreements and instruments) by waiver
or consent and (in the case of statutes) by succession of comparable successor
statutes and all attachments thereto and instruments incorporated therein.  References to a person are also to its
permitted successors and assigns.

 

(b)                                 The
phrases “the date of this Agreement,” “the date hereof,” and terms of similar
import, unless the context otherwise requires, shall be deemed to refer to
May 12, 2003.

 

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

 

50

 

Section 9.13                                Amendment
and Modification; Waiver

 

(a)                                  This
Agreement may be amended, modified and supplemented in any and all respects,
whether before or after any vote of the shareholders of the Company
contemplated hereby, by written agreement of the parties hereto, by action
taken by their respective boards of directors, at any time prior to the
Effective Time with respect to any of the terms contained herein; provided,
however, that after the approval of this Agreement by the shareholders of the Company,
no such amendment, modification or supplement shall be made which requires the
approval of such shareholders under the PBCL without obtaining such further
approval.

 

(b)                                 At
any time prior to the Effective Time, any party hereto may (i) waive any inaccuracy
in the representations and warranties of the other parties contained herein or
in any document, certificate or writing delivered by the other parties pursuant
hereto and (ii) subject to applicable Law, waive compliance with any agreement
or condition to its obligations; provided that any such extension or waiver
shall be valid if set forth in an instrument in writing signed by the party or
parties to be bound thereby.

 

Section 9.14                                Definitions.  As used herein,

 

“Adjustment Event” shall
have the meaning set forth in Section 2.7 hereof.

 

“Affiliate” has the
meaning given to it in Rule 12b-2 of Regulation 12B under the Exchange Act.

 

“Agreement” shall have
the meaning set forth in the preamble hereof.

 

“AI Cash Consideration”
shall have the meaning set forth in Section 2.1(c) hereof.

 

“AI Merger Consideration”
shall have the meaning set forth in Section 2.1(c) hereof.

 

“AI Parent Stock
Consideration” shall have the meaning set forth in Section 2.1(c) hereof.

 

“Amended Registration
Rights Agreement” means the second amendment and restatement of the
Registration Rights Agreement in the form attached as Exhibit D hereto.

 

“Amended Stockholders’
Agreement” means the First Amendment to the Amended and Restated Stockholders’
Agreement in the form attached as Exhibit E hereto.

 

“Annual Financial
Statements” shall have the meaning set forth in Section 3.6 hereof.

 

“APAR Consents” shall
have the meaning set forth in Section 3.5 hereof.

 

“APAR Voting Agreement”
means the Voting Agreement among Parent, the Company,   the APAR Holders and
Serving America First in the form attached as Exhibit F hereto.

 

“Articles of Merger”
shall have the meaning set forth in Section 1.2 hereof.

 

51

 

“Assumed Stock Options”
shall have the meaning set forth in Section 2.9 hereof.

 

“Assumed Stock Warrants”
shall have the meaning set forth in Section 2.9 hereof.

 

“Benefit Plans” shall
have the meaning set forth in Section 3.19(a)(i) hereof.

 

“Cash Consideration”
shall have the meaning set forth in Section 2.1(d) hereof.

 

“Closing” shall have the
meaning set forth in Section 1.3 hereof.

 

“Closing Date” shall have
the meaning set forth in Section 1.3 hereof.

 

“Code” shall have the
meaning set forth in the recitals hereof.

 

“Company Board Recommendation”
shall have the meaning set forth in Section 6.1(b) hereof.

 

“Company Capital Stock”
means the authorized capital stock of the Company, consisting of the Company
Common Stock, the Company Series A Preferred Stock and the Company Series S
Preferred Stock.

 

“Company Common Stock”
shall have the meaning set forth in the recitals hereto.

 

“Company Disclosure
Schedule” shall have the meaning set forth in the preamble to Article III
hereof.

 

“Company Financial
Statements” shall have the meaning set forth in Section 3.6 hereof.

 

“Company Material Adverse
Effect” shall have the meaning set forth in Section 3.1 hereof.

 

“Company Preferred Stock”
means the Company Series A Preferred Stock and the Company Series S Preferred
Stock.

