Document:

EXHIBIT 10.10

 

 

 

AGREEMENT AND PLAN OF MERGER

 

BY AND AMONG

 

SSA GLOBAL TECHNOLOGIES, INC.,

 

SENECA MERGER SUBSIDIARY INC.,

 

SENECA ACQUISITION SUBSIDIARY INC.

 

AND

 

ELEVON, INC.

 

 

Dated as of May 8, 2003

 

 

 

Table of Contents

 

	
  ARTICLE I DEFINITIONS

  	
   

  
	
   

  	
   

  
	
  ARTICLE II MERGER AND ASSET PURCHASE

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.1.

  	
  The
  Merger

  	
   

  
	
  Section 2.2.

  	
  Effective Time of the Merger

  	
   

  
	
  Section 2.3.

  	
  Officers

  	
   

  
	
  Section 2.4.

  	
  Asset
  Purchase

  	
   

  
	
  Section 2.5.

  	
  Closing

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  III CONVERSION OF SECURITIES

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 3.1.

  	
  Conversion of Capital Stock

  	
   

  
	
  Section 3.2.

  	
  Payment of Cash Merger Consideration.

  	
   

  
	
  Section 3.3.

  	
  Appraisal
  Rights

  	
   

  
	
  Section 3.4.

  	
  Stock Options and Restricted Stock

  	
   

  
	
  Section 3.5.

  	
  Employee Stock Purchase Plan

  	
   

  
	
  Section 3.6.

  	
  Further Assurances

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV REPRESENTATIONS AND WARRANTIES
  OF THE COMPANY

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.1.

  	
  Organization

  	
   

  
	
  Section 4.2.

  	
  Capitalization

  	
   

  
	
  Section
  4.3.

  	
  Authorization; Validity of Agreement;
  Company Action

  	
   

  
	
  Section 4.4.

  	
  Consents and Approvals; No Violations

  	
   

  
	
  Section 4.5.

  	
  SEC Reports and Financial Statements

  	
   

  
	
  Section 4.6.

  	
  No Undisclosed Liabilities

  	
   

  
	
  Section 4.7.

  	
  Absence of Certain Changes

  	
   

  
	
  Section 4.8.

  	
  Taxes

  	
   

  
	
  Section
  4.9.

  	
  Title to Properties; Owned and Leased Real
  Properties; No Liens

  	
   

  
	
  Section 4.10.

  	
  Intellectual Property

  	
   

  
	
  Section 4.11.

  	
  Products

  	
   

  
	
  Section
  4.12.

  	
  Agreements, Contracts and Commitments

  	
   

  
	
  Section 4.13.

  	
  Litigation

  	
   

  
	
  Section 4.14.

  	
  Environmental Matters

  	
   

  
	
  Section 4.15.

  	
  Employee Benefit Plans

  	
   

  
	
  Section 4.16.

  	
  Compliance with Laws

  	
   

  
	
  Section 4.17.

  	
  Permits and Licenses

  	
   

  
	
  Section 4.18.

  	
  Labor
  Matters

  	
   

  
	
  Section 4.19.

  	
  Insurance

  	
   

  
	
  Section 4.20.

  	
  Information in Proxy Statement

  	
   

  
	
  Section 4.21.

  	
  Opinion of Financial Advisor

  	
   

  
	
  Section 4.22.

  	
  Brokers

  	
   

  
	
  Section 4.23.

  	
  Voting Requirements

  	
   

  

 

i

 

	
  Section 4.24.

  	
  Rights
  Agreement

  	
   

  
	
  Section 4.25.

  	
  State Takeover Statutes

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  V REPRESENTATIONS AND WARRANTIES OF PARENT, 
  ACQUISITION SUBSIDIARY AND MERGER SUBSIDIARY

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 5.1.

  	
  Organization

  	
   

  
	
  Section
  5.2.

  	
  Authorization; Validity of Agreement;
  Necessary Action

  	
   

  
	
  Section 5.3.

  	
  Consents and Approvals; No Violations

  	
   

  
	
  Section 5.4.

  	
  Sufficiency of Funds

  	
   

  
	
  Section 5.5.

  	
  Information in Proxy Statement

  	
   

  
	
  Section 5.6.

  	
  Litigation

  	
   

  
	
  Section
  5.7.

  	
  Ownership of Merger Subsidiary; No Prior
  Activities

  	
   

  
	
  Section 5.8.

  	
  Brokers

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 6.1.

  	
  Interim Operations of the Company

  	
   

  
	
  Section 6.2.

  	
  Confidentiality

  	
   

  
	
  Section 6.3.

  	
  No Solicitation of Other Offers

  	
   

  
	
  Section 6.4.

  	
  Access to Information

  	
   

  
	
  Section 6.5.

  	
  Special Meeting

  	
   

  
	
  Section 6.6.

  	
  Proxy Statement

  	
   

  
	
  Section 6.7.

  	
  Cooperation

  	
   

  
	
  Section 6.8.

  	
  Public Disclosure

  	
   

  
	
  Section 6.9.

  	
  Notification of Certain Matters

  	
   

  
	
  Section 6.10.

  	
  Rights Agreement

  	
   

  
	
  Section 6.11.

  	
  Subsequent Filings

  	
   

  
	
  Section 6.12.

  	
  Communication to Employees

  	
   

  
	
  Section
  6.13.

  	
  Indemnification of Officers and Directors;
  Exculpation

  	
   

  
	
  Section 6.14.

  	
  Employee Benefits

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII CONDITIONS TO EFFECT THE MERGER

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  7.1.

  	
  Conditions to Each Party’s Obligation to
  Effect the Transactions

  	
   

  
	
  Section
  7.2.

  	
  Conditions to Parent’s, Merger Subsidiary’s
  and Acquisition Subsidiary’s Obligation to Effect the Transactions

  	
   

  
	
  Section
  7.3.

  	
  Conditions to the Company’s Obligation to
  Effect the Transactions

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII TERMINATION

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 8.1.

  	
  Termination

  	
   

  
	
  Section 8.2.

  	
  Effect of Termination

  	
   

  
	
  Section 8.3.

  	
  Fees and Expenses

  	
   

  
	
  Section 8.4.

  	
  Amendment

  	
   

  
	
  Section 8.5.

  	
  Extension; Waiver

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section
  9.1.

  	
  Nonsurvival of Representations and
  Warranties

  	
   

  

 

ii

 

	
  Section 9.2.

  	
  Notices

  	
   

  
	
  Section 9.3.

  	
  Entire Agreement

  	
   

  
	
  Section 9.4.

  	
  No Third Party Beneficiaries

  	
   

  
	
  Section 9.5.

  	
  Assignment

  	
   

  
	
  Section 9.6.

  	
  Interpretation

  	
   

  
	
  Section 9.7.

  	
  Counterparts

  	
   

  
	
  Section 9.8.

  	
  Severability

  	
   

  
	
  Section 9.9.

  	
  Governing Law

  	
   

  
	
  Section 9.10.

  	
  Submission to Jurisdiction

  	
   

  
	
  Section 9.11.

  	
  Remedies; Specific Performance

  	
   

  
	
  Section 9.12.

  	
  Waiver of Jury Trial

  	
   

  

 

Exhibit A – Form of Voting
Agreement

Exhibit B – Form of Certificate
of Incorporation of Surviving Corporation

Exhibit C – Form of Bill of
Sale

Exhibit C-1 – Form of
Assignment of Trademarks

 

iii

 

AGREEMENT AND PLAN OF MERGER

 

This AGREEMENT
AND PLAN OF MERGER (this “Agreement”),
dated as of May 8, 2003, is made by and among SSA Global Technologies, Inc., a
Delaware corporation (“Parent”),
Seneca Merger Subsidiary Inc. a Delaware corporation and an indirect
wholly-owned subsidiary of Parent (“Merger
Subsidiary”), Seneca Acquisition Subsidiary Inc. a Delaware
corporation and an indirect wholly-owned subsidiary of Parent (“Acquisition Subsidiary”), and Elevon, Inc.,
a Delaware corporation (the “Company”).  Parent, Merger Subsidiary, Acquisition Subsidiary
and the Company are each individually referred to herein as a “Party” and together collectively referred
to herein as the “Parties”.

 

W  I  T  N  E  S
S  E  T  H:

 

WHEREAS, the
respective Boards of Directors of the Company, Parent and Merger Subsidiary have
declared this Agreement advisable and approved the merger of Merger Subsidiary
with and into the Company, with the Company surviving (the “Merger”), upon the terms and subject to the
conditions set forth in this Agreement and the Delaware General Corporation
Law, as such law is in effect from time to time (the “DGCL”);

 

WHEREAS, the
respective Boards of Directors of Parent, the Merger Subsidiary and the Company
have determined that the Merger is in the interest of their respective
stockholders;

 

WHEREAS, the
respective Boards of Directors of the Parent, Acquisition Subsidiary and the
Company have approved the Asset Purchase (as hereinafter defined), upon the
terms and subject to the conditions set forth herein and in the DGCL;

 

WHEREAS, as
inducement and a condition to Parent’s and Acquisition Subsidiary’s willingness
to enter into this Agreement, the respective Boards of Directors of Parent,
Acquisition Subsidiary and the Company have determined that the Asset Purchase
is in the interest of their respective stockholders; and

 

WHEREAS, as
inducement and a condition to Parent’s willingness to enter into this
Agreement, Parent, the Company and certain of the Company Stockholders are
entering into a voting agreement and irrevocable proxy, dated as of the date
hereof, substantially in the form as that attached hereto as Exhibit A
(the “Voting Agreement”), pursuant
to which the Company Stockholders party thereto have agreed, among other
things, to vote the shares of Company Common Stock held by them in favor of the
adoption of this Agreement.

 

NOW,
THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements set forth below, the Parties agree as
follows:

 

 

ARTICLE I

 

DEFINITIONS

 

For purposes
of this Agreement the following terms shall have the meanings set forth below:

 

“Acquisition Agreement” shall mean any
letter of intent, agreement in principle, acquisition agreement, voting
agreement, stock purchase agreement or other similar agreement relating to an
Acquisition Proposal.

 

“Acquisition Proposal” shall mean (a) any
inquiry, proposal or offer (including any proposal to stockholders of the
Company) from any Person or group relating to any direct or indirect
acquisition or purchase of 15% or more of the consolidated assets of the
Company and its Subsidiaries or 15% or more of any class of equity securities
of the Company or any of its Subsidiaries in a single transaction or a series
of related transactions, (b) any tender offer (including a self-tender offer)
or exchange offer that, if consummated, would result in any Person or group
beneficially owning 15% or more of any class of equity securities of the
Company or any of its Subsidiaries or the filing with the SEC of a registration
statement under the Securities Act or any statement, schedule or report under
the Exchange Act in connection therewith, (c) any merger, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving the Company or any of its Subsidiaries, (d) any other
transaction the consummation of which could reasonably be expected to
materially impede, prevent or materially delay consummation of the Transactions
or (e) any public announcement by or on behalf of the Company, any of its
Subsidiaries or any of their respective Affiliates (or any of their respective
Representatives) or by any third party of a proposal, plan or intention to do
any of the foregoing or any agreement to engage in any of the foregoing.

 

“Action or Proceeding” shall mean actions,
suits, proceedings, pleadings, claims, arbitrations, investigations, charges,
allegations, complaints or demands.

 

“Affiliate” shall have the meaning set forth
in Rule 12b-2 of the Exchange Act.

 

“Ancillary Agreements” shall mean all
agreements entered into by and between the Company, on the one hand, and Parent
and/or Merger Subsidiary, on the other hand, in connection with the
Transactions, including, without limitation, the Voting Agreement.

 

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

 

“Appraisal Shares” shall mean Company Common
Stock outstanding immediately prior to the Effective Time that are held by any
Person that shall not have voted such Company Common Stock in favor of, or
consented in writing to, the Merger and shall have 

 

2

 

timely and properly demanded in writing appraisal of such Company
Common Stock in accordance with Section 262 of the DGCL.

 

“Benefit Plans” shall mean each retirement,
pension, savings, bonus, stock purchase, profit sharing, stock option, deferred
compensation, severance or termination pay, insurance, death, medical,
hospital, dental, vision care, drug, sick leave, disability, salary
continuation, vacation, incentive or other compensation plan or arrangement or
other employee benefit that the Company and its Subsidiaries currently maintain
or to which the Company and its Subsidiaries currently contribute or are
required to contribute or had an obligation to contribute for the last 6 years
with respect to any Pension Plan (as defined below) for the benefit of any of
its employees or former employees (or dependents or beneficiaries thereof) (or
as to which the Company and its Subsidiaries may otherwise have any liability,
including, but not limited to, any pension plan (“Pension Plan”) as defined in Section 3(2) of ERISA, any
welfare plan (“Welfare Plan”) as
defined in Section 3(1) of ERISA or any program administered by a government,
including, but not limited to, a Foreign Pension Plan, whether funded, insured
or self-funded or whether written or oral.

 

“Business Day” shall mean any day except a
Saturday, Sunday or any other day on which commercial banks are required or
authorized to be closed in New York, New York.

 

“CAA” shall have the meaning ascribed to
such term within the definition of Environmental Law.

 

“CERCLA” shall have the meaning ascribed to
such term within the definition of Environmental Law.

 

“Code” shall mean the Internal Revenue Code
of 1986, as amended, and the rules and regulations promulgated thereunder.

 

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

 

“Company Material Adverse Effect” shall mean
any event, change, occurrence, effect, fact, violation, development or
circumstances having or resulting in, individually or in the aggregate, a
material adverse effect on (a) the ability of the Company to duly perform its
obligations under this Agreement or to consummate the transactions contemplated
hereby on a timely basis or (b) the business, properties, assets (both tangible
and intangible), liabilities, condition (financial or otherwise), results of
operations or prospects of the Company and its Subsidiaries, taken as a whole;
provided,  however, that none of the following
shall be deemed in themselves, either alone or in combination, to constitute,
and none of the following shall be taken into account in determining whether
there has been or will be, a Company Material Adverse Effect: (A) any change in
the market price or trading volume of the Company’s stock after the date
hereof, provided that any underlying event, change, occurrence, effect,
development or circumstance that gave rise to such change in market price or
trading volume shall be taken into account in determining whether there has
been or would be a Company Material Adverse Effect, except as otherwise
provided in this paragraph; (B) any failure by the Company to meet internal
projections or forecasts or published revenue or earnings predictions for any
period ending (or 

 

3

 

for which revenues or earnings are released) on or after the date of
this Agreement, provided that any underlying event, change, occurrence,
effect, development or circumstance that gave rise to such failure shall be
taken into account in determining whether there has been or would be a Company
Material Adverse Effect, except as otherwise provided in this paragraph; (C)
any adverse event, change, occurrence, effect, development or circumstance
resulting primarily from the announcement or pendency of the Merger (including
any cancellations of or delays in customer orders, any reduction in sales, any
disruption in supplier, distributor, partner or similar relationships or any
loss of employees); (D) any adverse event, change, occurrence, effect,
development or circumstance resulting primarily from any action or inaction by
Parent or Merger Subsidiary (including any cancellations of or delays in
customer orders, any reduction in sales, any disruption in supplier,
distributor, partner or similar relationships or any loss of employees); (E)
any adverse event, change, occurrence, effect, development or circumstance
attributable to conditions affecting the industries in which the Company participates,
the U.S. economy as a whole or foreign economies in any locations where the
Company or any of its Subsidiaries has material operations or sales, including
any such conditions arising out of acts of terrorism or war or any armed
hostilities to the extent such acts of terrorism or war or armed hostilities do
not directly affect the Company or its employees or assets; (F) any adverse
event, change, occurrence, effect, development or circumstance resulting
primarily from (i) out-of-pocket fees and expenses (including legal,
accounting, investment banking and other fees and expenses) incurred in
connection with the transactions contemplated by this Agreement, or (ii) the
payment of any amounts due to, or the provision of any other benefits
(including benefits relating to acceleration of stock options) to, any officers
or employees under, employment contracts, noncompetition agreements, employee
benefit plans, severance arrangements or other arrangements in existence as of
the date of this Agreement or entered into after the date hereof as permitted
by this Agreement; or (G) any adverse event, change, occurrence, effect,
development or circumstance resulting primarily from or relating primarily to
compliance with the terms of, or the taking of any action required by, or the
failure to take any action prohibited by, this Agreement.

 

“Company Permits” shall mean permits,
approvals, licenses, authorizations, certificates, rights, exemptions, orders
and franchises from Governmental Entities necessary for the ownership of assets
and the lawful conduct of the business of the Company and its Subsidiaries as
now conducted and as currently contemplated.

 

“Company Real Property” shall mean,
collectively, the Leased Real Property.

 

“Company SEC Documents” shall mean all forms,
reports, schedules, statements and other documents (including, in each case,
exhibits, schedules, amendments or supplements thereto, and any other
information incorporated by reference therein) required to be filed with the
SEC by the Company since January 1, 2000 under the Exchange Act or the
Securities Act (as such documents have been amended or supplemented between the
time of their respective filing and the date of this Agreement).

 

“Company Stockholders” shall mean the record
holders of the Company Common Stock.

 

4

 

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

 

“Confidentiality Agreement” shall mean the
Confidentiality Agreement, dated as of February 21, 2003, by and between the
Company and Parent, as in effect from time to time.

 

“Contract(s)” shall mean any contract,
agreement, instrument, arrangement, guarantee, license, executory commitment or
understanding that is binding on the Company or any of its Subsidiaries.

 

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

 

“Customer Agreement” shall mean a written
agreement currently in effect between the Company and a customer of the Company
with respect to a Product, under which the Company (i) is currently receiving
revenue, or (ii) has received revenue within the last two years.

 

“CWA” shall have the meaning ascribed to
such term within the definition of Environmental Law.

 

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

 

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

 

“Environmental Law” includes the
Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), 42 U.S.C. 9601 et seq., as
amended, the Clean Air Act (“CAA”),
42 U.S.C. 7401 et seq., as amended, the Clean Water Act (“CWA”), 33 U.S.C. 1251 et seq., as amended,
the Occupational Safety and Health Act (“OSHA”),
29 U.S.C. 655 et seq., and any other federal, state, local or municipal laws,
statutes, regulations, rules or ordinances imposing liability or establishing
standards of conduct for protection of the environment.

 

“Environmental Permits” shall mean,
collectively, all permits, licenses and/or approvals required under
Environmental Laws to operate the business of the Company and its Subsidiaries
as currently operated and as contemplated in material compliances with all
Environmental Laws.

 

5

 

“ERISA” shall mean the Employee Retirement
Income Security Act of 1974, as amended.

 

“ERISA Affiliates” shall mean any entity
which, together with Parent, Merger Subsidiary and the Company, as the case may
be, would be treated as a single employer under Section 414(b), (c), (m) or (o)
of the Code.

 

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

 

“Foreign Pension Plan” shall mean any plan,
fund (including any superannuation fund) or other similar program established
or maintained by the Company, any Subsidiary of the Company or any of the
Company’s Affiliates outside the United States of America primarily for the
benefit of employees of the Company or any of the Subsidiaries of the Company
residing outside the United States of America, which fund or similar program
provides, or results in, retirement income, a deferral of income in
contemplation of retirement or payments to be made upon termination of
employment, and which plan is not subject to ERISA or the Code.

 

“GAAP” shall mean United States generally
accepted accounting principles applied on a consistent basis during the periods
involved.

 

“Governmental Approval” shall mean any
required filing, recordation, declaration or registration with, or permit,
order, authorization, consent or approval of, or action by or in respect of, or
the giving of notice to, any Governmental Entity.

 

“Governmental Directive” shall mean any
judgment, order, decree or directive by or at the request of any Governmental
Entity.

 

“Governmental Entity” shall mean any
federal, state, local or foreign government, court, arbitral tribunal,
administrative agency, body or commission or other governmental or other
regulatory authority, commission, agency or body or any non-governmental,
self-regulatory authority, commission, agency or body.

 

“Intellectual Property” shall mean all
foreign and domestic (i) trademarks, service marks, brand names, certification
marks, collective marks, d/b/a’s, Internet domain names, logos, symbols, trade
dress, assumed names, fictitious names, trade names, all applications and
registrations for all of the foregoing, and all goodwill associated therewith
and symbolized thereby, including all extensions, modifications and renewals of
same (collectively, “Trademarks”);
(ii) patents, registrations, and applications therefor, including divisions,
continuations, continuations-in-part and renewal applications, and including
renewals, extensions and reissues (collectively, “Patents”); (iii) confidential and proprietary information,
trade secrets and know-how, including processes, schematics, databases,
formulae, drawings, prototypes, models, designs and customer lists
(collectively, “Trade Secrets”);
(iv) published works of authorship (including computer software), copyrights
therein and thereto, and registrations and applications therefor, and all
renewals, extensions, restorations and reversions thereof (collectively, “Copyrights”); (v) proprietary computer
software used by the Company in connection with its business (including all
computer programs, object code, source code, user interface, and data bases)
(collectively, “Computer Software”);
and (vi) all claims or causes of 

 

6

 

action arising out of or related to any infringement, misappropriation
or other violation of any of the foregoing, including rights to recover for
past, present and future violations thereof (collectively, “Other Proprietary Rights”).

 

“Knowledge”, with respect to any individual
(and with respect to any other Person, the executive officers of such Person
and its subsidiaries) shall mean the actual knowledge of such individual (and
with respect to any other Person, the executive officers of such Person and its
subsidiaries) after reasonable inquiry.

 

“Laws” shall mean (i) any provisions of any
federal, state, local or foreign statute, law, rule, regulation or ordinance
applicable to a Person and (ii) any order, judgment, writ, injunction or decree
entered by a Governmental Entity naming a Person or binding on such Person or
its business or assets.

 

“Leased Real Property” shall mean,
collectively, all real property leased, subleased or licensed by the Company or
any of its Subsidiaries (as lessor or lessee or under which the Company or any
of its Subsidiaries has any liability).

 

“Licensed Intellectual Property” shall mean
all third party Intellectual Property that the Company is licensed or otherwise
permitted by other Persons to use, distribute, resell, sublicense or otherwise
commercially exploit.

 

“Licensed Intellectual Property Agreement”
shall mean all agreements concerning the Licensed Intellectual Property.

 

“Liens” shall mean any pledges, claims,
equities, options, liens, charges, mortgages, easements, rights-of-way, call rights,
rights of first refusal, “tag-” or “drag-” along rights, encumbrances, security
interests or other similar restrictions of any kind or nature whatsoever.

 

“Merger Subsidiary Common Stock” shall mean
the common stock, par value $0.01 per share, of Merger Subsidiary.

 

“Options” shall mean any options to purchase
Company Common Stock outstanding as of the Closing Date in accordance with the
Company’s Stock Plans.

 

“OSHA” shall have the meaning ascribed to
such term within the definition of Environmental Law.

 

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

 

“Owned Intellectual Property” shall mean
Intellectual Property owned by the Company or the Subsidiaries.

 

“Owned Real Property” shall mean all real
property owned in whole or in part by the Company or any of its Subsidiaries.

 

7

 

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

 

“Paying Agent” shall mean the bank or trust
company, which shall be located in the United States of America, designated by
Parent (with the consent of the Company, not to be unreasonably withheld or
delayed) to act as paying agent for the holders of Certificates in connection
with the Merger and to receive the funds to which holders of Certificates shall
become entitled pursuant to Section 3.1(c).

 

“Payment Fund” shall mean cash in an
aggregate amount which (i) is equal to (a) the aggregate Cash Merger Consideration
payable in accordance with Section 3.1(c) and (ii) is sufficient to enable the
Paying Agent to make payments pursuant to Sections 3.1(c) and 3.2, which funds
prior to disbursement in accordance with the terms of this Agreement shall be
invested by the Paying Agent as directed by the Parent.

 

“Pension Plan” shall have the meaning
ascribed to such term within the definition of Benefit Plans.

 

“Permitted Lien(s)” shall mean (a) Liens
reflected in the Company’s consolidated balance sheet as of December 31, 2002
contained in the Company SEC Documents (including the notes thereto), (b) Liens
consisting of zoning or planning restrictions, easements, permits and other
restrictions or limitations on the use of real property or irregularities in
title thereto that do not materially detract from the value of, or materially
impair the use of, such property by the Company or any of its Subsidiaries in
the operation of their respective business, (c) Liens of carriers,
warehousemen, mechanics, suppliers, materialmen or repairmen arising in the
ordinary course of business which are not material in amount or which are set
forth on Schedule 1.1(c) or (d) Liens for taxes, assessments or governmental
charges or levies on property not yet due and delinquent or being contested in
good faith by appropriate proceedings which are not material in amount or which
are set forth on Schedule 1.1(d), to the extent that all of such Liens referred
to in preceding clauses (a) through (d), inclusive, do not have a Company
Material Adverse Effect.

 

“Person(s)” shall mean and include an
individual, a partnership (general or limited), a joint venture, a corporation,
a trust, an estate, a limited liability company, an association, a joint-stock
company,  an unincorporated organization
or other entity and a Governmental Entity, government or other department or
agency thereof.

 

“Products” shall mean the Computer Software
products marketed, sold, licensed, supported, serviced or maintained by the
Company or its Subsidiaries, together with the inventory of the Products, the
Ancillary Product Materials and any and all such Computer Software related to,
comprising or constituting such products, and all supplements, modifications,
updates, corrections and enhancements to past and current versions of such
products and shipping versions of such products, in existence as of the date
hereof, and versions of such products currently under development; and any and
all English and foreign language versions of current and past versions of such
products, shipping versions of such products and versions of such products
currently under development, in each case, to the extent applicable, including
the source code and object code versions of such Computer Software; and all
Documentation relating thereto; and any and all back-up tapes and archival
tapes relating to the 

 

8

 

foregoing; provided, however, that the term “Products” shall not
include any of the foregoing to the extent (i) related to the discontinued
product commonly known as “Rarevision” or (ii) the Company has previously sold,
assigned, or otherwise transferred its rights to any product or product line to
any Person, including without limitation, those products commonly known as E5,
IMMPOWER and Aptos.

 

“Proxy Statement” shall mean the definitive
proxy statement of the Company mailed to its stockholders relating to the
Transactions and this Agreement, as amended or supplemented.

 

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

 

“Representative(s)” shall mean with respect
to any Person, such Person’s Affiliates, officers, directors, employees,
representatives, consultants, investment bankers, attorneys, accountants and
other agents.

 

“Required Asset Purchase Consents”
shall mean, collectively, all approvals, consents or waivers under each of the
Company Material Contracts that may be required under the terms thereof with
respect to the Asset Purchase.

 

“Required Merger Consents” shall mean,
collectively, all approvals, consents or waivers under each of the Company
Material Contracts that may be required under the terms thereof with respect to
the Merger and the other transactions contemplated hereby (other than the Asset
Purchase).

 

“Rights Agreement” shall mean that certain
Rights Agreement, dated as of June 1, 2000, between the Company and Fleet
National Bank, a National Banking Association, as rights agent thereunder, as
amended on August 7, 2001 and in effect on the date of this Agreement and
without giving effect to any amendments, modifications or supplements after the
date of this Agreement.

 

“SEC” shall mean the United States
Securities and Exchange Commission.

 

“Securities Act” shall mean the Securities
Act of 1933, as amended, including the rules and regulations promulgated
thereunder.

 

“Special Meeting” shall mean a special
meeting of the stockholders of the Company for the purpose of considering and
taking action upon the adoption of this Agreement and the approval of the
Merger and the Asset Purchase.

 

“Stock Plans” shall mean the Company’s:  (a) 1989 Employee Stock Option Plan and
related forms of Incentive Stock Option Grant and Supplemental Stock Option
Grant; (b) 1993 Non-Employee Directors’ Stock Option Plan, as amended; (c) 2002
Equity Incentive Plan (formerly the 1994 Equity Incentive Plan); (d) 1995
Non-Statutory Stock Option Plan for Non-Officer Employees, as amended; and (e)
any other stock option or restricted stock plan or agreement of the Company
including but not limited to the 1982 Incentive Stock Option Plan and the 1986
Supplemental Stock Option Plan.

 

9

 

“Subsequent Filings” means, collectively,
all subsequent filings made after the date of this Agreement amending or
superseding any Company SEC Documents (including any statements or schedules
therein) and any forms, reports, schedules, statements, registration
statements, proxy statements, or other documents (including in each case,
exhibits, schedules, amendments or supplements thereto, and any other
information incorporated by reference therein) filed with the SEC after the
date of this Agreement.

 

“Subsidiary” shall mean, with respect to any
Person at any time, any partnership (general or limited), joint venture,
corporation, trust, estate, limited liability company, association, joint-stock
company, unincorporated organization or other entity of which (or in which)
more than 50% of (a) the issued and outstanding shares of capital stock having
ordinary voting power to elect a majority of the board of directors of such
corporation (irrespective of whether at the time shares of capital stock of any
other class or classes of such corporation shall or might have voting power
upon the occurrence of any contingency), (b) the interest in the capital or profits
of such partnership, joint venture, association, joint stock company,
unincorporated organization, limited liability company or other entity, or (c)
the beneficial interest in such trust or estate, is, at such time, directly or
indirectly owned or controlled by such Person, by such Person and one or more
of its other Subsidiaries or by one or more of such Person’s other
Subsidiaries.

 

“Superior Proposal” shall mean a bona fide
written offer which is not solicited after the date hereof in violation of this
Agreement by or on behalf of the Company, any of its Subsidiaries or any of
their respective Affiliates (or any of their respective Representatives) made
by any Person to acquire, directly or indirectly, (i) more than 50% of the
shares of Company Common Stock pursuant to a tender offer followed by a merger,
(ii) all of the shares of Company Common Stock pursuant to a merger or (iii)
all or substantially all of the assets of the Company and its Subsidiaries, (x)
on terms (taken as a whole) which the Board of Directors of the Company
determines in good faith, after consultation with its outside nationally
recognized legal counsel (which may be its current outside legal counsel) and a
financial advisor of nationally recognized reputation (which may be its current
financial advisor), would, if consummated, be more favorable from a financial
point of view to the Company and its stockholders (in their capacity as such)
than the transactions contemplated hereby and (y) which the Board of Directors
determines in good faith (after consultation with outside nationally recognized
legal counsel (which may be its current outside legal counsel) and a financial
advisor of nationally recognized reputation (which may be its current financial
advisor)) is reasonably capable of being consummated (taking into account such
factors as the Board of Directors of the Company in good faith deems relevant,
including all legal, financial, regulatory and other aspects of such proposal
(including the terms of any financing, the likelihood of obtaining any
necessary financing in a timely manner and the likelihood that the proposed
transaction would be consummated) and the identity of the Person making such
proposal).

 

“Tax Return” shall mean any tax return,
statement, form or report (including any election, declaration, disclosure,
schedule, estimate and information Tax return and other information required to
be supplied to a taxing authority in connection with any Tax) relating to any
Tax.

 

10

 

“Tax” shall mean any tax, charge, duty, fee,
levy or other similar assessment or liability (whether payable directly or by
withholding and whether or not requiring the filing of a Tax Return), including
income, gross receipts, ad valorem, premium, value-added, excise, real
property, personal property, sales, use, services, transfer, withholding,
employment, payroll, franchise, profits, capital gains, capital stock,
occupation, severance, windfall profits, stamp, license, social security and
other taxes imposed by the United States or any state, local or foreign
government, or any agency thereof, or other political subdivision of the United
States or any such government, and any interest, fine, penalty, assessment or
addition to tax resulting from, attributable to or incurred in connection with
any of the foregoing.

 

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

 

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

 

“Transactions” shall mean the transactions
contemplated by this Agreement, and the Ancillary Agreements including, without
limitation, the Merger and the Asset Purchase.

 

“Transfer Regulations” shall means the
Transfer of Undertakings (Protection of Employment) Regulations 1981 or such
legislation enacted in an relevant jurisdictions pursuant to the EC Directive
77/187/EEC (the “Acquired Rights Directive”).

 

“U.S. Benefit Plan” shall mean each Benefit
Plan covering, or providing benefits to, employees of the Company and its
Subsidiaries based in the United States or to which ERISA or the Code is
applicable.

 

“Voting Debt” shall mean, collectively,
bonds, debentures, notes or other indebtedness or obligations which entitle the
holders thereof to vote (or which are convertible into or exercisable or
exchangeable for securities which entitle the holders thereof to vote) with the
stockholders of the Company or a Subsidiary of the Company, as the case may be,
on any matter.

 

“Voting Stockholders” shall mean the Company
Stockholders who are party to the Voting Agreement.

 

“WARN Act” shall mean the Workers Adjustment
Retraining Notification Act, 29 U.S.C. §§ 2101, et  seq.

 

“Welfare Plans” shall have the meaning
ascribed to such term within the definition of Benefit Plans.

 

In addition to
the foregoing definitions, the following terms shall have the definitions
specified in the section of the Agreement listed below:

 

11

 

	
  Defined Terms

  	
   

  	
  Section

  
	
   

  	
   

  	
   

  
	
  Agreement

  	
   

  	
  Preamble

  
	
  Asset
  Purchase  Documents

  	
   

  	
  2.5(d)(ii)

  
	
  Cash Merger
  Consideration

  	
   

  	
  3.1(c)

  
	
  Cash Merger
  Shares

  	
   

  	
  3.1(c)

  
	
  Certificate
  of Merger

  	
   

  	
  2.2

  
	
  Certificates

  	
   

  	
  3.2(b)(i)

  
	
  Closing

  	
   

  	
  2.5

  
	
  Closing Date

  	
   

  	
  2.5

  
	
  COBRA

  	
   

  	
  4.15(b)

  
	
  Company

  	
   

  	
  Preamble

  
	
  Company
  Disclosure Letter

  	
   

  	
  Article IV

  
	
  D&O
  Insurance

  	
   

  	
  6.13(b)

  
	
  DGCL

  	
   

  	
  Recitals

  
	
  Effective
  Time

  	
   

  	
  2.2

  
	
  Environmental
  Claim

  	
   

  	
  4.14

  
	
  Expense
  Reimbursement

  	
   

  	
  8.3(b)(ii).  8.3(b)(ii)

  
	
  Insurance
  Policies

  	
   

  	
  4.19

  
	
  Merger

  	
   

  	
  Recitals

  
	
  Merger
  Subsidiary

  	
   

  	
  Preamble

  
	
  Option
  Consideration

  	
   

  	
  3.4

  
	
  Parent

  	
   

  	
  Preamble

  
	
  Parties

  	
   

  	
  Preamble

  
	
  Party

  	
   

  	
  Preamble

  
	
  Preferred
  Stock

  	
   

  	
  4.2

  
	
  Purchase
  Plan

  	
   

  	
  3.5

  
	
  Purchase
  Plan Termination Date

  	
   

  	
  3.5

  
	
  Purchased
  Assets

  	
   

  	
  2.4

  
	
  SEC
  Contracts

  	
   

  	
  4.12

  
	
  Stock
  Incentive Plans

  	
   

  	
  3.4

  
	
  Surviving
  Corporation

  	
   

  	
  2.1

  
	
  Termination
  Date

  	
   

  	
  8.1(b)

  
	
  Termination
  Fee

  	
   

  	
  8.3(b)(ii)

  
	
  Voting
  Agreement

  	
   

  	
  Recitals

  

 

12

 

ARTICLE II

 

MERGER AND ASSET PURCHASE

 

Section
2.1.            The Merger. 
Upon the terms and subject to the conditions set forth in this
Agreement, and in accordance with the DGCL, at the Effective Time, Parent,
Merger Subsidiary and the Company shall consummate the Merger pursuant to which
(a) Merger Subsidiary shall be merged with and into the Company and the
separate corporate existence of Merger Subsidiary shall cease, (b) the Company
shall be the successor or surviving corporation in the Merger (the “Surviving Corporation”) and shall continue
to be governed by the DGCL, (c) the separate corporate existence of the Company
with all of its rights, powers and franchises shall continue unaffected by the
Merger, (d) the Amended and Restated Certificate of Incorporation, as amended,
of the Company as in effect immediately prior to the Effective Time shall be
amended so as to read in its entirety in the form attached hereto as Exhibit
B, and as so amended shall be the Restated Certificate of Incorporation of
the Surviving Corporation until further amended in accordance with the terms
thereof and the DGCL, and (e) the Company shall take all requisite actions so
that the By-laws of Merger Subsidiary, as in effect immediately prior to the
Effective Time, shall be the By-laws of the Surviving Corporation until further
amended in accordance with the terms thereof and the DGCL.  The Surviving Corporation shall possess all
the rights, privileges, immunities, powers and franchises of the Company and
Merger Subsidiary, and the Surviving Corporation shall by operation of law
become liable for all of the debts, liabilities and duties of the Company and
Merger Subsidiary.  The purpose of the
Surviving Corporation shall be as set forth in Article 2 of the Certificate of
Incorporation of the Surviving Corporation. 
The Merger shall have the effects set forth in Sections 259 through 261
of the DGCL.

 

Section 2.2.            Effective Time of the Merger.  Upon the terms and subject to the conditions
set forth in this Agreement, prior to the Closing, Merger Subsidiary and the
Company shall prepare, execute, and on the Closing Date shall cause to be filed
with the Secretary of State of the State of Delaware, the Certificate of Merger
in such form as is required by the relevant provisions of the DGCL (the “Certificate of Merger”) and all other
filings or recordings required under the DGCL. 
The Merger shall become effective upon the filing of the Certificate of
Merger, executed in accordance with the relevant provisions of the DGCL, with
the Secretary of State of the State of Delaware or at such later time as is
established by the Parties and set forth in the Certificate of Merger (the “Effective Time”).

 

Section
2.3.            Officers. 
Immediately following the Effective Time the Board of Directors of the
Surviving Corporation shall take all requisite actions so that the officers of
Merger Subsidiary immediately prior to the Effective Time shall be, from and
after the Effective Time, the officers of the Surviving Corporation, each to
hold office in accordance with the Restated Certificate of Incorporation and
By-laws of the Surviving Corporation, until such officer’s successor is duly
elected or appointed and qualified or until his or her earlier death,
resignation or removal in accordance with the Restated Certificate of
Incorporation and the By-laws of the Surviving Corporation.

 

13

 

Section
2.4.            Asset Purchase.  Immediately prior to the Effective Time the Company will sell,
assign, transfer, convey and deliver to Acquisition Subsidiary, free and clear
of all Liens (other than Permitted Liens), and Acquisition Subsidiary will
purchase, acquire and accept from the Company, certain assets of the Company
set forth on Schedule 2.4 (the “Purchased
Assets”).  The purchase price
for the Purchased Assets (the “Purchase Price”) shall be an amount equal to
$1,754,000 and shall be payable in immediately available same day funds at
Closing to an account designated by the Company at least two Business Days
prior to the Closing Date.

 

Section
2.5.            Closing. 
(a)  Unless this Agreement shall
have been terminated and the transactions contemplated hereby shall have been
abandoned pursuant to Article VIII, and subject to the satisfaction or waiver
(to the extent permitted by applicable law) of all of the conditions set forth
in Article VII, the closing of the Merger and the Asset Purchase (the “Closing”), shall take place at 10:00 a.m.
on a date to be specified by the Parties, which shall be no later than two
Business Days following the satisfaction or waiver (to the extent permitted by
applicable law) of all of the conditions set forth in Article VII other than
such conditions that by their nature are to be satisfied at the Closing, but
subject to the fulfillment or waiver (to the extent permitted by applicable
law) of those conditions (the “Closing Date”),
at the offices of Schulte Roth & Zabel LLP, 919 Third Avenue, New York, New
York 10022, unless another date, place or time is agreed to in writing by the
Parties.

 

(b)           Subject to fulfillment or waiver of
the conditions set forth in Article VII, at the Closing, Parent shall deliver
to the Company all of the following:

 

(i)            each Ancillary Agreement to which
Parent is a party duly executed on behalf of Parent;

 

(ii)           a certificate executed on behalf of
Parent by an officer thereof, dated as of the Closing Date, in form and
substance reasonably satisfactory to the Company certifying as to the
incumbency and signatures of the officers of Parent executing this Agreement
and any Ancillary Agreement;

 

(iii)          a certificate of good standing of
Parent, issued as of a recent date by the Secretary of State of the State of
Delaware; and

 

(iv)          the certificate contemplated by
Section 7.3(a).

 

(c)           Subject to fulfillment or waiver of
the conditions set forth in Article VII, at the Closing, each of Merger
Subsidiary and Acquisition Subsidiary shall deliver to the Company all of the
following:

 

(i)            each Ancillary Agreement to which
Merger Subsidiary or Acquisition Subsidiary is a party duly executed on behalf
of Merger Subsidiary or Acquisition Subsidiary, as the case may be;

 

(ii)           a copy of the Certificate of
Incorporation of each of Merger Subsidiary and Acquisition Subsidiary with all
amendments thereto certified as of a recent date by the Secretary of State of
the State of Delaware;

 

14

 

(iii)          a certificate of good standing of each
of Merger Subsidiary and Acquisition Subsidiary, issued as of a recent date by
the Secretary of State of the State of Delaware;

 

(iv)          a certificate of the Secretary or an
Assistant Secretary of each of Merger Subsidiary and Acquisition Subsidiary,
dated as of the Closing Date, in form and substance reasonably satisfactory to
the Company, certifying as to (A) the Certificate of Incorporation and the
Bylaws of Merger Subsidiary or Acquisition Subsidiary, as the case may be, and
(B) the incumbency and signatures of the officers of Merger Subsidiary or
Acquisition Subsidiary, as the case may be, executing this Agreement and the
Ancillary Agreements to which it is a party; and

 

(v)           the certificate contemplated by
Section 7.3(a).

 

(d)           Subject to fulfillment or waiver of
the conditions set forth in Article VII, at the Closing, the Company shall
deliver to Parent and Merger Subsidiary all of the following:

 

(i)            each Ancillary Agreement to which
the Company is a party duly executed on behalf of the Company;

 

(ii)           a bill of sale, duly executed on
behalf of the Company, in the form attached hereto as Exhibit C, and
short form assignments of trademarks in the form attached hereto as Exhibit
C-1 (collectively, the “Asset Purchase
Documents”);

 

(iii)          a copy of the Amended and Restated
Certificate of Incorporation of the Company with all amendments thereto,
certified as of a recent date by the Secretary of State of the State of
Delaware;

 

(iv)          a certificate of good standing of the
Company, issued as of a recent date by the Secretary of State of the State of
Delaware;

 

(v)           a certificate of the Secretary or an
Assistant Secretary of the Company, dated as of the Closing Date, in form and
substance reasonably satisfactory to Parent certifying as to (A) the Company’s
Amended Restated Certificate of Incorporation, as amended, and Bylaws, and (C)
the incumbency and signatures of the officers of the Company executing this
Agreement and the Ancillary Agreements;

 

(vi)          all consents, waivers or approvals
obtained by the Company described in Section 7.2(e) of the Company Disclosure
Letter; and

 

(vii)         the certificates contemplated by
Section 7.2(a);

 

(viii)        a certificate executed on behalf of the
Company’s transfer agent certifying as to the number of issued and outstanding
shares of Company Common Stock.