 

“Company Series A
Preferred Stock” means the Series A Convertible Preferred Stock, par value
$0.01 per share, of the Company.

 

“Company Series S
Preferred Stock” means the Series S Convertible Preferred Stock, par value
$0.01 per share, of the Company.

 

“Company Shareholders
Agreement” means the Amended and Restated Investors’ Rights Agreement, dated as
of November 2002, by and among the Company and the APAR Holders.

 

“Company Shareholder
Approval” means the approvals by the shareholders of the Company set forth in
Section 3.22 of this Agreement.

 

“Company Shareholders
Meeting” means the meeting of the shareholders of the Company to be called in
accordance with this Agreement for the purpose of obtaining the Company
Shareholder Approval.

 

52

 

“Company Stock Options”
shall have the meaning set forth on Section 2.9 hereof.

 

“Company Stock Warrants”
shall have the meaning set forth in Section 2.9 hereof.

 

“Confidentiality
Agreement” shall have the meaning set forth in Section 5.3 hereof.

 

“Contemplated
Transactions” means the transactions contemplated by this Agreement and the
exhibits hereto, including, without limitation, the Merger and the Parent
Amendments.

 

“Department of State”
shall have the meaning set forth in Section 1.2 hereof.

 

“Dissenting Shares” shall
have the meaning set forth in Section 2.8 hereof.

 

“DGCL” shall have the
meaning set forth in the recitals hereof.

 

“Effective Time” shall
have the meaning set forth in Section 1.2 hereof.

 

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

 

“Encumbrances” means any
lien, encumbrance, security interest, charge, surety, mortgage, option, pledge
or restriction on Transfer of any nature whatsoever other than liens for Taxes
not yet due or payable.

 

“Environmental Claim”
means any claim, action, demand, order, or written notice by or on behalf of,
any Governmental Entity or Person alleging potential liability arising out of,
based on or resulting from the violation of any Environmental Law or permit.

 

“Environmental Laws”
means all foreign, federal, state and local laws and regulations relating to
Releases or threatened Releases of Hazardous Materials or otherwise relating to
the generation, treatment, storage, transport or handling of Hazardous Materials.

 

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

 

“Exchange Act” means the
Securities Exchange Act of 1934, as amended.

 

“Founder Merger
Consideration” shall have the meaning set forth in Section 2.1(d) hereof.

 

“Founder Parent Stock
Consideration” shall have the meaning set forth in Section 2.1(d) hereof.

 

“GAAP” means United
States generally accepted accounting principles as in effect on the date or for
the period with respect to which such principles are applied.

 

“Governmental Entity”
shall have the meaning set forth in Section 3.5 hereof.

 

“Hazardous Materials”
means all substances defined or listed as “hazardous” or “toxic” under
Environmental Laws.

 

53

 

“HSR Act” means the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended.

 

“Insurance Policies”
shall have the meaning set forth in Section 3.16 hereof.

 

“Intellectual Property
Rights” shall have the meaning set forth in Section 3.15 hereof.

 

“Interim Financial Statements”
shall have the meaning set forth in Section 3.6 hereof.

 

“Laws” means any order,
writ, injunction, decree, judgment, permit, license, ordinance, law, statute,
rule or regulation.

 

“Lien” means, in respect
of any asset (including, any security) any mortgage, lien, pledge, charge,
security interest, or encumbrance of any kind in respect of such asset.

 

“Make-Whole Shares” shall
have the meaning set forth in Section 2.5 hereof.

 

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

 

“Merger Consideration”
shall have the meaning set forth in Section 2.1(e) hereof.

 

“Merger Sub Common Stock”
means the common stock, $0.001 par value per share, of Ness Acquisition Corp.

 

“Ness USA Issuance” shall
have the meaning set forth in Section 2.5 hereof.

 

“Other Parent Stock
Consideration” shall have the meaning set forth in Section 2.1(e) hereof.

 

“Parent Amendments” mean
(a) an amendment to Parent’s certificate of incorporation to increase Parent’s
authorized capital stock to an amount sufficient to provide Parent with the
authorized and available shares of Parent Common Stock necessary to issue the
Parent Common Stock and the stock options pursuant to Sections 2.1 and 2.9
hereof, respectively, and (b) waiver of all approval, preemptive and
anti-dilution rights in connection with the Contemplated Transactions.

 

“Parent Board
Recommendation” shall have the meaning set forth in Section 6.1(d) hereof.

 

“Parent Capital Stock”
means the authorized capital stock of Parent, consisting of the Parent Common
Stock, the Parent Class B Preferred Stock and the Parent Class C Preferred
Stock.

 

“Parent Class B
Preferred Stock” means the Class B Convertible Preferred Stock, $.01 par value
per share, of Parent.

 

“Parent Class C
Preferred Stock” means the Class B Convertible Preferred Stock, $.01 par value
per share, of Parent.

 

54

 

“Parent Common Stock”
means the common stock, $.01 par value per share, of Parent.

 

“Parent Consents” shall
have the meaning set forth in Section 4.5 hereof.

 

“Parent Disclosure
Schedule” shall have the meaning set forth in the preamble to Article IV
hereof.

 

“Parent Employee
Arrangements” means all employment, consulting, termination, profit sharing,
severance, change of control, individual compensation or indemnification
agreements, and all bonus or other incentive compensation, deferred
compensation, salary continuation, disability, severance, stock award, stock
option, stock purchase, educational assistance, legal assistance, club
membership, employee discount, employee loan, credit union or vacation
agreements, policies or arrangement under which Parent or any of its
Subsidiaries has any obligation or liability (contingent or otherwise) in
respect of any current or former officer, director, employee, consultant or
contractor of Parent or any of its Subsidiaries, other than Parent Benefit
Plans.

 

“Parent Financial
Statements” shall have the meaning set forth in Section 4.6 hereof.

 

“Parent Insurance
Policies” shall have the meaning set forth in Section 4.16 hereof.

 

“Parent Intellectual
Property Rights” shall have the meaning set forth in Section 4.15 hereof.

 

“Parent Material Adverse
Effect” shall have the meaning set forth in Section 4.1 hereof.

 

“Parent Option Plan”
means the 2003 Stock Option Plan of Ness Technologies, Inc.

 

“Parent Stockholder
Agreement” means the Amended and Restated Stockholders Agreement of Parent.

 

“Parent Stockholder
Approval” means the approvals by the stockholders of the Company set forth in
Section 4.21 of this Agreement.

 

“Parent Voting Agreement”
means the voting agreement among Parent, the Company, the Warburg Holders and
Nesstech LLC in the form attached as Exhibit G hereto.

 

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

 

“Perfected Dissenting
Shares” shall have the meaning set forth in Section 2.8 hereof.

 

“Permits” shall have the
meaning set forth in Section 3.11 hereof.

 

“Person” means an
individual, corporation, limited liability company, partnership, association,
trust, unincorporated organization, other entity or group (as defined in the
Exchange Act).

 

“Plan” shall have the
meaning set forth in Section 1.1 hereof.

 

55

 

“Registration Rights
Agreement” means the Amended and Restated Registration Rights Agreement, dated
as of May 18, 2000, among the investors listed on Schedule I thereto and
Parent, as amended to date.

 

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

 

“Representative” means,
with respect to any Person, each of such Person’s Affiliates, directors,
officers, employees, partners, members, representatives and agents, and each of
the heirs, executors and assigns of any of the foregoing.

 

“RS Cash Consideration”
shall have the meaning set forth in Section 2.1(d) hereof.

 

“RS Merger Consideration”
shall have the meaning set forth in Section 2.1(d) hereof.

 

“RS Parent Stock
Consideration” shall have the meaning set forth in Section 2.1(d) hereof.

 

“Rule 144” shall have the
meaning set forth in Section 3.20(d) hereof.

 

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

 

“Securities Exchange
Agreement” shall have the meaning set forth in Section 2.5 hereof.