 

15

 

ARTICLE III

 

CONVERSION OF SECURITIES

 

Section
3.1.            Conversion of Capital Stock.  As of the Effective Time, by virtue of the
Merger and without any action on the part of any Party or the Company
Stockholders or Merger Subsidiary Stockholders:

 

(a)           Capital Stock of Merger Subsidiary.  Each issued and outstanding share of Merger
Subsidiary Common Stock shall be converted into and become one fully paid and
nonassessable share of common stock, par value $0.01 per share, of the
Surviving Corporation and shall be the only issued and outstanding capital
stock of the Surviving Corporation. 
From and after the Effective Time, each outstanding certificate
theretofore representing shares of Merger Subsidiary Common Stock shall be
deemed for all purposes to evidence ownership and to represent the same number
of shares of common stock of the Surviving Corporation.

 

(b)           Cancellation of Treasury Stock and
Subsidiary-Owned Stock.  All Company
Common Stock that is owned by the Company or by any of its Subsidiaries or held
in the Company’s treasury immediately prior to the Effective Time shall be
cancelled and shall cease to exist and no consideration shall be delivered in
exchange therefor.

 

(c)           Exchange of Company Common Stock.  Each issued and outstanding share of Company
Common Stock (other than (i) shares of Company Common Stock to be cancelled in
accordance with Section 3.1(b) and (ii) any Appraisal Shares ) shall be
converted into the right to receive an amount in cash equal to $1.30 per share
of Company Common Stock (the “Cash Merger
Consideration”), payable to the holder thereof.  Such Cash Merger Consideration shall be paid
upon surrender of the certificate formerly representing such share of Company
Common Stock pursuant to Section 3.2. 
The shares of Company Common Stock converted into the right to receive
the Cash Merger Consideration are hereinafter referred to collectively as the “Cash Merger Shares”.  All such Cash Merger Shares, from and after
the Effective Time, shall no longer be outstanding and shall automatically be
cancelled and retired and shall cease to exist, and each holder of a
certificate formerly representing any Cash Merger Shares shall cease to have
any rights with respect thereto, except the right to receive the Cash Merger
Consideration therefor upon the surrender of such certificate in accordance
with Section 3.2, without interest.

 

Section
3.2.            Payment of Cash Merger
Consideration.

 

(a)           Paying Agent.  At least five Business Days prior to the
Effective Time, Parent shall designate the Paying Agent.  Immediately after the Effective Time, Parent
shall deposit the Payment Fund in trust with the Paying Agent.  The Payment Fund shall be invested by the
Paying Agent as directed by Parent.  The
Paying Agent shall, pursuant to irrevocable instructions, make the payments
referred to in Section 3.1(c) and this Section 3.2 out of the Payment
Fund.  The Payment Fund shall not be
used for any other purpose except as otherwise agreed to by Parent.  If the Payment Fund is insufficient to pay
all of the amounts required to be paid pursuant to Section 3.1(c) and this
Section 3.2, Parent from time to time after the Effective 

 

16

 

Time shall promptly
deposit in trust additional cash with the Paying Agent sufficient to make all
such payments, or shall cause the Surviving Corporation to do so.

 

(b)           Exchange Procedures.

 

(i)            Within two Business Days following
the Effective Time, Parent shall cause the Paying Agent to mail to each holder
of record of a certificate or certificates that immediately prior to the
Effective Time represented outstanding Cash Merger Shares (collectively, the “Certificates”), whose shares of Company
Common Stock were converted pursuant to Section 3.1(c) into the right to
receive the Cash Merger Consideration, (A) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon actual delivery of the Certificates to the
Paying Agent, and shall otherwise be in customary form), and (B) instructions
for use in effecting the surrender of the Certificates in exchange for payment
of the Cash Merger Consideration.

 

(ii)           Upon surrender of a Certificate for
cancellation to the Paying Agent or to such other agent or agents as may be
appointed by the Surviving Corporation, together with such letter of
transmittal, duly executed and completed in accordance with the instructions
thereon, together with any other items specified by the letter of transmittal
or otherwise reasonably required by the Paying Agent, the holder of such
Certificate shall be entitled to receive in exchange therefor the Cash Merger
Consideration for each Cash Merger Share represented by such Certificate, and
the Certificate so surrendered shall forthwith be cancelled.  Until so surrendered, each Certificate shall
be deemed, for all purposes, to evidence only the right to receive upon such
surrender the Cash Merger Consideration deliverable in respect thereof to which
the holder thereof is entitled pursuant to Section 3.1(c) and this Section
3.2.  No interest will be paid or will
accrue in respect of any cash payable upon the surrender of any Certificate.

 

(iii)          If any Certificate shall have been
lost, stolen or destroyed, then, upon the making of an affidavit of that fact
by the Person claiming such Certificate to be lost, stolen or destroyed, Parent
shall cause the Paying Agent to pay in exchange for such lost, stolen or
destroyed Certificate the Cash Merger Consideration deliverable in respect
thereof to which the holder thereof is entitled pursuant to Section 3.1(c) and
this Section 3.2; provided, that Parent may require the Person to whom
any such Cash Merger Consideration is paid, as a condition precedent to the
payment thereof, to give the Surviving Corporation a bond in such sum as it may
direct or otherwise indemnify the Surviving Corporation in a manner reasonably
satisfactory to Parent against any claim that may be made against the Surviving
Corporation with respect to the Certificate claimed to have been lost, stolen
or destroyed.

 

(iv)          If payment of Cash Merger
Consideration is to be made to a Person other than the Person in whose name the
surrendered Certificate is registered, it shall be a condition of payment that
the Certificate so surrendered be properly endorsed or be otherwise in proper
form for transfer and that the Person requesting such payment shall have paid
any transfer and other taxes required by reason of the payment of Cash Merger
Consideration to a Person other than the registered holder of the Certificate
surrendered or shall have established to the satisfaction of the Surviving
Corporation that such tax either has been paid or is not applicable.  Each of the Paying Agent, Parent and the
Surviving Corporation shall be entitled to deduct and 

 

17

 

withhold, or
cause to be deducted and withheld, from any consideration payable or otherwise
deliverable pursuant to this Agreement to any holder or former holder of Cash
Merger Shares such amounts as may be required to be deducted and withheld
therefrom under the Code or any provision of state, local or foreign Tax law or
under any other applicable legal requirement. 
To the extent such amounts are so deducted or withheld, such amounts
shall be treated for all purposes under this Agreement as having been paid to
the Person to whom such amounts would otherwise have been paid and shall be
paid to the appropriate Governmental Entity on behalf of such Person.

 

(v)           The Surviving Corporation shall pay
all charges and expenses of the Paying Agent in connection with the exchange of
the Cash Merger Consideration for the Cash Merger Shares.

 

(c)           No Further Transfer or Ownership
Rights in the Shares of Common Stock. 
From and after the Effective Time, the stock transfer books of the
Company shall be closed with respect to Company Common Stock and there shall be
no further registration of transfers of the Company Common Stock on the records
of the Surviving Corporation or its transfer agent, and if any Certificates are
presented to the Surviving Corporation for transfer, they shall be cancelled
and exchanged as provided in this Article III, subject to applicable law in the
case of Appraisal Shares.  All Cash
Merger Consideration paid upon the surrender for exchange of Certificates in
accordance with the terms of this Article III shall be deemed to have been paid
in full satisfaction of all rights pertaining to the Company Common Stock
exchanged for Cash Merger Consideration theretofore represented by such
Certificates.

 

(d)           Termination of Fund; No Liability.  At any time following the date which is the
six month anniversary of the Effective Time, Parent shall be entitled to
require the Paying Agent to deliver to it any funds (including any and all
interest and other income received with respect thereto) that had been made
available to the Paying Agent and that have not been disbursed to holders of
Certificates, and thereafter, such holders shall be entitled to look solely to
Parent (subject to abandoned property, escheat or other similar Laws) with
respect to the Cash Merger Consideration payable upon due surrender of their
Certificates, without any interest thereon; provided, that such holders
shall have no greater rights against Parent than may be accorded to general
creditors of Parent under applicable Laws. 
Any portion of the Payment Fund remaining unclaimed as of a date which
is immediately prior to such time as such amounts would otherwise escheat to or
become property of any government entity shall, to the extent permitted by
applicable law, become the property of Parent free and clear of any claims or
interest of any Person previously entitled thereto.  Notwithstanding the foregoing, neither Parent nor the Paying
Agent shall be liable to any Person for any amounts delivered to a public
official pursuant to any applicable abandoned property, escheat or other
similar Laws.

 

Section
3.3.            Appraisal Rights.  Notwithstanding anything in this Agreement to the contrary,
Appraisal Shares shall not be converted into or represent the right to receive
Cash Merger Consideration in accordance with Sections 3.1(c) and 3.2, but
rather each of the Appraisal Shares shall represent only the right to receive
payment of the appraised value of such Appraisal Shares in accordance with the
DGCL; provided, however, that if any holder of Appraisal Shares
shall (i) fail to establish his entitlement to appraisal rights as provided in
the DGCL or (ii) otherwise shall waive, withdraw or lose the right to appraisal
under the DGCL, 

 

18

 

then such
Appraisal Shares shall thereupon be deemed to have been converted as of the
Effective Time into, and to have become exchangeable solely for the right to
receive Cash Merger Consideration otherwise payable in accordance with Sections
3.1(c) and 3.2, without any interest thereon. 
The Company shall give Parent (a) prompt written notice of any demand
for appraisal received by the Company, the withdrawal of any such demand, and
any other notice or instrument delivered or served relating to Appraisal
pursuant to the DGCL and (b) the opportunity to direct all negotiations and
proceedings with respect to any demand for appraisal under the DGCL.  The Company shall not, except with the prior
written consent of Parent, (i) make any payment with respect to any demand for
appraisal, (ii) offer to settle or settle any such demand for appraisal, (iii)
waive any failure to timely deliver a written demand for appraisal in
accordance with the DGCL, or (iv) agree to do any of the foregoing.

 

Section
3.4.            Stock Options and Restricted Stock.  The Company shall take such action as shall
be required so that (i) immediately prior to the Effective Time, each outstanding
Option shall become immediately vested and exercisable in full, (ii) with
respect to any Options that remain outstanding and unexercised as of the
Effective Time, all such Options (whether or not then vested or exercisable and
without regard to the exercise price, if applicable, of such Options) granted
under any Stock Plan or otherwise, shall be cancelled as of the Effective Time,
and, pursuant to the Stock Plans, all such outstanding Options (whether or not
vested or exercisable) shall represent solely the right to receive, in
accordance with this Section 3.4, a cash payment in the amount of the Option
Consideration (as defined below), if any, with respect to any such Option and
shall no longer represent or represent the right to purchase Company Common
Stock or any other equity securities of the Company, Parent, the Surviving
Corporation or any other Person or any other consideration, and (iii) as of the
Effective Time, the Stock Plans shall be terminated.  The forgoing actions shall take effect immediately prior to the
Effective Time.  Each holder of an
option to purchase Company Common Stock shall receive from Parent, in respect
and in consideration of each Option so cancelled, as soon as practicable following
the Effective Time (but in any event not later than five Business Days), an
amount (net of applicable taxes) equal to the excess, if any, of the Cash
Merger Consideration over the exercise price of such Option, multiplied by the
total number of shares of Common Stock subject to such Option, without any
interest thereon (the “Option Consideration”).  In the event that the exercise price of such
option is equal to or greater than the Cash Merger Consideration, such option
shall be cancelled and have no further force or effect.  As soon as practicable following the
execution of this Agreement, the Company shall mail to each person who is a
holder of any such Options a letter describing the treatment of and payments
for such Options pursuant to this Section 3.4 and providing instructions for
use in obtaining payment for such Options. 
The Company shall take all steps to ensure that neither it nor any of
its Subsidiaries or Affiliates shall be bound by any Options, other options,
warrants, rights or agreements which would entitle any Person, other than
Parent or its Affiliates, to own any capital stock or equity of the Company of
the Surviving Corporation or any of their Subsidiaries or to receive any
payment in respect thereof, except as expressly contemplated by this Section
3.4.

 

Section
3.5.            Employee Stock Purchase Plan.  The Company shall take all necessary action
under the Company’s Employee Stock Purchase Plan (the “Purchase Plan”) to provide that on the
earlier of the close of business on June 30, 2003 or the Effective Time (the “Purchase Plan Termination Date”), (i) all
participants’ rights under the ongoing Offering (as defined in the Purchase
Plan) shall terminate, (ii) all accumulated payroll deductions allocated to 

 

19

 

each
participant’s account under the Purchase Plan shall thereupon be used to
purchase from the Company whole Common Shares at a price determined under the
terms of the Purchase Plan for the Offering using the Purchase Plan Termination
Date as the final Exercise Date (as defined in the Purchase Plan), and (iii)
the Purchase Plan will terminate.  At
the Effective Time, any Common Shares so purchased will be treated as provided
in Section 3.1 of this Agreement.

 

Section
3.6.            Further Assurances.  If at any time after the Effective Time the
Surviving Corporation shall consider or be advised that any agreements,
documents, deeds, bills of sale, assignments or assurances or any other acts or
things are necessary, desirable or proper (a) to vest, perfect or confirm, of
record or otherwise, in the Surviving Corporation, its right, title or interest
in, to or under any of the rights, privileges, powers, franchises, properties
or assets of either of the constituent corporations in the Merger, or (b)
otherwise to carry out the purposes of this Agreement, the Surviving
Corporation and its proper officers and directors or their designees are hereby
authorized to execute and deliver, in the name and on behalf of either of the
constituent corporations in the Merger, all such deeds, bills of sale,
assignments and assurances and do, in the name and on behalf of such
constituent corporations, all such other acts and things necessary, desirable
or proper, consistent with the terms of this Agreement, to vest, perfect or
confirm its right, title or interest in, to or under any of the rights,
privileges, powers, franchises, properties or assets of such constituent
corporations and otherwise to carry out the purposes of this Agreement.

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

The Company
has delivered to Parent a Disclosure Letter, dated the date hereof (the “Company Disclosure Letter”), receipt of
which has been acknowledged in writing thereon by Parent.  The Company Disclosure Letter shall be
arranged in sections and subsections corresponding to the sections and
subsections of this Article IV, but all of the disclosures are intended to
modify all of the Company’s representations and warranties only to the extent
that it is reasonably apparent from a reading of such disclosure that it also
qualifies or applies to such other representation or warranty.  The Company hereby represents and warrants
to Parent and Merger Subsidiary, except as expressly set forth in the
corresponding sections and subsections of the Company Disclosure Letter, as
follows:

 

Section
4.1.            Organization.  The Company and each of its Subsidiaries is an entity duly
organized, validly existing and in corporate good standing under the Laws of
its jurisdiction of organization and has all requisite power and authority to
own, lease and operate its properties and assets and to carry on its business
as now being conducted and as contemplated. 
The Company and each of its Subsidiaries is duly qualified or licensed
to do business, and is in corporate good standing as a foreign entity, in each
jurisdiction where the character of its properties or assets owned, operated
and leased or the nature of its activities makes such qualification necessary,
except where the failure to be so qualified or licensed or in good standing has
not resulted in and would not reasonably be likely to result in, individually
or in the aggregate, a Company Material Adverse Effect.  The Company has, prior to the date of this
Agreement, delivered to Parent true, complete and correct copies of the Amended
and Restated Certificate of Incorporation, as amended, and the By-laws of the
Company and the comparable 

 

20

 

governing
documents of each of the Company’s Subsidiaries, in each case as amended and in
full force and effect as of the date of this Agreement.  The respective certificates of incorporation
and by-laws or other organizational documents of such Subsidiaries do not
contain any provision limiting or otherwise restricting the ability of the
Company to control such Subsidiaries.

 

Section
4.2.            Capitalization.  (a) The authorized capital stock of the Company consists of (x)
50,000,000 shares of Company Common Stock and (y) 10,000,000 shares of
preferred stock, par value $0.001 per share (“Preferred
Stock”).  As of the close of
business on the date hereof, (i)  with
respect to Company Common Stock, 15,600,035 shares of Company Common Stock are
issued and outstanding, no shares of Company Common Stock are issued and held
in the treasury of the Company and 3,677,117 shares of Company Common Stock are
reserved for issuance upon exercise of outstanding Options to purchase Company
Common Stock, and (ii) with respect to Preferred Stock, no shares are issued
and outstanding, or held in the treasury of the Company, and 500,000 shares are
designated Series A Junior Participating Preferred Stock and are reserved for
issuance in connection with the Company’s stockholder rights plan pursuant to
the Rights Agreement.  Section 4.2(a) of
the Company Disclosure Letter sets forth the exercise price, grant date,
expiration date for and number of shares subject to all outstanding options to
purchase Company Common Stock and the vesting date and grant date for all
shares of Restricted Stock.  All
outstanding shares of capital stock or other equity interests, as the case may
be, of the Company and each of the Subsidiaries are duly authorized, validly
issued, fully paid and non-assessable, and are not subject to and were not
issued in violation of any preemptive rights, purchase option, call option,
right of first refusal, subscription right or any similar right, and were
issued in compliance with applicable federal and state securities laws and
regulations.  All shares of capital
stock of the Company subject to issuance on the terms and conditions set forth
in the instruments pursuant to which they are issuable, will, when issued in
accordance with the terms of such instruments, be duly authorized, validly
issued, fully paid and non-assessable, and will not be subject upon issuance
to, nor issued in violation of, any preemptive rights, purchase option, call
option, right of first refusal, subscription right or any similar right, and
will be issued in compliance with applicable federal and state securities laws
and regulations.  Except as set forth
above and in Section 4.2(d) of the Company Disclosure Letter, (A) there are no
shares of capital stock or other equity securities (voting or nonvoting) of the
Company or any of its Subsidiaries authorized, issued or outstanding, (B) there
are no outstanding or authorized options or restricted stock (other than the
Options to purchase Company Common Stock and Restricted Stock described in
Section 4.2(a) of the Company Disclosure Letter) or warrants, calls, preemptive
rights, subscriptions or other similar rights, convertible or exchangeable
securities, “phantom” stock rights, stock appreciation rights, limited stock
appreciation rights, stock-based performance units, agreements, arrangements,
commitments or claims of any character, contingent or otherwise, (1) relating
to the issued or unissued capital stock of the Company or any of its
Subsidiaries or (2) obligating the Company or any of its Subsidiaries to issue,
transfer or sell or cause to be issued, transferred or sold any shares of capital
stock or other equity interests in the Company or any of its Subsidiaries or
securities convertible into or exchangeable for such shares or equity
interests, or obligating the Company or any of its Subsidiaries to grant,
extend or enter into any such option, restricted stock, warrant, call,
preemptive right, subscription or other right, convertible or exchangeable
security, agreement, arrangement, commitment or claim, and (C) neither the
Company nor any of its Subsidiaries has authorized or outstanding Voting Debt.

 

21

 

(b)           Section 4.2 of the Company Disclosure
Letter sets forth a complete and accurate list of the Subsidiaries of the
Company.  Except for the Company’s
interest in its Subsidiaries and investments in marketable securities and
mutual funds, neither the Company nor any of its Subsidiaries owns directly or
indirectly any interest or investment (whether equity or debt securities) in,
nor is the Company or any of the Subsidiaries subject to any obligation or
requirement to provide for or to make any investment (whether equity or debt
securities) to or in, any Person.

 

(c)           Except as set forth in Section 4.2(c)
of the Company Disclosure Letter, all of the outstanding shares of capital
stock or other equity interests of each of the Company’s Subsidiaries are
owned, of record and beneficially, by the Company, or directly or indirectly
beneficially, by either the Company or one or more of its Subsidiaries, in each
case free and clear of all Liens.  No
shares of capital stock of, or ownership interests in, any of the Company’s
Subsidiaries are reserved for issuance.

 

(d)           Other than the Voting Agreement and
the Rights Agreement, there are no voting trusts, proxies, registration rights
agreements, or other agreements, commitments, arrangements or understandings of
any character by which the Company or any of its Subsidiaries is bound with
respect to the voting of any shares of capital stock or other equity interests
of the Company or any of its Subsidiaries or with respect to the registration
of the offering, sale or delivery of any shares of capital stock or other
equity interests of the Company or any of its Subsidiaries under the Securities
Act.

 

(e)           None of the Company or its
Subsidiaries are required to redeem, repurchase or otherwise acquire shares of
capital stock or other equity interests of the Company or any of its
Subsidiaries.

 

(f)            Except as set forth in Section
4.2(f) of the Company Disclosure Letter, there are no restrictions of any kind
which prevent or restrict the payment of dividends by the Company or any of its
Subsidiaries other than those imposed by the corporate laws of general
applicability of their respective jurisdictions of organization.

 

Section
4.3.            Authorization; Validity of
Agreement; Company Action. 
The Company has full corporate power and authority to execute and
deliver this Agreement, the Asset Purchase Documents, the Voting Agreement and
each instrument required hereby to be executed and delivered by the Company
prior to or at the Effective Time, and, subject to obtaining Company
Stockholder approval thereof to the extent required by the DGCL and the
Company’s Amended and Restated Certificate of Incorporation, as amended, to
perform its obligations hereunder and thereunder and to consummate the
Transactions.  The execution, delivery
and performance by the Company of this Agreement, the Voting Agreement and each
instrument required hereby to be executed and delivered by the Company prior to
or at the Effective Time and the performance of its obligations hereunder and
thereunder and the consummation by it of the Transactions have been duly
authorized by its Board of Directors, and, except for obtaining the approval of
the Company Stockholders as contemplated by Section 6.5, no other corporate
action on the part of the Company is necessary to authorize the execution,
delivery and performance by the Company of this Agreement, the Voting Agreement
and the consummation by it of the Transactions.  This Agreement, the Voting Agreement and each 

 

22

 

instrument
required hereby to be executed and delivered by the Company prior to the
Effective Time have been duly executed and delivered by the Company and,
assuming due and valid authorization, execution and delivery thereof by Parent
and Merger Subsidiary and any other parties thereto, is each a valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms.

 

Section
4.4.            Consents and Approvals; No Violations.  The execution and delivery of this Agreement
and the Ancillary Agreements by the Company does not, and the consummation by
the Company of the Transactions and the compliance by the Company with the
applicable provisions of this Agreement and the Ancillary Agreements will not:

 

(a)           assuming the stockholder approval
described in Section 4.23 is obtained, violate or conflict with or result in
any breach of any provision of the Amended and Restated Certificate of
Incorporation, as amended, or the By-laws of the Company or the comparable
governing documents of any of its Subsidiaries;

 

(b)           require any Governmental Approval,
except for (i) the filing with the SEC of (A) the Proxy Statement, and (B) such
reports, schedules or materials under the Exchange Act as may be required in
connection with this Agreement and the transactions contemplated by this
Agreement; (ii) the Governmental Approvals set forth in Section 4.4(b) of the
Company Disclosure Letter; (iii) the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware, all other filings and recordings
required under the DGCL and appropriate documents with the relevant authorities
of other states and countries in which the Company and its Subsidiaries are
qualified to do business and (iv) Government Approvals which, if not obtained,
would not reasonably be expected to (x) result in a material loss or liability
to the Company or its Subsidiaries or (y) interfere in a material manner with
the business or operations of the Company and its Subsidiaries or the ownership
of their properties or assets.

 

(c)           except as set forth in Section 4.4(c)
of the Company Disclosure Letter, result in a material violation or breach of,
conflict with, constitute (with or without due notice or lapse of time or both)
a material default under, give rise to any material penalty, right of
amendment, modification, renegotiation, termination, cancellation, payment or
acceleration or any right or obligation or loss of any material benefit or
right under, or result in the creation of any Liens upon any of the properties
or assets of the Company or any of its Subsidiaries under any of the terms,
conditions or provisions of any loan or credit agreement, note, bond, mortgage
or indenture, or under the terms, conditions or provisions of any Customer
Agreement, Material Contract, SEC Contract, lease for Leased Real Property,
license for Licensed Intellectual Property or material Company Permit; or

 

(d)           assuming that all Governmental
Approvals set forth in clause (b) have been obtained and all filings and
notifications described in clause (b) have been made, violate or conflict with
any Law applicable to the Company or any of the Subsidiaries or by which any of
their properties or assets may be bound except such violations or conflicts
that would not reasonably be expected to (x) result in a material loss or
liability to the Company or its Subsidiaries or (y) interfere in a material
manner with the business or operations of the Company and its Subsidiaries or
the ownership of their properties or assets.

 

23

 

Section
4.5.            SEC Reports and Financial
Statements.  (a)  The Company has timely filed with the SEC
all Company SEC Documents, all of which are publicly available by EDGAR (other
than the certification required under section 906 of the Sarbanes-Oxley Act of
2002 which have been furnished as correspondence to the SEC, a true and
complete copy of which has been delivered to Parent).  Except to the extent amended or superseded by a subsequent filing
with the SEC made prior to the date hereof, as of their respective dates (and
if so amended or superseded, then on the date of such filing prior to the date
hereof), the Company SEC Documents (including any financial statements or
schedules included therein) and any forms, reports, schedules, statements,
registration statements, proxy statements and other documents (including in
each case, exhibits, schedules, amendments or supplements thereto, and any
other information incorporated by reference therein) (i) did not, and in the
case of Subsequent Filings will not, contain any untrue statement of a material
fact or omit, or in the case of Subsequent Filings will not omit, to state a
material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading and (ii) complied, and in the case of Subsequent Filings
will comply, in all material respects with the applicable requirements of the
Exchange Act and the Securities Act, as the case may be except as set forth in
Section 4.5(a) of the Company Disclosure Letter.  Notwithstanding the foregoing, the Company makes no
representation or warranty with respect to any information supplied by Parent
or Merger Subsidiary in writing relating to Parent, Merger Subsidiary or any
affiliate thereof (other than the Company or any of its Subsidiaries), as the
case may be, expressly for inclusion or incorporation by reference in the Proxy
Statement.  None of the Company’s
Subsidiaries is required to file any forms, reports or other documents with the
SEC.

 

(b)           Except as set forth in Section
4.5(b), each of the financial statements contained or to be contained in the
Company SEC Documents (including, in each case, any related notes and
schedules) has (i) been prepared from, and is in accordance with, the books and
records of the Company and its consolidated Subsidiaries, complies in all
material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto, (ii) been
prepared in accordance with GAAP (except as may be indicated in the notes
thereto and in the case of unaudited quarterly financial statements, as
permitted by Form 10-Q under the Exchange Act) and fairly presents the
consolidated financial position and the consolidated results of operations and
cash flows of the Company and its consolidated Subsidiaries at the dates and
for the periods covered thereby except that the unaudited interim financial
statements were or are subject to normal and recurring year-end adjustments.

 

Section
4.6.            No Undisclosed Liabilities.  The Company and its Subsidiaries do not have
any claims, liabilities, indebtedness or payment obligations of any nature
(whether known or unknown, accrued, absolute, contingent, asserted, liquidated
or otherwise), except (a) as disclosed in Section 4.6 of the Company Disclosure
Letter; (b) as reflected and reserved against on the December 31, 2002 balance
sheet or disclosed in the notes thereto included in the Company SEC Documents;
(c) to the extent specifically identified as a claim, liability, indebtedness
or payment obligation of the Company or its Subsidiaries of any nature in any
section of the Company Disclosure Letter; (d) such claims, liabilities,
indebtedness or payment obligations of any nature that would have been required
to be disclosed as such in any section of the Company Disclosure Letter but for
the existence of a materiality or Company Material 

 

24

 

Adverse Effect qualification or
a specific dollar threshold limiting such disclosure or (e) that would not
individually or in the aggregate result in a Company Material Adverse Effect.

 

Section
4.7.            Absence of Certain Changes.  Since December 31, 2002, the Company has
conducted, and has caused its Subsidiaries to conduct, their respective
businesses only in the ordinary course of business consistent with past
practice.  Without limiting the
generality of the foregoing, except as disclosed in Section 4.7 of the Company
Disclosure Letter:

 

(a)           there has not occurred any event,
change, occurrence, effect, fact, violation, development or circumstance that
has resulted in or would reasonably be likely to result in, individually or in
the aggregate, a Company Material Adverse Effect;

 

(b)           there has been no declaration,
setting aside or payment by the Company or any Subsidiary of any dividend or
other distribution payable in cash, securities or other property with respect
to, or split, combination, redemption, reclassification, purchase or other
acquisition of, any shares of capital stock (or other equity interests) or
other securities of the Company or any of its Subsidiaries, other than those
payable by a wholly-owned Subsidiary of the Company solely to the Company or to
another wholly-owned Subsidiary of the Company, or any other change in the
capital structure of the Company or any of its Subsidiaries;

 

(c)           other than issuances of Common Stock
pursuant to the exercise of Options outstanding prior to the date of this
Agreement, there has been no issuance or sale, or authorization therefor, by
the Company or any Subsidiary of any shares of capital stock or any other
securities (equity or debt) of the Company or any of its Subsidiaries or
issuance, sale or authorization by the Company or any Subsidiary for any
securities (equity or debt) convertible into or exchangeable for, or options,
warrants, calls, commitments or rights of any kind to purchase or subscribe
for, or the entering into by the Company or any Subsidiary of any arrangement
or contract with respect to the issuance or sale of, any shares of capital
stock of any class of the Company or Voting Debt or other securities (equity or
debt), or any other changes to the capital structure of the Company or any of
its Subsidiaries;

 

(d)           there have been no Contracts (or
amendments, modifications, supplements or replacements to existing Contracts)
made or committed to be made or entered into to be performed by the Company or
any of its Subsidiaries relating to, and none of them have made any, capital
expenditures by the Company or any of its Subsidiaries with a value in excess
of $20,000 in the current year or any future calendar year, or in the aggregate
for such capital expenditures with a value in excess of $200,000;

 

(e)           neither the Company nor any of its
Subsidiaries has acquired, by merging or consolidating with, by purchasing an
equity interest in, by purchasing all or a portion of the assets of, or by any
other manner, any business or any Person, or other acquisition of any assets of
any Person (other than the purchase of equipment, inventories and supplies in
the ordinary course of business consistent with past practice);

 

(f)            there have been no transfers,
leases, licenses, guarantees, sales, mortgages, pledges, disposals of,
subjecting to Liens (other than Permitted Liens) or other encumbrances on, any
assets of the Company or any of its Subsidiaries that are material to their
business or that 

 

25

 

have a value
individually in excess of $50,000 other than with respect to (i) transactions
between wholly-owned Subsidiaries of the Company and the Company or between
wholly-owned Subsidiaries of the Company, (ii) dispositions of excess or
obsolete assets of the Company or any of its Subsidiaries in the ordinary
course of business consistent with past practice and (iii) leases, licenses or
sales in the ordinary course of business consistent with past practice;

 

(g)           except to the extent required under
existing employee and director benefit plans, agreements or arrangements in
effect on December 31, 2002, as set forth in Section 4.2 of the Company
Disclosure Schedule or required by applicable law or contemplated by Section
3.4, and other than the grant of awards in the ordinary course of business
pursuant to the Company’s stock option plans or the Purchase Plan prior to the
date of this Agreement and set forth in Section 4.2(a) of the Company
Disclosure Schedule, there have been no increases in the compensation or fringe
benefits of any of the Company’s or its Subsidiaries’ directors, officers or
employees (except for immaterial increases to employees who are not officers of
the Company or any of its Subsidiaries in the ordinary course of business
consistent with past practice), no grants of any severance or termination pay
not required to be paid under then existing severance plans, no employment,
benefit (including with respect to life or disability insurance or with respect
to premiums therefor), consulting or severance agreements, policies or
arrangements with any present or former directors, officers or other employees
of the Company or any of the Company’s Subsidiaries, no establishment or
adoption of or amendments, modifications, supplements, replacements or
terminations of any collective bargaining, bonus, profit sharing, thrift,
compensation, stock option, restricted stock, benefit (including with respect
to life or disability insurance or with respect to premiums therefor), pension,
retirement, deferred compensation, employment, termination, severance or other
plans, agreements, trusts, funds, policies or arrangements for the collective
benefit of any directors, officers or employees;

 

(h)           there have been no plans of complete
or partial liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganizations of the Company or any of its
Subsidiaries or any agreements relating to any Acquisition Proposals adopted or
entered into;

 

(i)            there has been no (i) incurrence,
assumption, modification or prepayment of any indebtedness for borrowed money,
issuance of any debt securities or warrants or other rights for the acquisition
of debt securities, or guarantees, endorsements or liabilities or responsibilities
for the obligations or indebtedness of another Person by the Company or any of
its Subsidiaries, other than indebtedness owing to or guarantees of
indebtedness owing to, the Company or any direct or indirect wholly-owned
Subsidiary of the Company, or capital leases entered into, or (ii) loans,
extensions of credit or advances by the Company or any of its Subsidiaries to
any other Person, other than to the Company or to any direct or indirect
wholly-owned Subsidiary of the Company, except, in the case of preceding
clauses (i) and (ii), for loans, extensions of credit or advances constituting
trade payables or receivables arising in the ordinary course of business and in
the case of preceding clause (ii), for advances to employees in respect of travel
and entertainment expenses in the ordinary course of business in amounts of
$10,000 or less to any individual on any date of determination and $50,000 in
the aggregate outstanding on any date of determination;

 

26

 

(j)            there have been no accelerations of
the payment, right to payment or vesting of any bonus, severance, profit
sharing, retirement, deferred compensation, stock option, restricted stock,
insurance (including arrangements or agreements for premiums therefor) or other
compensation or benefits of the Company or any of its Subsidiaries;

 

(k)           neither the Company nor any of its
Subsidiaries has made any payments, discharges, settlements or satisfactions of
any claims, litigation, liabilities or obligations (absolute, accrued, asserted
or unasserted, contingent or otherwise) other than (i) the payment, discharge,
settlement or satisfaction, in the ordinary course of business consistent with
past practice, of (A) liabilities reflected or reserved against in the December
31, 2002 balance sheet included in the Company SEC Documents or (B) liabilities
(other than litigation) subsequently incurred in the ordinary course of
business consistent with past practice and (ii) other claims, litigation,
liabilities or obligations (qualified as aforesaid) that in the aggregate do
not exceed $100,000;

 

(l)            there have been no plans,
announcements, implementations or effectuations of any reductions in force,
lay-offs, early retirement programs, severance programs or other programs or
efforts concerning the termination of employment of employees of the Company or
its Subsidiaries, other than routine employee terminations in the ordinary
course of business and consistent with past practice;

 

(m)          there have been no actions or
omissions which (i) constitute a violation of any material Company Permit,
which violations would result in or would reasonably be likely to result in,
individually or in the aggregate, the modification, suspension, cancellation,
termination of any one or more material Company Permit or otherwise have or
would reasonably be likely to have a material adverse impact on any customer or
client contract or relationship or the nature or level of discipline imposed on
account of future violations of the Laws applicable to the Company and the
Surviving Corporation or (ii) would (or would reasonably be likely to)
materially impede, delay, hinder or make more burdensome for the Surviving
Corporation or Parent to obtain and maintain any and all authorizations, approvals,
consents or orders from any Governmental Entity or other third party necessary
or required to maintain the Company Permits in effect at all times following
the Merger on the same terms as in effect on the date of this Agreement;

 

(n)           there have been no entries into any
new material lines of business;

 

(o)           there has been no failure to maintain
with current or other financially responsible insurance companies insurance on
the Company’s or its Subsidiaries’ assets, tangible and intangible, and their
respective businesses in such amounts and against such risks and losses as are
consistent with past practice and standard practice in the Company’s industry;

 

(p)           there has been (i) no materially
amended Tax Returns or claims for refund filed, (ii) no making or rescission of
any material Tax election or other failure to prepare all Tax Returns in a
manner which is consistent with the past practices of the Company and each
Subsidiary of the Company, as the case may be, with respect to the treatment of
items on such Tax Returns except to the extent that any inconsistency (A) did
not, would not, or may not materially increase Parent’s, the Company’s or any
of the Company’s Subsidiaries’ liability for 

 

27

 

Taxes for any
period or (B) is or was required by Law, (iii) no incurrence of any material
liability for Taxes other than in the ordinary course of business, apart from
any Tax liability that may result from the Asset Purchase, or (iv) no
settlement or closing agreement with a taxing authority that materially
increases or would reasonably be likely to materially increase the Tax
liability of the Company or any of its Subsidiaries for any period entered
into; and

 

(q)           there has been no material change by
the Company or any of its Subsidiaries in any accounting practices, policies or
procedures or any methods of reporting income, deductions or other items for
income tax purposes (except insofar as may have been required by applicable
law, GAAP or SEC rule or which are, or will be in the event of a requirement of
law, GAAP or SEC rule adopted after the date hereof, disclosed in the Company
SEC Documents and described in Section 4.7(g) of the Company Disclosure
Schedule).

 

Section
4.8.            Taxes.  (a) Tax
Returns.  Each of the Company and
its Subsidiaries has timely filed or caused to be timely filed with the
appropriate taxing authorities all material Tax Returns that are required to be
filed by, or with respect to, each of the Company and its Subsidiaries.

 

(b)           Payment of Taxes.  As of the date of the most recently filed
Company SEC Documents, any unpaid material Taxes of the Company and its
Subsidiaries imposed with respect to the income, assets or operations of the
Company and its Subsidiaries have been accrued and adequately disclosed and
provided for in such Company SEC Documents in accordance with GAAP.  Since the date of the most recently filed
Company SEC Documents, neither the Company nor any of its Subsidiaries has
incurred any material Tax liability outside the ordinary course of business,
other than any Tax liability that may be incurred as a result of the Asset
Purchase.

 

(c)           Other Tax Matters.

 

(1)           Except as set forth in Section 4.8(c)(1) of the Company
Disclosure Letter, (i)  neither the
Company nor any of its Subsidiaries is currently the subject of an audit or
other examination of Taxes by the tax authorities of any nation, state or
locality, (ii) no such audit or other examination is pending, or to the
Company’s Knowledge, threatened and (iii) neither the Company nor any of its
Subsidiaries has received any written notice from any taxing authority relating
to any issue which could have a material adverse effect on the Tax liability of
the Company or any of its Subsidiaries.

 

(2)           Neither the Company nor any of its Subsidiaries (i) has
entered into an agreement or waiver that will be in effect as of the Closing
Date or been requested to enter into an agreement or waiver extending any
statute of limitations relating to the payment or collection of Taxes of the Company
or any of its Subsidiaries, or (ii) is presently contesting the Tax liability
of the Company or any of its Subsidiaries in any administrative or judicial
proceeding.

 

(3)           Neither the Company nor any of its Subsidiaries has been
included in any affiliated group (within the meaning of Section 1504(a) of the
Code) or 

 

28

 

any
consolidated, combined or unitary group (under state or local law) of which the
Company or any such Subsidiary is or has been a member (each, an “Affiliated Group”) with any Person (other
than the Company or any current Subsidiary thereof) for any taxable period for
which, to the Company’s Knowledge, the statute of limitations has not expired.

 

(4)           Except as set forth in Section 4.8(c)(4), all material Taxes
which the Company and each or any of its Subsidiaries is (or was) required by
law to withhold or collect in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder or other third party
have been duly withheld or collected, and have been timely paid over to the
proper authorities to the extent due and payable.

 

(5)           No claim has been made in writing by any taxing authority in
a jurisdiction where the Company or any of its Subsidiaries does not file Tax
Returns that the Company or any of its Subsidiaries is or may be subject to
taxation by that jurisdiction.

 

(6)           There are no tax sharing, allocation, indemnification or
similar agreements in effect as between the Company or any of its Subsidiaries
or any predecessor or affiliate thereof (other than Parent and its affiliates)
and any other party under which Parent, Merger Subsidiary, the Company or any
of the Company’s Subsidiaries could be liable for any Taxes or other claims of,
or could otherwise have any liability or obligation to, any party after the
Closing Date.

 

(7)           Neither the Company nor any of its Subsidiaries has applied
for, been granted, or agreed to any accounting method change for which it will
be required to take into account any adjustment under Section 481 of the Code
or any similar provision of the Code or the corresponding tax laws of any
nation, state or locality.

 

(8)           No election under Section 341(f) of the Code has been made
or shall be made prior to the Closing Date to treat the Company or any of its
Subsidiaries as a consenting corporation, as defined in Section 341 of the
Code.

 

(9)           Neither the Company nor any of its Subsidiaries is a party
to any agreement that would require (including as a result of the execution and
delivery of this Agreement or the consummation of the Merger or any of the
other transactions contemplated by this Agreement) the Company or any of its
Subsidiaries or any affiliate thereof to make any payment that would constitute
an “excess parachute payment” for purposes of Sections 280G and 4999 of the
Code or that would not be deductible pursuant to Section 162(m) of the Code.

 

(10)         The Company and each of its Subsidiaries have delivered or
made available to Parent and Merger Subsidiary true, complete and correct
copies of each of the Tax Returns for income Taxes filed on behalf of the
Company and each of its Subsidiaries for the 1999, 2000 and 2001 tax years.

 

29

 

Section
4.9.            Title to Properties; Owned and
Leased Real Properties; No Liens.  (a) The Company and each of its Subsidiaries has, in the case of
Leased Real Property and leased assets, valid leasehold interests in, (i) all
of its material tangible properties and assets (real and personal), including
all such properties and assets reflected in the Company’s consolidated balance
sheet as of December 31, 2002 contained in the Company SEC Documents, except as
indicated in the notes thereto or as sold or otherwise disposed of in the ordinary
course of business after such date, and (ii) all the material tangible
properties and assets that have been purchased by the Company or any of the
Subsidiaries since December 31, 2002, except for such properties and assets
that have been sold or otherwise disposed of in the ordinary course of
business, in each case subject to no Liens, except for Permitted Liens.

 

(b)           The Company has no Owned Real
Property.

 

(c)           Section 4.9(c)(i) of the Company
Disclosure Letter sets forth a complete and correct list of all Leased Real
Property.  The Company or one of its
Subsidiaries has a valid leasehold interest in all Leased Real Property, free
and clear of any and all Liens except for Permitted Liens.  Except as set forth in Section 4.9(c)(ii),
each lease with respect to the Leased Real Property is in full force and effect
in accordance with its terms in all material respects; in each case, the
Company or its Subsidiary, as applicable, has been in peaceable possession
since the commencement of the original term of such lease and is not in default
thereunder in any material respect, and, to the Knowledge of the Company, there
exists no default or event, occurrence, condition or act (including the
Transactions) which, with the giving of notice, the lapse of time or the
happening of any further event or condition (including the Transactions), would
become a default in any material respect under such lease.  Except as set forth in Section 4.9(c)(iii),
neither the Company nor any of its Subsidiaries has violated any of the terms
or conditions under any such lease in any material respect, and, to the
Company’s Knowledge, all of the covenants to be performed by any other party
under any such lease have been fully performed in all material respects.  The Company has, prior to the date of this
Agreement, made available to Parent true, complete and correct copies of each
lease or other agreement (including, in each case, any and all amendments,
modifications and supplements thereto) with respect to each Leased Real
Property as set forth in Section 4.9(c) of the Company Disclosure Letter.

 

(d)           All of the Company’s and its
Subsidiaries’ material personal property, including computers, electronics,
leasehold improvements, furnishings, machinery and equipment, is in good repair
(ordinary wear and tear excepted), has been well maintained, is in good working
order and, to the knowledge of the Company, materially complies with all
applicable Laws.

 

(e)           Except as set forth in Section 4.9(e)
of the Company Disclosure Letter, neither the Company nor any of its
Subsidiaries is contractually obligated to undertake or pay for the restoration
or removal of any alterations or improvements or the repair of any damages
(including any such damages arising from lapses of maintenance) with respect to
any Leased Real Property which is reasonably likely to cost in excess of
$100,000 in the aggregate except to the extent that such restoration, removal,
alteration, improvement or repair is specifically provided for on the Balance
Sheet.

 

30

 

Section
4.10.          Intellectual Property.           (a) 
Section 4.10(a) of the Company Disclosure Letter sets forth a true and
complete list of all of the (i) Registered and material unregistered Owned
Intellectual Property and (ii) Licensed Intellectual Property (other than
Computer Software that is readily commercially available for $100,000 or less)
used by the Company, separated into the following categories:  (A) Licensed Intellectual Property that is
separate from the Products (i.e., an add-on Product) that is sold or licensed
(bundled) together with one or more products and (B) Licensed Intellectual
Property not licensed by the Company and its Subsidiaries to customers but used
internally by the Company or its Subsidiaries.

 

(b)           Except as set forth in Section
4.10(b) of the Company Disclosure Letter, to the Company’s Knowledge, all Owned
Intellectual Property is valid, subsisting and enforceable.  Except as set forth in Section 4.10(b) of the
Company Disclosure Letter, no Owned Intellectual Property (i) has been
adjudicated invalid or unenforceable, (ii) has been abandoned or cancelled
(excepting any expirations in the ordinary course), or (iii) is subject to any
outstanding order, judgment or decree restricting its use or adversely
affecting the Company’s or its Subsidiaries’ rights thereto.  To the Company’s Knowledge, no Licensed
Intellectual Property has been abandoned, cancelled or adjudicated invalid
(excepting any expirations in the ordinary course), or is subject to any outstanding
order, judgment or decree restricting its use or adversely affecting or
reflecting the Company’s or the Subsidiaries’ rights thereto.  The Company has taken commercially
reasonable steps to ensure that the Owned Intellectual Property has been marked
where appropriate with notices and legends as permitted by Federal and State
laws or otherwise permitted to indicate the Company’s or its Subsidiaries’
patent, trademark, copyright, confidential, proprietary, and other Intellectual
Property rights in such Owned Intellectual Property.

 

(c)           Except as set forth in Section
4.10(c) of the Company Disclosure Letter, the Company and its Subsidiaries own
or have the right to use all Intellectual Property currently used in their
business.  All rights in and to the
Owned Intellectual Property are free of all Liens and are fully assignable by
the Company and the Subsidiaries to any Person, without payment, consent of any
Person or other condition or restriction and, after giving effect to the Asset
Purchase, good and valid title to the Purchased Assets will vest in Acquisition
Subsidiary.  The Owned Intellectual
Property and Licensed Intellectual Property is sufficient to operate the
business of the Company as currently conducted.  Except as set forth in Section 4.10(c) of the Company Disclosure
Letter, no Person other than the Company has any ownership interest in, or a
right to receive a royalty or similar payment with respect to, any of the Owned
Intellectual Property.

 

(d)           Except as set forth in Section
4.10(d) of the Company Disclosure Letter, the Company has no Knowledge of any
(i) suit, action, reissue, reexamination, public protest, interference,
arbitration, mediation, opposition, cancellation or other proceeding
(collectively, “Suit”) that is pending alleging that the Company or the
Subsidiaries have violated any Intellectual Property rights of any Person, (ii)
claim that has been threatened or asserted against the Company or the
Subsidiaries or any of their indemnitees (as indemnities under a Customer Agreement)
alleging a violation of any Intellectual Property rights of any Person, (iii)
violation by the Company or the Subsidiaries of any Person’s Intellectual
Property rights, or (iv) information that would constitute a reasonable basis
for any of the foregoing.

 

31

 

(e)           Except as set forth in Section
4.10(e) of the Company Disclosure Letter, no Suit is pending relating to any
Customer Agreement or Licensed Intellectual Property Agreement, including any
Suit alleging that the Company or the Subsidiaries or another person has
breached any Customer Agreement or Licensed Intellectual Property Agreement or
that any such agreement is invalid or unenforceable.  No such Suit has been threatened or asserted in writing and, to
the Knowledge of the Company, none has been threatened or asserted orally or
electronically.  To the Company’s
Knowledge (but without inquiry) there exists no event, condition or occurrence
which, with the giving of notice or lapse of time, or both, would constitute a
breach or default by the Company or the Subsidiaries or the other signatory
under any Customer Agreement or Licensed Intellectual Property Agreement.  No party to any Customer Agreement or
Licensed Intellectual Property Agreement has given the Company or the
Subsidiaries (i) notice of its intention to cancel or terminate any Customer
Agreement or Licensed Intellectual Property Agreement or (ii) written notice
that it will not renew any Customer Agreement or Licensed Intellectual Property
Agreement.

 

(f)            No Suit is pending concerning the
Owned Intellectual Property, including any Suit alleging that the Owned
Intellectual Property is invalid, unenforceable, unpatentable, unregisterable,
cancelable, not owned or not owned exclusively by the Company or its
Subsidiaries.  No such Suit has been
threatened or asserted in writing and, to the Knowledge of the Company, none
has been threatened or asserted orally or electronically.  To the Company’s Knowledge (but without
inquiry), no valid basis for any such Suits or claims exists.

 

(g)           Except as set forth in Section
4.10(g) of the Company Disclosure Letter, the Company has no Knowledge that any
Person is violating any Owned Intellectual Property or any material Licensed
Intellectual Property.

 

(h)           Except as set forth in Section
4.10(h) of the Company Disclosure Letter, the Company and the Subsidiaries have
timely made all filings, recordations, and payments with the appropriate
foreign and domestic agencies required to maintain in subsistence all Registered
Owned Intellectual Property and reflecting the Company or a Subsidiary as the
owner thereof.  Except as set forth in
Section 4.10(h) of the Company Disclosure Letter, no due dates for filings or
payments concerning the Registered Trademarks (including office action
responses, affidavits of use, affidavits of continuing use, renewals, requests
for extension of time, maintenance fees, application fees and foreign
convention priority filings) falling due within ninety (90) days of the Closing
Date, whether or not such due dates are extendable.

 

(i)            Except as set forth in a Customer
Agreement or other agreement with a customer of the Company, in each case with
respect to source code comprising the Company’s Products, the Company and the
Subsidiaries have taken all reasonable measures to protect the secrecy,
confidentiality and value of all Trade Secrets used in their businesses  (including entering into appropriate
confidentiality agreements with all officers, directors, employees, and other
Persons who are authorized to use Company Trade Secrets).  To the Company’s Knowledge except as set
forth in a Customer Agreement or other agreement with a customer of the
Company, in each case with respect to source code comprising the Company’s
Products, none of the Company Trade Secrets have been disclosed to any Person
unless such Person executed appropriate confidentiality agreements prohibiting
the unauthorized use or disclosure of such 

 

32

 

Company Trade
Secrets and containing other terms as reasonably necessary or appropriate for
the protection and maintenance of such Company Trade Secrets.

 

(j)            To the Company’s Knowledge, no
current or former Company or Subsidiary employee is or was a party to any
confidentiality agreement and/or agreement not to compete that forbids or
forbade at any time during such employee’s employment by the Company or a
Subsidiary the activity that such employee was hired to perform or otherwise
performed on behalf of or in connection with such employee’s employment by the
Company or a Subsidiary.

 

Section
4.11.          Products. 
(a)        Except as set forth in
Section 4.11(a) of the Company Disclosure Letter, the Company is the sole and
exclusive owner of the Products and all constituent parts thereof (excluding
Licensed Intellectual Property).

 

(b)           Except as set forth in Section
4.11(b) of the Company Disclosure Letter, to the Company’s Knowledge, the
Products perform in all material respects in accordance with the Ancillary
Product Materials and applicable Customer Agreement.  No Disabling Devices were embedded in the Products by the Company
or any Subsidiary and, to the Company’s Knowledge, the Products do not contain
any Disabling Devices.

 

(c)           The source code for the Products will
compile into executable object code.  To
the Company’s Knowledge, the source code, Ancillary Product Materials and other
Documentation, to the extent pertaining to the Products are accurate and
sufficiently documented to enable a Computer Software developer of reasonable
skill to understand, modify, repair, maintain, compile and otherwise use the
material aspects of the Products.

 

(d)           Section 4.11(d) of the Company
Disclosure Letter contains (i) true and complete copies of the Company’s
current versions of its standard Customer Agreements, (ii) true and complete
list of the names of the top 25 revenue generating customers under the Customer
Agreements and copies of the foregoing Customer Agreements have been made
available to Merger Subsidiary, and (iii) a list of any Customer Agreement
which contains any provision that allows the customer to acquire ownership
interest in or to the Product.

 

(e)           Except as set forth in Section
4.11(e) of the Company Disclosure Letter, neither the Company nor any of the
Subsidiaries has granted to any Person, and no Person, other than the Company
(including any independent contractors who have performed services for the
Company or the Subsidiaries),  is
authorized to produce, support, maintain, distribute, sublicense, or resell any
of the Products.  Except as set forth in
Section 4.11(e) of the Company Disclosure Letter, there are no exclusive
arrangements between the Company or any of the Subsidiaries and any other
Person to license, sublicense, sell, use or distribute any of the
Products.  Section 4.11(e) of the
Company Disclosure Schedule sets forth a true and complete list of all
agreements by the Company or the Subsidiaries with resellers of the Products
and all agreements pursuant to which the Company or the Subsidiaries are
resellers of products.

 

(f)            All third party rights to use any
future version of the Products is governed by a Customer Agreement.

 

33

 

(g)           Section 4.11(g) of the Company
Disclosure Letter sets forth a true and complete list of customer names for all
Customer Agreements.

 

(h)           Except with respect to the Company’s
or a Subsidiaries’ obligation to provide general maintenance services pursuant
to a Customer Agreement and except as set forth in Section 4.11(h) of the
Company Disclosure Letter, no Customer Agreement or other agreement obligates
the Company or any of the Subsidiaries to develop or provide any specific
improvement, enhancement, change in functionality or other alteration in the
performance of the Products.

 

Section 4.12.          Agreements, Contracts and
Commitments.  Except for
Contracts filed as exhibits to Company SEC Documents pursuant to Item 601 of
Regulation S-K and listed on the exhibit index to the Company’s annual report
on Form 10-K for the fiscal year ended December 31, 2002 (“SEC Contracts”), or as disclosed in Section
4.12 of the Company’s Disclosure Letter, neither the Company nor any of its
Subsidiaries is a party to or bound by any Contract currently in effect and of
the following nature (collectively, the “Company
Material Contracts”):

 

(a)           Contracts (other than Benefit Plans,
which are covered under Section 4.15) with any current or former employee,
director or officer of, or consultant of or to, the Company or any of its
Subsidiaries under which the Company or its Subsidiaries may have ongoing or
future payment obligations for services rendered or to be rendered;

 

(b)           Contracts that (x) involve the
performance by the Company or any of its Subsidiaries of services of an amount
or value (as measured by the revenue derived therefrom during the fiscal year
ended December 31, 2002) in excess of $100,000 annually or (y) involve payments
by the Company or any of its Subsidiaries in excess of $50,000 annually, unless
terminable by the Company on not more than 30 days notice without material
penalty;

 

(c)           Contracts (i) for the sale of assets
of the Company or any of its Subsidiaries involving aggregate consideration of
$50,000 or more (other than licenses of Products in the ordinary course of
business), or (ii) for the grant to any Person of any preferential rights to
purchase any material amount of assets or any material asset of the Company or
any of its Subsidiaries;

 

(d)           Contracts for the acquisition, by
merging or consolidating with, by purchasing an equity interest in or a portion
of the assets of, or by any other manner having the same or similar effect, any
business or any Person or assets of any Person (other than the purchase of
equipment, inventories and supplies in the ordinary course of business
consistent with past practice);

 

(e)           Contracts (including loan agreements,
credit agreements, notes, bonds, mortgages or other agreements, indentures or
instruments) relating to indebtedness for borrowed money, letters of credit,
the deferred purchase price of property, conditional sale arrangements, capital
lease obligations, obligations secured by a Lien, or interest rate or currency
hedging activities (including guarantees or other contingent liabilities in
respect of any of the foregoing but in any event excluding trade payables
arising in the ordinary course of business consistent 

 

34

 

with past
practice, intercompany indebtedness shown on the Company’s balance sheet as of
December 31, 2002 included in the Company SEC Documents and immaterial leases
for telephones, copy machines, facsimile machines and other office equipment);

 

(f)            Loans or advances to (other than
advances to employees in respect of travel and entertainment expenses in the
ordinary course of business in amounts of $10,000 or less to any individual on
any date of determination, and $50,000 in the aggregate on any date of
determination), or investments in, any Person, other than the Company or a
Subsidiary, or any Contracts relating to the making of any such loans, advances
or investments or any Contracts involving a sharing of profits (except for
bonus arrangements with employees entered into in the ordinary course of
business consistent with past practice);

 

(g)           Contracts relating to any joint
venture, partnership, strategic alliance or similar arrangement (including any
franchising agreement);

 

(h)           Contracts to be performed relating to
capital expenditures of the Company and/or its Subsidiaries with a value in
excess of $20,000 in any fiscal year, or in the aggregate capital expenditures
of the Company and/or its Subsidiaries with a value in excess of $200,000;

 

(i)            Contracts relating to any material
Company Permits;

 

(j)            Contracts which contain restrictions
with respect to payment of dividends or any other distribution in respect of
its capital stock;

 

(k)           Contracts containing covenants
purporting to restrict the Company or any of its Subsidiaries or its or their
affiliates from competing with or otherwise materially restraining, limiting or
impeding the Company’s or any of its Subsidiaries’ ability to compete with any
Person or conduct any business or line of business or which materially restrict
any other Person from competing with the Company, any of its Subsidiaries or
any of its or their affiliates;

 

(l)            Contracts which are material to the
Company or any of its Subsidiaries and which restrict the Company or any of its
Subsidiaries from disclosing any information concerning or obtained from any
other Person (other than Contracts entered into in the ordinary course of
business);

 

(m)          Contracts required to be disclosed
under Item 404 of Regulation S-K under the Securities Act;

 

(n)           Contracts required to be filed under
Item 601(b)(10) of Regulation S-K under the Securities Act; and

 

(o)           Contracts that contain minimum annual
purchase obligations (take-or-pay) or that contain penalties or repricing
provisions (e.g., “retroactive discounts”) if certain minimum quantities
are not purchased in excess of $10,000 individually and $50,000 in the
aggregate.

 

Each Company Material Contract
and SEC Contract is in full force and effect, is a valid and binding obligation
of the Company or the Subsidiary of the Company party thereto and, to the
Company’s Knowledge, each other party thereto, except as would not reasonably be
expected to 

 

35

 

(x) result in a material loss or liability to the Company or its
Subsidiaries or (y) interfere in a material manner with the business or
operations of the Company and its Subsidiaries or the ownership of their
properties or assets.  There exists no
default or event of default or event, occurrence, condition or act (including
the consummation of the transactions contemplated hereby) on the part of the
Company or any Subsidiary or, to the Company’s Knowledge, on the part of any
other party to any Company Material Contract that, with the giving of notice or
the lapse of time or both, would become a default or event of default under any
Company Material Contract or SEC Contract that could reasonably be expected to
(x) result in a material loss or liability to the Company or its Subsidiaries
or (y) interfere in a material manner with the business or operations of the
Company and its Subsidiaries or the ownership of their properties or assets.

 

Section
4.13.          Litigation. 
(a) Except as set forth in the Company SEC Documents filed prior to the
date of this Agreement or in Section 4.13 of the Company Disclosure Letter,
there are no Actions or Proceedings pending against or, to the Company’s
Knowledge, threatened against or binding upon the Company or any of its
Subsidiaries, or any of their respective properties or rights that could
reasonably be expected to (x) result in a material loss or liability to the
Company or its Subsidiaries, (y) interfere in a material manner with the
business or operations of the Company and its Subsidiaries or the ownership of
their properties or (z) prevent the transactions contemplated by this
Agreement.

 

(b)           Neither the Company nor any of its
Subsidiaries is a party to any Governmental Directive mandating any conduct
material to the business or operations of the Company and its Subsidiaries or
prohibiting any conduct material to the business or operations of the Company
and its Subsidiaries by any of them or subject to any commitment letter or
similar undertaking material to the business or operations of the Company and
its Subsidiaries executed in connection with any such Governmental Directive or
has adopted any board resolution with respect to any such Governmental Directive.

 

Section
4.14.          Environmental Matters.  (a) The operations of the Company and its
Subsidiaries are in compliance with Environmental Laws, except for such
noncompliance that would not, individually or in the aggregate, be reasonably
likely to result in a Company Material Adverse Effect.

 

(b)           Each of the Company and its
Subsidiaries has obtained and is in compliance with all necessary permits or
authorizations required under Environmental Laws, except for such failure to
have, or noncompliance with, such permits or authorizations that would not,
individually or in the aggregate, be reasonably likely to have a Company
Material Adverse Effect with respect to the Company and its Subsidiaries.

 

(c)           There has been no release to the
environment of any substances defined as hazardous under any Environmental Law
associated with any Company operations at any of the properties operated by the
Company and its Subsidiaries while such properties were operated by the Company
or any of its Subsidiaries that could reasonably be expected to result in a
material liability to the Company.

 

(d)           No claims have been asserted against
the Company or any of its Subsidiaries under any Environmental Law (“Environmental Claims”), nor has the Company
or 

 

36

 

any of its
Subsidiaries received written notice of any threatened or pending Environmental
Claims against the Company or any of its Subsidiaries and, to the Company’s
knowledge, there is no valid basis for any such Environmental Claim that could
reasonably be expected to result in material liability to the Company.

 

Section
4.15.          Employee Benefit Plans.  (a) Section 4.15(a) of the Company
Disclosure Letter sets forth a true, complete and correct list of all Benefit
Plans.  The Benefit Plans are in
substantial compliance with the requirements of all applicable Laws and each
Benefit Plan has been operated, maintained and administered in substantial
compliance with its terms.  There are no
pending, nor, to the Company’s Knowledge, has the Company or any of its
Subsidiaries received notice of any threatened, Actions or Proceedings, against
or otherwise involving any of the Benefit Plans and their assets.  All contributions required to be made as of
the date of this Agreement to the Benefit Plans have been made or provided for.

 

(b)           (i) Any U.S. Benefit Plan intended to
be qualified under Section 401(a) of the Code has been determined by the IRS to
be so qualified and no Benefit Plan has been amended since the effective date
of its most recent determination letter prior to the end of its remedial
amendment period, in any material respect that would result in its
disqualification; (ii) each of the Company, its Subsidiaries and each of their
Affiliates has submitted each U.S. Benefit Plan intended to be qualified under
Section 401(a) of the Code for a determination letter in accordance with
Revenue Procedure 2001-55; (iii) neither the Company nor any of its
Subsidiaries nor any of their ERISA Affiliates has any material liability
(contingent or otherwise) under Title IV of ERISA (other than for the payment
of premiums, none of which are overdue) or has incurred or expects to incur any
liability in connection with an “accumulated funding deficiency” within the
meaning of Section 412 of the Code, whether or not waived; (iv) neither the
Company nor any of its Subsidiaries has incurred or expects to incur any
material liability (including additional contributions, fines, taxes or
penalties) as a result of a failure to administer or operate any Benefit Plan
that is a “group health plan” (as such term is defined in Section 607(1) of
ERISA or Section 5000(b)(1) of the Code) in compliance with the applicable
requirements of Part 6 of Subtitle B of Title I of ERISA or Section 4980B of
the Code (“COBRA”); (v) except as
set forth in Section 4.15(b)(v) of the Company Disclosure Letter, any U.S.
Benefit Plan providing for health and welfare benefits is fully insured; (vi)
no reportable event (as defined in Section 4043(c) of ERISA) has occurred or is
expected to occur with respect to any Pension Plan; (vii) neither the Company
nor any of its Subsidiaries nor any of their ERISA Affiliates has incurred any
withdrawal liability with respect to a “multiemployer plan” under Title IV of
ERISA and no event or condition has occurred which would be expected to cause
the Company, any Subsidiary of the Company, or any ERISA Affiliate to incur
such withdrawal liability; or (viii) neither the Company, any Subsidiary of the
Company nor any of their ERISA Affiliates has incurred any liability or penalty
under Section 4975 of the Code or Section 502(i) of ERISA with respect to any
U.S. Benefit Plan, or has engaged in a “prohibited transaction” (as defined in
Section 4975 of the Code or Section 406 of ERISA).  Except as set forth in Section 4.15 of the Company Disclosure
Letter, the execution of this Agreement and consummation of the Merger as set
forth therein will not (either alone or upon the occurrence of any additional
or subsequent events) constitute an event under any plan, policy, arrangement
or agreement or any trust or loan that will or may result in any payment
(whether of severance pay or otherwise), acceleration, forgiveness or
indebtedness, vesting, distribution, increase in benefits or obligation to fund
benefits with respect to any current or former employees of the Company or 

 

37

 

any of its
Subsidiaries (whether or not any such payment would constitute a “parachute
payment” or “express parachute payment” within the meaning of Section 280G of
the Code).

 

(c)           Except as set forth in Section
4.15(c) of the Company Disclosure Letter, neither the Company nor any of its
Subsidiaries, nor any Affiliate of the Company maintains or is required to
contribute to any Foreign Pension Plan to which the Company would have any
liability.

 

(d)           Except as set forth in Section
4.15(d) of the Company Disclosure Letter, and as required under Section 4980B
of the Code or other applicable Law, neither the Company nor any of its
Subsidiaries has any obligation to provide post-retirement or post-termination
of employment, health or life benefits to current or former employees.  Except as set forth in Section 4.15(d) of
the Company Disclosure Letter, any continuation coverage provided under any
welfare benefits plan complies with Section 4980B of the Code and is at the
expense of the participant or beneficiary.

 

(e)           Any terminated Benefit Plan has been
terminated in accordance with applicable Laws and all benefits under any such
terminated Benefit Plan have been made in accordance with the terms of such
Benefit Plan.

 

(f)            Each Benefit Plan may be amended or
terminated at any time after the Closing Date without liability to the Company.

 

(g)           The Company has made available to
Parent and Merger Subsidiary true and complete copies of the Benefit Plans,
together with all amendments thereto, and to the extent applicable (i) all
current summary plan descriptions; (ii) the annual report on Internal Revenue
Service Form 5500-series, including any attachments thereto, for each of the
last three plan years; (iii) the most recent accountant’s report, if any; and
(iv) the most recent Internal Revenue Service determination letter.

 

Section
4.16.          Compliance with Laws.  Neither the Company nor any of the Subsidiaries
are in violation of, nor have any of them received any notice alleging any such
violation with respect to, any applicable provisions of any Laws the violation
of which could reasonably be expected to (x) result in a material loss or
liability to the Company or its Subsidiaries or (y) interfere in a material
manner with the business or operations of the Company and its Subsidiaries or
the ownership of their properties or assets. 
No investigation or review by any Governmental Entity with respect to the
Company or any of its Subsidiaries is pending or, to the Company’s Knowledge,
threatened, nor, to the Company’s Knowledge, has any Governmental Entity
indicated an intention to conduct the same that could reasonably be expected to
(x) result in a material loss or liability to the Company or its Subsidiaries
or (y) interfere in a material manner with the business or operations of the
Company and its Subsidiaries or the ownership of their properties or assets.

 

Section
4.17.          Permits and Licenses.  The Company and each of the Subsidiaries
have obtained and have complied with, and are in compliance with, all Company
Permits and there has not occurred any default under any such Company Permit
and no Action or Proceeding has been filed or commenced against any of them
alleging any failure to so comply, except such 

 

38

 

failure to
obtain, noncompliance, default, Action or Proceeding as would not, individually
or in the aggregate, reasonably be expected to result in a Company Material
Adverse Effect.  There are no material
oral or written understandings or waivers between the Company or any of its
Subsidiaries, on the one hand, and any Governmental Entity, on the other, with
respect to any material Company Permit.

 

Section
4.18.          Labor Matters. 
(a) Neither the Company nor any of its Subsidiaries is a party to or
otherwise bound by any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor organization.

 

(b)           Except as set forth in Section
4.18(b) of the Company Disclosure Letter, (i) there is no material pending or
to the Company’s Knowledge threatened labor strike, or dispute, walkout, work
stoppage, slow-down, lockout or organizational effort involving employees of
the Company or any of its Subsidiaries, (ii) (x) as of the date hereof, there
is no unfair labor practice charge or complaint against the Company or any of
its Subsidiaries, either pending or, to the Company’s Knowledge, threatened and
(y) as of the Effective Time there will be no material unfair labor practice
charge or complaint against the Company or any of its Subsidiaries, either
pending or, to the Company’s Knowledge, threatened; (iii) no union is currently
certified, and there is no union representation question and no union or other
organizational activity that would be subject to the National Labor Relations
Act (20 U.S.C. §151 et  seq.) exists or, to the Company’s
Knowledge, is threatened with respect to the Company’s or any of its
Subsidiaries’ operations, (iv) there are no material occupational health and
safety claims against the Company or any of its Subsidiaries, and (v) except as
set forth in Section 4.18(b) of the Company Disclosure Letter, (x) as of the
date hereof there are no complaints, charges, or claims against the Company or
any of its Subsidiaries pending, or to the Company’s Knowledge threatened in
writing to be brought or filed, and (y) as of the Effective time there will be
no material complaints, charges, or claims against the Company or any of its
Subsidiaries pending, or to the Company’s Knowledge threatened in writing to be
brought or filed with any authority or arbitrator based on, arising out of, in
connection with, or otherwise relating to the employment or termination of employment
or any individual by the Company.

 

(c)           Neither the Company nor any of its
Subsidiaries has effectuated (i) a “plant
closing” (as defined in the WARN Act) affecting any site of
employment or one or more facilities or operating units within any site of
employment of the Company or any Subsidiary; or (ii) a “mass layoff” (as defined in the WARN Act)
affecting any site of employment or facility of the Company or any of its
Subsidiaries; nor has the Company and/or any Subsidiary been engaged in layoffs
or employment terminations sufficient in number to trigger application of any
similar state or local law; and none of the affected employees has suffered an
“employment loss” (as defined in
the WARN Act) since ninety days prior to the date hereof.  Neither the Company nor any of its
Subsidiaries has incurred any material liability under the WARN Act or similar
state laws which remains unpaid of unsatisfied.

 

(d)           Except as set forth in Section
4.18(d) of the Disclosure Letter, (i) the Company and its Subsidiaries are in
material compliance with the terms and provisions of the Immigration Reform and
Control Act of 1986, as amended, and all related regulations promulgated
thereunder,  (ii) the Company and its
Subsidiaries are in material compliance with all laws governing the employment
of its employees, including, but not limited to, all such 

 

39

 

federal,
state, and local laws relating to wages, hours, collective bargaining,
discrimination, retaliation, civil rights, safety and health, workers’
compensation and the collection and payment of withholding and/or Social
Security taxes and similar taxes, (iii) no employee or independent contractor
has filed a complaint for which the Company has received notice and the Company
has not conducted any internal investigation regarding conduct that may
constitute a violation of any federal, state or local law governing employment,
(iv) since December 31, 2002, no officer or employee of the Company or any of
its Subsidiaries has received, and no officer has given, notice to terminate
his employment, (v) there are no officers or employees of the Company or any of
its Subsidiaries who are on secondment, maternity leave or absent on grounds of
disability, military or other leave of absence (other than normal holidays or
absence due to illness), (vi) the Sellers and the Company and its Subsidiaries
have complied with their material obligations to inform and consult with trade
unions and other representatives of workers and to send notices to relevant
governmental officials, (vii) the Company and its Subsidiaries have maintained
adequate and suitable records regarding the service of their directors,
officers and employees and such records comply with requirements of data
protection legislation regarding the processing and storage of personal data on
individuals except as would not reasonably be expected to (x) result in a
material loss or liability to the Company or its Subsidiaries or (y) interfere
in a material manner with the business or operations of the Company and its
Subsidiaries or the ownership of their properties or assets and (viii) the
Company and its Subsidiaries have not entered into any agreement and no event
has occurred which may involve the Company and its Subsidiaries in the future
acquiring any undertaking or part of one such that the Transfer Regulations may
apply thereto except as would not reasonably be expected to (x) result in a
material loss or liability to the Company or its Subsidiaries or (y) interfere
in a material manner with the business or operations of the Company and its
Subsidiaries or the ownership of their properties or assets.

 

(e)           All salaries and wages and other
benefits, bonuses and commissions of all directors, officers or employees of
the Company and its Subsidiaries have, to the extent due, been paid or
discharged in full, including but not limited all payments due under the 2002
Results Incentive Plan and the 2002 Utilization Bonus Plan and the 2002
Sales/Business Solutions Plan.

 

(f)            Neither the Company nor its
Subsidiaries have entered into any agreement or arrangement for the management
or operation of its business or any part thereof other than with their
respective employees.

 

(g)           Except as set forth in Section
4.18(g) of the Disclosure Letter, neither the Company nor any of its
Subsidiaries has extended a loan to any employee for which amounts are
outstanding, except for advances in respect of travel and entertainment
expenses in the ordinary course of business. 
Since December 31, 2002, no such loans have been forgiven.

 

(h)           Except as set forth in Section
4.18(h) of the Disclosure Letter, neither the Company nor any of its
Subsidiaries is a party to any oral or written:  (i) agreement with any executive officer or employee of the
Company or any of its Subsidiaries (A) the benefits of which are contingent, or
the payment or terms of which are accelerated or materially altered, upon the
occurrence of a transaction involving the Company or any of its Subsidiaries of
the nature of any of the transactions contemplated by this Agreement, (B)
providing any term of 

 

40

 

employment or
compensation guarantee or (C) providing severance benefits or other benefits
after the termination of employment of such executive officer or employee; or
(ii) agreement or plan binding the Company or any of its Subsidiaries,
including any stock option plan, stock appreciate right plan, restricted stock
plan, stock purchase plan, severance benefit plan, insurance plan or
arrangement (including with respect to life, health, or disability insurance)
or with respect to the premium therefore, any of the benefits of which shall be
increased, or the vesting of the benefits of which shall be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement (either
alone or upon the occurrence of any additional or subsequent event) or the
value of any of the benefits of which shall be calculated on the basis of any
of the transactions contemplated by this Agreement (such agreements and plans
referred to in clause (i) or (ii), collectively, the “Executive Agreements”).

 

(i)            All current employees of the Company
and its Subsidiaries have signed the Employee Proprietary Information and
Inventions Agreement.

 

Section
4.19.          Insurance. 
Section 4.19 of the Company Disclosure Letter sets forth the material
insurance coverages maintained by the Company and its Subsidiaries.  The Company has made available to Parent and
Merger Subsidiary copies of all material insurance policies which are owned by
the Company or its Subsidiaries or which name the Company or any of its
Subsidiaries as an insured, additional insured or loss payee (including those
pertaining to the Company’s or any of its Subsidiaries’ assets, employees or
operations) (collectively, the “Insurance
Policies”) and (a) each of the Insurance Policies is in full force
and effect and is valid, outstanding and enforceable, and all premiums due
thereon have been paid in full and cover against the risks of the nature
normally insured against by entities in the same or similar lines of business
as the Company and its Subsidiaries in coverage amounts typically and
reasonably carried by such entities, (b) none of the Insurance Policies shall
terminate or lapse (or be affected in any other material adverse manner) by
reason of the Merger, (c) each of the Company and its Subsidiaries has complied
in all material respects with the provisions of each Insurance Policy under
which it is the insured party, (d) to the Knowledge of the Company, no insurer
under any Insurance Policy has cancelled or generally disclaimed liability
under any such Insurance Policy or indicated any intent to do so or not to
renew any such Insurance Policy and (e) to the Knowledge of the Company, all material
claims under the Insurance Policies have been filed in a timely fashion.

 

Section
4.20.          Information in Proxy Statement.  The Proxy Statement when distributed or
otherwise disseminated to the Company’s stockholders, as applicable, will
comply as to form in all material respects with all applicable requirements of
the Exchange Act and other applicable Laws. 
If at any time prior to the date of the Special Meeting any event occurs
which should be described in an amendment or supplement to the Proxy Statement,
the Company will file and disseminate, as required, an amendment or supplement
which complies as to form in all material respects with the Exchange Act and
any other applicable Laws.

 

Section
4.21.          Opinion of Financial Advisor.  The Board of Directors of the Company has
received the written opinion of Updata Capital, Inc., dated May 8, 2003, a
true, complete and correct signed copy of which shall be delivered to Parent
promptly after receipt of a written copy thereof by the Company, to the effect
that, as of the date of such written opinion and on the basis of and subject to
the assumptions set forth therein, the Cash Merger 

 

41

 

Consideration
to be received in the Merger by the holders of Company Common Stock, is fair to
such holders from a financial point of view, and such opinion has not been
withdrawn or modified as of the date of this Agreement.  The Company has been authorized by Updata
Capital, Inc. to permit the inclusion of such fairness opinion in the Proxy
Statement.

 

Section
4.22.          Brokers.  No
agent, broker, Person or firm acting on behalf of the Company or any of its
Subsidiaries other than Updata Capital, Inc. is or will be entitled to any
advisory commission or broker’s or finder’s fee from any of the Parties (or
their respective Affiliates) in connection with this Agreement or any of the
transactions contemplated hereby.  All
amounts paid, or which are or will be payable, to Updata Capital, Inc. arising
out of or in connection with this transaction are set forth on Section 4.22 of
the Company Disclosure Letter.

 

Section
4.23.          Voting Requirements.  The affirmative vote of the holders of at
least a majority of the outstanding shares of Company Common Stock held by
Company Stockholders is the only vote of the holders of any class or series of
the Company’s capital stock or other securities of the Company necessary under
applicable law or stock exchange (or similar self-regulatory organization)
regulations to adopt this Agreement and approve the Transactions contemplated
hereby and for consummation by the Company of the Transactions contemplated
hereby.

 

Section
4.24.          Rights Agreement.  The Company has amended the Rights Agreement (without redeeming
the Rights (as such term is defined in the Rights Agreement) identified
therein), (a) to render the Rights Agreement inapplicable with respect to this
Agreement, the Voting Agreement and Transactions (b) so that (i) neither the
Parent nor the Merger Subsidiary nor any of their “Affiliates” or “Associates”
(as such terms are defined in the Rights Agreement) is considered to be an
“Acquiring Person”, “Interested Stockholder” or “Transaction Person” (as such
terms are defined in the Rights Agreement) as a result of the announcement or
execution of this Agreement or the Voting Agreement or the consummation of the
Transactions and (ii) the provisions of the Rights Agreement, including the
occurrence of a “Distribution Date”, a “Shares Acquisition Date” or a
“Transaction” (as such terms are defined in the Rights Agreement) and Sections
11(a)(ii) and 13(a) of the Rights Agreement, are not and shall not be triggered
by reason of the announcement or execution of this Agreement or the Voting
Agreement or the consummation of the Transactions and (c) to cause the Rights
to expire immediately prior to the Effective Time.

 

Section
4.25.          State Takeover Statutes.  The Board of Directors of the Company has
taken any and all requisite action so that neither the restrictions on
“business combinations” set forth in Section 203 of the DGCL, nor any other
“moratorium”, “control share”, “fair price”, “affiliate transaction”, “business
combination” or other antitakeover laws of any state other than the State of
Delaware, will apply to this Agreement or the Voting Agreement or to the Merger
or any of the other Transactions.

 

42

 

ARTICLE V

 

REPRESENTATIONS AND WARRANTIES OF PARENT, 

ACQUISITION SUBSIDIARY AND MERGER SUBSIDIARY

 

Each of
Parent, Acquisition Subsidiary and Merger Subsidiary hereby represents and
warrants to the Company that:

 

Section
5.1.            Organization. 
Each of Parent, Merger Subsidiary and Acquisition Subsidiary is a
corporation duly organized, validly existing and in good standing under the
Laws of its jurisdiction of organization and has all requisite corporate power
and authority to own, lease and operate its properties and assets and to carry
on its business as it is currently being conducted.  Each of Parent, Merger Subsidiary and Acquisition Subsidiary is
duly qualified or licensed to do business, and is in good standing as a foreign
corporation in each jurisdiction where the character of its properties or
assets owned, operated and leased or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified or
licensed or in good standing has not resulted in and would not reasonably be
likely to result in, individually or in the aggregate, a material adverse
effect on either Parent, Merger Subsidiary or Acquisition Subsidiary or
materially impair the ability of either Parent, Merger Subsidiary or
Acquisition Subsidiary to consummate the transactions contemplated hereby.  Each of Parent, Merger Sub and Acquisition
Subsidiary has, prior to the date of this Agreement, delivered to the Company
true, complete and correct copies of their respective Certificate of
Incorporation and the By-laws (or other comparable governing documents), in
each case as amended and in full force and effect as of the date of this
Agreement.

 

Section
5.2.            Authorization; Validity of
Agreement; Necessary Action. 
Each of Parent, Merger Subsidiary and Acquisition Subsidiary has full
corporate power and authority to execute and deliver this Agreement and each
instrument required hereby to be executed and delivered by it prior to or at
the Effective Time, to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby.  The execution, delivery and performance by each of Parent, Merger
Subsidiary and Acquisition Subsidiary of this Agreement and each instrument
required hereby to be executed and delivered by it prior to or at the Effective
Time and the performance of its obligations hereunder and thereunder and the
consummation by it of the Transactions have been duly authorized by the Board
of Directors of each of Parent, Merger Subsidiary and Acquisition Subsidiary,
and, except for the adoption of this Agreement by Parent as the sole
stockholder of Merger Subsidiary, no other corporate action on the part of
Parent, Merger Subsidiary or Acquisition Subsidiary is necessary to authorize
the execution, delivery and performance by Parent, Merger Subsidiary and
Acquisition Subsidiary of this Agreement and the consummation by them of the
transactions contemplated hereby.  This
Agreement and each instrument required hereby to be executed and delivered
prior to the Effective Time has been duly executed and delivered by each of
Parent, Merger Subsidiary and/or Acquisition Subsidiary, as the case may be,
and, assuming due and valid authorization, execution and delivery hereof by the
Company, is a valid and binding obligation of each of Parent, Merger Subsidiary
and/or Acquisition Subsidiary, as the case maybe, enforceable against each of
them in accordance with its terms.

 

43

 

Section
5.3.            Consents and Approvals; No
Violations.  The execution and
delivery of this Agreement by Parent, Merger Subsidiary and Acquisition
Subsidiary does not, and the consummation by Parent, Merger Subsidiary and
Acquisition Subsidiary of the Transactions and the compliance by Parent, Merger
Subsidiary and Acquisition Subsidiary with the applicable provisions of this
Agreement will not:

 

(a)           violate or conflict with or result in
any breach of any provision of the Certificate of Incorporation or the By-laws
of Parent or the Certificate of Incorporation or the By-laws of Merger
Subsidiary or Acquisition Subsidiary;

 

(b)           require any filing, recordation,
declaration or registration with, or permit, order, authorization, consent or
approval of, or action by or in respect of, or the giving of notice to, any
Governmental Entity, except for (i) the Governmental Approvals with respect to
the Merger and the transactions contemplated hereby and (ii) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware, all
other filings or recordings required under the DGCL and appropriate documents
with the relevant authorities of other states in which Parent, Merger
Subsidiary or Acquisition Subsidiary qualified to do business;

 

(c)           result in a violation or breach of,
conflict with, constitute (with or without due notice or lapse of time or both)
a default under, give rise to any penalty, right of amendment, modification,
renegotiation, termination, cancellation, payment or acceleration or any right
or obligation or loss of any material benefit or right under, or result in the
creation of any Liens upon any of the properties or assets of Parent, Merger
Subsidiary or Acquisition Subsidiary under, any of the terms, conditions or
provisions of any loan or credit agreement, note, bond, mortgage, indenture,
lease, license, sublicense, franchise, permit, concession, agreement, contract,
obligation, commitment, understanding, arrangement, franchise agreement or
other instrument, obligation or authorization applicable to Parent, Merger
Subsidiary or Acquisition Subsidiary, or by which any such Person or any of its
properties or assets may be bound; or

 

(d)           violate or conflict with any Laws
applicable to Parent, Merger Subsidiary or Acquisition Subsidiary or by which
any of their properties or assets may be bound;

 

excluding from preceding
clauses (b), (c) and (d) such matters that have not resulted in and would not
reasonably be likely to result in, individually or in the aggregate, a material
adverse effect on either Parent, Merger Subsidiary or Acquisition Subsidiary
and would not materially impair the ability of either Parent, Merger Subsidiary
or Acquisition Subsidiary to consummate the Transactions.

 

Section
5.4.            Sufficiency of Funds.  At the Closing of the Asset Purchase and at
the Effective Time, as applicable, (x) Parent shall have funds on hand or
available financing in an amount sufficient to pay (i) all of the Cash Merger
Consideration, (ii) all of the Option Consideration, and (iii) all fees and
expenses payable by Parent, Merger Subsidiary and/or Acquisition Subsidiary
related to the transactions contemplated by this Agreement and the Ancillary
Agreements and (y) Acquisition Subsidiary shall have funds on hand or available
financing in an amount sufficient to pay the Purchase Price.  Upon completion of the Transactions
(including, without limitation, the deposit of the Payment Fund), the Parent
intends that the Surviving Corporation will have cash and cash equivalents of
at least $5 million and 

 

44

 

Parent will
not cause Surviving Corporation to incur any indebtedness in connection with
the consummation of the Transaction.  At
the Effective Time, Acquisition Subsidiary shall enter into a license with the
Surviving Corporation to provide the Surviving Corporation with such rights in
the Owned Intellectual Property as are necessary to conduct the business of the
Surviving Corporation with respect to its currently existing properties and
assets in substantially the same manner that it was conducted prior to the sale
of the Owned Intellectual Property.