 

“Subsidiary” means, in
respect of any party, any corporation, partnership or other entity or
organization, whether incorporated or unincorporated, of which (i) such other
party or any other subsidiary of such party is a general partner (excluding
such partnerships where such party or any subsidiary of such party does not
have a majority of the voting interest in such partnership) or (ii) at least a
majority of the securities or other interests having by their terms ordinary
voting power to elect a majority of the board of directors or others performing
similar functions in respect of such corporation or other organization is
directly or indirectly owned or controlled by such party or by any one or more
of its subsidiaries, or by such party and one or more of its subsidiaries.  Solely for purposes of Section 3.19 and
Section 4.19, the term “Subsidiary” shall also include any trade or business
that is required to be aggregated with the Company or the Parent, as
applicable, under Section 414(b), (c), (m) or (o) of the code.

 

“Surviving Corporation”
shall have the meaning set forth in Section 1.1 hereof.

 

“Tax Return” shall have
the meaning set forth in Section 3.13 hereof.

 

“Taxes” shall have the
meaning set forth in Section 3.13 hereof.

 

“Transfer” means any
sale, assignment, pledge, hypothecation, or other disposition or Encumbrances.

 

56

 

IN WITNESS WHEREOF, each
of the parties has caused this Agreement to be duly executed on its behalf as
of the date first above written.

 

	
   

  	
  NESS TECHNOLOGIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Raviv Zoller

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Raviv Zoller

  
	
   

  	
   

  	
  Title:

  	
  CEO & President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  NESS ACQUISITION CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Raviv Zoller

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Raviv Zoller

  
	
   

  	
   

  	
  Title:

  	
  CEO & President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  APAR HOLDING CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Kushal Desai

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Kushal Desai

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
  Address:

  
	
   

  	
   

  	
  Facsimile:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WARBURG, PINCUS EQUITY PARTNERS,

  L.P.

  
	
   

  	
   

  
	
   

  	
  By: Warburg, Pincus
  & Co., General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Frank Brochin

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Frank Brochin

  
	
   

  	
   

  	
  Title:

  	
  Partner

  
	
   

  	
   

  	
  Address:

  
	
   

  	
   

  	
  Facsimile:

  
								

 

57

 

	
   

  	
  WARBURG, PINCUS VENTURES

  INTERNATIONAL, L.P.

  
	
   

  	
   

  
	
   

  	
  By: Warburg, Pincus
  & Co., General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Frank Brochin

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Frank Brochin

  
	
   

  	
   

  	
  Title:

  	
  Partner

  
	
   

  	
   

  	
  Address:

  
	
   

  	
   

  	
  Facsimile:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WARBURG, PINCUS NETHERLANDS

  EQUITY PARTNERS I, C.V.

  
	
   

  	
   

  
	
   

  	
  By: Warburg, Pincus
  & Co., General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Frank Brochin

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Frank Brochin

  
	
   

  	
   

  	
  Title:

  	
  Partner

  
	
   

  	
   

  	
  Address:

  
	
   

  	
   

  	
  Facsimile:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WARBURG, PINCUS NETHERLANDS

  EQUITY PARTNERS II, C.V.

  
	
   

  	
   

  
	
   

  	
  By: Warburg, Pincus
  & Co., General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Frank Brochin

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Frank Brochin

  
	
   

  	
   

  	
  Title:

  	
  Partner

  
	
   

  	
   

  	
  Address:

  
	
   

  	
   

  	
  Facsimile:

  
							

 

58

 

	
   

  	
  WARBURG, PINCUS NETHERLANDS

  EQUITY PARTNERS III, C.V.

  
	
   

  	
   

  
	
   

  	
  By: Warburg, Pincus
  & Co., General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Frank Brochin

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Frank Brochin

  
	
   

  	
   

  	
  Title:

  	
  Partner

  
	
   

  	
   

  	
  Address:

  
	
   

  	
   

  	
  Facsimile:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  APAR INVESTMENTS (SINGAPORE)

  PRIVATE LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Kushal Desai

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Kushal Desai

  
	
   

  	
   

  	
  Title:

  	
  Board Director

  
	
   

  	
   

  	
  Address:

  
	
   

  	
   

  	
  Facsimile:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Rajeev Srivastava

  	
   

  
	
   

  	
  Rajeev Srivastava

  
	
   

  	
  Address:

  
	
   

  	
  Facsimile:

  
							

 

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Exhibit 4.1    
    

        Temporary Certificate—Exchangeable for Definitive Certificate When Ready for Delivery  

	

NUMBER	

8.375% SERIES C

CUMULATIVE

REDEEMABLE

PREFERRED STOCK	

 

 A L E X A N D R I A
 REAL ESTATE EQUITIES, INC.	