 

Section
5.5.            Information in Proxy Statement.  None of the information supplied or to be supplied
by Parent, Merger Subsidiary and/or Acquisition Subsidiary in writing relating
to Parent, Merger Subsidiary, Acquisition Subsidiary or any Affiliate thereof
(other than the Company or any of its Subsidiaries), as the case may be,
expressly for inclusion or incorporation by reference in the Proxy Statement,
any amendment or supplement thereto or any other documents filed with the SEC
by the Company in connection with the Transactions, when supplied to the
Company, when filed with the SEC and, in case of the Proxy Statement, when
mailed to the stockholders of the Company and at the time of the Special
Meeting, will contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are
made, not misleading.  Notwithstanding
the foregoing, Parent, Merger Subsidiary and Acquisition Subsidiary make no
representation or warranty with respect to any information supplied by the
Company in writing relating to the Company or any Affiliate thereof (other than
Parent, Merger Subsidiary or Acquisition Subsidiary) expressly for inclusion or
incorporation by reference in the Proxy Statement.

 

Section
5.6.            Litigation. 
(a) There is no suit, claim, action, proceeding or investigation pending
or, to the knowledge of Parent, threatened against Parent, Merger Subsidiary or
Acquisition Subsidiary and (b) neither Parent, Merger Subsidiary nor
Acquisition Subsidiary is subject to any outstanding order, writ, judgment,
injunction or decree of any Governmental Entity which, in the case of (a) or
(b), would, individually or in the aggregate, reasonably be expected to prevent
or materially delay Parent’s, Merger Subsidiary’s or Acquisition Subsidiary’s
ability to consummate the Merger.

 

Section
5.7.            Ownership of Merger Subsidiary;
No Prior Activities.

 

(a)           Each of Merger Subsidiary and
Acquisition Subsidiary was formed solely for the purpose of engaging in the
transactions contemplated by this Agreement.

 

(b)           Except for obligations or liabilities
incurred in connection with its incorporation or organization and the
transactions contemplated by this Agreement and each Ancillary Agreement,
neither Merger Subsidiary nor Acquisition Subsidiary has, and neither Merger
Subsidiary nor Acquisition Subsidiary will have, incurred, directly or
indirectly, through any subsidiary or affiliate, any obligations or liabilities
or engaged in any business activities of any type or kind whatsoever or entered
into any agreements or arrangements with any person.

 

Section
5.8.            Brokers.  No
broker, finder or investment banker is entitled to any brokerage, finder’s or
other fee or commission in connection with the Merger based upon arrangements
made by or on behalf of Parent, Merger Subsidiary or Acquisition Subsidiary.

 

45

 

ARTICLE VI

 

COVENANTS

 

Section
6.1.            Interim Operations of the Company.  Except as (i) set forth on Section 6.1 of
the Company Disclosure Letter, (ii) expressly provided herein or (iii)
consented to in writing by Parent (such consent not to be unreasonably
withheld), from and after the date of this Agreement until the earlier of the
termination of this Agreement in accordance with its terms or the Effective
Time, the Company shall, and shall cause each of its Subsidiaries to, act and
carry on its business only in the ordinary course of business consistent with
past practice and use reasonable best efforts to maintain and preserve its and
its Subsidiaries’ business organization, assets and properties, keep available
the services of its officers and key employees and maintain and preserve its
advantageous business relationships with customers, clients, suppliers and
others having material business dealings with it.  Without limiting the generality of the foregoing, from and after
the date of this Agreement until the earlier of the termination of this
Agreement in accordance with its terms or the Effective Time, the Company shall
not, and shall not permit any of its Subsidiaries to, directly or indirectly,
do any of the following without the prior written consent of Parent (such
consent not to be unreasonably withheld) except as otherwise contemplated by
Section 6.1 of the Company Disclosure Letter:

 

(a)           except as contemplated by Section
2.1, amend its Amended and Restated Certificate of Incorporation, as amended,
or By-laws or comparable governing documents;

 

(b)           sell, transfer or pledge or agree to
sell, transfer or pledge any shares of capital stock or other equity interests
owned by it in any other Person;

 

(c)           declare, set aside or pay any
dividend or other distribution payable in cash, securities or other property
with respect to, or split, combine, redeem or reclassify, or purchase or
otherwise acquire, any shares of its capital stock (or other equity interests)
or other securities of the Company or any of its Subsidiaries, other than the
making of a dividend or other distribution by a wholly-owned Subsidiary to
another wholly-owned Subsidiary or to the Company, or any other change in the
capital structure of the Company on any of its Subsidiaries;

 

(d)           except as contemplated by Sections
2.1 and 3.1 or as set forth in Section 6.1(d) of the Company Disclosure Letter,
issue or sell, or authorize to issue or sell, any shares of its capital stock
(whether unrestricted or restricted) or any other securities (equity or debt)
of the Company or any of its Subsidiaries, or issue or sell, or authorize to
issue or sell, any securities (equity or debt) convertible into or exchangeable
for, or options, warrants, calls, commitments or rights of any kind to purchase
or subscribe for, or enter into any arrangement or contract with respect to the
issuance or sale of, any shares of its capital stock of any class of the
Company or Voting Debt or other securities (equity or debt), or make any other
change in its capital structure, except for the possible issuance by the
Company of shares of Company Common Stock pursuant to the terms of any Options
outstanding on the date hereof and disclosed in Section 4.2(a) of the Company
Disclosure Letter;

 

(e)           acquire, authorize or make (or commit
to make) any investment in, or make any capital contribution to, any Person;

 

46

 

(f)            make (or commit to make), or enter
into any Contracts (or any amendments, modifications, supplements or
replacements to existing Contracts) to be performed relating to the making of
capital expenditures in excess of $25,000 in any calendar year, or in the aggregate
for capital expenditures with a value in excess of $100,000;

 

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

 

(h)           transfer, lease, license, guarantee,
sell, mortgage, pledge, dispose of, subject to any Lien (other than a Permitted
Lien) or otherwise encumber any material assets or other assets that have a
value individually in excess of $10,000 other than with respect to (i)
transactions between a wholly-owned Subsidiary of the Company and the Company
or between wholly-owned Subsidiaries of the Company, (ii) dispositions of
excess or obsolete assets in the ordinary course of business consistent with
past practice and (iii) leases, licenses or sales of the Company’s software or
other assets in the ordinary course of business consistent with past practice;

 

(i)            except to the extent required under
existing employee and director benefit plans, agreements or arrangements in
effect as of the date hereof or required by applicable law or contemplated by
Section 3.4 or as set forth in Section 6.1(i) of the Company Disclosure Letter,
(i) increase the compensation or fringe benefits of any of its directors,
officers or employees (except for immaterial increases to employees who are not
officers of the Company or any of its Subsidiaries in the ordinary course of
business consistent with past practice) or grant any severance or termination
pay not currently required to be paid under existing severance plans, (ii)
enter into, amend, modify, supplement or replace any employment, benefit
(including with respect to life or disability insurance or with respect to
premiums therefor), consulting or severance agreement, policy or arrangement
with any present or former director, officer or other employee of the Company
or any of its Subsidiaries, or (iii) establish, adopt, enter into or amend,
modify, supplement, replace or terminate any collective bargaining, bonus,
profit sharing, thrift, compensation, stock option, restricted stock, benefit
(including with respect to life or disability insurance or with respect to
premiums therefor), pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the collective benefit of any directors, officers or employees
(it being understood and agreed that in no event shall the Company or any of
its Subsidiaries amend, modify, supplement, replace or terminate the policy in
effect on the date hereof and described in Section 6.1(i) of the Company
Disclosure Letter, with respect to suspension of any increases in the
compensation or other remuneration of directors, officers and other employees
of the Company and its Subsidiaries);

 

(j)            except as may be required by
applicable law, GAAP or SEC rule, make any change in any of its accounting
practices, policies or procedures or any of its methods of reporting income,
deductions or other items for income tax purposes;

 

(k)           except as contemplated by Sections
2.1 and 3.1 or as set forth in Section 6.1(k) of the Company Disclosure Letter,
adopt or enter into a plan of complete or partial 

 

47

 

liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any of its Subsidiaries or any agreement relating
to an Acquisition Proposal, except as expressly permitted in Section 6.3;

 

(l)            (i) incur, assume, modify or prepay
any indebtedness for borrowed money, issue any debt securities or warrants or
other rights to acquire debt securities, or guarantee, endorse or otherwise
become liable or responsible for the obligations or indebtedness of another
Person, other than indebtedness owing to the Company or any direct or indirect
wholly-owned Subsidiary of the Company or guarantees of indebtedness of the
Company or any direct or indirect wholly-owned Subsidiary of the Company, or
enter into any capital lease in each case, in an amount in excess of $10,000,
or (ii) make any loans, extensions of credit or advances to any other Person,
other than to the Company or to any direct or indirect wholly-owned Subsidiary
of the Company, except, in the case of preceding clauses (i) and (ii), for
loans, extensions of credit or advances constituting trade payables or
receivables arising in the ordinary course of business and in the case of
preceding clause (ii), for advances to employees in respect of travel and
entertainment expenses in the ordinary course of business in amounts of $10,000
or less to any individual on any date of determination and $50,000 in the
aggregate outstanding on any date of determination;

 

(m)          except as provided by this Agreement
or described in the Company Disclosure Letter, accelerate the payment, right to
payment or vesting of any bonus, severance, profit sharing, retirement,
deferred compensation, stock option, restricted stock, insurance (including
arrangements or agreements for the premiums therefor) or other compensation or
benefits;

 

(n)           pay, discharge, settle or satisfy any
claims, litigation, liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise) other than (i) the payment, discharge,
settlement or satisfaction, in the ordinary course of business consistent with
past practice, of (A) liabilities reflected or reserved against in the December
31, 2002 balance sheet included in the Company SEC Documents or (B) liabilities
(other than litigation) subsequently incurred in the ordinary course of
business consistent with past practice and (ii) other claims, litigation,
liabilities or obligations (qualified as aforesaid) that in the aggregate do
not exceed $25,000;

 

(o)           plan, announce, implement or
effectuate any reduction in force, lay-off, early retirement program, severance
program or other program or effort concerning the termination of employment of
employees of the Company or its Subsidiaries, other than routine employee
terminations in the ordinary course of business and consistent with past
practice;

 

(p)           take any action or omit to take any
action (including the adoption of any shareholder rights plan or amendments to
its Amended and Restated Certificate of Incorporation, as amended, or By-laws
(or comparable governing documents)) which would, directly or indirectly,
restrict or impair the ability of Parent or Merger Subsidiary, as the case may
be, to vote or otherwise to exercise the rights and receive the benefits of a
stockholder with respect to securities of the Company that may be acquired or
controlled by Parent or Merger Subsidiary, as the case may be, or any action
which would permit any Person to acquire securities of the 

 

48

 

Company or any
of its Subsidiaries from the Company or such Subsidiary on a basis not
available to Parent or Merger Subsidiary;

 

(q)           take any action or omit to take any
action which (i) constitutes a violation of any Company Permit, which
violations would result in or would reasonably be likely to result in,
individually or in the aggregate, the modification, suspension, cancellation,
termination of any one or more Company Permits or otherwise have or would
reasonably be likely to have a material adverse impact on any customer or
client contract or relationship or the nature or level of discipline imposed on
account of future violations of the Laws applicable to the Company and the Surviving
Corporation or (ii) would (or would reasonably be likely to) materially impede,
delay, hinder or make more burdensome for the Surviving Corporation or Parent
to obtain and maintain any and all authorizations, approvals, consents or
orders from any Governmental Entity or other third party necessary or required
to maintain the Company Permits in effect as of the date hereof in effect at
all times following the Merger on the same terms as in effect on the date of
this Agreement;

 

(r)            enter into any new material line of
business or enter into any agreement that restrains, limits or impedes the
Company’s or any of its Subsidiaries’ ability to compete with or conduct any
business or line of business;

 

(s)           (i) file or cause to be filed any
materially amended Tax Returns or claims for refund; (ii) make or rescind any
material Tax election or otherwise fail to prepare all Tax Returns in a manner
which is consistent with the past practices of the Company and each Subsidiary
of the Company, as the case may be, with respect to the treatment of items on
such Tax Returns except to the extent that any inconsistency (A) would not or
may not materially increase Parent’s, the Company’s or any of the Company’s
Subsidiaries’ liability for Taxes for any period or (B) is required by Law;
(iii) incur any material liability for Taxes other than in the ordinary course
of business, apart from any Tax Liability that may result from the Asset
Purchase; or (iv) enter into any settlement or closing agreement with a taxing
authority that materially increases or would reasonably be likely to materially
increase the Tax liability of the Company or any of its Subsidiaries for any
period;

 

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

 

(u)           authorize, agree or announce an
intention, in writing or otherwise, to take any of the foregoing actions or
fail to take any action that would prevent any of the foregoing from occurring.

 

Section
6.2.            Confidentiality.  The Parties acknowledge the Confidentiality Agreement, which
Confidentiality Agreement shall continue in full force and effect in accordance
with its terms, except as expressly modified herein or pursuant hereto.

 

Section
6.3.            No Solicitation of Other Offers.  (a) 
Each of the Company and its Subsidiaries shall, and shall cause its
Affiliates and each of its and their respective Representatives to, immediately
cease any discussions, activities or negotiations with any other 

 

49

 

Person or
Persons that may be ongoing with respect to any Acquisition Proposal.  The Company and its Subsidiaries shall not
take, and shall cause their respective Representatives not to take, any action
after the date hereof (i) to encourage, solicit, initiate or facilitate,
directly or indirectly, the making or submission of any Acquisition Proposal
(including by taking any action that would make the Rights Agreement
inapplicable to an Acquisition Proposal), (ii) to enter into any agreement,
arrangement or understanding with respect to any Acquisition Proposal, other
than a confidentiality agreement referred to below or in connection with the
termination of this Agreement pursuant to Section 8.1(f), in accordance with
the terms and under the circumstances contemplated below in this Section
6.3(a), or to agree to approve or endorse any Acquisition Proposal or enter into
any agreement, arrangement or understanding that would require the Company to
abandon, terminate or fail to consummate the Transactions, (iii) to initiate or
participate in any way in any discussions or negotiations with (other than
discussions or negotiations solely related to the execution of a
confidentiality agreement referred to below), or furnish or disclose any
information to, any Person (other than Parent or Merger Subsidiary) in
furtherance of any proposal that constitutes, or could reasonably be expected
to lead to, any Acquisition Proposal, or (iv) to grant any waiver or release
under any standstill, confidentiality or similar agreement entered into by the
Company or any of its Subsidiaries or any of their Affiliates or
Representatives except to the extent the Board of Directors of the Company
determines in good faith, after consultation with outside nationally recognized
legal counsel (which may be its current outside legal counsel) that failure to
grant such waiver or release would be inconsistent with its fiduciary duties
under applicable law; provided, that so long as there has been no breach
of this Section 6.3(a), prior to obtaining the approval of the Company
Stockholders contemplated by Section 6.5, in response to a written Acquisition
Proposal that was not solicited after the date hereof and otherwise in
compliance with its obligations under Section 6.3(c), the Company may (1)
request clarifications from, or furnish information to, (but not enter into
discussions with) any Person which makes such Acquisition Proposal if (A) such
action is taken subject to a confidentiality agreement with the Company
containing customary terms and conditions; provided, that if such
confidentiality agreement contains provisions that are less restrictive than the
comparable provisions of the Confidentiality Agreement, or omits restrictive
provisions contained in the Confidentiality Agreement, then the Confidentiality
Agreement shall be deemed to be automatically amended to contain in
substitution for such comparable provisions such less restrictive provisions,
or to omit such restrictive provisions, as the case may be, and in connection
with the foregoing, the Company agrees not to waive any of the provisions in
any such confidentiality agreement without waiving the similar provisions in
the Confidentiality Agreement to the same extent, (B) such action is taken
solely for the purpose of obtaining information reasonably necessary to
ascertain whether such Acquisition Proposal is, or is reasonably likely to lead
to, a Superior Proposal, and (C) the Board of Directors of the Company
reasonably determines in good faith, after consultation with outside nationally
recognized legal counsel (which may be its current outside legal counsel), that
failure to take such actions would be inconsistent with its fiduciary duties
under applicable law or (2) participate in discussions or negotiations with,
request clarifications from, or furnish information to, any Person which makes
such Acquisition Proposal if (x) such action is taken subject to a
confidentiality agreement with the Company containing customary terms and
conditions; provided, that if such confidentiality agreement contains
provisions that are less restrictive than the comparable provisions of the
Confidentiality Agreement, or omits restrictive provisions contained in the
Confidentiality Agreement, then the Confidentiality Agreement shall be deemed 

 

50

 

to be
automatically amended to contain in substitution for such comparable provisions
such less restrictive provisions, or to omit such restrictive provisions, as
the case may be, and in connection with the foregoing, the Company agrees not
to waive any of the provisions in any such confidentiality agreement without
waiving the similar provisions in the Confidentiality Agreement to the same
extent, (y) the Board of Directors of the Company reasonably determines in good
faith, after consultation with outside nationally recognized legal counsel
(which may be its current outside legal counsel) and financial advisor (which
may be its current outside financial advisor), that such Acquisition Proposal
is a Superior Proposal and (z) the Board of Directors of the Company reasonably
determines in good faith, after consultation with outside nationally recognized
legal counsel (which may be its current outside nationally recognized legal
counsel), that failure to take such actions would be inconsistent with its
fiduciary duties under applicable law. 
Without limiting the foregoing, Parent, Merger Subsidiary and the
Company agree that any violation of the restrictions set forth in this Section
6.3(a) by any Representative of the Company or any of its Subsidiaries or their
respective Affiliates (other than any such Person who is an Affiliate or
employee of Parent or of any of its Affiliates), whether or not such Person is
purporting to act on behalf of the Company or any of its Subsidiaries or their
respective Affiliates, shall constitute a breach by the Company of this Section
6.3(a).  It is understood that no
discussions with any Person shall give rise to a violation of this Section
6.3(a) if (i) the Company, its Subsidiaries or its Representatives, as
applicable, did not know or have reason to know that such discussion related to
an Acquisition Proposal and (ii) such discussion was immediately ceased once
the Company, its Subsidiary or Representatives, as applicable, knew or had
reason to know it related to an Acquisition Proposal.

 

(b)           Neither the Board of Directors of the
Company nor any committee thereof shall (i) withdraw, modify or amend, or
propose to withdraw, modify or amend, in a manner adverse to Parent, Merger
Subsidiary or Acquisition Subsidiary, the approval, adoption or recommendation,
as the case may be, of the Transactions, this Agreement or any of the other
transactions contemplated hereby, (ii) approve or recommend, or propose to
approve or recommend, any Acquisition Proposal, (iii) cause the Company to
accept such Acquisition Proposal and/or enter into any Acquisition Agreement,
or (iv) resolve to do any of the foregoing; provided, that the Board of
Directors of the Company may withdraw, modify or amend such recommendation
prior to obtaining the approval of the Company Stockholders contemplated by
Section 6.5 if (w) the Company has complied with its obligations under this
Section 6.3, (x) the Board of Directors of the Company reasonably determines in
good faith, after consultation with outside nationally recognized legal counsel
(which may be its current outside legal counsel), that failure to take such
actions would be inconsistent with its fiduciary duties under applicable law
and (z) prior to taking such actions, the Board of Directors of the Company
shall have given Parent at least 48 hours notice of its intention to take such
action and the opportunity to meet with the Company and its outside counsel and
financial advisor.  Any such withdrawal,
modification or change shall not change the approval of the Board of Directors
of the Company for purposes of causing any state takeover statute or other
similar law to be inapplicable to the Transactions.  During the term of this Agreement, nothing contained in this
Section 6.3(b) shall limit the Company’s obligation to hold and convene the meeting
of the Company’s Stockholders referred to in Section 6.5 and to submit this
Agreement and the Transactions for adoption and approval by the Company
Stockholders (including, without limitation, regardless of whether the
recommendation of the Board of Directors of the Company of this Agreement or
the Transactions shall have been withdrawn or modified).

 

51

 

(c)           In addition to the obligations of the
Company set forth in Section 6.3(a), the Company shall as promptly as
practicable (and in any event within 24 hours) advise Parent of any request for
information with respect to any Acquisition Proposal or of any Acquisition
Proposal, or any inquiry, proposal, discussions or negotiation with respect to
any Acquisition Proposal, the terms and conditions of such request, Acquisition
Proposal, inquiry, proposal, discussion or negotiation and the Company shall,
within 24 hours of the receipt thereof, promptly provide to Parent copies of
any written materials received by the Company in connection with any of the
foregoing, and the identity of the Person making any such Acquisition Proposal
or such request, inquiry or proposal or with whom any discussions or
negotiations are taking place.  The
Company shall keep Parent fully informed of the status and material details
(including amendments or proposed amendments) of any such request or
Acquisition Proposal and keep Parent fully informed as to the material details
of any information requested of or provided by the Company and as to the
details of all discussions or negotiations with respect to any such request,
Acquisition Proposal, inquiry or proposal, and shall provide to Parent within
24 hours of receipt thereof all written materials received by the Company with
respect thereto.  The Company shall
promptly provide to Parent any non-public information concerning the Company
provided to any other Person in connection with any Acquisition Proposal, which
was not previously provided to Parent. 
If an event that is not caused by the Company, its Subsidiaries or any
of their Affiliates or Representatives occurs which prevents the Company from
complying with the timing of the information delivery requirements set forth in
this Section 6.3(c), the Company shall not be deemed to be in violation of this
Section 6.3(c) provided that (i) the Company acts reasonably and in good faith
to supply the required information as soon as possible and (ii) such delay in
the receipt of information does not adversely affect Parent in any material
respect.

 

(d)           Nothing contained in this Section 6.3
shall prohibit the Board of Directors of the Company nor any committee thereof
from (i) making and disclosing to the Company Stockholders a position
contemplated by Rule 14d-9 or Rule 14e-2(a) promulgated under the Exchange Act
or (ii) making any disclosure to the Company Stockholders if the Board of
Directors of the Company determines in good faith, after consultation with
outside nationally-recognized legal counsel (which may be its current outside
legal counsel), that failure to make such disclosure pursuant to this clause
(ii) would be inconsistent with its fiduciary duties under applicable law.

 

(e)           The Company shall promptly (and in
any event within three Business Days following the date hereof) request in
writing each Person which has heretofore executed a confidentiality agreement
in connection with its consideration of acquiring the Company or any portion
thereof to return all confidential information heretofore furnished to such
Person by or on behalf of the Company, and the Company shall use its best
efforts to have such information returned or destroyed (to the extent
destruction of such information is permitted by such confidentiality
agreement).

 

Section
6.4.            Access to Information.  The Company shall (and shall cause each of
its Subsidiaries to) afford to Parent and its Representatives reasonable
access, upon reasonable advance notice, during normal business hours during the
period prior to the Effective Time, to all of the properties, books, contracts,
commitments, personnel and records and accountants of the Company and its
Subsidiaries and, during such period, the Company shall (and shall cause each

 

52

 

of its
Subsidiaries to) furnish to Parent (a) a copy of each report, schedule, registration
statement and other document filed or received by it or any of its Subsidiaries
during such period pursuant to the requirements of federal or state securities
laws and (b) all other information concerning the business, properties, assets
and personnel of the Company and its Subsidiaries as Parent may reasonably
request.  Parent, Merger Subsidiary,
Acquisition Subsidiary and their Affiliates and Representatives will hold any
such information that is nonpublic in confidence in accordance with the
Confidentiality Agreement.  No
information or knowledge obtained in any investigation pursuant to this Section
6.4 or otherwise shall affect or be deemed to modify any representation or
warranty contained in this Agreement or the conditions to the obligations of
the Parties to consummate the Transactions.

 

Section
6.5.            Special Meeting.  As promptly as practicable after the execution and delivery of
this Agreement, the Company, acting through its Board of Directors, shall, in
accordance with applicable law, duly call, give notice of, convene and hold the
Special Meeting, which meeting shall be held as promptly as practicable
following the preparation and mailing of the Proxy Statement, and the Company
agrees that this Agreement and the Transactions shall be submitted at such
meeting for adoption and approval by the Company Stockholders.  The Proxy Statement shall provide for
separate votes by Company Stockholders on the Merger and the Asset Purchase,
but shall also provide that neither shall be deemed to be approved unless both
are approved by the requisite vote of the Company Stockholders.  Subject to Section 6.3(b), the Company shall
use its reasonable best efforts to solicit and obtain from the Company
Stockholders proxies, and shall take all other action necessary and advisable
to secure the vote of the Company Stockholders required by applicable law and
by the Amended and Restated Certificate of Incorporation, as amended, or the
By-laws of the Company to obtain their adoption of this Agreement and approval
of the Transactions, and, subject to Section 6.3(b), the Board of Directors of
the Company shall recommend that the Company Stockholders vote in favor of the
adoption of this Agreement and the approval of the Transactions at the Special
Meeting and the Company agrees that it shall include in the Proxy Statement
such recommendation of the Board of Directors of the Company that the Company
Stockholders adopt this Agreement and approve the Transactions.  Without limiting the generality of the
foregoing, the Company agrees that its obligations pursuant to the first
sentence of this Section 6.5 during the term of this Agreement shall not be
affected by (a) the commencement, public proposal, public disclosure or
communication to the Company, any of its Subsidiaries or any of their
respective Affiliates (or any of their respective Representatives) of any
Acquisition Proposal or (b) the withdrawal or modification by the Board of
Directors of the Company of its recommendation of this Agreement or the
Transactions.

 

Section
6.6.            Proxy Statement.  As promptly as practicable after the execution and delivery of
this Agreement, the Company shall:

 

(a)           prepare and, after consultation with
and review by Parent and its outside counsel, file with the SEC a preliminary
proxy statement relating to the Transactions and this Agreement and use its
reasonable best efforts (i) to obtain and furnish the information required to
be included by the SEC in the Proxy Statement and, after consultation with and
review by Parent, to respond promptly to any comments made by the SEC with
respect to the preliminary proxy statement and promptly cause the Proxy
Statement to be mailed to its stockholders and, if necessary, after the Proxy
Statement shall have been so mailed, promptly circulate amended or 

 

53

 

supplemental
proxy material and, if required in connection therewith, resolicit proxies; provided,
that no such amended or supplemental proxy material will be mailed by the
Company without consultation with and review by Parent and its outside counsel
(which review shall not be unreasonably delayed) and (ii), subject to Section
6.3(b), to obtain the necessary approvals of this Agreement and the
Transactions by its stockholders;

 

(b)           promptly notify Parent of the receipt
of the comments of the SEC and of any request from the SEC for amendments or
supplements to the preliminary proxy statement or the Proxy Statement or for
additional information, and will promptly supply Parent and its outside counsel
with copies of all written correspondence between the Company or its
representatives, on the one hand, and the SEC or members of its staff, on the
other hand, with respect to the preliminary proxy statement, the Proxy
Statement or the Transactions;

 

(c)           promptly inform Parent and its
outside counsel if at any time prior to the Special Meeting any event should
occur that is required by applicable law to be set forth in an amendment of, or
a supplement to, the Proxy Statement, in which case, the Company, with the
cooperation and approval of and in consultation with Parent and its outside
counsel, will, upon learning of such event, promptly prepare and mail such
amendment or supplement; and

 

(d)           it is expressly understood and agreed
that (i) Parent, Merger Subsidiary, Acquisition Subsidiary and the Company will
cooperate with each other in connection with all aspects of the preparation,
filing and clearance by the SEC of the Proxy Statement (including the
preliminary proxy statement and any and all amendments or supplements thereto),
(ii) the Company shall give Parent and its outside counsel the opportunity to
review and comment on the Proxy Statement prior to it being filed with the SEC
and shall give Parent and its outside counsel the opportunity to review and
comment on all amendments and supplements to the Proxy Statement and all
responses to requests for additional information and replies to comments prior
to their being filed with, or sent to, the SEC and each of the Company and
Parent agrees to use its reasonable best efforts, after consultation with the
other, to respond promptly to all such comments of and requests by the SEC and
(iii) the Company shall promptly inform Parent and its counsel of the content
of all communications with the SEC and its staff relating to the Proxy
Statement, this Agreement or the transactions contemplated hereby.

 

Section
6.7.            Cooperation. 
Subject to the terms and conditions provided herein, each of the
Company, Parent, Merger Subsidiary and Acquisition Subsidiary shall, and the
Company shall cause each of its Subsidiaries to, cooperate and use their
reasonable best efforts to take, or cause to be taken, all appropriate action,
and do, or cause to be done, and assist and cooperate with the other Parties in
doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the Transactions
(including the satisfaction of the respective conditions set forth in Article
VII), and to make, or cause to be made, all filings necessary, proper or
advisable under applicable Laws, rules and regulations to consummate and make
effective the transactions contemplated by this Agreement.  Without limiting the generality of the
foregoing, each of the Company, Parent, Merger Subsidiary and Acquisition
Subsidiary shall, and the Company shall cause each of its Subsidiaries to,
cooperate and use their reasonable best efforts to promptly:

 

54

 

(a)           make any and all filings,
recordations, declarations or registrations with, obtain any and all actions or
non-actions, licenses, permits, consents, approvals, waivers, authorizations,
qualifications and orders of, give any and all notices to, take reasonable
steps to avoid an Action or Proceeding by, any and all Governmental Entities
and parties to contracts with the Company and its Subsidiaries, in each case
prior to the Closing Date, as are necessary, proper or advisable to consummate
and make effective, in the most expeditious manner practicable, the
Transactions; it being understood and agreed that:

 

(i)            the Company and its Subsidiaries
shall use their reasonable best efforts to cooperate with Parent in any manner
reasonably requested by Parent in connection with obtaining at or prior to the
Closing all Required Merger Consents (no such Required Merger Consent to be
conditioned on any increase in the amount payable under the applicable Company
Material Contract or any reduction in the term thereof or any other material
changes in the provisions thereof, except as may be required by the express
terms of the applicable Company Material Contract, and such Required Merger
Consent shall otherwise be on terms and conditions reasonably satisfactory to
Parent); in connection with the foregoing, neither the Company nor any of its
Subsidiaries shall, without the prior written consent of Parent, make (or
commit to make) any payment or otherwise provide (or commit to provide) any
value or benefit to any Person in connection with obtaining any Required Merger
Consent (except as may be required by the express terms of the respective
Company Material Contracts);

 

(ii)           the Company and its Subsidiaries
shall use their commercially reasonable efforts to cooperate with Parent in any
manner reasonably requested by Parent in connection with obtaining at or prior
to the Closing any Required Asset Consents (no such Required Asset Consent to
be conditioned on any increase in the amount payable under the applicable
Company Material Contract or any reduction in the term thereof or any other
material changes in the provisions thereof, except as may be required by the
express terms of the applicable Company Material Contract, and such Required
Asset Consent shall otherwise be on terms and conditions reasonably
satisfactory to Parent); in connection with the foregoing, neither the Company
nor any of its Subsidiaries shall, without the prior written consent of Parent,
make (or commit to make) any payment or otherwise provide (or commit to
provide) any value or benefit to any Person in connection with obtaining any
Required Asset Consent (except as may be required by the express terms of the
respective Company Material Contracts); provided, to obligate or require
the Company or its Subsidiaries to obtain any consent, approval or waiver in
connection with the Asset Purchase;

 

(iii)          each of the Parties shall
expeditiously give and make any and all notices and reports required to be made
by such Party to the appropriate Persons with respect to Company Permits and
each of the Parties shall, prior to the Effective Time, use its reasonable best
efforts to cooperate with the other in any manner reasonably requested by the
other in connection with obtaining at or prior to the Closing the regulatory
approvals or consents as may be required by any Governmental Entities in order
to obtain and maintain in effect at all times following the Effective Time all
Company Permits and other Governmental Approvals necessary to maintain
continuity of its relationships with all customers and clients; without limiting
the foregoing, each of the Parties shall, to the extent necessary of such
Party, (A) duly and promptly file and process any and all applications
necessary to obtain all required regulatory approvals or consents as a result
of the consummation of the transactions contemplated by this Agreement, 

 

55

 

including the
amendment of any and all documents required to be amended with respect to the
existing licensees under the Company Permits and (B) duly and promptly file
with all appropriate Governmental Entities, and thereafter duly process renewal
applications for all of the Company’s licensed Subsidiaries whose licenses will
expire during the period from the date of this Agreement and until all of the
respective applications shall have been approved; and

 

(iv)          the Company and its Board of Directors
shall, if any “fair price”, “moratorium”, “control share acquisition”,
“business combination” or other state takeover statute or similar statute, rule
or regulation becomes applicable to this Agreement or the Transactions, take
all action within its power to ensure that the Transactions may be consummated
as promptly as practicable on the terms contemplated by this Agreement and
otherwise to minimize the effect of such statute, rule or regulation on the
Transactions;

 

(b)           defend any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement or
the consummation of any of the Transactions (including seeking to have any stay
or temporary restraining order entered by any court or other Governmental
Entity vacated or reversed); it being understood and agreed that the Company
shall promptly notify Parent of any litigation or threatened litigation
(including any stockholder litigation), other than where Parent is the adverse
party, against the Company and/or its directors relating to any of the
transactions contemplated by this Agreement and the Company shall give Parent
the opportunity to participate, in the defense or settlement of any such
litigation; provided, that no settlement with respect to any such
litigation shall be agreed to without Parent’s prior consent (not to be
unreasonably withheld or delayed); and

 

(c)           execute and deliver any additional
instruments necessary to consummate the Transactions and to fully carry out the
purposes of this Agreement.

 

Section
6.8.            Public Disclosure.  The press release announcing the execution
of this Agreement shall be issued only in such form as shall be mutually agreed
upon by the Company and Parent and each of the Company and Parent shall consult
with, and obtain the consent of, the other Party (which shall not be
unreasonably withheld or delayed) before issuing any other press release or
otherwise making any public statement with respect to the Merger or this
Agreement and shall not issue any such press release or make any such public
statement prior to consulting with and obtaining the prior consent of the other
Party (which shall not be unreasonably withheld or delayed); provided,
that a Party may, without consulting with or obtaining the prior consent of the
other Party, issue such press release or make such public statement as may be
required by applicable Law or by any listing agreement with a national
securities exchange or automated quotation system to which Parent (or an
Affiliate thereof) or the Company, as the case may be, is a party, if such
Party has used reasonable best efforts to consult with the other Party and to
obtain such other Party’s consent, but has been unable to do so in a timely
manner.

 

Section
6.9.            Notification of Certain Matters.  The Company shall give prompt notice to
Parent and Parent shall give prompt written notice to the Company, of (a) the
occurrence or non-occurrence of any event known to such Party, the occurrence
or non-occurrence of which has resulted in, or is reasonably likely to result
in, any representation or warranty set forth in this Agreement made by such
Party to be untrue or inaccurate (taking into 

 

56

 

account any
materiality qualification, to the extent applicable); (b) any material failure
by such Party to comply with or satisfy any covenant, condition or agreement to
be complied with or satisfied by it hereunder; or (c) any action, suit, proceeding,
inquiry or investigation pending or, to the knowledge of such Party, threatened
which questions or challenges or relates to this Agreement or the consummation
of any of the transactions contemplated hereby; provided, that the
delivery of any notice pursuant to this Section 6.9 shall not limit or
otherwise affect the remedies available hereunder to the Party receiving such
notice and that no such notification shall modify the representations or
warranties of any Party or the conditions to the obligations of any Party
hereunder.  Each of the Company, Parent,
Merger Subsidiary or Acquisition Subsidiary shall give prompt notice to the
other Parties of any written notice from any third party alleging that the consent
of such third party is or may be required in connection with the transactions
contemplated by this Agreement.

 

Section
6.10.          Rights Agreement.  During the term of this Agreement and prior to the Effective
Time, the Company shall not, without the prior written consent of the Parent,
unless required to do so by a court of competent jurisdiction (i) redeem or
exchange the Rights, (ii) amend (other than, subject to the following clause
(iii), to defer the “Distribution Date” (as such term is defined in the Rights
Agreement) in the case of commencement of a tender or exchange offer (but not
in the case of any purchase of Company Common Stock pursuant to such tender or
exchange offer) that would otherwise trigger a “Distribution Date” pursuant to
Section 3(a)(ii) of the Rights Agreement) or terminate the Rights Agreement or
(iii) take any action which would allow any “Person” (as such term is defined
in the Rights Agreement) other than Parent, Merger Subsidiary or Acquisition
Subsidiary (or their Affiliates) to be the “Beneficial Owner” (as such term is
defined in the Rights Agreement) of fifteen percent or more of the Company
Common Stock without causing a “Distribution Date” or a “Share Acquisition
Date” (as such term is defined in the Rights Agreement) to occur.

 

Section
6.11.          Subsequent Filings.  Until the Effective Time, the Company will
timely file with the SEC each Subsequent Filing required to be filed by the
Company and will promptly deliver to Parent, Merger Subsidiary and Acquisition
Subsidiary copies of each such Subsequent Filing filed with the SEC.  Each of the audited consolidated financial
statements and unaudited interim financial statements (including, in each case,
any related notes and schedules) contained or to be contained in the Subsequent
Filings shall be prepared from, and shall be in accordance with, the books and
records of the Company and its consolidated Subsidiaries, shall comply in all
material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto, shall be
prepared in accordance with GAAP (except as may be indicated in the notes
thereto) and shall fairly present the consolidated financial position and the
consolidated results of operations and cash flows of the Company and its
consolidated Subsidiaries at the dates and for the periods covered thereby.

 

Section
6.12.          Communication to Employees.  The Company and Parent will cooperate with
each other with respect to, and endeavor in good faith to agree in advance upon
the method and content of, all written or oral communications or disclosure to
employees of the Company or any of its Subsidiaries with respect to the
Transactions.

 

57

 

Section
6.13.          Indemnification of Officers and
Directors; Exculpation.

 

(a)           Parent and the Surviving Corporation
agree that the indemnification obligations set forth in the Company Amended and
Restated Certificate of Incorporation, as amended, and the Company By-laws
shall survive the Merger (and, prior to the Effective Time, Parent shall cause
the Certificate of Incorporation and By-laws of Merger Sub to reflect such
provisions) and shall not be amended, repealed or otherwise modified for a
period of six years after the Effective Time in any manner that would adversely
affect the rights thereunder of any individual who on or prior to the Effective
Time was a director, officer, trustee, fiduciary, employee or agent of the
Company or any Company Subsidiary or who served at the request of the Company
or any Company Subsidiary as a director, officer, trustee, partner, fiduciary,
employee or agent of another corporation, partnership, joint venture, trust,
pension or other employee benefit plan or enterprise, unless such amendment or
modification is required by Law.

 

(b)           The Surviving Corporation shall
obtain a prepaid insurance and indemnification policy covering the Company’s
current directors and officers for a period of six years from the Effective
Time that provides coverage for events occurring prior to the Effective Time (the
“D&O Insurance”) that is no
less favorable than the Company’s existing policy (true and complete copies
which have been previously provided to Parent) or, if substantially equivalent
insurance coverage is unavailable, the best available coverage; provided,
however, that the Surviving Corporation shall not be required to expend
a premium in excess of $1 million for such D&O Insurance.  Parent shall, and shall cause the Surviving
Corporation to, maintain such policies in full force and effect, and continue to
honor the obligations thereunder.  The
obligations under this Section 6.13 shall not be terminated or modified in such
a manner as to adversely affect any indemnitee to whom this Section 6.13
applies without the consent of such affected indemnitee (it being expressly
agreed that the indemnitees to whom this Section 6.13 applies shall be third
party beneficiaries of this Section 6.13).

 

(c)           In the event Parent or the Surviving
Corporation (i) consolidates with or merges into any other person and shall not
be the continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers all or substantially all of its properties and assets
to any person, then, and in each such case, proper provisions shall be made so
that such continuing or surviving corporation or entity or transferee of such
assets, as the case may be, shall assume the obligations set forth in this
Section 6.13.

 

(d)           The provisions of this Section 6.13
are intended to be in addition to the rights otherwise available to the current
officers and directors of the Company by law, charter, statute, bylaw or
agreement, and shall operate for the benefit of, and shall be enforceable by,
each of the Indemnified Parties, their heirs and their representatives.

 

Section
6.14.          Employee Benefits.  Parent shall take all action necessary and
appropriate to ensure that, following the Effective Time, Parent or the
Surviving Corporation provides, or causes to be provided, compensation,
vacation and leave, and employee benefit plans, programs, policies and
arrangements (including medical, dental, vision, accident, life, disability and
other employee welfare benefits) to those employees of the Company who will be
retained by the Surviving Corporation following the Effective Time (the “Retained Employees”) that are substantially
the same as those made available to similarly situated 

 

58

 

employees of
Parent; provided, however, that any Retained Employee whose
employment is terminated by Parent or the Surviving Corporation during the 90 -
day period following the Effective Time shall receive severance benefits at
least equal to the severance benefits that would have been provided by the
Company as of the date hereof under the Company’s severance plans described in
Section 4.15(a).  Retained Employees
shall be provided credit by Parent or the Surviving Corporation for all service
with the Company, to the same extent as such service was credited for such purpose
by the Company, under (x) all Company Benefit Plans for purposes of
eligibility, vesting and benefit accrual under Parent’s Benefit Plans, and (y)
severance plans, programs and policies for purposes of calculating the amount
of each such employee’s severance benefits under Parent’s Benefit Plans.  The Surviving Corporation shall give credit
to each Retained Employee for earned but unused vacation and accrued
vacation.  From and after the Effective
Time, Parent or the Surviving Corporation shall (i) cause any pre-existing
conditions or limitations and eligibility waiting periods (to the extent that
such waiting periods would be applicable) under any group health plan of the
Surviving Corporation to be waived with respect to Retained Employees and their
dependents and (ii) give each Retained Employees credit for the plan year in
which the Effective Time occurs towards applicable deductibles and annual
out-of-pocket limits for medical expenses incurred prior to the Effective Time
for which payment has been made.

 

Section 6.15.          Executive Agreements.  Parent shall cause the Surviving Corporation
to honor and perform the Executive Agreements in accordance with their terms.

 

ARTICLE VII

 

CONDITIONS TO EFFECT THE MERGER

 

Section
7.1.            Conditions to Each Party’s
Obligation to Effect the Transactions.  The respective obligations of each Party to this Agreement to
effect the Transactions shall be subject to the satisfaction or waiver (to the
extent permitted by applicable law) on or prior to the Closing Date of each of
the following conditions:

 

(a)           Stockholder Approval.  This Agreement, the Merger and the Asset
Sale shall have each been duly adopted and approved by the requisite
affirmative vote of the Company Stockholders in accordance with applicable law,
the Company’s Amended and Restated Certificate of Incorporation, as amended,
and By-laws.

 

(b)           Governmental Approvals.  Other than the filing of the Certificate of
Merger and all other filings or recordings required under the DGCL as
contemplated by Section 2.2, all authorizations, consents, orders or approvals
of, or declarations or filings with, or expirations of waiting periods imposed
by, any Governmental Entity in connection with the Transactions, the failure of
which to file, obtain or occur, individually or in the aggregate, would make
the consummation of the Transactions illegal or result or would reasonably be
likely to result in a Company Material Adverse Effect, shall have been filed,
been obtained or occurred and shall not have expired or been withdrawn; provided,
that the right to assert this condition shall not be available to a Party whose
material failure to fulfill any obligation under this Agreement has been the
principal cause of or resulted in the failure of this condition to be
satisfied.

 

59

 

(c)           No Restraints.  There shall be no preliminary or permanent
order or injunction of a court or other Governmental Entity of competent
jurisdiction precluding, restraining, enjoining or prohibiting consummation of
the Transactions, and there shall not be instituted, pending or threatened in
writing any Action or Proceeding by any Governmental Entity seeking to
preclude, restrain, enjoin or prohibit consummation of the Transactions.

 

(d)           Illegality.  There shall have been no action taken, or
statute, rule, regulation, judgment or executive order promulgated, entered,
enforced, enacted, issued or deemed applicable to the Transactions by any
Governmental Entity that directly or indirectly prohibits or makes illegal the
consummation of the Transactions.

 

Section
7.2.            Conditions to Parent’s, Merger
Subsidiary’s and Acquisition Subsidiary’s Obligation to Effect the
Transactions.  The obligation of
Parent, Merger Subsidiary and Acquisition Subsidiary to effect the Transactions
shall be subject to the satisfaction on or prior to the Closing Date of each of
the following conditions, any and all of which may be waived in whole or in
part by Parent or Merger Subsidiary, Acquisition Subsidiary to the extent
permitted by applicable law:

 

(a)           Performance of Obligations;
Representations and Warranties.  (i)
The Company shall have performed in all material respects each of its covenants
and agreements contained in this Agreement required to be performed at or prior
to the Effective Time, (ii) (x) each of the representations and warranties of
the Company contained in this Agreement (other than the representations and
warranties of the Company identified in subsection (y)) shall be true and
correct in all material respects (except that those representations and warranties
which address matters only as of a particular date need only be true and
correct in all material respect as of such date and to the extent that the
representations and warranties contained in Section 4.8 that are qualified by
any reference to materiality shall be true and correct in all respects) and (y)
each of the representations and warranties of the Company contained in Section
4.4(b), (c) and (d), the last paragraph of Section 4.12, Section 4.13, Section
4.16 and Section 4.18 shall be true and correct, such that the aggregate effect
of any breaches of or inaccuracies in such representations and warranties do
not comprise a Company Material Adverse Effect on and as of the Effective Time
as if made on and as of such date (it being agreed that for purposes of this
subsection (y), such representations and warranties shall be deemed not
qualified by any reference to materiality generally or whether or not any
breach could result or could reasonably be expected to result in a Company
Material Adverse Effect), and (iii) Parent shall have received a certificate
signed on behalf of the Company by its Chief Executive Officer or its Chief
Financial Officer to such effect.

 

(b)           Ancillary Agreements.  Each of the Ancillary Agreements to which
the Company is or will be a party shall be valid, in full force and effect, and
the Company shall have complied with each Ancillary Agreement and all material
respects.

 

(c)           No Litigation.  No requirement of Law shall have been
issued, enacted, enabled, promulgated or enforced by any Government Entity
which would have materially reduced the benefits of the transactions
contemplated hereby to Parent or the Surviving Corporation in a manner that
Parent, in its good faith reasonable judgment, would not have entered into this
Agreement had such condition or requirement been known on the date hereof.

 

60

 

(d)           Company Material Adverse Effect.  There shall not have occurred any event
having or resulting in, or which could reasonably be expected to result in, a
Company Material Adverse Effect.  The
Company shall have delivered to Parent and Merger Subsidiary a certificate,
signed on behalf of the Company by the Chief Executive Officer of the Company, to
such effect.

 

(e)           Consents.  The Company shall have obtained each consent
or approval described in Section 7.2(e) of the Company Disclosure Letter.

 

(f)            Resignations.  All of the directors of the Company and its
Subsidiaries in office immediately prior to the Effective Time shall have
provided executed, undated forms of resignation, which shall not have been
revoked, from their positions as directors of the Company and each of its
Subsidiaries as applicable.

 

Section
7.3.            Conditions to the Company’s
Obligation to Effect the Transactions.  The obligation of the Company to effect the Merger shall be
subject to the satisfaction on or prior to the Closing Date of each of the
following conditions, any and all of which may be waived in whole or in part by
the Company, to the extent permitted by applicable law:

 

(a)           Performance of Obligations;
Representations and Warranties.  (i)
Each of Parent, Acquisition Subsidiary and Merger Subsidiary shall have
performed in all material respects each of their respective agreements
contained in this Agreement required to be performed on or prior to the
Effective Time, (ii) each of the representations and warranties of Parent,
Acquisition Subsidiary and Merger Subsidiary contained in this Agreement shall
be true and correct, such that the aggregate effect of any inaccuracies in such
representations and warranties will not have a material adverse effect on the
ability of Parent, Acquisition Subsidiary or Merger Subsidiary to duly perform
their respective obligations under this Agreement or to consummate the transactions
contemplated hereby on a timely basis on and as of the Effective Time as if
made on and as of such date (other than representations and warranties which
address matters only as of a certain date which shall be true and correct as of
such certain date and except as contemplated or permitted by this Agreement),
without regard for purposes of this Section 7.3(a) to any materiality
qualifications contained in such representations and warranties and (iii) the
Company shall have received a certificate signed on behalf of Parent, Merger
Subsidiary and Acquisition Subsidiary by an officer thereof to such effect.

 

(b)           Ancillary Agreements.  Each of the Ancillary Agreements to which
Parent, Acquisition Subsidiary and/or Merger Subsidiary is or will be a Party
shall be valid, in full force and effect, and Parent and/or Merger Subsidiary
as the case may be, shall have complied with each Ancillary Agreement in all
material respects.

 

(c)           Asset Purchase.  The obligation of the Company to effect the
Merger shall be subject to, and conditioned upon, the closing of the Asset
Purchase pursuant to Section 2.4.

 

61

 

ARTICLE VIII

 

TERMINATION

 

Section
8.1.            Termination. 
This Agreement may be terminated and the Transactions may be abandoned
at any time prior to the Effective Time, by written notice by the terminating
Party to the other Parties, whether before or after Company Stockholder
approval thereof, as follows:

 

(a)           by mutual written consent duly
authorized by the Boards of Directors of Parent and the Company;

 

(b)           by either Parent or the Company, if
the Transactions shall not have been consummated on or prior to 180 days after
the signing of this Agreement (or such later date as may be agreed to in
writing by Parent and the Company) (as the same may be extended from time to
time as contemplated below, the “Termination
Date”), unless the Transactions shall not have been consummated
because of a material breach of any representation, warranty, obligation,
covenant or agreement set forth in this Agreement on the part of the Party
seeking to terminate this Agreement;

 

(c)           by either Parent or the Company, if a
Governmental Entity or court of competent jurisdiction shall have issued a
nonappealable final order, decree or ruling or taken any other nonappealable
final action, in each case having the effect of permanently restraining,
enjoining or otherwise prohibiting the Transactions (provided, that the
right to terminate this Agreement under this Section 8.1(c) shall not be
available to any Party whose material failure to fulfill any obligation under
this Agreement has been the principal cause of or resulted in such order,
decree ruling or action);

 

(d)           by either Parent or the Company, if
at the Special Meeting (including any adjournment or postponement thereof
permitted by this Agreement), the requisite vote of the stockholders of the
Company approving each of this Agreement, the Merger and the Asset Purchase
shall not have been obtained upon votes taken thereon;

 

(e)           by Parent, if (i) the Company shall
have (A) withdrawn, modified or amended, or proposed to withdraw, modify or
amend, in a manner adverse to Parent or Merger Subsidiary, the approval,
adoption or recommendation, as the case may be, of this Agreement or any of the
Transactions or (B) approved or recommended, or proposed to approve or
recommend, or entered into any agreement, arrangement or understanding with
respect to, any Acquisition Proposal; (ii) the Company’s Board of Directors or
any committee thereof shall have resolved to take any of the actions set forth
in preceding subclause (i); (iii) if after an Acquisition Proposal has been
made, the Board of Directors of the Company fails to affirm its recommendation
and approval of this Agreement and the Transactions within three Business Days
of any request by Parent to do so; or (iv) if a tender offer or exchange offer
constituting an Acquisition Proposal is commenced and the Board of Directors of
the Company does not recommend against acceptance of such offer by the Company
Stockholders (including by taking no position or a neutral position with
respect thereto);

 

62

 

(f)            by the Company, if a Superior
Proposal is received by the Company and the Board of Directors of the Company
reasonably determines in good faith, after consultation with outside nationally
recognized legal counsel (which may be its current outside legal counsel), that
it is necessary to terminate this Agreement and enter into an agreement to
effect the Superior Proposal in order to comply with its fiduciary duties under
applicable law; provided, that the Company may not terminate this
Agreement pursuant to this Section 8.1(f) unless the Company has complied with
its obligations under Section 6.3 and until (x) two Business Days have elapsed
following delivery to Parent of a written notice of such determination by the
Board of Directors of the Company and during such two Business Day period the
Company has fully cooperated with Parent (including informing Parent of the
terms and conditions of such Superior Proposal and the identity of the Person
making such Superior Proposal) with the intent of enabling the Parties to agree
to a modification of the terms and conditions of this Agreement so that the
transactions contemplated hereby may be effected on such adjusted terms, (y) at
the end of such two Business Day period, the Acquisition Proposal continues to
constitute a Superior Proposal, and the Board of Directors of the Company
continues to reasonably determine in good faith, after consultation with
outside nationally recognized legal counsel (which may be its current outside
legal counsel), that it is necessary to terminate this Agreement and enter into
an agreement to effect the Superior Proposal in order to comply with its
fiduciary duties under applicable law and (z) (A) prior to such termination,
Parent has received all fees and expense reimbursements set forth in Section
8.3 by wire transfer in same day funds and (B) simultaneously or substantially
simultaneously with such termination the Company enters into a definitive
acquisition, merger or similar agreement to effect the Superior Proposal;

 

(g)           by Parent, if there shall have been a
breach by the Company of any provision of Section 6.3;

 

(h)           by Parent, if there has been a breach
of or failure to perform any representation, warranty, covenant or agreement on
the part of the Company set forth in this Agreement, which breach or failure to
perform (i) would cause the conditions set forth in Section 7.2(a) or 7.2(b)
not to be satisfied, and (ii) either cannot be cured or has not been cured
prior to the earlier of (x) the fifteenth calendar day following receipt by the
Company of written notice of such breach from Parent and (y) the Termination
Date; or

 

(i)            by the Company, if there has been a
breach of or failure to perform any representation, warranty, covenant or
agreement on the part of Parent or Merger Subsidiary set forth in this
Agreement, which breach or failure to perform (i) would cause the conditions
set forth in Section 7.3(a) or 7.3(b) not to be satisfied, and (ii) either
cannot be cured or has not been cured prior to the earlier of (x) the fifteenth
calendar day following receipt by Parent of written notice of such breach from
the Company and (y) the Termination Date.

 

The right of any Party to
terminate this Agreement pursuant to this Section 8.1 shall remain operative
and in full force and effect regardless of any investigation made by or on
behalf of any Party, any Person controlling any such Party or any of their
respective officers or directors, whether prior to or after the execution of
this Agreement.

 

Section
8.2.            Effect of Termination.  In the event of termination of this
Agreement as provided in Section 8.1, written notice thereof shall forthwith be
given to the other 

 

63

 

Party or
Parties specifying the provision hereof pursuant to which such termination is
made, and this Agreement shall immediately become void and there shall be no
liability or obligation on the part of Parent, the Company, Merger Subsidiary,
Acquisition Subsidiary or their respective officers, directors, stockholders or
Affiliates; provided, that (i) any such termination shall not relieve
any Party from liability for any willful breach of this Agreement and (ii) the
provisions of Section 4.21, the provisos relating to amendment to or waivers of
confidentiality agreements set forth in Section 6.3(a), the provisions of
Sections 6.2, 6.8, this Section 8.2, Section 8.3 and Article IX and the
Confidentiality Agreement shall remain in full force and effect and survive any
termination of this Agreement.

 

Section
8.3.            Fees and Expenses.  (a) Except as set forth in this Section 8.3, all fees and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the Party incurring such fees and
expenses, whether or not the Merger is consummated; provided, however, that
Parent shall pay one-half of the expenses related to printing, filing and mailing
the Proxy Statement and all SEC and other regulatory filing fees incurred in
connection with the Proxy Statement if this Agreement is terminated pursuant to
Section 8.1(a), by Parent pursuant to Section 8.1(b) or by the Company pursuant
to Section 8.1(i).

 

(b)           Parent Expenses:  If this Agreement is terminated pursuant to
Section 8.1(d), 8.1(e), Section 8.1(f) or Section 8.1(h), then Parent shall be
entitled to receive from the Company a reimbursement for the reasonable,
documented out-of-pocket expenses of Parent and Merger Subsidiary and
Acquisition Subsidiary (including printing fees, filing fees and fees and
expenses of its legal and financial advisors) related to this Agreement and the
transactions contemplated hereby and any related financing, in an amount not to
exceed $250,000 (“Parent  Expense Reimbursement”).

 

(c)           Company Expenses:  If this Agreement is terminated pursuant to
Section 8.1(i), then the Company shall be entitled to receive from Parent a
reimbursement for the out-of-pocket expenses of the Company (including printing
fees, filing fees and fees and expenses of its legal and financial advisors)
related to this Agreement and the transactions contemplated hereby and any
related financing, in an amount not to exceed $250,000 (“Company  Expense
Reimbursement”).

 

(d)           Termination Fee.  (i) 
If this Agreement is terminated:

 

(1)           pursuant to Section 8.1(e), Section 8.1(f), Section 8.1(g)
or Section 8.1(h);

 

(2)           pursuant Section 8.1(d) provided that an Acquisition
Proposal (or an intention to make an Acquisition Proposal) has been made,
proposed, communicated or disclosed, after the date of this Agreement, in a
manner which is or otherwise becomes public (including being known to
unaffiliated stockholders of the Company) and not expressly and publicly
withdrawn prior to the Special Meeting; or

 

(3)           by the Company in accordance with Section 8.1(b) provided
that an Acquisition Proposal (or an intention to make an Acquisition Proposal) 

 

64

 

has been made,
proposed, communicated or disclosed, after the date of this Agreement, and not
expressly withdrawn prior to such termination, and, within twelve months of
such termination, the Company enters into an agreement, arrangement or
understanding (including a letter of intent) with respect to or consummates any
Acquisition Proposal;

 

(ii)           then Parent shall be entitled to
receive from the Company, as liquidated damages and not as a penalty, an amount
equal to $500,000 (the “Termination Fee”)
and shall not be entitled to any other damages at law or any equitable relief
hereunder (except with respect to those sections that survive termination of
this Agreement).  Notwithstanding the
foregoing, nothing herein shall relieve any party from liability, or limit its liability,
for any willful breach or willful misrepresentation hereunder, or prevent any
party from asserting any equitable remedies available to it for such willful
breach or willful misrepresentation.

 

(e)           The Company and Parent acknowledges
that the Parent Expense Reimbursement, Company Expense Reimbursement and
Termination Fee provided for in this Section 8.3 are an integral part of the
transactions contemplated by this Agreement and not a penalty, and that,
without the Parent Expense Reimbursement, Company Expense Reimbursement and
Termination Fee provided for above, neither Parent, Merger Subsidiary nor
Company would enter into this Agreement.

 

Section
8.4.            Amendment. 
To the extent permitted by applicable law, this Agreement may be amended
by the Parties, by action taken or authorized by their respective Boards of
Directors, at any time before or after approval of the matters presented in
connection with the Transactions by the Company Stockholders; provided,
that after any such approval, no amendment shall be made that by law requires
further approval by such Company Stockholders without such further
approval.  This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
Parties.

 

Section
8.5.            Extension; Waiver.  At any time prior to the Effective Time, the Parties, by action
taken or authorized by their respective Boards of Directors, may, to the extent
legally allowed, (a) extend the time for the performance of any of the
obligations or other acts of the other Parties, (b) waive any inaccuracies in
the representations and warranties contained herein or in any document
delivered pursuant hereto and (c) waive compliance with any of the agreements
or conditions contained herein.  Any
agreement on the part of a Party to any such extension or waiver shall be valid
only if set forth in a written instrument signed on behalf of such Party.  The failure of any Party to assert any of
its rights under this Agreement or otherwise shall not constitute a waiver of
such rights.

 

ARTICLE IX

 

MISCELLANEOUS

 

Section
9.1.            Nonsurvival of Representations
and Warranties.  The
respective representations and warranties of the Company, on the one hand, and
each of Parent, Merger Subsidiary and Acquisition Subsidiary, on the other hand,
contained in this Agreement, any Ancillary Agreement or in any document,
certificate or instrument delivered prior to or at the 

 

65

 

Closing shall not be deemed
waived or otherwise affected by any investigation made by any Party.  Each and every such representation and
warranty shall expire with, and be terminated and extinguished by, the Closing,
and thereafter none of the Company, Parent, Merger Subsidiary or Acquisition
Subsidiary shall be under any liability whatsoever with respect to any such
representation and warranty.  This
Section 10.1 shall have no effect upon any other obligations of the Parties,
whether to be performed before or after the Effective Time.

 

Section
9.2.            Notices.  All
notices, requests, claims and demands and other communications hereunder shall
be in writing and shall be deemed duly delivered (i) four Business Days after
being sent by registered or certified mail, return receipt requested, postage
prepaid, or (ii) one Business Day after being sent for next business day
delivery, fees prepaid, via a reputable nationwide overnight courier service,
in each case to the intended recipient as set forth below:

 

(a)           if to Parent, Merger Subsidiary or
Acquisition Subsidiary, to:

 

SSA Global
Technologies, Inc.

110 Sheppard
Avenue East

Suite 701

Attention:    Shelley
R. Isenberg

Telephone:  (416)
228-2242

Facsimile:     (416)
221-0994

 

with a copy
to:

 

Schulte Roth
& Zabel LLP

919 Third Avenue

New York, New York  10022

Attention:    Robert
B. Loper, Esq. 

Telephone:  (212)
756-2138

Facsimile:     (212)
593-5955

 

(b)           if to the Company, to:

 

Elevon, Inc.

303 Second Street, Three North

San Francisco, CA 94107

Attention:    Stanley
V. Vogler

Telephone:  (415)
243-2737

Facsimile:     (415)
281-1558

 

66

 

with a copy
to:

 

Latham &
Watkins LLP

505 Montgomery Street

Suite 1900

San Francisco, CA 94111

Attention:        John
M. Newell, Esq.

Telephone:      (415)
391-0600

Facsimile:         (415)
395-8095

 

Any Party may give any notice
or other communication hereunder using any other means (including personal
delivery, messenger service, facsimile or ordinary mail), but no such notice or
other communication shall be deemed to have been duly given unless and until it
actually is received by the Party for whom it is intended.  Any Party may change the address to which
notices and other communications hereunder are to be delivered by giving the
other Parties to this Agreement notice in the manner herein set forth.

 

Section
9.3.            Entire Agreement.  This Agreement (including the Company Disclosure Letter and the
other documents and instruments referred to herein that are to be delivered at
the Closing), and the Confidentiality Agreement, constitutes the entire
agreement among the Parties and supersedes any prior understandings, agreements
or representations by or among the Parties, or any of them, written or oral,
with respect to the subject matter hereof.

 

Section
9.4.            No Third Party Beneficiaries.  Except for the provisions of Sections 6.13,
6.14 and 6.15, this Agreement is not intended, and shall not be deemed, to
confer any rights or remedies upon any Person other the Parties and their
respective successors and permitted assigns, to create any agreement of
employment with any Person or to otherwise create any third-party beneficiary
hereto.

 

Section
9.5.            Assignment. 
Neither this Agreement nor any of the rights, interests or obligations
under this Agreement may be assigned or delegated, in whole or in part, by
operation of law or otherwise by any of the Parties without the prior written
consent of the other Parties, and any such assignment without such prior
written consent shall be null and void, except that, prior to the approval of
this Agreement and the Transactions by the Company’s stockholders, Parent  may substitute any direct or indirect
wholly-owned subsidiary of Parent for Merger Subsidiary or Acquisition
Subsidiary without consent of the Company, and Parent may assign its rights and
obligations under this Agreement to a newly formed Affiliate of Parent; provided,
that Parent, Merger Subsidiary and/or Acquisition Subsidiary, as the case may
be, shall remain liable for all of its obligations under this Agreement.  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 assigns.

 

Section
9.6.            Interpretation.  When a reference is made in this Agreement to Sections, such
reference shall be to a Section of this Agreement unless otherwise indicated.  Whenever the words “include”, “includes” or
“including” are used in this Agreement they shall be deemed to be followed by
the words “without limitation”.

 

67

 

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

 

Section 9.8.            Severability. 
If any term, provision, agreement, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other authority to be
invalid, void or unenforceable, the remainder of the terms, provisions,
agreements, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated so
long as the economic or legal substance of the transactions contemplated hereby
is not effected in any manner materially adverse to any Party.  Upon such a determination, the Parties shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the Parties as closely as possible in an acceptable manner in order
that the transactions contemplated hereby be consummated as originally
contemplated to the fullest extent possible.

 

Section
9.9.            Governing Law. 
This Agreement shall be governed by and construed in accordance with the
internal laws of the State of Delaware (without reference to its choice of law
rules).

 

Section
9.10.          Submission to Jurisdiction.  Each Party hereby irrevocably and
unconditionally agrees that any action, suit or proceeding, at Law or equity,
arising out of or relating to this Agreement or any agreements or transactions
contemplated hereby shall only be brought in any federal court of the State of
Delaware or any state court located in Delaware, and hereby irrevocably and
unconditionally expressly submits to the personal jurisdiction and venue of
such courts for the purposes thereof and hereby irrevocably and unconditionally
waives (by way of motion, as a defense or otherwise) any and all
jurisdictional, venue and convenience objections or defenses that such party
may have in such action, suit or proceeding. 
Each Party hereby irrevocably and unconditionally consents to the
service of process of any of the aforementioned courts.  Nothing herein contained shall be deemed to
affect the right of any Party to serve process in any manner permitted by Law
or commence legal proceedings or otherwise proceed against any other Party in
any other jurisdiction to enforce judgments obtained in any action, suit or
proceeding brought pursuant to this Section 9.10.

 

Section
9.11.          Remedies; Specific Performance.  The Parties acknowledge that money damages
would not be an adequate remedy at Law if any party fails to perform in any
material respect any of its obligations hereunder and accordingly agree that
each Party, in addition to any other remedy to which it may be entitled at Law or
in equity shall be entitled to seek to compel specific performance of the
obligations of any other Party under this Agreement, without the posting of any
bond, in accordance with the terms and conditions of this Agreement in any
court of the United States or any State thereof having jurisdiction, and if any
action should be brought in equity to enforce any of the provisions of this
Agreement, none of the Parties hereto shall raise the defense that there is an
adequate remedy at Law.  Except as set
forth in Section 8.3, no remedy shall be exclusive of any other remedy and all
available remedies shall be cumulative.

 

68

 

Section
9.12.          Waiver of Jury Trial.  EACH OF PARENT, MERGER SUBSIDIARY,
ACQUISITION SUBSIDIARY AND THE COMPANY HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF PARENT, MERGER
SUBSIDIARY, ACQUISITION SUBSIDIARY OR THE COMPANY IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE AND ENFORCEMENT OF THIS AGREEMENT.

 

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

 

69

 

IN WITNESS
WHEREOF, each of the Parent, Merger Subsidiary, Acquisition Subsidiary and the
Company has caused this Agreement to be executed by its duly authorized officer
as of the date first written above.

 

 

	
   

  	
  SSA GLOBAL
  TECHNOLOGIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kirk
  Isaacson

  
	
   

  	
   

  	
  Name:

  	
  Kirk
  Isaacson

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SENECA
  MERGER SUBSIDIARY INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kirk
  Isaacson

  
	
   

  	
   

  	
  Name:

  	
  Kirk
  Isaacson

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SENECA
  ACQUISITION SUBSIDIARY INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kirk
  Isaacson

  
	
   

  	
   

  	
  Name:

  	
  Kirk
  Isaacson

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ELEVON, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Frank M.
  Richardson

  
	
   

  	
   

  	
  Name:

  	
  Frank M.
  Richardson

  
	
   

  	
   

  	
  Title:

  	
  Chief
  Executive Officer

  

 

Signature page to Merger AgreementEXHIBIT 10.11

 

 

 

 

COMBINATION AGREEMENT

 

BY AND AMONG

 

SSA GLOBAL TECHNOLOGIES INC.,

 

36338 YUKON INC.

 

IRONSIDE TECHNOLOGIES INC.

 

 

AND

 

JOEL KALLETT

 

 

Dated as of June 17,
2003

 

 

 

Table of Contents

 

 

	
  ARTICLE I DEFINITIONS

  	
   

  
	
   

  	
   

  
	
  ARTICLE II COMBINATION

  	
   

  
	
   

  	
   

  
	
   

  	
  Section
  2.1.

  	
  Amendment
  to the Articles of the Company.

  	
   

  
	
   

  	
  Section
  2.2.

  	
  The
  Amalgamation

  	
   

  
	
   

  	
  Section
  2.3.

  	
  Consummation
  of the Amalgamation.

  	
   

  
	
   

  	
  Section
  2.4.

  	
  Closing.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  III REDEMPTION; PAYMENT OF REDEMPTION PROCEEDS

  	
   

  
	
   

  	
   

  
	
   

  	
  Section
  3.1.

  	
  Redemption
  of Amalco Redeemable Preferred Shares.

  	
   

  
	
   

  	
  Section
  3.2.

  	
  Payment
  of Redemption Proceeds.

  	
   

  
	
   

  	
  Section
  3.3.

  	
  Dissent
  Rights.

  	
   

  
	
   

  	
  Section
  3.4.

  	
  Stock
  Options.

  	
   

  
	
   

  	
  Section
  3.5.

  	
  Further
  Assurances.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV REPRESENTATIONS AND WARRANTIES
  OF THE COMPANY

  	
   

  
	
   

  	
   

  
	
   

  	
  Section
  4.1.

  	
  Organization.

  	
   

  
	
   

  	
  Section
  4.2.

  	
  Capitalization.

  	
   

  
	
   

  	
  Section
  4.3.

  	
  Authorization;
  Validity of Agreement; Company Action.

  	
   

  
	
   

  	
  Section
  4.4.

  	
  Consents
  and Approvals; No Violations.

  	
   

  
	
   

  	
  Section
  4.5.

  	
  Financial
  Statements.

  	
   

  
	
   

  	
  Section
  4.6.

  	
  No
  Undisclosed Liabilities.

  	
   

  
	
   

  	
  Section
  4.7.

  	
  Absence
  of Certain Changes.

  	
   

  
	
   

  	
  Section
  4.8.

  	
  Taxes.

  	
   

  
	
   

  	
  Section
  4.9.

  	
  Title
  to Properties; Owned and Leased Real Properties; No Liens.

  	
   

  
	
   

  	
  Section
  4.10.

  	
  Intellectual
  Property.

  	
   

  
	
   

  	
  Section
  4.11.

  	
  Products.

  	
   

  
	
   

  	
  Section
  4.12.

  	
  Agreements,
  Contracts and Commitments

  	
   

  
	
   

  	
  Section
  4.13.

  	
  Litigation
  and Governmental Directives.

  	
   

  
	
   

  	
  Section
  4.14.

  	
  Environmental
  Matters.

  	
   

  
	
   

  	
  Section
  4.15.

  	
  Employee
  Benefit Plans.

  	
   

  
	
   

  	
  Section
  4.16.

  	
  Compliance
  with Laws.

  	
   

  
	
   

  	
  Section
  4.17.

  	
  Permits
  and Licenses.

  	
   

  
	
   

  	
  Section
  4.18.

  	
  Labor
  Matters.

  	
   

  
	
   

  	
  Section
  4.19.

  	
  Insurance.

  	
   

  
	
   

  	
  Section
  4.20.

  	
  Information
  in Company Circular.

  	
   

  
	
   

  	
  Section
  4.21.

  	
  Brokers

  	
   

  
	
   

  	
  Section
  4.22.

  	
  Voting
  Requirements.

  	
   

  
	
   

  	
  Section
  4.23.

  	
  Compliance
  with Take-over Laws

  	
   

  

 

i

 

	
   

  	
  Section
  4.24.

  	
  Business
  Activity Restriction.

  	
   

  
	
   

  	
  Section
  4.25.

  	
  Customers
  and Suppliers.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V REPRESENTATIONS AND WARRANTIES OF
  PARENT AND SUBCO

  	
   

  
	
   

  	
   

  
	
   

  	
  Section
  5.1.

  	
  Organization.

  	
   

  
	
   

  	
  Section
  5.2.

  	
  Authorization;
  Validity of Agreement; Necessary Action.

  	
   

  
	
   

  	
  Section
  5.3.

  	
  Consents
  and Approvals; No Violations.

  	
   

  
	
   

  	
  Section
  5.4.

  	
  Sufficiency
  of Funds.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI COVENANTS

  	
   

  
	
   

  	
   

  
	
   

  	
  Section
  6.1.

  	
  Interim
  Operations of the Company.

  	
   

  
	
   

  	
  Section
  6.2.

  	
  Confidentiality.

  	
   

  
	
   

  	
  Section
  6.3.

  	
  No
  Solicitation of Other Offers.

  	
   

  
	
   

  	
  Section
  6.4.

  	
  Access
  to Information.

  	
   

  
	
   

  	
  Section
  6.5.

  	
  Company
  Circular Amendments.

  	
   

  
	
   

  	
  Section
  6.6.

  	
  Company
  Meeting.

  	
   

  
	
   

  	
  Section
  6.7.

  	
  Commercially
  Reasonable Efforts.

  	
   

  
	
   

  	
  Section
  6.8.

  	
  Public
  Disclosure.

  	
   

  
	
   

  	
  Section
  6.9.

  	
  Notification
  of Certain Matters.

  	
   

  
	
   

  	
  Section
  6.10.

  	
  Communication
  to Employees

  	
   

  
	
   

  	
  Section
  6.11.

  	
  Company
  Warrants.

  	
   

  
	
   

  	
  Section
  6.12.

  	
  Escrow
  Agreement/Paying Agent Agreement

  	
   

  
	
   

  	
  Section
  6.13.

  	
  Shareholder
  Agreement and Waiver

  	
   

  
	
   

  	
  Section
  6.14.

  	
  Indemnification
  of Officers and Directors; Exculpation

  	
   

  
	
   

  	
  Section
  6.15.

  	
  Paying
  Agent Agreement

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  VII CONDITIONS TO EFFECT THE AMALGAMATION

  	
   

  
	
   

  	
   

  
	
   

  	
  Section
  7.1.

  	
  Conditions
  to Each Party’s Obligation to Effect the Transactions.

  	
   

  
	
   

  	
  Section
  7.2.

  	
  Conditions
  to Parent’s and Subco’s Obligation to Effect the Transactions.

  	
   

  
	
   

  	
  Section
  7.3.

  	
  Conditions
  to the Company’s Obligation to Effect the Transactions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  VIII INDEMNIFICATION

  	
   

  
	
   

  	
   

  
	
   

  	
  Section
  8.1.

  	
  Indemnification
  of Parent

  	
   

  
	
   

  	
  Section
  8.2.

  	
  General
  Indemnification Provisions.

  	
   

  
	
   

  	
  Section
  8.3.

  	
  Certain
  Limits on Indemnification.

  	
   

  
	
   

  	
  Section
  8.4.

  	
  Satisfaction
  of Indemnification Obligations; Exclusive Remedy

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX TERMINATION

  	
   

  
	
   

  	
   

  
	
   

  	
  Section
  9.1.

  	
  Termination.

  	
   

  
	
   

  	
  Section
  9.2.

  	
  Effect
  of Termination.

  	
   

  
	
   

  	
  Section
  9.3.

  	
  Fees
  and Expenses.

  	
   

  
	
   

  	
  Section
  9.4.

  	
  Amendment.

  	
   

  
	
   

  	
  Section
  9.5.

  	
  Extension;
  Waiver.

  	
   

  

 

ii

 

	
  ARTICLE X MISCELLANEOUS

  	
   

  
	
   

  	
   

  
	
   

  	
  Section
  10.1.

  	
  Survival
  of Representations and Warranties

  	
   

  
	
   

  	
  Section
  10.2.

  	
  Notices.

  	
   

  
	
   

  	
  Section
  10.3.

  	
  Entire
  Agreement.

  	
   

  
	
   

  	
  Section
  10.4.

  	
  No
  Third Party Beneficiaries.

  	
   

  
	
   

  	
  Section
  10.5.

  	
  Assignment.

  	
   

  
	
   

  	
  Section
  10.6.

  	
  Interpretation.

  	
   

  
	
   

  	
  Section
  10.7.

  	
  Counterparts.

  	
   

  
	
   

  	
  Section
  10.8.

  	
  Severability.

  	
   

  
	
   

  	
  Section
  10.9.

  	
  Governing
  Law.

  	
   

  
	
   

  	
  Section
  10.10.

  	
  Submission
  to Jurisdiction.

  	
   

  
	
   

  	
  Section
  10.11.

  	
  Remedies;
  Specific Performance.

  	
   

  
	
   

  	
  Section
  10.12.

  	
  Waiver
  of Jury Trial.

  	
   

  
	
   

  	
  Section
  10.13.

  	
  Appointment
  of Shareholders’ Representative.

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit A –
  Form of Shareholder Agreement and Waiver

  	
   

  
	
  Exhibit B –
  Form of Articles of Amendment

  	
   

  
	
  Exhibit C –
  Form of Amalgamation Agreement

  	
   

  
	
  Exhibit D –
  Form of Escrow Agreement

  	
   

  
	
  Exhibit E –
  Form of Paying Agent Agreement

  	
   

  

 

iii

 

COMBINATION AGREEMENT

 

This
COMBINATION AGREEMENT (this “Agreement”), dated as of June 17,
2003, is made by and among SSA Global Technologies Inc., a Delaware corporation
(“Parent”),
36338 Yukon Inc., a corporation incorporated under the laws of the Yukon
Territory and a direct wholly-owned subsidiary of Parent (“Subco”), Ironside
Technologies Inc.,  a corporation continued under the laws of
the Yukon Territory (the “Company”) and Joel Kallett, in his capacity
as the Shareholders’ Representative. 
Parent, Subco, the Company and the Shareholders’ Representative are each
individually referred to herein as a “Party” and together collectively referred
to herein as the “Parties”.

 

W  I  T  N  E  S
S  E  T  H:

 

WHEREAS, the
respective Boards of Directors of the Company and Parent have authorized and
approved this Agreement and the amalgamation of Subco and the Company (the “Amalgamation”)
pursuant to an amalgamation agreement to be entered into between Subco and the
Company substantially in that form attached hereto as Exhibit C (the “Amalgamation
Agreement”), upon the terms and subject to the conditions set forth
in this Agreement and the Business Corporations Act (Yukon), as such
law is in effect from time to time (the “BCA”); and

 

WHEREAS, the
Board of Directors of the Company has determined that the Amalgamation is in
the interest of its shareholders; and

 

WHEREAS, as
inducement and a condition to Parent’s willingness to enter into this
Agreement, Parent, Subco and certain of the Company Shareholders have,
concurrently with the Parties execution of this Agreement, entered into a
Shareholder Agreement and Waiver substantially in the form attached hereto as Exhibit
A (collectively, the “ Shareholder Agreements and Waivers”),
pursuant to which such Company Shareholders have agreed, among other things, to
(i) be bound by Article VIII hereto and (ii) waive any error or failure on the
part of the Company, if at all to call, hold or convene the Company Meeting (as
hereinafter defined) in accordance with applicable Law or take any action in
relation thereto.

 

NOW,
THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements set forth below, the Parties agree as
follows:

 

ARTICLE
I

 

DEFINITIONS

 

For purposes
of this Agreement the following terms shall have the meanings set forth below:

 

“Acquisition
Proposal” shall mean any of the following: (a) any proposal or offer
(including any proposal to shareholders of the Company) from any Person or
group relating to any direct or indirect acquisition or purchase of 15% or more
of the consolidated assets of the Company and its Subsidiaries or 15% or more
of any class of equity securities of the Company

 

 

or any of its Subsidiaries in a
single transaction or a series of related transactions; (b) any tender offer
(including a self-tender offer) or exchange offer that, if consummated, would
result in any Person or group beneficially owning 15% or more of any class of
equity securities of the Company or any of its Subsidiaries; (c) any merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving the Company or any of its Subsidiaries; (d)
any other transaction the consummation of which could reasonably be expected to
materially impede, prevent or materially delay consummation of the
Transactions; or (e) any public announcement by or on behalf of the Company,
any of its Subsidiaries or any of their respective Affiliates (or any of their
respective Representatives) or by any third party of a proposal, plan or
intention to do any of the foregoing or any agreement to engage in any of the
foregoing.

 

“Action or
Proceeding” shall mean actions, suits, proceedings, pleadings,
claims, arbitrations, investigations, charges, allegations, complaints or
demands.

 

“Affiliate”
shall mean an “affiliated entity” within the meaning of OSC Rule 45-501 under
the Ontario Securities Act.

 

“Aggregate
Redemption Amount” means an amount equal to $6,250,000 less
(a) the amount set forth on Schedule 1.1(b)(3) representing the Company’s
obligation and that of its Subsidiaries to pay their landlords under the
agreements referenced in Section 7.2(i) in respect of each of the leases
governing the Pleasanton and Markham premises less (b) the
aggregate amount of all Transaction Expenses incurred by or on behalf of the
Company or reimbursable by the Company to other Persons.  For purposes of determining the amount of
the Payment Fund, such Transaction Expenses shall be assumed to be equal to the
amount set forth in the certificate delivered pursuant to Section 7.2(k),
without prejudice to Parent’s rights under Section 9.3 hereof and the Escrow
Agreement to be reimbursed in respect of any amount by which the Company’s
actual Transaction Expenses are thereafter determined to exceed the amount set
forth in such certificate.

 

“Amalco”
means the corporation resulting from the Amalgamation.

 

“Amalco
Common Shares” means the common shares in the capital of Amalco.

 

“Amalco
Preferred Redeemable Shares” means the non-voting Redeemable
Preferred Shares in the capital of Amalco.

 

“Ancillary
Agreements” shall mean all agreements entered into by and between
the Company or the Company Shareholders, on the one hand, and Parent and/or
Subco, on the other hand, in connection with the Transactions, including,
without limitation, the Amalgamation Agreement and the Shareholder Agreements
and Waivers, but not including the Escrow Agreement and the Paying Agent
Agreement.

 

“Ancillary
Product Materials” shall mean all Documentation concerning the
Products, including customer support materials such as support training
materials, support bulletins, and any and all data contained in the customer
support organization computer system of the Company; and marketing materials
relating to the Products, including sale and marketing

 

2

 

collateral, white papers,
product data sheets and descriptions, performance benchmark reports, customer
training materials, sales training materials and sales presentation materials.

 

“Articles of
Amendment” shall mean the articles of amendment of the Company
substantially in that form attached hereto as Exhibit B.

 

“Benefit
Plans” shall mean each retirement, pension, savings, thrift, bonus,
stock purchase, profit sharing, stock option, share appreciation, phantom
share, restricted stock, deferred compensation, severance or termination pay,
life, health, medical, hospital, dental, vision care, disability, drug or other
insurance (whether insured or self-insured), sick leave, salary continuation,
vacation, incentive, mortgage insurance, employee loan, employee assistance,
supplementary unemployment benefit, supplementary retirement or other
compensation plan, program, agreement, practice or arrangement or other employee
benefit (whether written or unwritten) that the Company and its Subsidiaries
currently maintain or to which the Company and its Subsidiaries currently
contribute or are required to contribute or had an obligation to contribute for
the last 6 years for the benefit of any of its employees or former employees,
officers or former officers, and directors or former director (or dependents or
beneficiaries thereof) (or as to which the Company and its Subsidiaries may
otherwise have any liability, including but not limited to, ) any pension plan
(“Pension
Plan”) as defined in Section 3(2) of ERISA, any welfare plan (“Welfare Plan”)
as defined in Section 3(1) of ERISA or any program administered by a
government, including, but not limited to, a Foreign Pension Plan, whether
funded, insured or self-funded or whether written or oral.

 

“Board of
Directors” shall mean the board of directors of the Company, Parent
or Subco, as the context so provides.

 

“Business Day”
shall mean any day except a Saturday, Sunday or any other day on which
commercial banks are required or authorized to be closed in New York, New York
or the Yukon Territory.

 

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

 

“CAA”
shall have the meaning ascribed to such term within the definition of
Environmental Law.

 

“CERCLA”
shall have the meaning ascribed to such term within the definition of
Environmental Law.

 

“CEPA” shall
have the meaning ascribed to such term within the definition of Environmental
Law.

 

“Class A
Shares” shall mean the Class A Special Shares of the Company.

 

“Class B
Shares” shall mean the Class B Special Shares of the Company, and
together with the Class A Shares, the “Company Non-Participating Preferred Shares.”

 

3

 

“Class C
Shares” shall mean, collectively, the Class C-1 Special Shares (the
“Class
C-1 Shares”) and the Class C-2 Special Shares (the “Class C-2
Shares”) of the Company.

 

“Class D
Shares” shall mean the Class D Special Shares of the Company and,
together with the Class C Shares, the “Company Participating Preferred Shares.”

 

“Code”
shall mean the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder.

 

“Company
Articles” shall mean the Restated Articles of Continuance of the
Company filed April 11, 2000.

 

“Company
By-laws” shall mean the by-laws of the Company, including By-law No.
2 enacted and confirmed October 30, 1998.