8.375% SERIES C

CUMULATIVE

REDEEMABLE

PREFERRED STOCK	

SHARES
	 	 	 	 	 
	INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND	 	 	 	SEE REVERSE FOR IMPORTANT NOTICE ON TRANSFER RESTRICTIONS AND OTHER INFORMATION
	 	 	 	 	CUSIP 015271 40 6

        THIS
CERTIFIES THAT 

        IS
THE RECORD HOLDER OF 

FULLY PAID AND NONASSESSABLE SHARES OF THE 8.375% SERIES C CUMULATIVE REDEEMABLE PREFERRED STOCK, $.01 PAR VALUE PER SHARE (THE "SERIES C PREFERRED STOCK"),OF 

	
	 	ALEXANDRIA REAL ESTATE EQUITIES, INC.	 	

	 (the "Company") transferable on the books of the Company by the holder hereof in person or by duly authorized agent upon surrender of this Certificate properly endorsed. This Certificate is not valid until countersigned by
the Transfer Agent and registered by the Registrar. This Certificate and the shares represented hereby are issued and shall be subject to all of the provisions of the charter (the "Charter") and the Bylaws of the Company and any amendments
thereto.
	        WITNESS the seal of the Company and the facsimile signatures of its duly authorized officers.
	Dated:	 	 	 	 
	 	 	 	 	 
	[SEAL OF ALEXANDRIA REAL ESTATE EQUITIES, INC., MARYLAND]
	 	 	 	 	 
	/s/  PETER J. NELSON    

SECRETARY	 	 	 	/s/  JERRY M. SUDARSKY   

CHAIRMAN
	 	 	 	 	 

COUNTERSIGNED AND REGISTERED:

                        AMERICAN STOCK TRANSFER & TRUST COMPANY

                                        TRANSFER
AGENT AND REGISTRAR 

BY

AUTHORIZED
SIGNATURE 

        THE
COMPANY IS AUTHORIZED TO ISSUE TWO CLASSES OF STOCK WHICH ARE DESIGNATED AS COMMON STOCK AND PREFERRED STOCK. THE PREFERRED STOCK MAY BE ISSUED IN ONE OR MORE SERIES OR CLASSES. THE
BOARD OF DIRECTORS IS AUTHORIZED TO DETERMINE THE PREFERENCES, LIMITATIONS AND RELATIVE RIGHTS OF EACH SERIES OR CLASS OF PREFERRED STOCK BEFORE THE ISSUANCE OF ANY SUCH SERIES OR CLASS OF PREFERRED
STOCK. THE COMPANY WILL FURNISH, WITHOUT CHARGE, TO ANY STOCKHOLDER MAKING A REQUEST THEREFOR, A COPY OF THE COMPANY'S CHARTER AND A FULL STATEMENT OF THE INFORMATION REQUIRED BY SECTION 2-211(B) OF
THE CORPORATIONS AND ASSOCIATIONS ARTICLE OF THE ANNOTATED CODE OF MARYLAND WITH RESPECT TO THE DESIGNATIONS AND ANY PREFERENCES, CONVERSION AND OTHER RIGHTS, VOTING POWERS, RESTRICTIONS, LIMITATIONS
AS TO DIVIDENDS AND OTHER DISTRIBUTIONS, QUALIFICATIONS AND TERMS AND CONDITIONS OF REDEMPTION OF THE STOCK OF EACH CLASS WHICH THE COMPANY HAS THE AUTHORITY TO ISSUE AND, SINCE THE COMPANY IS
AUTHORIZED TO ISSUE PREFERRED STOCK IN SERIES OR CLASSES, (i) THE DIFFERENCES IN THE RELATIVE RIGHTS AND PREFERENCES BETWEEN THE SHARES OF EACH SERIES OR CLASS TO THE EXTENT SET, AND
(ii) THE AUTHORITY OF THE BOARD OF DIRECTORS TO SET SUCH RIGHTS AND PREFERENCES OF SUBSEQUENT SERIES OR CLASSES. REQUEST FOR SUCH WRITTEN STATEMENT MUST BE DIRECTED TO THE SECRETARY OF THE
COMPANY AT ITS PRINCIPAL OFFICE. THE FOREGOING SUMMARY DOES NOT PURPORT TO BE COMPLETE AND IS SUBJECT TO AND QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE CHARTER OF THE COMPANY. 

        The
shares of Series C Preferred Stock represented by this Certificate are subject to restrictions on transfer for the purpose of establishing or maintaining the Company's status
as a real estate investment trust under the Internal Revenue Code of 1986, as amended (the "Code"). No person may Beneficially Own shares in excess of the Ownership Limit, which may increase or
decrease from time to time, unless such Person is an Excepted Holder. Any Person who attempts to beneficially own shares in violation of the above limitation must immediately notify the Company. If
the restrictions on ownership or transfer are violated, the shares represented hereby will be automatically exchanged for shares of Excess Stock, which will be held in trust for a Charitable
Beneficiary. The foregoing is qualified in its entirety by reference to the Charter and all capitalized terms in this legend have the meanings defined in the Charter. The Company will furnish a copy
of the Charter to any stockholder of the Company on request and without charge. Such request must be made to the Secretary of the Company at the Company's principal office. 

        KEEP
THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN, OR DESTROYED THE COMPANY WILL REQUIRE A BOND OF INDEMNITY AS A CONDITION TO THE ISSUANCE OF A REPLACEMENT CERTIFICATE. 

        The
following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or
regulations: 

	TEN COM	 	—	 	as tenants in common	 	UNIF GIFT MIN ACT—	 	.............................    Custodian    .............................	 	 
	 	 	 	 	 	 	 	 	(Cust)
                                         
 (Minor)	 	 
	TEN ENT	 	—	 	as tenants by the entireties	 	 	 	under Uniform Gifts to Minors
	JT TEN	 	—	 	as joint tenants with right of	 	 	 	 	 	 
	 	 	 	 	survivorship and not as tenants	 	 	 	Act.............................................................................
	 	 	 	 	in common	 	 	 	(State)
	 	 	 	 	 	 	UNIF TRF MIN ACT—	 	.....................  Custodian (until age    ).....................	 	 
	 	 	 	 	 	 	 	 	    (Cust)
                                         
 	 	 
	    	 	  	 	                  	 	 	 	.......................................under Uniform Transfers
	 	 	 	 	 	 	 	 	    (Minor)
                                     	 	 
	    	 	  	 	                  	 	 	 	to Minors Act..........................................................
	 	 	 	 	                    	 	 	 	(State)

Additional abbreviations may also be used though not in the above list. 

        FOR VALUE RECEIVED, _________________________ hereby sell, assign and transfer unto 

	 	 	PLEASE INSERT SOCIAL SECURITY OR OTHER	 	 
	 	 	IDENTIFYING NUMBER OF ASSIGNEE	 	 
	

	
	 	 	 	

	
	 	 	 	

	
	 	 	 	

	
	 	 	 	

	

	 
	 	 
	 	 
	 	 

	
 (PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
	

	

	

 Shares of the preferred stock represented by the within Certificate, and do hereby irrevocably constitute and appoint
	

 Agent to transfer the said stock on the books of the within named Company with full power of substitution in the premises.
	

Dated    __________________________________

	

 	
 	

 	
 	

 
	 	 	X	 	

	

 	
 	
X	
 	

	 	 	NOTICE:	 	THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME(S) AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.

Signature(s)
Guaranteed 

	 
	 

	

 	

 
	By	
 THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION
PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.
	

 	

 

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Exhibit 4.1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00068-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00068-of-00352.parquet"}]]