 

“Company
Circular” shall mean the notice of special meeting and accompanying
management proxy circular of the Company, including all appendices thereto,
sent to Company Shareholders in connection with the Company Meeting, as amended
or supplemented.

 

“Company
Common Shares” shall mean the common shares of the Company, and
together with the Company Preferred Shares, the “Company Shares.”

 

“Company
Contribution” shall have the meaning ascribed to such term within
the definition of Payment Fund.

 

“Company
Material Adverse Effect” shall mean a material adverse effect on (a)
the ability of the Company to duly perform its obligations under this Agreement
or to consummate the transactions contemplated hereby to which it is a party on
a timely basis or (b) the business, properties, assets (both tangible and intangible),
liabilities, condition (financial or otherwise), or results of operations of
the Company and its Subsidiaries, taken as a whole; provided, however,
that “Company Material Adverse Effect” shall not include or take into account
(i) any change, event or effect that is caused by conditions affecting the U.S.
economy and/or the Canadian economy generally (including, without limitation,
acts of war or terrorism to the extent not disproportionately affecting the
Company or any of its Subsidiaries); (ii) any change, event or effect caused by
conditions generally affecting the business-to-business software industry
(including, without limitation, acts of war or terrorism to the extent not
disproportionately affecting the Company or any of its Subsidiaries) which
changes, events or effects do not affect the Company disproportionately
relative to other entities operating in such industry; or (iii) any adverse
change or effect resulting from a change in accounting rules or procedures
announced by the Financial Accounting Standards Board or Canadian Institute of
Chartered Accountants which changes do not affect the Company
disproportionately relative to other entities operating in the
business-to-business software industry.

 

“Company
Meeting” means the special meeting of the Company Shareholders,
including any adjournment or postponement thereof, called and held in
accordance with the Company Articles, the Company By-laws, the Shareholders
Agreement and the BCA, to consider the Transactions.

 

4

 

“Company New
Common Shares” means the new class of common shares of the Company
into which the Company Participating Preferred Shares will be converted upon
the filing of the Articles of Amendment.

 

“Company
Participating Preferred Shareholders” shall mean the record holders
of the Company Participating Preferred Shares.

 

“Company
Permits” shall mean permits, approvals, licenses, authorizations,
certificates, rights, exemptions, orders and franchises from Governmental
Entities necessary for the ownership of assets and the lawful conduct of the
business of the Company and its Subsidiaries as now conducted and as currently
contemplated.

 

“Company
Preferred Shares” shall mean, collectively, the Company
Non-Participating Preferred Shares and the Company Participating Preferred
Shares.

 

“Company
Shareholders” shall mean the record holders of the Company Common
Shares and the Company Preferred Shares.

 

“Company
Warrants” shall mean, collectively, warrants of the Company issued
to Goodyear Tire & Rubber Company, Intertape Polymer, Inc., Gordon Capital
Corporation, CIBC Wood Gundy Securities, Inc., Donaldson Lufkin & Jenrette
Securities Corporation, CIBC World Markets, Inc. and Yorkton Securities, Inc.

 

“Computer
Software” shall mean proprietary computer software and all service
offerings of the Company in connection with its business (including all
computer programs, object code, source code, user interface, data bases and
documentation).

 

“Confidentiality
Agreement” shall mean the Confidentiality Agreement, dated as of
October 12, 2002, by and between the Company and Parent, as in effect from time
to time.

 

“Contract(s)”
shall mean any contract, agreement, instrument, arrangement, guarantee,
license, executory commitment or understanding that is binding on the Company
or any of its Subsidiaries.

 

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

 

“Customer
Agreement” shall mean an agreement between a customer of the Company
and one or more of the Company and its Subsidiaries.

 

“CWA”
shall have the meaning ascribed to such term within the definition of
Environmental Law.

 

“Disabling
Devices” shall mean Computer Software viruses, time bombs, logic
bombs, Trojan horses, trap doors, back doors, or other computer instructions,
intentional devices or techniques that are designed to threaten, infect,
assault, vandalize, defraud, disrupt, damage, disable, maliciously encumber,
hack into, incapacitate, infiltrate or slow or shut down a

 

5

 

computer system or any
component of such computer system, including any such device affecting system
security or compromising or disclosing user data.

 

“Dissent
Shares” shall mean Company Shares outstanding immediately prior to
the Amalgamation becoming effective that are held by any Person that has duly
dissented in respect of the Articles of Amendment and/or the Amalgamation and
shall have delivered a written objection in respect of the Articles of
Amendment and/or the Amalgamation to the Company in a timely and proper manner
in accordance with Section 193 of the BCA.

 

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

 

“Environmental
Law”  includes the Comprehensive Environmental Response,
compensation and Liability Act (“CERCLA”), 42 U.S.C. 9601 et seq., as
amended, the Clean Air Act (“CAA”), 42 U.S.C. 7401 et seq., as amended,
the Clean Water Act (“CWA”), 33 U.S.C. 1251 et seq., as amended,
the Occupational Safety and Health Act (“OSHA”), 29 U.S.C. 655 et seq., the Yukon
Environmental Act (“YEA”), SY 1991, Ch.5, the Yukon
Occupational Health and Safety Act (“OHSA”), RSY 1986, Ch. 23 and the Canadian
Environmental Protection Act (“CEPA”), RSC 1999, C-15.31 and their
regulations, and any other federal, provincial, territorial, municipal, state,
local or municipal laws, statutes, regulations, rules or ordinances imposing
liability or establishing standards of conduct for protection of the human
health and the environment.

 

“ERISA”
shall mean the Employee Retirement Income Security Act of 1974, as amended.

 

“ERISA
Affiliates” shall mean any entity which, together with Parent, Subco
and the Company, as the case may be, would be treated as a single employer
under Section 414(b), (c), (m) or (o) of the Code.

 

“ESA”
shall mean the Employment Standards Act 2000 (Ontario).

 

“Foreign
Pension Plan” shall mean any plan, fund (including any
superannuation fund) or other similar program established or maintained by the
Company, any Subsidiary of the Company or any of the Company’s Affiliates or
for which the Company, any Subsidiary of the Company or any of the Company’s
Affiliates have any liability including any state, local, provincial or federal
government sponsored plan outside the United States of America primarily for
the benefit of employees of the Company or any of the Subsidiaries of the
Company residing outside the United States of America, which fund or similar
program provides, or results in, retirement income, a deferral of income in
contemplation of retirement or payments to be made upon termination of
employment, and which plan is not subject to ERISA or the Code.

 

“GAAP”
shall mean United States generally accepted accounting principles applied on a
consistent basis during the periods involved.

 

6

 

“Governmental
Approval” shall mean any required filing, recordation, declaration
or registration with, or permit, order, authorization, consent or approval of,
or action by or in respect of, or the giving of notice to, any Governmental
Entity.

 

“Governmental
Directive” shall mean any judgment, order, decree or directive by or
at the request of any Governmental Entity.

 

“Governmental
Entity” shall mean any federal, provincial, territorial, municipal,
state, local or foreign government, court, arbitral tribunal, administrative
agency, body or commission or other governmental or other regulatory authority,
commission, agency or body or any non-governmental, self-regulatory authority,
commission, agency or body.

 

“Intellectual
Property” shall mean all foreign and domestic (i) trademarks,
service marks, brand names, certification marks, collective marks, d/b/a’s,
Internet domain names, logos, symbols, trade dress, assumed names, fictitious
names, trade names, and other indicia of origin, all applications and
registrations for all of the foregoing, and all goodwill associated therewith
and symbolized thereby, including all extensions, modifications and renewals of
same (collectively, “Trademarks”); (ii) inventions, discoveries
and ideas, whether patentable or not, and all patents, registrations, and
applications therefor, including divisions, continuations,
continuations-in-part and renewal applications, and including renewals,
extensions and reissues (collectively, “Patents”); (iii) confidential and
proprietary information, trade secrets and know-how, including processes,
schematics, databases, formulae, drawings, prototypes, models, designs and
customer lists (collectively, “Trade Secrets”); (iv) published and
unpublished works of authorship, whether copyrightable or not (including
computer software), copyrights therein and thereto, and registrations and
applications therefor, and all renewals, extensions, restorations and
reversions thereof (collectively, “Copyrights”); and (v) all other
intellectual property or proprietary rights and claims or causes of action
arising out of or related to any infringement, misappropriation or other
violation of any of the foregoing, including rights to recover for past,
present and future violations thereof (collectively, “Other Proprietary Rights”).

 

“Intellectual
Property Contracts” shall mean all agreements concerning the
Business Intellectual Property, including agreements granting the Company or
the Subsidiaries rights to use the Licensed Intellectual Property, agreements
granting rights to use Owned Intellectual Property, confidentiality agreements,
Trademark coexistence agreements, Trademark consent agreements and nonassertion
agreements.

 

“ITA”
means the Income
Tax Act (Canada) as amended.

 

“Knowledge”
means, with respect to the Company, the actual knowledge of Bill Lipsin and
Daniel Fairfax, after reasonable inquiry, and where applicable, of the officers
with primary responsibility for the relevant subject matter.

 

“Laws”
shall mean (i) any provisions of any federal, provincial, territorial,
municipal, state, local or foreign statute, law, rule, regulation or ordinance
applicable to a Person, including Environmental Laws and (ii) any order,
judgment, writ, injunction or decree entered by a Governmental Entity naming a
Person or binding on such Person or its business or assets.

 

7

 

“Leased Real
Property” shall mean, collectively, all real property leased,
subleased or licensed by the Company or any of its Subsidiaries (as lessor or
lessee or under which the Company or any of its Subsidiaries has any
liability).

 

“Licensed
Intellectual Property” shall mean Intellectual Property that the
Company and the Subsidiaries are licensed or otherwise permitted by other
Persons to use.

 

“Liens”
shall mean any pledges, claims, equities, options, liens, charges, mortgages,
easements, rights-of-way, call rights, rights of first refusal, “tag-” or
“drag-” along rights, encumbrances, security interests or other similar
restrictions of any kind or nature whatsoever.

 

“Ontario
Securities Act” means the Securities Act (Ontario) and the rules and
regulations made thereunder, as now in effect and as they may be amended from
time to time prior to the Effective Date.

 

“Options”
shall mean any options to purchase Company Common Shares outstanding as of the
Closing Date in accordance with the Company’s (a) 1998 Amended and Restated
Stock Option Plan and (b) 2000 Stock Incentive Plan and related Option Exchange
Program and any options granted to employees in any other manner.

 

“OHSA”
shall have the meaning ascribed to such term within the definition of
Environmental Law.

 

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

 

“Owned
Intellectual Property” shall mean Intellectual Property owned by the
Company or the Subsidiaries.

 

“Owned Real
Property” shall mean all real property owned in whole or in part by
the Company or any of its Subsidiaries.

 

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

 

“Paying Agent”
shall mean a bank, trust company or other service provider, which shall be
located in the United States of America or Canada and which shall be reasonably
satisfactory to the Company, as designated by Parent to act as paying agent for
the holders of Amalco Preferred Redeemable Shares in connection with the
redemption of such shares immediately following the Amalgamation and to receive
the funds to which former holders of Amalco Preferred Redeemable Shares shall
become entitled pursuant to Section 3.1(b).

 

“Payment Fund”
shall mean cash in an aggregate amount which (i) is equal to (a) the Aggregate
Redemption Amount payable in accordance with Section 3.1(b) minus  (b)  the
funds available to the Company in cash immediately following the Amalgamation
becoming effective as mutually agreed to by Parent and the Company (the “Company
Contribution”) minus (c) the amount of the Escrow Fund
deposited in accordance with Section 3.1(d), and (ii) is

 

8

 

sufficient to enable the Paying
Agent, upon combining the Payment Fund with the Company Contribution, to make
payments pursuant to Section 3.1(b) and Section 3.2, which funds prior to
disbursement in accordance with the terms of this Agreement shall be invested
by the Paying Agent as directed by Parent.

 

“Pension Plan”
shall have the meaning ascribed to such term within the definition of Benefit
Plans.

 

“Permitted
Lien(s)” shall mean (a) Liens reflected in the Company’s
consolidated balance sheet as of March 31, 2003 (including the notes thereto)
included in the Company Unaudited Financial Statements delivered to the Parent
by the Company prior to the date hereof and as certified by the Company’s Chief
Executive Officer (the “2003 Balance Sheet”), (b) Liens
consisting of zoning or planning restrictions, easements, permits and other
restrictions or limitations on the use of real property or irregularities in
title thereto that do not materially detract from the value of, or materially
impair the use of, such property by the Company or any of its Subsidiaries in
the operation of their respective business, (c) Liens of carriers,
warehousemen, mechanics, suppliers, materialmen or repairmen arising in the
ordinary course of business which are not material in amount or which are set
forth on Schedule 1.2(c) or (d) Liens for taxes, assessments or governmental
charges or levies on property not yet due and delinquent or being contested in
good faith by appropriate proceedings which are immaterial in amount or which
are set forth on Schedule 1.2(d), to the extent that all of such Liens
referred to in preceding clauses (a) through (d), inclusive, do not have a
Company Material Adverse Effect.

 

“Person(s)”
shall mean and include an individual, a partnership (general or limited), a
joint venture, a corporation, a trust, an estate, a limited liability company,
an association, a joint-stock company, 
an unincorporated organization or other entity and a Governmental
Entity, government or other department or agency thereof.

 

“Products”
shall mean the Computer Software products marketed, sold, licensed, supported,
serviced or maintained by the Company or its Subsidiaries, together with the
inventory of the Products, the Ancillary Product Materials and any and all such
Computer Software related to, comprising or constituting such products, and all
supplements, modifications, updates, corrections and enhancements to past and
current versions of such products, shipping versions of such products, and
versions of such products currently under development; and any and all English
and foreign language versions of current and past versions of such products,
shipping versions of such products and versions of such products currently
under development, in each case including the source code and object code
versions of such Computer Software; and all Documentation relating thereto; and
any and all back-up tapes and archival tapes relating to the foregoing.

 

“Release”
shall mean any spill, emission, release, discharge, leak, injection, deposit,
dispersal, leaching, migration, pumping, pouring or dumping on or into the
environment or into or from any property.

 

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

 

9

 

“Registration
Rights Agreement” means the Registration Rights Agreement, dated April
11, 2000 between the Company and certain shareholders named therein.

 

“Representative(s)”
shall mean with respect to any Person, such Person’s Affiliates, officers,
directors, employees, representatives, consultants, investment bankers,
attorneys, accountants and other agents.

 

“Required
Consents” shall mean, collectively, all approvals, consents or
waivers under each of the Company Material Contracts that may be required under
the terms thereof with respect to the Transactions.

 

“Restricted
Stock” shall mean any Company Common Shares subject to restriction
whether granted as stock bonuses or restricted stock in accordance with the
Company’s 2000 Stock Incentive Plan.

 

“Shareholders
Agreement” means the Second Amended and Restated Shareholders’
Agreement, dated April 11, 2000 between the Company and the shareholders named
therein.

 

“Stock Plans”
shall mean any stock option or restricted stock plan or agreement of the
Company currently in force as of the date of this Agreement.

 

“Subco Common
Shares” shall mean the common shares of Subco.

 

“Subsidiary”
shall mean a “subsidiary entity” within the meaning of OSC Rule 45-501 under
the Ontario Securities Act.

 

“Superior
Proposal” shall mean a bona fide written offer which is not
solicited by or on behalf of the Company, any of its Subsidiaries or any of
their respective Affiliates (or any of their respective Representatives) made
by a third party to acquire, directly or indirectly, (i) more than 35% of the
Company Shares pursuant to a tender offer followed by a merger, (ii) all of the
Company Shares pursuant to a merger or (iii) all or substantially all of the
assets of the Company and its Subsidiaries, (w) on terms (taken as a whole)
which the Board of Directors of the Company determines in good faith, after consultation
with its outside nationally recognized legal counsel (which may be its current
outside legal counsel) and a financial advisor of nationally recognized
reputation, would, if consummated, be more favorable from a financial point of
view to the Company and its shareholders (in their capacity as such) than the
transactions contemplated hereby, (x) which the Board of Directors determines
in good faith (after consultation with outside nationally recognized legal
counsel (which may be its current outside legal counsel) and a financial
advisor of nationally recognized reputation) is reasonably capable of being
consummated (taking into account such factors as the Board of Directors of the
Company in good faith deems relevant, including all legal, financial,
regulatory and other aspects of such proposal (including the terms of any
financing and the likelihood that the transaction would be consummated) and the
identity of the Person making such proposal), (y) which is not conditioned on
the receipt of any financing and (z) which is not made in violation of any
standstill, confidentiality or similar agreement entered into by the Company or
any of its Subsidiaries or any of their Affiliates or Representatives.

 

10

 

“Tax Return”
shall mean any tax return, statement, form or report (including any election,
declaration, disclosure, schedule, estimate and information Tax return and
other information required to be supplied to a taxing authority in connection
with any Tax) relating to any Tax.

 

“Tax”
shall mean any tax, charge, duty, fee, levy or other similar assessment or
liability (whether payable directly or by withholding and whether or not
requiring the filing of a Tax Return), including income, gross receipts, ad
valorem, premium, value-added, excise, real property, personal property, sales,
use, services, transfer, withholding, employment, payroll, franchise, profits,
capital gains, capital stock, occupation, severance, windfall profits, stamp,
license, social security and other taxes imposed by the United States, Canada,
the United Kingdom, the Federal Republic of Germany or any federal, provincial,
territorial, state, local or foreign government, or any agency thereof, or
other political subdivision of the United States or any such government, and
any interest, fine, penalty, assessment or addition to tax resulting from,
attributable to or incurred in connection with any of the foregoing.

 

“Third Party
Software” shall mean all Computer Software used or held for use,
sale, distribution or license by the Company or any of its Subsidiaries (as a
separate Product or as a component of a Product) that neither the Company nor
any of its Subsidiaries owns.

 

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

 

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

 

“Transactions”
shall mean the transactions contemplated by this Agreement, and the Ancillary
Agreements including, without limitation, the Articles of Amendment, the
Amalgamation and the Redemption.

 

“U.S. Benefit
Plan” shall mean each Benefit Plan covering, or providing benefits
to, employees of the Company and its Subsidiaries based in the United States or
to which ERISA or the Code is applicable.

 

“Voting Debt”
shall mean, collectively, bonds, debentures, notes or other indebtedness or
obligations which entitle the holders thereof to vote (or which are convertible
into or exercisable or exchangeable for securities which entitle the holders
thereof to vote) with the stockholders of the Company or a Subsidiary of the
Company, as the case may be, on any matter.

 

“WARN Act”
shall mean the Workers Adjustment Retraining Notification Act, 29 U.S.C.
§§ 2101, et  seq.

 

“Welfare
Plans” shall have the meaning ascribed to such term within the
definition of Benefit Plans.

 

“$”
shall mean United States Dollars.

 

11

 

In addition to
the foregoing definitions, the following terms shall have the definitions
specified in the section of the Agreement listed below:

 

	
  Defined
  Terms

  	
   

  	
  Section

  
	
   

  	
   

  	
   

  
	
  116 Funds

  	
   

  	
  17

  
	
  116 Holder

  	
   

  	
  17

  
	
  Accounting
  Arbitrator

  	
   

  	
  9.3(a)(ii)

  
	
  Affiliated
  Group

  	
   

  	
  4.8(a)

  
	
  Agreement

  	
   

  	
  Preamble

  
	
  Amalgamation

  	
   

  	
  Recitals

  
	
  Amalgamation
  Agreement

  	
   

  	
  Recitals

  
	
  Articles of
  Amalgamation

  	
   

  	
  2.3

  
	
  BCA

  	
   

  	
  Recitals

  
	
  Business
  Trade Secrets

  	
   

  	
  4.10(j)

  
	
  Certificate
  of Amalgamation

  	
   

  	
  2.3

  
	
  Certificate
  of Amendment

  	
   

  	
  2.1(a)

  
	
  Certificates

  	
   

  	
  3.2(b)(i)

  
	
  Claim

  	
   

  	
  8.2(b)

  
	
  Closing

  	
   

  	
  2.4

  
	
  Closing Date

  	
   

  	
  2.4

  
	
  Company

  	
   

  	
  Preamble

  
	
  Company
  Audited Financial Statemetns

  	
   

  	
  4.5

  
	
  Company
  Disclosure Letter

  	
   

  	
  Article IV

  
	
  Company
  Financial Statements

  	
   

  	
  4.5

  
	
  Company
  Material Contracts

  	
   

  	
  4.12

  
	
  Company
  Unaudited Financial Statements

  	
   

  	
  4.5

  
	
  Determination
  Date

  	
   

  	
  9.3(a)(ii)

  
	
  Employment
  Agreements

  	
   

  	
  4.18(m)

  
	
  Environmental
  Claim

  	
   

  	
  4.14(f)

  
	
  Escrow
  Account

  	
   

  	
  3.1(d)

  
	
  Escrow Agent

  	
   

  	
  3.1(d)

  
	
  Escrow
  Agreement

  	
   

  	
  3.1(d)

  
	
  Escrow
  Amount

  	
   

  	
  3.1(d)

  
	
  Indemnified
  Parties

  	
   

  	
  6.14(a)

  
	
  Indemnitee

  	
   

  	
  8.2(a)

  
	
  Indemnitors

  	
   

  	
  8.2(a)

  
	
  Insurance
  Policies

  	
   

  	
  4.19(a)

  
	
  Losses

  	
   

  	
  8.1

  
	
  Parent

  	
   

  	
  Preamble

  
	
  Parent
  Indemnitiees

  	
   

  	
  8.1

  
	
  Parties

  	
   

  	
  Preamble

  
	
  Party

  	
   

  	
  Preamble

  
	
  Pro Rata
  Interest

  	
   

  	
  3.1(d)

  
	
  Redemption

  	
   

  	
  3.1(a)

  
	
  Redemption
  Consideration

  	
   

  	
  3.1(b)

  
	
  Registrar

  	
   

  	
  2.1(a)

  

 

12

 

	
  Replacement
  Contracts

  	
   

  	
  6.7(a)(i)

  
	
  Shareholder
  Agreements and Waivers

  	
   

  	
  Recitals

  
	
  Shareholder
  Approvals

  	
   

  	
  4.22(c)

  
	
  Shareholder
  Representative Expenses

  	
   

  	
  10.13(d)

  
	
  Stock
  Incentive Plans

  	
   

  	
  3.4

  
	
  Subco

  	
   

  	
  Preamble

  
	
  Termination
  Date

  	
   

  	
  9.1(b)

  
	
  Termination
  Fee

  	
   

  	
  9.3(b)(i)

  
	
  Third-Party
  Claims

  	
   

  	
  8.2(b)

  
	
  Transaction
  Expenses

  	
   

  	
  9.3(a)(i)

  
	
  Transaction
  Expenses Excess

  	
   

  	
  9.3(a)(i)

  
	
  Transaction
  Expenses Excess Statement

  	
   

  	
  9.3(a)(ii)

  
	
  Updata

  	
   

  	
  4.21

  
	
  USTS

  	
   

  	
  4.14(d)

  

 

13

 

ARTICLE
II

 

COMBINATION

 

Section 2.1.            Amendment to the
Articles of the Company.

 

(a)           Subject to the
conditions set forth in this Agreement and obtaining the requisite Shareholder
Approvals, the Company shall amend the Company Articles in substantially the
form set out in the Articles of Amendment and in accordance with the BCA.  Upon the terms and subject to the conditions
set forth in this Agreement, prior to the Closing, the Company shall prepare,
execute, and on or prior to the Closing Date shall cause to be filed with the
registrar of corporations under the BCA, Articles of Amendment in such form as
is required by the relevant provisions of the BCA and all other filings or
recordings required under the BCA.  The
Articles of Amendment shall become effective upon the issuance of a Certificate
of Amendment (the “Certificate of Amendment”) by the registrar
of corporations or a deputy appointed under the relevant provisions of the BCA
(the “Registrar”).

 

(b) Each
holder of Company Non-Participating Preferred Shares who is a non-resident of
Canada for purposes of the ITA shall apply for, and obtain, a clearance
certificate pursuant to, and within the time provided for in, section 116 of
the ITA in respect of the disposition of the relevant Company Non-Participating
Preferred Shares on the filing of the Articles of Amendment.

 

Section 2.2.            The Amalgamation.  Following issuance of the Certificate of
Amendment pursuant to Section 2.1 and subject to the conditions set forth in
this Agreement and obtaining the requisite Shareholder Approvals, Parent, Subco
and the Company shall consummate the Amalgamation pursuant to which Subco and
the Company shall amalgamate to form Amalco, a corporation amalgamated under
the BCA.

 

Section 2.3.            Consummation of the
Amalgamation.  Upon the terms and
subject to the conditions set forth in this Agreement and the Amalgamation
Agreement, prior to the Closing, Subco and the Company shall prepare, execute,
and on the Closing Date shall cause to be filed with the Registrar, Articles of
Amalgamation in such form as is required by the relevant provisions of the BCA
(the “Articles
of Amalgamation”) and all other filings or recordings required under
the BCA.  The Amalgamation shall become
effective upon the issuance of a Certificate of Amalgamation (the Certificate
of Amalgamation”) by the Registrar.

 

Section 2.4.            Closing.  (a)           Unless
this Agreement shall have been terminated and the transactions contemplated
hereby shall have been abandoned pursuant to Article IX, and subject to the
satisfaction or waiver (to the extent permitted by applicable Law) of all of
the conditions set forth in Article VII, the closing of the Amalgamation (the “Closing”),
shall take place at 10:00 a.m. on a date to be specified by the Parties, which
shall be no later than two Business Days following the satisfaction or waiver
(to the extent permitted by applicable Law) of all of the conditions set forth
in Article VII other than such conditions that by their nature are to be
satisfied at the Closing, but subject to the fulfillment or waiver (to the
extent permitted by applicable Law) of those conditions (the “Closing Date”),
at the offices of Schulte Roth & Zabel

 

14

 

LLP, 919 Third Avenue, New
York, New York 10022, unless another date or place is agreed to in writing by
the Parties.

 

(b)           Subject to fulfillment
or waiver of the conditions set forth in Article VII, at or prior to the
Closing, Parent shall deliver to the Company all of the following:

 

(i)            each Ancillary
Agreement to which Parent is a party, the Escrow Agreement and the Paying Agent
Agreement, in each case duly executed on behalf of Parent;

 

(ii)           a certificate executed
on behalf of Parent by an officer thereof, dated as of the Closing Date, in
form and substance reasonably satisfactory to the Company certifying as to the
incumbency and signatures of the officers of Parent executing this Agreement,
any Ancillary Agreement to which Parent is a party, the Escrow Agreement and
the Paying Agent Agreement; and

 

(iii)          the certificate
contemplated by Section 7.3(a).

 

(c)           Subject to fulfillment
or waiver of the conditions set forth in Article VII, at or prior to the
Closing, Subco shall deliver to the Company all of the following:

 

(i)            the Amalgamation
Agreement and each other Ancillary Agreement to which Subco is a party duly
executed on behalf of Subco;

 

(ii)           a certificate of status  of
Subco, issued as of a recent date by the Registrar;

 

(iii)          a certificate of an
officer of Subco, dated as of the Closing Date, in form and substance
reasonably satisfactory to the Company, certifying as to (A) the articles
and the by-laws of Subco and (B) the incumbency and signatures of the officers
of Subco executing this Agreement and the Ancillary Agreements to which it is a
party; and

 

(iv)          the certificate
contemplated by Section 7.3(a).

 

(d)           Subject to fulfillment
or waiver of the conditions set forth in Article VII, at or prior to the
Closing, the Company shall deliver to Parent and Subco all of the following:

 

(i)            the Amalgamation
Agreement, each other Ancillary Agreement to which the Company is a party, the
Escrow Agreement and the Paying Agent Agreement, in each case duly executed on
behalf of the Company;

 

(ii)           a certificate of status  of
the Company, issued as of a recent date by the Registrar;

 

(iii)          a certificate of an
officer of the Company, dated as of the Closing Date, in form and substance
reasonably satisfactory to Parent certifying as to (A) the Company Articles, as
amended by the Articles of Amendment and the Company By-laws, (B) the
incumbency and signatures of the officers of the Company executing this
Agreement, the Ancillary Agreements to which the Company is a party, the Escrow
Agreement, and the Paying

 

15

 

Agent Agreement; (C) the
registered Company Shareholders and the number of issued and outstanding
Company Shares as of the Closing Date, and (D) the number of issued and
outstanding Company Warrants as of the Closing Date;

 

(iv)          copies of all consents,
waivers or approvals obtained by the Company with respect to the consummation
of the transactions contemplated by this Agreement; and

 

(v)           the certificates
contemplated by Section 7.2(a), (e) and (k).

 

 

ARTICLE
III

 

REDEMPTION; PAYMENT OF REDEMPTION PROCEEDS

 

Section 3.1.            Redemption of
Amalco Redeemable Preferred Shares.

 

(a)                           Forthwith
following the Amalgamation becoming effective, Parent shall cause Amalco to
redeem (the “Redemption”) for cash (subject to Section 3.1(d) (e), and (f))
all of the outstanding Amalco Redeemable Preferred Shares issued pursuant to
the Amalgamation in accordance with the terms of such Amalco Redeemable
Preferred Shares.

 

(b)                           As
a result of the Redemption, each former Company Participating Preferred
Shareholder who has executed a Shareholder Agreement and Waiver shall, subject
to Section 3.1(d), have the right to receive, in exchange for each issued and
outstanding Amalco Redeemable Preferred Share he, she or it holds, an amount
equal to (i) the quotient of (A) the Aggregate Redemption Amount divided by
(B) the total number of Amalco Redeemable Preferred Shares issued and
outstanding as a result of the Amalgamation (the “Redemption Consideration”).

 

(c)                           Each
holder of a certificate formerly representing any Company Shares or Company New
Common Shares shall cease to have any rights with respect thereto, except in
the case of former holders of Company Participating Preferred Shares who shall
have the right to receive the Redemption Consideration therefor upon the
surrender of such certificate in accordance with Section 3.1 (d), without
interest.

 

(d)                           Forthwith
following the Amalgamation becoming effective, Parent shall cause Amalco to
deposit in cash, a portion of the Aggregate Redemption Consideration equal to
$624,999.72  (the “Escrow Amount”) in the account to be
established under the escrow agreement (the “Escrow Account”),
substantially in the form of Exhibit D hereto (the “Escrow Agreement”), to be
executed and delivered on or prior to the Closing Date by the escrow agent (the
“Escrow
Agent”), Parent, the Company and the Shareholders’ Representative.  The Escrow Amount will be held on behalf of
the former Company Participating Preferred Shareholders (in accordance with
their respective Pro Rata Interests) and Parent, as the case may be, and
applied pursuant to the terms and subject to the conditions of the Escrow
Agreement.

 

16

 

For purposes
of this Agreement, “Pro Rata Interest” means, with respect to a
former Company Participating Preferred Shareholder, a fraction, the numerator
of which is the product determined by multiplying (A) the number of Amalco
Redeemable Preferred Shares such Company Participating Preferred Shareholder is
entitled to receive upon consummation of the Amalgamation by (B) the Redemption
Consideration and the denominator of which is the Aggregate Redemption Amount.

 

(e)           Each holder of Amalco
Redeemable Preferred Shares who is a non-resident of Canada for purposes of the
ITA (a “116
Holder”) shall apply for, and obtain, a clearance certificate
pursuant to, and within the time provided for in, section 116 of the ITA in
respect of the Amalco Redeemable Preferred Shares held by such non-resident
holder which are redeemed.  Each 116
Holder shall deliver a clearance certificate, which is acceptable to Parent, to
Amalco on or before Closing.

 

(f)            In respect of each 116
Holder who does not deliver an acceptable clearance certificate to Amalco as
provided for in Section 3.1(e), the Paying Agent shall withhold from the
consideration otherwise payable to any such 116 Holder an amount equal to 25%
of the Redemption Consideration in respect of the particular 116 Holder (the “116 Funds”).  The Paying Agent shall remit the 116 Funds
to the Canada Customs and Revenue Agency on the 27th day following
the end of the month in which the Closing occurs in respect of all 116 Holders,
unless the Paying Agent receives a clearance certificate, acceptable to Amalco,
prior to that 27th day from one or more 116 Holders in which event
the Paying Agent shall pay the relevant 116 Funds to each 116 Holder who has
delivered an acceptable clearance certificate, within 5 business days of such
delivery.

 

Section 3.2.            Payment of
Redemption Proceeds.

 

(a)                           Paying
Agent.  Prior to the Amalgamation
becoming effective, Parent shall designate the Paying Agent.  At or prior to the Amalgamation becoming
effective, Parent shall deposit the Payment Fund and shall cause the Company to
deposit the Company Contribution, in each case, in trust with the Paying Agent,
as required pursuant to the paying agent agreement, substantially in the form
of Exhibit E hereto (the “Paying Agent Agreement”), to be executed on
or prior to the Closing Date by the Paying Agent, Parent, the Company and the
Shareholders’ Representative.  The
Payment Fund shall be invested by the Paying Agent as directed by Parent.  The Paying Agent shall, pursuant to
irrevocable instructions, make the payments referred to in Section 3.1(b),
Section 3.1(d) and this Section 3.2 out of the Payment Fund and the Company
Contribution.  Neither the Payment Fund
nor the Company Contribution shall be used for any other purpose except as
otherwise agreed to by Parent.  If the
sum of the Payment Fund and the Company Contribution is insufficient to pay all
of the amounts required to be paid pursuant to Section 3.1(b), and Section 3.1(d)
and this Section 3.2, Parent from time to time after the redemption of the
Amalco Redeemable Preferred Shares shall promptly deposit in trust additional
cash with the Paying Agent sufficient to make all such payments, or shall cause
Amalco to do so.

 

17

 

(b)                           Exchange
Procedures.

 

(i)            Within
five Business Days following the Amalgamation becoming effective, Parent shall
cause the Paying Agent to mail to each holder of record of a certificate or
certificates that immediately prior to the Articles of Amendment represented
outstanding Company Participating Preferred Shares (collectively, the “Certificates”),
whose Company Participating Preferred Shares were converted pursuant to the
Articles of Amendment and the Amalgamation into Amalco Redeemable Preferred
Shares and then redeemed and pursuant to Section 3.1(c) represent the right to
receive the Redemption Consideration, (A) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon actual delivery of the Certificates to the
Paying Agent, and shall otherwise be in customary form), and (B) instructions
for use in effecting the surrender of the Certificates in exchange for payment
of the Redemption Consideration.

 

(ii)           Upon
surrender of a Certificate for cancellation to the Paying Agent or to such
other agent or agents as may be appointed by Amalco, together with such (A)
letter of transmittal, duly executed and completed in accordance with the
instructions thereon, together with any other items specified by the letter of
transmittal or otherwise reasonably required by the Paying Agent and (B) a duly
executed and completed Shareholder Agreement and Waiver, the holder of such Certificate
shall be entitled to receive (subject to Section 3.1(b) and the terms of the
Escrow Agreement) in exchange therefor the Redemption Consideration, less any
amount to be withheld in satisfaction of withholding tax obligations, for each
Amalco Redeemable Preferred Share represented by such Certificate, and the
Certificate so surrendered shall forthwith be cancelled.  Until so surrendered, each Certificate
shall, subject to Section 3.3, be deemed, for all purposes, to evidence only
the right to receive upon such surrender the Redemption Consideration
deliverable in respect thereof to which the holder thereof is entitled pursuant
to Section 3.1(b) and this Section 3.2. 
No interest will be paid or will accrue in respect of any cash payable
upon the surrender of any Certificate.

 

(iii)          If
any Certificate shall have been lost, stolen or destroyed, then, upon the
making of an affidavit of that fact by the Person claiming such Certificate to
be lost, stolen or destroyed, Parent shall cause the Paying Agent to pay in
exchange for such lost, stolen or destroyed Certificate the Redemption
Consideration deliverable in respect thereof to which the holder thereof is
entitled pursuant to Section 3.1(b) and this Section 3.2; provided, that
Parent may require the Person to whom any such Redemption Consideration is
paid, as a condition precedent to the payment thereof, to indemnify Amalco in a
manner reasonably satisfactory to Parent against any claim that may be made
against Amalco with respect to the Certificate claimed to have been lost,
stolen or destroyed.

 

(iv)          Each
of the Paying Agent, Parent and Amalco shall be entitled to deduct and
withhold, or cause to be deducted and withheld, from any consideration payable
or otherwise deliverable pursuant to this Agreement to any holder or former
holder of Amalco Redeemable Preferred Shares such amounts as may be required to
be deducted and withheld therefrom under the Code, the ITA or any provision of
provincial, territorial, state, local or foreign Tax law or under any other
applicable legal requirement.  To the
extent such amounts are so deducted or withheld, such amounts shall be treated
for all purposes under this Agreement as

 

18

 

having been
paid to the Person to whom such amounts would otherwise have been paid and
shall be paid to the appropriate Governmental Entity on behalf of such Person.

 

(v)           Amalco
shall pay all charges and expenses of the Paying Agent in connection with the
distribution of the Redemption Consideration for the Certificates.

 

(c)                           No
Further Transfer or Ownership Rights in the Company Shares or Company Warrants.  From and after the Amalgamation becoming
effective, the stock transfer books of the Company shall be closed with respect
to the Company Shares and the Company Warrants and there shall be no further
registration of transfers of the Company Shares or the Company Warrants on the
records of Amalco other than to give effect to the redemption of the Amalco
Redeemable Preferred Shares, and if any Certificates are presented to Amalco
for transfer, they shall be cancelled and exchanged, if at all, as provided in
this Article III, subject to applicable Law in the case of Dissent Shares.  All Redemption Consideration paid upon the
surrender of Certificates in accordance with the terms of this Article III
shall be deemed to have been paid in full satisfaction of all rights pertaining
to the Company Participating Preferred Shares previously represented by such
Certificates.

 

(d)                           Termination
of Fund; No Liability.  At any time
following the date which is the six month anniversary of the Amalgamation
becoming effective, Parent shall be entitled to require the Paying Agent to
deliver to it any funds (including any and all interest and other income
received with respect thereto) that had been made available to the Paying Agent
and that have not been disbursed to holders of Certificates, and thereafter,
such holders shall be entitled to look solely to Parent (subject to abandoned
property, escheat or other similar Laws) with respect to the Redemption
Consideration payable upon due surrender of their Certificates, without any
interest thereon; provided, that such holders shall have no greater
rights against Parent than may be accorded to general creditors of Parent under
applicable Laws.  Any portion of the
Payment Fund remaining unclaimed as of a date which is immediately prior to
such time as such amounts would otherwise escheat to or become property of any
government entity shall, to the extent permitted by applicable Law, become the
property of Parent free and clear of any claims or interest of any Person
previously entitled thereto. 
Notwithstanding the foregoing, neither Parent nor the Paying Agent shall
be liable to any Person for any amounts delivered to a public official pursuant
to any applicable abandoned property, escheat or other similar Laws.

 

Section 3.3.            Dissent Rights.  Notwithstanding anything in this Agreement
to the contrary, Dissent Shares shall not be converted into or represent the
right to receive Redemption Consideration in accordance with Section 3.1(b) and
Section 3.2, but rather each of the Dissent Shares shall represent only the
right to receive payment upon exercise of dissent rights in respect of such
Dissent Shares in accordance with the BCA. 
The Company shall give Parent (a) prompt written notice of dissent
received by the Company, the withdrawal of any such demand, and any other
notice or instrument delivered or served relating to dissent pursuant to the
BCA and (b) the opportunity to direct all negotiations and proceedings with
respect to any demand for dissent under the BCA.  The Company shall not, except with the prior written consent of
Parent, (i) make any payment with respect to any demand for dissent, (ii) offer
to settle or settle any such demand for dissent, (iii) waive any failure to
timely deliver a written demand for dissent in accordance with the BCA, or (iv)
agree to do any of the foregoing.

 

19

 

Section 3.4.            Stock Options.  With respect to any Options outstanding
prior to the Amalgamation becoming effective, the Company shall take such
action as shall be required to effectuate (i) the cancellation, upon the
Amalgamation becoming effective, of all Options (whether or not then vested or
exercisable and without regard to the exercise price, if applicable, of such
Options) granted under any Stock Plan or otherwise and to no longer represent
or represent the right to purchase Company Shares or any other equity
securities of the Company, Parent, Amalco or any other Person or any other
consideration, and (ii) the termination, upon the Amalgamation becoming
effective, of the Stock Plans and any other plan, program or arrangement
providing for the issuance or grant of any other interest in respect of the
capital stock or equity of the Company or any Subsidiary or Affiliate thereof
(collectively, with the Stock Plans, the “Stock Incentive Plans”).  The foregoing actions shall take effect at
or prior to the Amalgamation becoming effective in accordance with the terms of
the applicable Stock Incentive Plan. The Company shall take all steps to ensure
that neither it nor any of its Subsidiaries or Affiliates is or shall be bound
by any Options, Restricted Stock, other options, warrants, rights or agreements
which would entitle any Person, other than Parent or its Affiliates, to own any
capital stock or equity of the Company or Amalco or any of their Subsidiaries
or to receive any payment in respect thereof.

 

Section 3.5.            Further Assurances.  If at any time after the Amalgamation
becomes effective Amalco shall consider or be advised that any agreements,
documents, deeds, bills of sale, assignments or assurances or any other acts or
things are necessary, desirable or proper (a) to vest, perfect or confirm, of
record or otherwise, in Amalco, its right, title or interest in, to or under
any of the rights, privileges, powers, franchises, properties or assets of
either of the amalgamating corporations in the Amalgamation, or (b) otherwise
to carry out the purposes of this Agreement, Amalco and its proper officers and
directors or their designees are hereby authorized to execute and deliver, in
the name and on behalf of either of the constituent corporations in the
Amalgamation, all such deeds, bills of sale, assignments and assurances and do,
in the name and on behalf of such constituent corporations, all such other acts
and things necessary, desirable or proper, consistent with the terms of this
Agreement, to vest, perfect or confirm its right, title or interest in, to or
under any of the rights, privileges, powers, franchises, properties or assets
of such constituent corporations and otherwise to carry out the purposes of
this Agreement.

 

ARTICLE
IV

 

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

The Company has delivered to Parent a Disclosure Letter, dated the date
hereof (the “Company Disclosure Letter”), receipt of which has been
acknowledged in writing thereon by Parent. 
The Company Disclosure Letter shall be arranged in sections and
subsections corresponding to the sections and subsections of this Article
IV.  The Company hereby represents and
warrants to Parent and Subco, except as expressly set forth in the
corresponding sections and subsections of the Company Disclosure Letter, as
follows:

 

20

 

Section 4.1.            Organization.

(a)                           The
Company and each of its Subsidiaries is an entity duly organized, validly
existing and, to the extent applicable, in corporate good standing under the
Laws of its jurisdiction of organization and has all requisite power and
authority to own, lease and operate its properties and assets and to carry on
its business as now being conducted and as contemplated.  The Company and each of its Subsidiaries is
duly qualified or licensed to do business, and is in corporate good standing as
a foreign entity, in each jurisdiction where the character of its properties or
assets owned, operated and leased or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified or
licensed or in good standing has not resulted in and would not reasonably be
likely to result in, individually or in the aggregate, a Company Material
Adverse Effect.  The Company has, prior to
the date of this Agreement, delivered to Parent true, complete and correct
copies of the Company Articles and the Company By-laws and the comparable
governing documents of each of the Company’s Subsidiaries, in each case as
amended and in full force and effect as of the date of this Agreement.  The respective articles and by-laws or other
organizational documents of such Subsidiaries do not contain any provision
limiting or otherwise restricting the ability of the Company to control such
Subsidiaries.  The Company has made all
necessary filings under all applicable corporate, securities and taxation laws
or any other laws to which the Company is subject.

 

(b)                           The
Company is not conducting business in any jurisdiction other than the
jurisdictions listed in Section 4.1(b) of the Company Disclosure Letter.

 

Section 4.2.            Capitalization.

 

(a)                           The
authorized capital stock of the Company consists of an unlimited number of
Company Shares.  As of the close of
business on the date hereof, (i) 4,050,508  Company Common Shares are
issued and outstanding, no  Company Common Shares are issued and held
in the treasury of the Company and 13,258,872  Company Common Shares are
reserved for issuance upon exercise of outstanding Options and Company Warrants
to purchase Company Common Shares, and (ii) with respect to Company Preferred
Shares, 18,799,276 Class A Shares are issued and outstanding, 480,000 Class A
Shares are reserved for issuance upon exercise of outstanding Company Warrants
to purchase Class A Shares,  16,630,212 Class B Shares are issued and
outstanding, 30,065,025 Class C-1 Shares are issued and outstanding, 4,209,102  Class
C-2 Shares are issued and outstanding, 601,300  Class C Shares are reserved
for issuance upon exercise of outstanding Company Warrants to purchase Class
C-1 Shares, 8,052,170 Class D Shares are issued and outstanding.  Section 4.2(a) of the Company Disclosure
Letter sets forth the exercise price, grant date, expiration date for and
number of shares subject to all outstanding Options or Company Warrants to
purchase Company Common Shares, Class A Shares, Class C Shares, or Class D
Shares, as the case may be, and the vesting date and grant date for all shares
of restricted stock.  All outstanding
shares of capital stock or other equity interests, as the case may be, of the
Company and each of the Subsidiaries are duly authorized, validly issued, fully
paid and non-assessable, and are not subject to and were not issued in
violation of any preemptive rights, purchase option, call option, right of
first refusal, subscription right or any similar right, and were issued in
compliance with applicable federal, provincial, territorial and state
securities laws and regulations.  All
shares of capital stock of the Company subject to issuance on the terms and
conditions set forth in the instruments pursuant to which they are issuable,
will, when issued in accordance with the terms of such instruments, be

 

21

 

duly
authorized, validly issued, fully paid and non-assessable, and will not (other
than as contemplated under the Shareholders Agreement or in connection with the
Transactions) be subject upon issuance to, nor issued in violation of, any
preemptive rights, purchase option, call option, right of first refusal,
subscription right or any similar right, and will be issued in compliance with
applicable federal, provincial, territorial and state securities laws and
regulations.  Except as set forth above,
(A) there are no shares of capital stock or other equity securities
(voting or nonvoting) of the Company or any of its Subsidiaries authorized,
issued or outstanding, (B) there are no outstanding or authorized options or
Restricted Stock (other than the Options to purchase Company Common Shares
described in Section 4.2(a) of the Company Disclosure Letter) or warrants
(other than the Company Warrants to purchase Company Common Shares, Class A
Shares or Class C-1 Shares), calls, preemptive rights (other than as
contemplated under the Shareholders Agreement or in connection with the
Transactions), subscriptions or other similar rights, convertible or
exchangeable securities, “phantom” stock rights, stock appreciation rights,
limited stock appreciation rights, stock-based performance units, agreements,
arrangements, commitments or claims of any character, contingent or otherwise,
(1) relating to the issued or unissued capital stock of the Company or any
of its Subsidiaries or (2) obligating the Company or any of its
Subsidiaries to issue, transfer or sell or cause to be issued, transferred or
sold any shares of capital stock or other equity interests in the Company or
any of its Subsidiaries or securities convertible into or exchangeable for such
shares or equity interests, or obligating the Company or any of its
Subsidiaries to grant, extend or enter into any such option, Restricted Stock,
warrant, call, preemptive right, subscription or other right, convertible or
exchangeable security, agreement, arrangement, commitment or claim, and
(C) neither the Company nor any of its Subsidiaries has authorized or
outstanding Voting Debt.  Upon
completion of the Amalgamation, any Company Warrants that are not cancelled at
or prior to the Amalgamation shall be exercisable only for the amount of
Redemption Consideration (if any) that would have been paid in respect of the
Company Common Shares, Class A Shares or Class C-1 Shares, that would have been
issuable upon exercise of such Company Warrants immediately prior to the
Amalgamation.

 

(b)                           Section
4.2(b)  of the Company Disclosure Letter
sets forth a complete and accurate list of the Subsidiaries of the
Company.  Except for the Company’s
interest in its Subsidiaries and investments in marketable securities and
mutual funds, neither the Company nor any of its Subsidiaries owns directly or
indirectly any interest or investment (whether equity or debt) in, nor is the
Company or any of the Subsidiaries subject to any obligation or requirement to
provide for or to make any investment (whether equity or debt) to or in, any
Person.

 

(c)                           All
of the outstanding shares of capital stock or other equity interests of each of
the Company’s Subsidiaries are owned, of record and beneficially, by the
Company, or directly or indirectly beneficially, by either the Company or one
or more of its Subsidiaries, in each case free and clear of all Liens.  No shares of capital stock of, or ownership
interests in, any of the Company’s Subsidiaries are reserved for issuance.

 

(d)                           Other
than the Shareholders Agreement, the Registration Rights Agreement and the
agreements set forth in Section 4.2(d) of the Company Disclosure Letter, there
are no voting trusts, proxies, registration rights agreements, or other
agreements, commitments, arrangements or understandings of any character by
which the Company or any of

 

22

 

its
Subsidiaries is bound with respect to the voting of any shares of capital stock
or other equity interests of the Company or any of its Subsidiaries or with
respect to the registration of the offering, sale or delivery of any shares of
capital stock or other equity interests of the Company or any of its
Subsidiaries under any applicable Law.

 

(e)                           Except
as contemplated under the Shareholders Agreement or in connection with the
Transactions, none of the Company or its Subsidiaries are required to redeem,
repurchase or otherwise acquire shares of capital stock or other equity
interests of the Company or any of its Subsidiaries.

 

(f)                            Except
as contemplated under the Shareholders Agreement or in connection with the
Transactions, there are no restrictions of any kind which prevent or restrict
the payment of dividends by the Company or any of its Subsidiaries other than
those imposed by the corporate laws of general applicability of their
respective jurisdictions of organization.

 

(g)                           Section
4.2(g) of the Company Disclosure Letter sets forth a complete and accurate list
of (i) the stated and paid in capital of the Company and (ii) the names and
addresses of each Company Shareholder, based on the books and records of the
Company.

 

(h)           Except as set forth in
Section 4.2(h) of the Company Disclosure Letter, each of the Company
Shareholders is not a non-resident person for purposes of the ITA.

 

Section 4.3.            Authorization;
Validity of Agreement; Company Action.

 

(a)           The Company has full
corporate power and authority to execute and deliver this Agreement, the
Amalgamation Agreement, each other Ancillary Agreement to which it is party and
each instrument required hereby to be executed and delivered by the Company
prior to or upon the Amalgamation becoming effective, and, subject to obtaining
the Shareholder Approvals required by the BCA, the Company Articles, the
Company By-laws and the Shareholders Agreement, to perform its obligations
hereunder and thereunder and to consummate the Transactions.  The execution, delivery and performance by
the Company of this Agreement, the Amalgamation Agreement, each other Ancillary
Agreement to which it is party and each instrument required hereby to be
executed and delivered by the Company prior to or upon the Amalgamation
becoming effective and the performance of its obligations hereunder and
thereunder and the consummation by it of the Transactions have been duly
authorized by its Board of Directors, and, except for obtaining the Shareholder
Approvals as contemplated by Section 6.6, no other corporate action on the part
of the Company is necessary to authorize the execution, delivery and
performance by the Company of this Agreement, the Amalgamation Agreement, each
other Ancillary Agreement to which it is party and the consummation by it of
the Transactions.  This Agreement has
been, and the Amalgamation Agreement, each other Ancillary Agreement to which
it is party and each instrument required hereby to be executed and delivered by
the Company prior to the Amalgamation becoming effective has been or, if
executed after the date hereof and upon or prior to the Amalgamation becoming
effective, will be, duly executed and delivered by the Company and, assuming
due and valid authorization, execution and delivery hereof and thereof by
Parent and Subco and any other parties thereto, constitutes, or, in the case of
the Ancillary Agreements have been or, if executed after the date hereof and
upon or prior to the Amalgamation becoming effective, will constitute, valid
and

 

23

 

binding obligations of the
Company enforceable against the Company in accordance with their respective
terms, except as enforceability may be limited by (i) applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other Laws of
general application affecting the enforcement of creditors’ rights generally
now or hereafter in effect and (ii) general principles of equity, regardless of
whether asserted in a proceeding in equity or at law.

 

(b)           The Board of Directors
of the Company has determined, in consultation with its financial advisors,
that the Transactions are fair to, and in the best interests of the Company
Shareholders from a financial point of view.

 

Section 4.4.            Consents and
Approvals; No Violations.  The
execution and delivery by the Company of this Agreement, the Amalgamation
Agreement and each other Ancillary Agreement to which it is party does not, and
the consummation by the Company of the Transactions and the compliance by the
Company with the applicable provisions of this Agreement, the Amalgamation
Agreement and each other Ancillary Agreement to which it is party will not:

 

(a)                           violate
or conflict with or result in any breach of any provision of the Company
Articles or the Company By-laws or the comparable governing documents of any of
its Subsidiaries;

 

(b)                           require
any Governmental Approval, except for (i) the Governmental Approvals set
forth in Section 4.4(b) of the Company Disclosure Letter; and (ii) the filing
of the Articles of Amendment and the Articles of Amalgamation with the
Registrar, all other filings and recordings required under the BCA and
appropriate documents with the relevant authorities of other territories,
provinces, states and countries in which the Company and its Subsidiaries are
qualified to do business;

 

(c)                           result
in a material violation or breach of, conflict with, constitute (with or
without due notice or lapse of time or both) a material default under, give
rise to any penalty, right of amendment, modification, renegotiation,
termination, cancellation, payment or acceleration or any right or obligation
or loss of any material benefit or right under, or result in the creation of
any Liens upon any of the properties or assets of the Company or any of its
Subsidiaries under any of the terms, conditions or provisions of any loan or
credit agreement, note, bond, mortgage, indenture, lease, license, sublicense,
franchise, permit, concession, agreement, contract, obligation, commitment,
understanding, arrangement, franchise agreement or other instrument, obligation
or authorization applicable to the Company or any of its Subsidiaries, or by
which any such Person or any of its properties or assets may be bound; or

 

(d)                           materially
violate or conflict with any Law applicable to the Company or any of the
Subsidiaries or by which any of their properties or assets may be bound.

 

Section 4.5.            Financial
Statements.  Set forth on Section
4.5 of the Company Disclosure Letter are the audited consolidated statements
(balance sheet and related statements of operations, cash flows and changes in
shareholders’ equity) of the Company and its Subsidiaries as of March 31, 2002
(the “Company
Audited Financial Statements”) and the unaudited

 

24

 

consolidated
statements (balance sheet and related statements of operations cash flows and
changes in Shareholders’ equity) of the Company and its subsidiaries as of
March 31, 2003 (the “Company Unaudited Financial Statements”,
and together with the Company Audited Financial Statements, the “Company
Financial Statements”).  The
Company Financial Statements are in accordance with the books and accounts of
the Company at March 31, 2002 and March 31, 2003, as the case may be, and have
been prepared in accordance with GAAP applied on a consistent basis throughout
the relevant periods, except that unaudited Company Financial Statements may
not contain all footnotes required by GAAP. 
The Company Financial Statements are true and correct and fairly present
the financial condition and operating results of the Company and its
Subsidiaries as of the dates, and for the periods, indicated therein.  Except as set forth in the 2003 Balance
Sheet, the Company has no liabilities, contingent or otherwise, other than (a)
immaterial liabilities incurred in the ordinary course of business subsequent
to March 31, 2003; and (b) obligations under contracts and commitments incurred
in the ordinary course of business and not required under GAAP to be reflected
in the Company Financial Statements. 
The Company maintains and will continue to maintain a standard system of
accounting established and administered in accordance with GAAP.

 

Section 4.6.            No Undisclosed
Liabilities.  The Company and its
Subsidiaries do not have any claims, liabilities, indebtedness or obligations
of any nature (whether known or unknown, accrued, absolute, contingent,
asserted, liquidated or otherwise), except (a) as disclosed in Section 4.6 of
the Company Disclosure Letter or, (b) reflected and reserved against on the
2003 Balance Sheet.  Except as disclosed
in the Company Financial Statements, the Company is not a guarantor or
indemnitor of any indebtedness of any other person, firm or corporation.

 

Section 4.7.            Absence of Certain
Changes.  Since March 31, 2003 (the
date of the 2003 Balance Sheet), the Company has conducted, and has caused its
Subsidiaries to conduct, their respective businesses only in the ordinary
course of business consistent with past practice.  Without limiting the generality of the foregoing:

 

(a)                           there
has not occurred any event, change, occurrence, effect, fact, violation,
development or circumstance that has resulted in or would reasonably be likely
to result in, individually or in the aggregate, a Company Material Adverse
Effect;

 

(b)                           there
has been no declaration, setting aside or payment by the Company or any
Subsidiary of any dividend or other distribution payable in cash, securities or
other property with respect to, or split, combination, redemption,
reclassification, purchase or other acquisition of, any shares of capital stock
(or other equity interests) or other securities of the Company or any of its
Subsidiaries, other than those payable by a wholly-owned Subsidiary of the
Company solely to the Company or to another wholly-owned Subsidiary of the
Company, or any other change in the capital structure of the Company or any of
its Subsidiaries;

 

(c)                           there
has been no issuance or sale, or authorization therefor, by the Company or any
Subsidiary of any shares in the capital or any other securities (equity or
debt) of the Company or any of its Subsidiaries or issuance, sale or
authorization by the Company or any Subsidiary for any securities (equity or
debt) convertible into or exchangeable for, or options, warrants, calls,
commitments or rights of any kind to purchase or subscribe for, or the entering

 

25

 

into by the
Company or any Subsidiary of any arrangement or contract with respect to the
issuance or sale of, any shares in the capital of any class of the Company or
Voting Debt or other securities (equity or debt), or any other changes to the
capital structure of the Company or any of its Subsidiaries;

 

(d)                           there
have been no Contracts (or amendments, modifications, supplements or replacements
to existing Contracts) made or committed to be made or entered into to be
performed by the Company or any of its Subsidiaries relating to, and none of
them have made any, capital expenditures with a value in excess of $10,000 in
any calendar year, or in the aggregate for capital expenditures with a value in
excess of $100,000;

 

(e)                           neither
the Company nor any of its Subsidiaries has acquired, by merging or
consolidating with, by purchasing an equity interest in, by purchasing all or a
portion of the assets of, or by any other manner, any business or any Person,
or other acquisition of any assets of any Person (other than the purchase of
equipment, inventories and supplies in the ordinary course of business
consistent with past practice);

 

(f)                            there
have been no transfers, leases, licenses, guarantees, sales, mortgages,
pledges, disposals of, subjecting to Liens (other than Permitted Liens) or
other encumbrances on, any assets of the Company or any of its Subsidiaries
that are material to their business or that have a value individually in excess
of $10,000 other than with respect to (i) transactions between wholly-owned
Subsidiaries of the Company and the Company or between wholly-owned
Subsidiaries of the Company, (ii) dispositions of excess or obsolete assets of
the Company or any of its Subsidiaries in the ordinary course of business
consistent with past practice, (iii) leases, licenses or sales in the ordinary
course of business consistent with past practice, and (iv) the arrangements
with respect to the Pleasanton and Markham premises, as referenced in Section
7.2(i);

 

(g)                           except
to the extent required under employee employment agreements or Benefit Plans in
effect on March 31, 2003 (the date of the 2003 Balance Sheet), as set forth in
Section 4.7(g) of the Company Disclosure Schedule or required by applicable Law
or contemplated by Section 3.4, there have been no increases in the
compensation or fringe benefits of any of the Company’s or its Subsidiaries’
directors, officers or employees (except for immaterial increases to employees
who are not officers of the Company or any of its Subsidiaries in the ordinary
course of business consistent with past practice), no grants of any severance
or termination pay not required to be paid under then existing severance plans,
no employment, consulting or severance agreements, policies or arrangements
with any present or former directors, officers or other employees of the
Company or any of the Company’s Subsidiaries, no establishment or adoption of
or amendments, modifications, supplements, replacements or terminations of any
collective bargaining agreement, or Benefit Plan or plan that qualifies as a
Benefit Plan (including premiums therefor) for the collective benefit of any
directors, officers or employees or independent contractors.

 

(h)                           no
director, former director, officer, shareholder or employee of the Company or
any person not dealing at arm’s length within the meaning of the ITA  with
any such Person is indebted to the Company except as disclosed in Section
4.7(h) of the Company Disclosure Letter.

 

26

 

(i)                            there
have been no plans of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganizations of the
Company or any of its Subsidiaries or any agreements relating to any
Acquisition Proposals adopted or entered into;

 

(j)                            there
has been no (i) incurrence, assumption, modification or prepayment of any
indebtedness for borrowed money, issuance of any debt securities or warrants or
other rights for the acquisition of debt securities, or guarantees,
endorsements or liabilities or responsibilities for the obligations or
indebtedness of another Person by the Company or any of its Subsidiaries, other
than indebtedness owing to or guarantees of indebtedness owing to, the Company
or any direct or indirect wholly-owned Subsidiary of the Company, or capital
leases entered into, or (ii) loans, extensions of credit or advances by the
Company or any of its Subsidiaries to any other Person, other than to the
Company or to any direct or indirect wholly-owned Subsidiary of the Company,
except, in the case of preceding clauses (i) and (ii), for loans, extensions of
credit or advances constituting trade payables or receivables arising in the
ordinary course of business and in the case of preceding clause (ii), for
advances to employees in respect of travel and entertainment expenses in the
ordinary course of business in amounts of $10,000 or less to any individual on any
date of determination and $50,000 in the aggregate outstanding on any date of
determination;

 

(k)                           Except
as set forth on Section 4.7(k) of the Company Disclosure Letter, there have
been no accelerations of (i) the payment, right to payment or vesting under any
Benefit Plan (including arrangements or agreements for premiums therefor) or
(ii) other compensation arrangements provided by the Company or any of its
Subsidiaries;

 

(l)                            neither
the Company nor any of its Subsidiaries has made any payments, discharges,
settlements or satisfactions of any claims, litigation, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise) other than (i) the payment, discharge, settlement or satisfaction,
in the ordinary course of business consistent with past practice, of (A)
liabilities reflected or reserved against in the 2003 Balance Sheet or (B)
liabilities (other than litigation) subsequently incurred in the ordinary
course of business consistent with past practice, (ii) other claims,
litigation, liabilities or obligations (qualified as aforesaid) that in the
aggregate do not exceed $100,000, and (iii) the arrangements with respect to
the Pleasanton and Markham premises, as referenced in Section 7.2(i);

 

(m)                          Except
as set forth on Section 4.7(m) of the Company Disclosure Letter, there have
been no plans, announcements, implementations or effectuations of any
reductions in force, lay-offs, early retirement programs, severance programs or
other programs or efforts concerning the termination of employment of employees
of the Company or its Subsidiaries, other than routine employee terminations in
the ordinary course of business and consistent with past practice;

 

(n)                           there
have been no actions or omissions which (i) constitute a violation of any
material Company Permit, which violations would result in or would reasonably
be likely to result in, individually or in the aggregate, the modification,
suspension, cancellation, termination of any one or more material Company
Permit or otherwise have or would reasonably be likely to adversely affect any
material customer or client contract or relationship or the nature

 

27

 

or level of
discipline imposed on account of future violations of the Laws applicable to
the Company and Amalco or (ii) would (or would reasonably be likely to)
materially impede, delay, hinder or make more burdensome for Amalco or Parent
to obtain and maintain any and all authorizations, approvals, consents or
orders from any Governmental Entity or other third party necessary or required
to maintain the Company Permits in effect at all times following the
Amalgamation on the same terms as in effect on the date of this Agreement;

 

(o)                           there
have been no entries into any new material lines of business;

 

(p)                           there
has been no failure to maintain with current or other financially responsible
insurance companies insurance on the Company’s or its Subsidiaries’ assets,
tangible and intangible, and their respective businesses in such amounts and
against such risks and losses as are consistent with past practice and standard
practice in the Company’s industry;

 

(q)                           there
has been (i) no materially amended Tax Returns or claims for refund filed, (ii)
no making or rescission of any material Tax election or other failure to
prepare all Tax Returns in a manner which is consistent with the past practices
of the Company and each Subsidiary of the Company, as the case may be, with
respect to the treatment of items on such Tax Returns except to the extent that
any inconsistency (A) did not, would not, or may not materially increase
Parent’s, the Company’s or any of the Company’s Subsidiaries’ liability for
Taxes for any period or (B) is or was required by Law, (iii) no incurrence of
any material liability for Taxes other than in the ordinary course of business,
or (iv) no settlement or closing agreement with a taxing authority that
materially increases or would reasonably be likely to materially increase the
Tax liability of the Company or any of its Subsidiaries for any period entered
into;

 

(r)                            there
has been no material change by the Company or any of its Subsidiaries in any
accounting practices, policies or procedures or any methods of reporting
income, deductions or other items for income tax purposes; and

 

(s)                           there
has been no material damage, destruction or loss (whether or not covered by
insurance) to the Company’s or any of its Subsidiaries’ tangible or intangible
property or assets, including software or systems.

 

Section 4.8.            Taxes.

 

(a)                           Tax
Returns.  Except as set forth in
Section 4.8(a) of the Company Disclosure Letter, the Company, each of its
Subsidiaries and each affiliated group (within the meaning of Section 1504(a)
of the Code) or consolidated, combined, or unitary group (under state or local
law) of which the Company or any such Subsidiary is or has been a member (each,
an “Affiliated
Group”) have timely filed or caused to be timely filed with the
appropriate taxing authorities all Tax Returns that are required to be filed
by, or with respect to, the Company, each Subsidiary and each Affiliated Group
and such returns are correct in all material respects.

 

(b)                           Payment
of Taxes.  The tax accounts of the
Company reflected in the Company Financial Statements are true and complete in
all material respects.  All Taxes
imposed with respect to the income, assets or operations of the Company or any
of its 

 

28

 

Subsidiaries
for all taxable years or other taxable periods that end on or before the Closing
Date have been either timely paid or will be timely paid in full on or prior to
the Closing Date or accrued and adequately disclosed and fully provided for in
the 2003 Balance Sheet in accordance with GAAP.  The Company has made installments of Taxes as of and when
required with respect to any taxable year or other taxable period beginning
before and ending on or after the Closing Date, neither the Company nor any of
its Subsidiaries nor any Affiliated Group has incurred any Tax liability
outside of the ordinary course of business with respect to the portion of such
taxable year or other taxable period ending on and including the Closing Date.

 

(c)                           Other
Tax Matters.

 

(1)           Neither
the Company nor any of its Subsidiaries nor any Affiliated Group is currently
the subject of an audit or other examination of Taxes by the tax authorities of
any nation, province, territory, state or locality, (ii) no such audit or other
examination is pending, or to the Company’s Knowledge, threatened and (iii)
neither the Company nor any of its Subsidiaries has received any written notice
from any taxing authority relating to any issue which could have an adverse
effect on the Tax liability of the Company or any of its Subsidiaries.

 

(2)           Neither
the Company nor any of its Subsidiaries (i) has entered into an agreement or
waiver that will be in effect as of the Closing Date or been requested to enter
into an agreement or waiver extending any time limitation or statute of
limitations relating to the filing of any Tax Return, the assessment, payment
or collection of Taxes of the Company or any of its Subsidiaries, or (ii) is
presently contesting the Tax liability of the Company or any of its
Subsidiaries in any administrative or judicial proceeding.

 

(3)           Neither
the Company nor any of its Subsidiaries has been included in any Affiliated
Group with any Person (other than the Company or any current Subsidiary
thereof) for any taxable period for which the statute of limitations has not
expired.

 

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

 

(5)           No
claim has been made in writing by any taxing authority in a jurisdiction where
the Company or any of its Subsidiaries does not file Tax Returns that the
Company or any of its Subsidiaries is or may be subject to taxation by that
jurisdiction.

 

(6)           There
are no tax sharing, allocation, indemnification or similar agreements in effect
as between the Company or any of its Subsidiaries or any predecessor or
affiliate thereof (other than Parent and its affiliates) and any other party
under which Parent, Subco, the Company or any of the Company’s Subsidiaries
could be

 

29

 

liable for any
Taxes or other claims of, or could otherwise have any liability or obligation
to, any party after the Closing Date.

 

(7)           Neither
the Company nor any of its Subsidiaries has applied for, been granted, or
agreed to any accounting method change for which it will be required to take
into account any adjustment under Section 481 of the Code or any similar
provision of the Code or the corresponding Tax Laws of any nation, province,
territory, state or locality.

 

(8)           No
election under Section 341(f) of the Code has been made or shall be made prior
to the Closing Date to treat the Company or any of its Subsidiaries as a
consenting corporation, as defined in Section 341 of the Code.

 

(9)           Neither
the Company nor any of its Subsidiaries is a party to any agreement that would
require (including as a result of the execution and delivery of this Agreement
or the consummation of the Amalgamation or any of the other transactions
contemplated by this Agreement) the Company or any of its Subsidiaries or any
affiliate thereof to make any payment that would constitute an “excess
parachute payment” for purposes of Sections 280G and 4999 of the Code or that
would not be deductible pursuant to Section 162(m) of the Code or the
corresponding Tax Laws of any nation, province, territory, state or locality.

 

(10)         The
Company and each of its Subsidiaries have delivered to Parent and Subco true,
complete and correct copies of each of the Tax Returns for income Taxes filed
on behalf of the Company and each of its Subsidiaries for the 1999 tax year and
all subsequent tax years.

 

(11)         The
non-capital losses (as defined in the ITA) of the Company and each of its
Subsidiaries, in the aggregate, are equal to or exceed the amounts listed in
Company Audited Financial Statements.

 

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

 

(13)         No
indebtedness of the Company or any of its Subsidiaries consists of “corporate
acquisition indebtedness” within the meaning of Section 279 of the Code.

 

30

 

Section 4.9.            Title to
Properties; Owned and Leased Real Properties; No Liens.

(a)           Except
as set forth on Section 4.9(a) of the Company Disclosure Letter, the Company
has all assets, properties, rights and Contracts necessary to permit the
Company to continue to conduct its business in the same manner as it is
currently being conducted.  The Company
and each of its Subsidiaries has good and marketable, valid leasehold interests
in, (i) all of its material tangible properties and assets (real and personal),
including all such properties and assets reflected in the 2003 Balance Sheet,
except as indicated in the notes thereto or as sold or otherwise disposed of in
the ordinary course of business after such date, or, with respect to the
Pleasanton and Markham premises, as dealt with under the agreements referenced
in Section 7.2(i), and (ii) all the material tangible properties and assets
that have been purchased by the Company or any of the Subsidiaries since March
31, 2003 (the date of the 2003 Balance Sheet), except for such properties and
assets that have been sold or otherwise disposed of in the ordinary course of
business, in each case subject to no Liens, except for Permitted Liens.

 

(b)           The
Company has no Owned Real Property.

 

(c)           Section
4.9(c) of the Company Disclosure Letter sets forth a complete and correct list
of the addresses of all Leased Real Property. 
The Company or one of its Subsidiaries has a valid leasehold interest in
all Leased Real Property, free and clear of any and all Liens except for
Permitted Liens.  Each lease with
respect to the Leased Real Property is in full force and effect in accordance
with its terms in all material respects; in each case, the Company or its
Subsidiary, as applicable, has been in peaceable possession since the
commencement of the original term of such lease and is not in default
thereunder in any material respect, and there exists no default or event,
occurrence, condition or act (including the Amalgamation and transactions
contemplated hereby) which, with the giving of notice, the lapse of time or the
happening of any further event or condition (including the Transactions), would
become a default in any material respect under such lease.  Neither the Company nor any of its
Subsidiaries has violated any of the terms or conditions under any such lease
in any material respect, and, to the Company’s Knowledge, all of the covenants
to be performed by any other party under any such lease have been fully
performed in all material respects.  The
Company has, prior to the date of this Agreement, made available to Parent
true, complete and correct copies of each lease or other agreement (including,
in each case, any and all amendments, modifications and supplements thereto)
with respect to each Leased Real Property.

 

(d)           All
of the Company’s and its Subsidiaries’ personal property, including all
computers, electronics, leasehold improvements, furnishings, machinery and
equipment, is in good repair, has been well maintained, substantially complies
with all applicable Laws and all computers, electronics, machinery and
equipment is in good working order.

 

(e)           Neither
the Company nor any of its Subsidiaries is obligated to undertake or pay for
the restoration or removal of any alterations or improvements or the repair of
any damages (including any such damages arising from lapses of maintenance)
with respect to any Leased Real Property in excess of $10,000 in the aggregate
except to the extent that such restoration, removal, alteration, improvement or
repair is specifically provided for on the 2003 Balance Sheet or under the
agreements referenced in Section 7.2(i).

 

31

 

Section 4.10.          Intellectual Property.

 

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

 

(b)           All
Business Intellectual Property is valid, subsisting and enforceable.  No Owned Intellectual Property has been
abandoned or canceled (excepting any expirations in the ordinary course),
adjudicated invalid or unenforceable, or is subject to any outstanding order,
judgment or decree restricting its use or adversely affecting or reflecting the
Company’s or the Subsidiaries’ rights thereto. 
To the Company’s Knowledge, no Licensed Intellectual Property has been
abandoned or canceled (excepting any expirations in the ordinary course),
adjudicated invalid or unenforceable, or is subject to any outstanding order,
judgment or decree restricting its use or adversely affecting or reflecting the
Company’s or the Subsidiaries’ rights thereto. 
The Owned Intellectual Property has been marked where appropriate with
notices and legends as permitted by Federal and State laws or otherwise
permitted to indicate the Company’s or the Subsidiaries’ patent, trademark,
copyright, confidential, proprietary, and other Intellectual Property rights in
such Owned Intellectual Property.

 

(c)           The
Company and the Subsidiaries own or have the right to use all Intellectual
Property used or contemplated to be used in the business of the Company and the
Subsidiaries in accordance with their current business plans.  All such rights are free of all Liens and,
except as set forth in Section 4.10(c) of the Company Disclosure Letter, are
fully assignable by the Company and the Subsidiaries to any Person, without
payment, consent of any Person or other condition or restriction.  The Business Intellectual Property
constitutes all Intellectual Property necessary to operate the business of the
Company and the Subsidiaries as currently conducted and as currently
contemplated to be conducted in accordance with their current business
plans.  No Person other than the Company
has any ownership interest in, or a right to receive a royalty or similar
payment with respect to, any of the Owned Intellectual Property.

 

(d)           No
suit, action, reissue, reexamination, public protest, interference,
arbitration, mediation, opposition, cancellation or other proceeding
(collectively, “Suit”) is pending concerning any claim or position that the
Company or the Subsidiaries have violated any Intellectual Property
rights.  No claim has been threatened or
asserted against the Company or the Subsidiaries or, to the Company’s
Knowledge, any of their indemnitees for violation of any Intellectual Property
rights.  To the Company’s Knowledge, the
Company and the Subsidiaries are not violating and have not violated any
Intellectual Property rights.

 

(e)           No
Suit is pending concerning any Intellectual Property Contract, including any
Suit concerning a claim or position that the Company or the Subsidiaries or
another Person has breached any Intellectual Property Contract or that any
Intellectual Property Contract is invalid or unenforceable.  No such claim has been threatened or
asserted.  The Company and the
Subsidiaries are in compliance with, and have conducted their business so as to
comply with, all terms of all Intellectual Property Contracts.  There exists no event, condition or
occurrence which, with the giving of notice or lapse of time, or both, would
constitute a breach or default by the Company or the Subsidiaries or, to the
Company’s Knowledge, another Person under any Intellectual Property
Contract.  Each Person who is a party to
any Intellectual Property

 

32

 

Contract had
and has all rights, power and authority necessary to enter into, be bound by
and fully perform such Intellectual Property Contract.  No party to any Intellectual Property
Contract has given the Company or the Subsidiaries notice of its intention to
cancel, terminate or fail to renew any Intellectual Property Contract.  The execution and delivery of this Agreement
and consummation of the transactions contemplated hereby will not result in the
breach of, or create on behalf of any Person the right to terminate or modify
any Intellectual Property Contract.

 

(f)            No
Suit is pending concerning the Owned Intellectual Property, including any Suit
concerning a claim or position that the Owned Intellectual Property is invalid,
unenforceable, unpatentable, unregisterable, cancelable, not owned or not owned
exclusively by the Company or the Subsidiaries.  No such claim has been threatened or asserted.  To the Company’s Knowledge, no valid basis
for any such Suits or claims exists.

 

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

 

(h)           Except
as set forth in Section 4.10(h) of the Company Disclosure Letter, to the
Company’s Knowledge, no Person is violating any Business Intellectual Property.

 

(i)            The
Registered Owned Intellectual Property is in good standing and the Company and
the Subsidiaries have timely made all filings and payments with the appropriate
foreign and domestic agencies required to maintain in subsistence all
Registered Owned Intellectual Property. 
Except as set forth in Section 4.10(i) of the Company Disclosure Letter,
no due dates for filings or payments concerning the Registered Owned
Intellectual Property (including office action responses, affidavits of use,
affidavits of continuing use, renewals, requests for extension of time,
maintenance fees, application fees and foreign convention priority filings)
fall due within ninety (90) days of the Closing Date, whether or not such due
dates are extendable.  The Company and
the Subsidiaries are in compliance with the applicable rules and regulations of
such agencies with respect to Registered Owned Intellectual Property.  All documentation necessary to confirm and
effect the Company’s and the Subsidiaries’ ownership of Owned Intellectual
Property, if acquired from other Persons, has been recorded in the United
States Patent and Trademark Office, the United States Copyright Office, the
Canadian Intellectual Property Office and other official offices, as
appropriate.

 

(j)                            The
Company and the Subsidiaries have taken all reasonable measures to protect the
secrecy, confidentiality and value of all Trade Secrets used in their
businesses (collectively, “Business Trade Secrets”) (including
entering into appropriate confidentiality agreements with all officers,
directors, employees, and other Persons with access to the Business Trade
Secrets).  Except as set forth in
Section 4.10(j) of the Company Disclosure Letter, none of the Business Trade
Secrets have been disclosed to any Person other than

 

33

 

Company and
Subsidiary employees, Company and Subsidiary customers (but only with respect
to the disclosure of source code under Customer Agreements), or Company and
Subsidiary contractors who had a need to know and use such Business Trade
Secrets in the ordinary course of employment or contract performance and who
executed appropriate confidentiality agreements prohibiting the unauthorized
use or disclosure of such Business Trade Secrets and containing other terms as
reasonably necessary or appropriate for the protection and maintenance of such
Business Trade Secrets.

 

(k)                           To
the Company’s Knowledge, no current or former Company or Subsidiary employee is
or was a party to any confidentiality agreement and/or agreement not to compete
that restricts or forbids, or restricted or forbade at any time during such
employee’s employment by the Company or a Subsidiary such employee’s
performance of the Company’s or the Subsidiaries’ business, or any other
activity that such employee was hired to perform or otherwise performed on
behalf of or in connection with such employee’s employment by the Company or a
Subsidiary.

 

(l)                            No
consents are required in order for the Intellectual Property (or, to the extent
sub-licensed, Licensed Intellectual Property) to be licensed or sub-licensed to
any third party.

 

(m)                          To
the Company’s Knowledge, the conduct of the Company’s business does not involve
any infringement, misuse or misappropriation of any Intellectual Property
rights of third parties.

 

(n)                           All
of the Owned Intellectual Property and, to the Company’s Knowledge, all of the
Licensed Intellectual Property, is subsisting, and to the Company’s Knowledge,
none of the Owned Intellectual Property or the Licensed Intellectual Property
is invalid or unenforceable.  To the
Company’s Knowledge, no infringement, misuse or misappropriation of the Owned
Intellectual Property has occurred.

 

(o)                           Copies
of all license and maintenance agreements for the Third Party Software have
been made available by the Company to Parent and Subco, except in respect of
Third Party Software that is shrink-wrapped software and that is purchased
off-the-shelf by the Company.

 

Section 4.11.          Products.  Except as set forth in Section 4.11(a) of
the Company Disclosure Letter, the Company is the sole and exclusive owner of
the Products and all constituent parts thereof (excluding any Third Party
Software contained therein).

 

(b)                           Section
4.11(b) of the Company Disclosure Letter contains a true and complete list of
all Third Party Software, separated into the following categories and
sub-categories:  (i) Third Party
Software that is incorporated into Products that is (A) embedded in one or more
Products, or (B) separate from the Products (i.e., an add-on Product)
that is sold or licensed (bundled) together with one or more Products, and (ii)
Third Party Software not licensed by the Company or the Subsidiaries to
customers but used internally by the Company or the Subsidiaries.

 

34

 

(c)                           The
versions of the Products that have been generally commercially released perform
substantially in accordance with the Ancillary Product Materials and meet all
contractual terms and written warranties provided to any customers who purchase
or license, or have purchased or licensed, such Products from the Company,
Subsidiaries or their agents.  To the
Company’s Knowledge, the Products do not contain any Disabling Devices.

 

(d)                           The
source code for the Products that have been generally commercially released
will compile into executable object code and such executable object code is
capable of substantially performing the functions described in the Ancillary
Product Materials.  The source code,
Ancillary Product Materials and other Documentation, to the extent pertaining
to the Products are accurate and sufficiently documented to enable a Computer
Software developer of reasonable skill to understand, modify, repair, maintain,
compile and otherwise use the material aspects of the Products.  The Company or the Subsidiaries have taken
commercially reasonable steps to protect the source code for the Products as
Trade Secrets of the Company or the Subsidiaries.

 

(e)                           Section
4.11(e) of the Company Disclosure Letter contains (i) true and complete copies
of the Company’s current versions of its standard Customer Agreements, and all
material deviations thereto; (ii) a true and complete list of customer names
for all Customer Agreements (and the Company has provided or made available
copies of the Customer Agreements for the top 10 revenue generating customers);
and (iii) a true and complete list of all other agreements pursuant to which
the Company or the Subsidiaries is obligated to provide support services with
respect to the Products (and the Company has provided or made available copies
of all such other agreements).

 

(f)                            Except
as set forth in Section 4.11(f) of the Company Disclosure Letter, neither the
Company nor any of the Subsidiaries has granted to any Person, and no Person,
other than the Company (including any independent contractors who have
performed services for the Company or the Subsidiaries), holds any rights in,
or licenses to produce, support, maintain, modify, distribute, license,
sublicense, sell, use in development or otherwise use, any of the Products.  There are no exclusive arrangements between
the Company or any of the Subsidiaries and any other Person to license,
sublicense, sell, use or distribute any of the Products.  Section 4.11(f) of the Company Disclosure
Schedule sets forth a true and complete list of all agreements by the Company
or the Subsidiaries with resellers of the Products and all agreements pursuant
to which the Company or the Subsidiaries are resellers of products.

 

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

 

(h)                           No
agreement pursuant to which the Company or any of the Subsidiaries has licensed
the use of the Products to any third party obligates the Company or any of the
Subsidiaries to develop and provide any specific improvement, enhancement,
change in functionality or other alteration in the performance of the Products
beyond the Company’s current Products.

 

35

 

Section 4.12.          Agreements, Contracts
and Commitments.  Section 4.12 of
the Company Disclosure Letter contains a list of each of the following
contracts to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries is bound (collectively, the “Company
Material Contracts”):

 

(a)                           Contracts,
express or implied, with any current or former employee, director or officer
of, or consultant of or to, the Company or any of its Subsidiaries under which
the Company or its Subsidiaries may have ongoing or future payment obligations
for services rendered or to be rendered;

 

(b)                           Contracts
that involve the performance of services of an amount, payments or value (as
measured by the revenue derived therefrom during the fiscal year ended March
31, 2003) in excess of $50,000 annually, unless terminable by the Company on
not more than 30 days notice without material penalty;

 

(c)                           Contracts
(i) for the sale of assets of the Company or any of its Subsidiaries involving
aggregate consideration of $50,000 or more (other than licenses of Products in
the ordinary course of business), or (ii) for the grant to any Person of any
preferential rights to purchase any material amount of assets or any material
asset of the Company or any of its Subsidiaries;

 

(d)                           Contracts
for the acquisition, by merging or consolidating with, by purchasing an equity
interest in or a portion of the assets of, or by any other manner having the
same or similar effect, any business or any Person or assets of any Person
(other than the purchase of equipment, inventories and supplies in the ordinary
course of business consistent with past practice);

 

(e)                           Contracts
(including loan agreements, credit agreements, notes, bonds, mortgages or other
agreements, indentures or instruments) relating to indebtedness for borrowed
money, letters of credit, the deferred purchase price of property, conditional
sale arrangements, capital lease obligations, obligations secured by a Lien, or
interest rate or currency hedging activities (including guarantees,
indemnifications or other contingent liabilities in respect of any of the
foregoing but in any event excluding trade payables arising in the ordinary
course of business consistent with past practice, intercompany indebtedness
shown on the 2003 Balance Sheet and immaterial leases for telephones, copy
machines, facsimile machines and other office equipment);

 

(f)            Loans
or advances to (other than advances to employees in respect of travel and
entertainment expenses in the ordinary course of business in amounts of $10,000
or less to any individual on any date of determination, and $50,000 in the
aggregate on any date of determination), or investments in, any Person, other
than the Company or a Subsidiary, or any Contracts relating to the making of
any such loans, advances or investments or any Contracts involving a sharing of
profits (except for bonus arrangements with employees entered into in the
ordinary course of business consistent with past practice);

 

(g)           Contracts
relating to any joint venture, partnership, strategic alliance profit sharing
arrangement or other association of any kind (including any franchising
agreement); any

 

36

 

Contract under
which the Company agrees to carry on any part of its business or any other
activity in such manner or by which the Company agrees to share any revenues or
profit with any Person;

 

(h)           Contracts
to be performed relating to capital expenditures with a value in excess of
$10,000 in any fiscal year, or in the aggregate capital expenditures with a
value in excess of $50,000;

 

(i)            Contracts
relating to any Company Permits;

 

(j)            Contracts
which contain restrictions with respect to payment of dividends or any other
distribution in respect of its capital stock;

 

(k)           Contracts
containing covenants purporting to restrict the Company or any of its
Subsidiaries or its or their affiliates from competing with or otherwise
restraining, limiting or impeding the Company’s or any of its Subsidiaries’
ability to compete with, any Person or conduct any business or line of business
or which restrict any other Person from competing with the Company, any of its
Subsidiaries or any of its or their affiliates;

 

(l)            Contracts
which are material to the Company or any of its Subsidiaries and which restrict
the Company or any of its Subsidiaries from disclosing any information
concerning or obtained from any other Person (other than Contracts entered into
in the ordinary course of business);

 

(m)          Contracts
or commitments to pay any royalty, license fee or management fee; and

 

(n)           Contracts
that contain minimum annual purchase obligations (take-or-pay) or that contain
penalties or repricing provisions (e.g., “retroactive discounts”) if
certain minimum quantities are not purchased.

 

Each Company Material Contract
is in full force and effect, is a valid and binding obligation of the Company
or the Subsidiary of the Company party thereto and, to the Company’s Knowledge,
each other party thereto.  There exists
no default or event of default or event, occurrence, condition or act
(including the consummation of the transactions contemplated hereby) on the
part of the Company or any Subsidiary or, to the Company’s Knowledge, on the
part of any other party to any Company Material Contract that, with the giving
of notice or the lapse of time or both, would become a default or event of
default under any Company Material Contract.

 

Section 4.13.          Litigation and
Governmental Directives.

 

(a)           There
are no Actions or Proceedings  pending against or, to the Company’s
Knowledge, threatened against or binding upon or materially adversely affecting
or which could materially adversely affect the Company or any of its
Subsidiaries, or any of their respective properties or rights, or seeking to
prevent the transactions contemplated by this Agreement.

 

(b)           Neither
the Company nor any of its Subsidiaries is a party to any Governmental
Directive mandating or prohibiting any conduct by any of them or subject to any

 

37

 

commitment
letter or similar undertaking executed in connection with any such Governmental
Directive or has adopted any board resolution with respect to any Governmental
Directive.

 

(c)           There
are no outstanding orders, notices or similar requirements relating to the
Company or any of its Subsidiaries issued by any building, environmental, fire,
health, labor or police authorities or from any other federal, provincial,
territorial, state or municipal authority and there are no matters under
discussion with any such authorities relating to order, notices or similar
requirements.

 

Section 4.14.          Environmental Matters.

 

(a)           The
operations of the Company and its Subsidiaries are in material compliance with
Environmental Laws.

 

(b)           Each
of the Company and its Subsidiaries has obtained, holds in good standing and is
in material compliance with all Company Permits and Governmental Approvals
required under Environmental Laws.

 

(c)           Neither
the Company nor any of its Subsidiaries has received any environmental
directive or notice regarding any actual or alleged violation of any
Environmental Law or actual or potential liability arising under any
Environmental Law in connection with the operation of the Company’s business or
the use, operation or occupation of the Leased Real Property.

 

(d)           To
the Company’s Knowledge, there are no and have been no substances defined as
hazardous under any Environmental Laws, or any underground storage tanks (“USTS”),
above-ground storage tanks (“ASTS”), polychlominated biphenylys (“PCBS”),
asbestos-containing materials (“ACMS”) at, or under the Leased Real
Property during the term of the Company’s use, occupation or operation of the
Leased Real Property or as a result of the operation of its business.

 

(e)           There
has been no Release to the environment of any substances defined hazardous
under any Environmental Law associated with any Company operations at any of
the properties operated by the Company and its Subsidiaries while such
properties were owed, used, occupied or operated by the Company or any of its
Subsidiaries.

 

(f)            No
claims have been asserted against the Company or any of its Subsidiaries under
any Environmental Law (“Environmental Claims”), nor has the Company
or any of its Subsidiaries received written notice of any threatened or pending
Environmental Claims against the Company or any of its Subsidiaries and, to the
Company’s Knowledge, there is no valid basis for any such Environmental Claim.

 

Section 4.15.          Employee Benefit Plans.

 

(a)           Section
4.15 of the Company Disclosure Letter sets forth a true, complete and correct
list of all Benefit Plans.  The Benefit
Plans comply substantially, and where applicable are registered in accordance,
with the requirements of all applicable Laws and each

 

38

 

Benefit Plan
has been operated, maintained and administered in substantial compliance with
its terms, applicable Laws and administrative guidelines issued by regulatory
authorities.

 

(b)           There
are no pending, nor has the Company or any of its Subsidiaries received notice
of any threatened, Actions or Proceedings, against the Company or any of its
Subsidiaries, the funding agent, the insurers or the fund relating to any
Benefit Plan or otherwise involving any of the Benefit Plans and their assets.

 

(c)           All
employer and employee payments, contributions and premiums required to be made
in connection with the Benefit Plans under applicable Laws or their terms as of
the date of this Agreement have been made or provided for.

 

(d)           Any
U.S. Benefit Plan intended to be qualified under Section 401(a) of the Code has
been determined by the IRS to be so qualified or has remaining under applicable
Law a period of time in order to obtain such determination of qualification and
no Benefit Plan has been amended since the effective date of its most recent
determination letter prior to the end of its remedial amendment period, in any
respect that would result in its disqualification.  Except as otherwise set forth in Section 4.15(d) of the Company
Disclosure Letter, each U.S. Benefit Plan intended to be qualified under
Section 401(a) of the Code has received a determination letter from the
Internal Revenue Service to the effect that it meets the requirements of
Section 401(a) of the Code.  Neither the
Company nor any of its Subsidiaries nor any of their ERISA Affiliates has any
liability (contingent or otherwise) under Title IV of ERISA (other than for the
payment of premiums, none of which are overdue) or has incurred or expects to
incur any liability in connection with an “accumulated funding deficiency”
within the meaning of Section 412 of the Code, whether or not waived.  Neither the Company nor any of its
Subsidiaries has incurred or expects to incur any material liability with
respect to its Benefit Plans (including additional contributions, fines, taxes
or penalties) or operate any Benefit Plan that is a “group health plan” (as
such term is defined in Section 607(1) of ERISA or Section 5000(b)(1) of the
Code) in compliance with the applicable requirements of Part 6 of Subtitle B of
Title I of ERISA or Section 4980B of the Code (“COBRA”).  No reportable event (as defined in Section
4043(c) of ERISA) has occurred or is expected to occur with respect to any
Pension Plan.  Neither the Company nor
any of its Subsidiaries nor any of their ERISA Affiliates has incurred any
withdrawal liability with respect to a “multiemployer plan” under Title IV of
ERISA and no event or condition has occurred which would be expected to cause
the Company, any Subsidiary of the Company, or any ERISA Affiliate to incur such
withdrawal liability.  The execution of,
and performance of the transactions contemplated in, this Agreement will not
(either alone or upon the occurrence of any additional or subsequent events)
constitute an event under any U.S. Benefit Plan that will or may result in any
payment (whether of severance pay or otherwise), acceleration, forgiveness or
indebtedness, vesting, distribution, increase in benefits or obligation to fund
benefits with respect to any current or former employees of the Company or any
of its Subsidiaries (whether or not any such payment would constitute a
“parachute payment” or “excess parachute payment” within the meaning of Section
280G of the Code).  Neither the Company,
any Subsidiary of the Company nor any of their ERISA Affiliates has incurred
any liability or penalty under Section 4975 of the Code or Section 502(i) of
ERISA with respect to any U.S. Benefit Plan, or has engaged in a “prohibited
transaction” (as defined in Section 4975 of the Code or Section 406 of ERISA).

 

39

 

(e)                                  Except
as set forth in Section 4.15(e) of the Company Disclosure Letter, neither the
Company nor any of its Subsidiaries, nor any Affiliate of the Company maintains
or is required to contribute to any Foreign Pension Plan to which the Company
would have any liability.

 

(f)                                    Except
as required under Section 4980B of the Code or other applicable Law or
disclosed in Section 4.15(a) of the Company Disclosure Letter, neither the
Company nor any of its Subsidiaries has any obligation to provide
post-retirement or post-termination of employment, health or life benefits
to current or former employees.  Any
continuation coverage provided under any welfare benefits plan complies with
Section 4980B of the Code or other applicable Law and is at the expense of the
participant or beneficiary.

 

(g)                                 Any
terminated Benefit Plan has been terminated in accordance with its terms and
applicable Laws and all benefits under any such terminated Benefit Plan have
been made in accordance with its terms and applicable Laws.

 

(h)                                 Each
Benefit Plan may be amended or terminated at any time after the Closing Date
without liability to the Company.

 

(i)                                     The
Company has provided or made available to Parent and Subco true, complete and
up-to-date copies of the Benefit Plans and each Executive Agreement, together
with all amendments thereto, and to the extent applicable (i) all current and
past summary plan descriptions; (ii) the annual report on Internal Revenue
Service Form 5500-series, including any attachments thereto, for each of the
last two plan years; (iii) the most recent accountant’s report, if any; (iv)
the most recent Internal Revenue Service determination letter if applicable,
and if not evidence of any application in respect thereof; (v) the two most
recent actuarial reports, if any; (vi) the most recent financial statements, if
any; (vi) all contracts relating to Benefit Plans with respect to which the
Company or any of its Subsidiaries may have any liability, including insurance
contracts, investment management contracts, subscription and participation
agreements, record keeping agreements and other services agreements.

 

(j)                                     All
contracts in respect of the Benefit Plans are valid and the Company or any of
its Subsidiaries, or following the Amalgamation becoming effective, the Parent
or Amalco, can enforce such contracts or cause such contracts to be enforced.

 

(k)                                  Except
as permitted by the Benefit Plans, their applicable funding agreements and
applicable Laws, there has been no withdrawal of assets or any other amounts
from any of the Benefit Plans other than proper payments of benefits to
eligible beneficiaries, refunds of over-contributions to plan members and
permitted payments of reasonable expenses incurred by or in respect of such Benefit
Plans.

 

(l)                                     All
employer contribution holidays have been permitted by the terms of the Benefit
Plans and have been in accordance with applicable Laws.

 

(m)                               No
order has been made or notice given pursuant to any applicable Laws requiring
(or proposing to require) the Company or any of its Subsidiaries to take (or
refrain from taking) any action in respect of any Benefit Plan, and no event
has occurred and no condition or circumstance exists that has resulted or,
could reasonably result in any Benefit Plan

 

40

 

(i) being
ordered or required to be terminated or wound-up in whole or in part, (ii) have
its registration under any applicable Laws refused or revoked, (iii) being
placed under the administration of any trustee or any regulatory authority or
(iv) being required to pay any material taxes or penalties under any applicable
Laws.

 

(n)                                 Except
as disclosed in Section 4.15(n) of the Company Disclosure Letter, all of the
Benefit Plans are fully funded in accordance with their terms and all
applicable Laws and generally accepted actuarial principles and practices.

 

(o)                                 No
event has occurred and there has been no failure to act on the part of the
Company or any of its Subsidiaries, or to the Company’s Knowledge, on the part
of any funding agent or any administrator of any of the Benefit Plans that
could subject the Company or any of its Subsidiaries, following the
Amalgamation becoming effective the Parent or Amalco, or the fund of any
Benefit Plan to the imposition of any tax, penalty or other disability with
respect to any Benefit Plans, whether by way of indemnity or otherwise.

 

(p)                                 Neither
the Company nor any of its Subsidiaries has any obligation in respect of any
Benefit Plans that are multi-employer pension plans or multi-employer benefit
plans except contribution obligations as are set out in the collective
agreements provided to Parent and Subco.

 

(q)                                 None
of the Benefit Plans require or permit a retroactive increase in premiums or
payments, and the level of insurance reserves, if any, under any self-insured
Benefit Plan is reasonable and sufficient to provide for all incurred but
unreported claims.

 

Section 4.16.                             Compliance
with Laws.  Neither the Company nor
any of the Subsidiaries are in material violation of, nor have any of them
received any notice alleging any such violation with respect to, any applicable
provisions of any Laws applicable to the conduct of their businesses or the
ownership or operation of their properties or assets.  No investigation or review by any Governmental Entity with
respect to the Company or any of its Subsidiaries is pending or, to the
Company’s Knowledge, threatened, nor, to the Company’s Knowledge, has any
Governmental Entity indicated an intention to conduct the same.

 

Section 4.17.                             Permits
and Licenses.  The Company and each
of the Subsidiaries have obtained and have complied with, and are in compliance
with, all material Company Permits and there has not occurred any default under
any such Company Permit and no Action or Proceeding has been filed or commenced
against any of them alleging any failure to so comply.  Set forth on Section 4.17 of the Company
Disclosure Letter is a description of any oral or written understandings or
waivers between the Company or any of its Subsidiaries, on the one hand, and
any Governmental Entity, on the other, with respect to any Company Permit.

 

Section 4.18.                             Labor
Matters.  

 

(a)                                  Neither
the Company nor any of its Subsidiaries is a party to or otherwise bound by any
collective bargaining agreement or collective agreement, contract or other
agreement or understanding with a trade union, council of trade unions,
employee bargaining agency, affiliated bargaining agency or labor union
organization.  There is no actual,
pending or threatened labor strike or dispute, walkout, work stoppage,
slowdown, picketing, hand billing,

 

41

 

boycott,
arbitration, grievance, complaint, charge or similar labor related dispute,
lockout or organizational effort involving employees of the Company or any of
its Subsidiaries, and there have not been any such activities or disputes or
proceedings within the last year.  There
is no unfair labor practice charge or complaint against the Company or any of
its Subsidiaries, either actual, pending or threatened; no union, council of
trade unions, employee bargaining agency, affiliated bargaining agency or labor
organization is currently certified, or otherwise asserts bargaining rights or
a representation question with respect to any employees of the Company or any
of its Subsidiaries, has applied to be certified or has applied to have the
Company or any of its Subsidiaries declared a related employer or a successor
employer pursuant to applicable labor relations legislation.

 

(b)                                 There
are no occupational health and safety claims or complaints against the Company
or any of its Subsidiaries and there are no actual, pending or threatened
prosecutions under applicable occupational health and safety legislation
against the Company, any of its Subsidiaries or their respective supervisors
and there have been no such prosecutions.

 

(c)                                  Neither
the Company nor any of its Subsidiaries has effectuated (i) a “plant closing”
(as defined in the WARN Act or other applicable employment/labor legislation
including, but not limited to, the ESA) affecting any site of employment or one
or more facilities or operating units within any site of employment of the
Company or any Subsidiary; (ii) a “mass layoff” (as defined in the WARN Act or
other applicable employment/labor legislation including, but not limited to,
the ESA) affecting any site of employment or facility of the Company or any of
its Subsidiaries; (iii) a layoff or termination of 50 or more employees at an
establishment, within the meaning of the ESA, in the same four week period; or
(iv) a severance, within the meaning of the ESA, of 50 or more employees at an
establishment within a six-month period as a result of a permanent
discontinuance of all or part of the business; nor has the Company and/or any
Subsidiary been engaged in layoffs or employment terminations sufficient in
number to trigger application of any similar state, provincial or local Law;
and none of the affected employees has suffered an “employment loss” (as defined
in the WARN Act) since ninety days prior to the date hereof.  Neither the Company nor any of its
Subsidiaries has incurred any material liability under the WARN Act or similar
state, local or provincial local Laws including, but not limited to, the ESA
which remains unpaid or unsatisfied.

 

(d)                                 The
Company and its Subsidiaries are in substantial compliance with the terms and
provisions of the Immigration Reform and Control Act of 1986, as amended and
all other applicable immigration Laws and all related regulations promulgated
thereunder.

 

(e)                                  Except
as set forth in Section 4.18(e) of the Company Disclosure Letter, there are no
complaints, charges, grievances or other claims against the Company or any of
its Subsidiaries actual, pending, or to the Company’s Knowledge, threatened to
be brought or filed, with any authority, including a court, commission, board
or arbitrator based on, arising out of, in connection with, or otherwise
relating to the employment or termination of employment or any individual by the
Company.

 

(f)                                    The
Company and its Subsidiaries are in material compliance with all laws governing
the employment of its employees, including, but not limited to, all such
federal, state, provincial, and local laws relating to wages, hours, holidays,
overtime, vacation, collective

 

42

 

bargaining,
discrimination, retaliation, civil rights, safety and health, workers’
compensation and the collection and payment of withholding and similar
taxes.  Neither the Company nor any of
its Subsidiaries is aware of any complaint by an employee, consultant or
dependent or independent contractor or has conducted any internal investigation
regarding conduct that may constitute a violation of any federal, state,
provincial or local law governing employment.

 

(g)                                 Since
March 31, 2003 (the date of the 2003 Balance Sheet), no officer or employee of
the Company or any of its Subsidiaries has given or received notice to
terminate his employment.

 

(h)                                 There
are no officers or employees of the Company or any of its Subsidiaries who are
on secondment, maternity leave or absent on grounds of disability, military or
other leave of absence (other than normal holidays and vacations or absence of
no more than one week due to illness).

 

(i)                                     All
salaries and wages and other benefits, bonuses and commissions of all
directors, officers or employees of the Company and its Subsidiaries have, to
the extent due, been paid or discharged in full, including but not limited to
all payments set forth or refrenced in the Employment Agreements and due under
the incentive compensation plan, the sales commission plan and the retention
bonus plan.

 

(j)                                     The
Company and its Subsidiaries have not entered into any agreement and no event
has occurred which may involve the Company and its Subsidiaries in the future
acquiring any undertaking or part of one such that the Transfer Regulations may
apply thereto.

 

(k)                                  The
Company and its Subsidiaries have complied with their obligations, if any, to
inform and consult with trade unions and other representatives of workers and
to send notices to relevant governmental officials.

 

(l)                                     The
Company and its Subsidiaries have maintained adequate and suitable records as
required by law regarding the employment of their directors, officers and
employees and such records and record keeping practices substantially comply
with requirements of data protection legislation regarding the processing and
storage of personal data on individuals.

 

(m)                               
All employees of the Company and U.S. Subsidiaries have signed employment
agreements that contain a confidentiality and assignment of inventions
provision.  The Company has provided or
made available to the Parent and Subco true and complete copies of each employment
agreement and amendments and schedules thereto (collectively the “Employment
Agreements”).

 

(n)                                 Except
as set forth in Section 4.18(n) of the Company Disclosure Letter, neither the
Company nor any of its Subsidiaries is a party to any oral or written:  (i) agreement with any executive officer or
employee of the Company or any of its Subsidiaries (A) the benefits of
which are contingent, or the payment or terms of which are accelerated or
materially altered, upon the occurrence of a transaction involving the Company
or any of its Subsidiaries of the nature of any of the transactions
contemplated by this Agreement, (B) providing any term of employment or
compensation guarantee or (C) providing severance benefits or other benefits
after the termination of employment of such executive officer or employee; or
(ii) agreement or

 

43

 

plan binding
the Company or any of its Subsidiaries, or with respect to the premiums
therefor, any of the benefits of which shall be increased, or the vesting of
the benefits of which shall be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement (either alone or upon the
occurrence of any additional or subsequent event) or the value of any of the
benefits of which shall be calculated on the basis of any of the transactions
contemplated by this Agreement.

 

(o)                                 Neither
the Company nor any of its Subsidiaries has extended a loan that is currently
outstanding to any employee, except for advances in respect of travel and
entertainment expenses in the ordinary course of business.

 

(p)                                 Section
4.18(p) of the Company Disclosure Letter sets out:

 

(i)                                     the
names of all employees or consultants of the Company and any of its
Subsidiaries;

 

(ii)                                  their
annual salary or remuneration;

 

(iii)                               their
job title;

 

(iv)                              their
total length of employment or service, including any prior employment as
disclosed in the records of the Company and any of its Subsidiaries that would
affect calculation of years of service for purposes of benefit entitlement
(including statutory notice or statutory notice or statutory severance pay) or
pension entitlement;

 

(v)                                 the
length of any consulting contract;

 

(vi)                              whether
the employees are union or non-union; and

 

(vii)                           other
terms and conditions of their employment (other than Benefit Plans.)

 

(q)                                 All
vacation pay for employees of the Company and any of its Subsidiaries is
properly reflected and accrued in the books and accounts of the Company and all
of its subsidiaries.

 

(r)                                    The
Company and any of its Subsidiaries have prepared and posted pay equity plans
in accordance with applicable Law for all employees of the Company and any of
its Subsidiaries and have made all necessary adjustments pursuant to such pay
equity plans.

 

(s)                                  Any
pre-start health and safety reviews have been conducted and written reports
have been obtained and are being maintained by the Company and any of its
Subsidiaries, in accordance with the requirements of applicable occupational
health and safety legislation and where an exemption to such requirements apply,
documents establishing the exemption are being maintained as required.

 

Section 4.19.                             Insurance.  Section 4.19 of the Company Disclosure
Letter sets forth the material insurance coverages maintained by the Company
and its Subsidiaries.  The

 

44

 

Company has
made available to Parent and Subco copies of all material insurance policies
which are owned by the Company or its Subsidiaries or which name the Company or
any of its Subsidiaries as an insured, additional insured or loss payee
(including those pertaining to the Company’s or any of its Subsidiaries’
assets, employees or operations) (collectively, the “Insurance Policies”) and (a)
each of the Insurance Policies is in full force and effect and is valid, outstanding
and enforceable, and all premiums due thereon have been paid in full and cover
against the risks of the nature normally insured against by entities in the
same or similar lines of business as the Company and its Subsidiaries in
coverage amounts typically and reasonably carried by such entities, (b) none of
the Insurance Policies shall terminate or lapse (or be affected in any other
adverse manner) by reason of the transactions contemplated by this Agreement,
(c) each of the Company and its Subsidiaries has complied in all material
respects with the provisions of each Insurance Policy under which it is the
insured party, (d) no insurer under any Insurance Policy has cancelled or
generally disclaimed liability under any such Insurance Policy or indicated any
intent to do so or not to renew any such Insurance Policy and (e) all material
claims under the Insurance Policies have been filed in a timely fashion.

 

Section 4.20.                             Information
in Company Circular.  The Company
has delivered all notices and disclosure that is required under applicable Law
in respect to the Transactions.  The
Company Circular complies in all material respects with all applicable Laws.

 

Section 4.21.                             Brokers.  No agent, broker, Person or firm acting on
behalf of the Company or any of its Subsidiaries other than Updata Capital,
Inc. (“Updata”)
is or will be entitled to any advisory commission or broker’s or finder’s fee
from any of the Parties (or their respective Affiliates) in connection with
this Agreement or any of the transactions contemplated hereby.  All amounts paid, or which are or will be
payable, to Updata arising out of or in connection with this transaction are
set forth on Section 4.21 of the Company Disclosure Letter.

 

Section 4.22.                             Voting
Requirements.

 

(a)                                  The
approval of the Articles of Amendment requires the affirmative vote of (i) at
least two-thirds of each of the Company Common Shares, the Class A Shares, the
Class B Shares, the Class C-1 Shares, the Class C-2 Shares and the Class D
Shares, duly represented in person or by proxy at the Company Meeting, in each
case voting separately as a class, (ii) holders of more than two-thirds of the
Company Preferred Shares, voting together as a single class, (iii) the holders
of at least two-thirds of the outstanding Class B Shares, (iv) the holders of
at least 75% of the Class C-1 Shares and Class C-2 Shares, voting together as a
single class, and (v) the holders of at least 75% of the Class D Shares.

 

(b)                                 The
approval of the Amalgamation requires the affirmative vote of (i) at least
two-thirds of each of the Company Common Shares, the Class A Shares, the Class
B Shares, the Class C-1 Shares, the Class C-2 Shares and the Class D Shares,
duly represented in person or by proxy at the Company Meeting, in each case
voting separately as a class, and (ii) holders of more than two-thirds of the
Company Preferred Shares, voting together as a single class.

 

(c)                                  The
required approvals of the Company Shareholders set forth in Section 4.22 (a)
and (b) above (collectively, the “Shareholder Approvals”) are the only votes
of the

 

45

 

holders of any
class or series of the Company’s capital stock or other securities of the
Company necessary under the Company Articles, the Company By-laws, the Shareholders
Agreement, the BCA, other applicable Law or stock exchange (or similar
self-regulatory organization) regulations, to approve the Transactions and for
consummation by the Company of the Transactions.

 

Section 4.23.                             Compliance
with Take-over Laws.  The Company is
not a reporting issuer as such term is defined in the Ontario Securities Act,
there is not a published market in respect of the Company’s securities, and the
number of holders of Company Shares is not more than fifty, exclusive of
holders who are in the employment of the Company or its affiliates, and
exclusive of holders who were formerly in the employment of the Company or its
affiliates and who while in that employment were, and have continued after that
employment to be, security holders of the Company.

 

Section 4.24.                             Business
Activity Restriction.  There is no
non-competition or other similar agreement, commitment, judgment, injunction,
order or decree to which the Company or any of its Subsidiaries is a party or
subject to that has or could reasonably be expected to have the effect of
prohibiting or impairing the conduct of business by the Company or any of its
Subsidiaries.  Neither the Company nor
any of its Subsidiaries has entered into any agreement under which the Company
or any of its Subsidiaries is restricted from selling, licensing or otherwise
distributing any of its technology or products to, or providing services to,
customers or potential customers or any class of customers, in any geographic
area, during any period of time or in any segment of the market or line of
business.

 

Section 4.25.                             Customers
and Suppliers.  Except as set forth
in Section 4.25 of the Company Disclosure Letter, no customer which
individually accounted for more than 2% of the Company’s gross revenues during
the 12-month period preceding the date hereof nor customers which in the
aggregate accounted for more than 10% during such period of such revenues has
or have canceled or otherwise terminated, or made any written threat to the
Company to cancel or otherwise terminate or decrease its or their relationship
with the Company, or has or have decreased materially its or their relationship
with the Company or its or their usage of the services or products of the
Company, as the case may be.

 

ARTICLE
V

 

REPRESENTATIONS AND WARRANTIES

OF PARENT AND SUBCO

 

Each of Parent and Subco hereby represents and warrants to the Company
that:

 

Section 5.1.                                   Organization.  Each of Parent and Subco is a corporation
duly organized, validly existing and in good standing under the Laws of its
jurisdiction of organization and has all requisite corporate power and
authority to own, lease and operate its properties and assets and to carry on
its business as it is currently being conducted.  Each of Parent and Subco is duly qualified or licensed to do
business, and is in good standing as a foreign corporation in each jurisdiction
where the character of its properties or assets owned, operated and leased or
the nature of its activities makes such qualification necessary, except where the

 

46

 

failure to be
so qualified or licensed or in good standing has not resulted in and would not
reasonably be likely to result in, individually or in the aggregate, a material
adverse effect on either Parent or Subco or materially impair the ability of
either Parent or Subco to consummate the transactions contemplated hereby.

 

Section 5.2.                                   Authorization;
Validity of Agreement; Necessary Action. 
Each of Parent and Subco has full corporate power and authority to
execute and deliver this Agreement, each Ancillary Agreement to which it is a
party and each instrument required hereby to be executed and delivered by it
prior to or upon the Amalgamation becoming effective, to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby.  The execution,
delivery and performance by each of Parent and Subco of this Agreement, each
Ancillary Agreement to which it is a party and each instrument required hereby
to be executed and delivered by it prior to or upon the Amalgamation becoming
effective and the performance of its obligations hereunder and thereunder and
the consummation by it of the Transactions have been duly authorized by the
board of directors of each of Parent and Subco, and except as contemplated
under the Amalgamation Agreement, no other corporate action on the part of
Parent or Subco is necessary to authorize the execution, delivery and
performance by Parent and Subco of this Agreement and the consummation by them
of the transactions contemplated hereby. 
This Agreement, each Ancillary Agreement to which it is a party and each
instrument required hereby to be executed and delivered to the Company prior to
the Amalgamation becoming effective has been duly executed and delivered by
each of Parent and Subco and, assuming due and valid authorization, execution
and delivery hereof by the Company, is a valid and binding obligation of each
of Parent and Subco enforceable against each of them in accordance with its
terms.

 

Section 5.3.                                   Consents
and Approvals; No Violations.  The
execution and delivery of this Agreement by Parent and Subco does not, and the
consummation by Parent and Subco of the Transactions and the compliance by
Parent and Subco with the applicable provisions of this Agreement will not:

 

(a)                                  violate
or conflict with or result in any breach of any provision of the Certificate of
Incorporation or the By-laws of Parent or the articles or the by-laws of Subco;

 

(b)                                 require
any filing, recordation, declaration or registration with, or permit, order,
authorization, consent or approval of, or action by or in respect of, or the
giving of notice to, any Governmental Entity, except for the filing of the
Articles of Amalgamation with the Registrar, together all other filings or
recordings required under the BCA and appropriate documents with the relevant
authorities of other provinces, territories and states in which Parent and
Subco are qualified to do business;

 

(c)                                  result
in a violation or breach of, conflict with, constitute (with or without due
notice or lapse of time or both) a default under, give rise to any penalty,
right of amendment, modification, renegotiation, termination, cancellation,
payment or acceleration or any right or obligation or loss of any material
benefit or right under, or result in the creation of any Liens upon any of the
properties or assets of Parent or Subco under, any of the terms, conditions or
provisions of any loan or credit agreement, note, bond, mortgage, indenture,
lease, license, sublicense, franchise, permit, concession, agreement, contract,
obligation, commitment,

 

47

 

understanding,
arrangement, franchise agreement or other instrument, obligation or
authorization applicable to Parent or Subco, or by which any such Person or any
of its properties or assets may be bound; or

 

(d)                                 violate
or conflict with any Laws applicable to Parent or Subco or by which any of
their properties or assets may be bound;

 

excluding from preceding
clauses (b), (c) and (d) such matters that have not resulted in and would not
reasonably be likely to result in, individually or in the aggregate, a material
adverse effect on either Parent or Subco and would not materially impair the
ability of either Parent or Subco to consummate the Transactions.

 

Section 5.4.                                   Sufficiency
of Funds.  Affiliates have funds on
hand or available financing in an amount sufficient to consummate the
Transactions.

 

ARTICLE
VI

 

COVENANTS

 

Section 6.1.                                   Interim
Operations of the Company.  Except
as (i) set forth on Section 6.1 of the Company Disclosure Letter,
(ii) expressly provided herein or (iii) consented to in writing by
Parent, from and after the date of this Agreement until the earlier of the
termination of this Agreement in accordance with its terms or upon the
Amalgamation becoming effective, the Company shall, and shall cause each of its
Subsidiaries to, act and carry on its business only in the ordinary course of
business consistent with past practice and use commercially reasonable efforts
to maintain and preserve its and its Subsidiaries’ business organization,
assets and properties, keep available the services of its officers and key
employees and maintain and preserve its advantageous business relationships
with customers, clients, suppliers and others having material business dealings
with it.  Without limiting the
generality of the foregoing, from and after the date of this Agreement until
the earlier of the termination of this Agreement in accordance with its terms
or upon the Amalgamation becoming effective, the Company shall not, and shall
not permit any of its Subsidiaries to, directly or indirectly, do any of the
following without the prior written consent of Parent (which consent shall not
be unreasonably withheld or delayed) except as otherwise contemplated by
Section 6.1 of the Company Disclosure Letter or otherwise expressly permitted
hereunder:

 

(a)                                  amend
the Company Articles or the Company By-laws or comparable governing documents;

 

(b)                                 sell,
transfer or pledge or agree to sell, transfer or pledge any shares of capital
stock or other equity interests owned by it in any other Person;

 

(c)                                  declare,
set aside or pay any dividend or other distribution payable in cash, securities
or other property with respect to, or split, combine, redeem or reclassify, or
purchase or otherwise acquire, any shares of its capital stock (or other equity
interests) or other securities of the Company or any of its Subsidiaries, other
than the making of a dividend or other distribution by a wholly-owned
Subsidiary to another wholly-owned Subsidiary or to the Company, or any other
change in the capital structure of the Company on any of its Subsidiaries;

 

48

 

(d)                                 except
pursuant to the terms of Options or Company Warrants that are outstanding as of
the date hereof and listed on Section 6.1 of the Company Disclosure Letter,
issue or sell, or authorize to issue or sell, any shares of its capital stock
(whether unrestricted or restricted) or any other securities (equity or debt)
of the Company or any of its Subsidiaries, or issue or sell, or authorize to
issue or sell, any securities (equity or debt) convertible into or exchangeable
for, or options, warrants, calls, commitments or rights of any kind to purchase
or subscribe for, or enter into any arrangement or contract with respect to the
issuance or sale of, any shares of its capital stock of any class of the
Company or Voting Debt or other securities (equity or debt), or make any other
change in its capital structure;

 

(e)                                  acquire,
authorize or make (or commit to make) any investment in, or make any capital
contribution to, any Person;

 

(f)                                    make
(or commit to make), or enter into any Contracts (or any amendments,
modifications, supplements or replacements to existing Contracts) to be
performed relating to the making of capital expenditures in excess of $10,000
in any calendar year, or in the aggregate for capital expenditures with a value
in excess of $25,000;

 

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

 

(h)                                 transfer,
lease, license, guarantee, sell, mortgage, pledge, dispose of, subject to any
Lien (other than a Permitted Lien) or otherwise encumber any material assets or
other assets that have a value individually in excess of $10,000 other than
with respect to (i) transactions between a wholly-owned Subsidiary of the
Company and the Company or between wholly-owned Subsidiaries of the Company,
(ii) dispositions of excess or obsolete assets in the ordinary course of
business consistent with past practice, (iii) leases, licenses or sales of the
Company’s software or other assets in the ordinary course of business
consistent with past practice, and (iv) the arrangements referenced in Section
7.1(i);

 

(i)                                     except
to the extent required under employee and director employment agreements or
Benefit Plans in effect on March 31, 2003 (the date of the 2003 Balance Sheet),
or required by applicable Law or contemplated by Section 3.4, (i) increase the
compensation or fringe benefits of any of its directors, officers, employees or
consultants (except for immaterial increases to employees who are not officers
of the Company or any of its Subsidiaries in the ordinary course of business
consistent with past practice) or grant any severance or termination pay not
currently required to be paid under existing severance plans, (ii) enter into,
amend, modify, supplement or replace any employment, benefit (including with
respect to life or disability insurance or with respect to premiums therefore)
consulting or severance agreement, policy or arrangement with any present or
former director, officer or other employee of the Company or any of its
Subsidiaries, or (iii) establish, adopt, enter into or amend, modify,
supplement, replace or terminate

 

49

 

any collective
bargaining agreement, or Benefit Plan or plan that qualifies as a Benefit Plan
(including with respect to premiums therefor) for the collective benefit of any
directors, officers or employees (it being understood and agreed that in no
event shall the Company or any of its Subsidiaries amend, modify, supplement,
replace or terminate the policy in effect on the date hereof and previously
disclosed to Parent with respect to suspension of any increases in the compensation
or other remuneration of directors, officers and other employees of the Company
and its Subsidiaries);

 

(j)                                     except
as may be required by applicable Law or GAAP, make any change in any of its
accounting practices, policies or procedures or any of its methods of reporting
income, deductions or other items for income tax purposes;

 

(k)                                  except
as contemplated by Section 2.1, adopt or enter into a plan of complete or
partial liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization of the Company or any of its
Subsidiaries or any agreement relating to an Acquisition Proposal, except as
expressly permitted in Section 6.3;

 

(l)                                     except
as contemplated by Section 6.7(a)(i), (i) incur, assume, modify or prepay any
indebtedness for borrowed money, issue any debt securities or warrants or other
rights to acquire debt securities, or guarantee, endorse or otherwise become
liable or responsible for the obligations or indebtedness of another Person,
other than indebtedness owing to the Company or any direct or indirect
wholly-owned Subsidiary of the Company or guarantees of indebtedness of the
Company or any direct or indirect wholly-owned Subsidiary of the Company, or
enter into any capital lease in each case, in an amount in excess of $10,000,
or (ii) make any loans, extensions of credit or advances to any other
Person, other than to the Company or to any direct or indirect wholly-owned
Subsidiary of the Company, except, in the case of preceding clauses (i) and
(ii), for loans, extensions of credit or advances constituting trade payables
or receivables arising in the ordinary course of business and in the case of
preceding clause (ii), for advances to employees in respect of travel and
entertainment expenses in the ordinary course of business in amounts of $5,000  or
less to any individual on any date of determination and $25,000  in
the aggregate outstanding on any date of determination;

 

(m)                               except
as provided by this Agreement accelerate the payment, right to payment or
vesting under any Benefit Plan (including arrangements or agreements for the
premiums therefor) or other compensation or benefits;

 

(n)                                 pay,
discharge, settle or satisfy any claims, litigation, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise) other than
(i) the payment, discharge, settlement or satisfaction, in the ordinary
course of business consistent with past practice, of (A) liabilities reflected
or reserved against in the 2003 Balance Sheet or (B) liabilities (other than
litigation) subsequently incurred in the ordinary course of business consistent
with past practice, (ii) other claims, litigation, liabilities or
obligations (qualified as aforesaid) that in the aggregate do not exceed
$10,000, and (iii) the arrangements referenced in Section 7.2(i);

 

(o)                                 plan,
announce, implement or effectuate any reduction in force, lay-off, early
retirement program, severance program or other program or effort concerning the
termination of employment of employees of the Company or its Subsidiaries,
other than routine employee terminations in the ordinary course of business and
consistent with past practice;

 

50

 

(p)                                 take
any action or omit to take any action (including the adoption of any
shareholder rights plan or amendments to the Company Articles or the Company
By-laws (or comparable governing documents)) which would, directly or
indirectly, restrict or impair the ability of Parent or Subco, as the case may
be, to vote or otherwise to exercise the rights and receive the benefits of a
shareholder with respect to securities of the Company that may be acquired or
controlled by Parent or Subco, as the case may be, or any action which would
permit any Person to acquire securities of the Company or any of its
Subsidiaries from the Company or such Subsidiary on a basis not available to
Parent or Subco;

 

(q)                                 take
any action or omit to take any action which (i) constitutes a violation of any
Company Permit, which violations would result in or would reasonably be likely
to result in, individually or in the aggregate, the modification, suspension,
cancellation, termination of any one or more Company Permits or otherwise have
or would reasonably be likely to have a material adverse impact on any customer
or client contract or relationship or the nature or level of discipline imposed
on account of future violations of the Laws applicable to the Company and
Amalco or (ii) would (or would reasonably be likely to) materially impede, delay,
hinder or make more burdensome for Amalco or Parent to obtain and maintain any
and all authorizations, approvals, consents or orders from any Governmental
Entity or other third party necessary or required to maintain the Company
Permits in effect as of the date hereof in effect at all times following the
Amalgamation on the same terms as in effect on the date of this Agreement;

 

(r)                                    enter
into any new material line of business or enter into any agreement that
restrains, limits or impedes the Company’s or any of its Subsidiaries’ ability
to compete with or conduct any business or line of business;

 

(s)                                  (i)
file or cause to be filed any materially amended Tax Returns or claims for
refund; (ii) make or rescind any material Tax election or otherwise fail to prepare
all Tax Returns in a manner which is consistent with the past practices of the
Company and each Subsidiary of the Company, as the case may be, with respect to
the treatment of items on such Tax Returns except to the extent that any
inconsistency (A) would not or may not materially increase Parent’s, the
Company’s or any of the Company’s Subsidiaries’ liability for Taxes for any
period or (B) is required by Law; (iii) incur any material liability for Taxes
or materially decrease the amount of non- capital losses of the Company or any
of its Subsidiaries other than in the ordinary course of business; or (iv)
enter into any settlement or closing agreement with a taxing authority that
materially increases or would reasonably be likely to materially increase the
Tax liability of the Company or any of its Subsidiaries or materially decrease
the amount of non- capital losses of the Company or any of its Subsidiaries for
any period.

 

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

 

(u)                                 authorize,
agree or announce an intention, in writing or otherwise, to take any of the
foregoing actions or fail to take any action that would prevent any of the
foregoing from occurring.

 

51

 

Section 6.2.                                   Confidentiality.  The Parties acknowledge the Confidentiality
Agreement, which Confidentiality Agreement shall continue in full force and
effect in accordance with its terms, except as expressly modified herein or
pursuant hereto.

 

Section 6.3.                                   No
Solicitation of Other Offers.

 

(a)                                  No
Solicitation of Other Offers.  (a)  Each of the Company and
its Subsidiaries shall, and shall cause its Affiliates and each of its and
their respective Representatives to, immediately cease any discussions,
activities or negotiations with any other Person or Persons that may be ongoing
with respect to any Acquisition Proposal. 
The Company and its Subsidiaries shall not take, and shall cause their
respective Representatives not to take, any action after the date hereof
(i) to encourage, solicit, initiate or facilitate, directly or indirectly,
the making or submission of any Acquisition Proposal (ii) to enter into
any agreement, arrangement or understanding with respect to any Acquisition
Proposal, other than a confidentiality agreement referred to below or in
connection with the termination of this Agreement pursuant to Section 9.1(f),
in accordance with the terms and under the circumstances contemplated below in
this Section 6.3(a), or to agree to approve or endorse any Acquisition Proposal
or enter into any agreement, arrangement or understanding that would require
the Company to abandon, terminate or fail to consummate the Transactions,
(iii) to initiate or participate in any way in any discussions or
negotiations with (other than discussions or negotiations solely related to the
execution of a confidentiality agreement referred to below), or furnish or
disclose any non-public information concerning the Company to, any Person
(other than Parent or Subco or any of their respective Affiliates or
Representatives) in furtherance of any proposal that constitutes, or could
reasonably be expected to lead to, any Acquisition Proposal (except to the
extent that an unsolicited Acquisition Proposal is or is reasonably likely to
lead to a Superior Proposal, as described below), or (iv) to grant any
waiver or release under any standstill, confidentiality or similar agreement
entered into by the Company or any of its Subsidiaries or any of their
Affiliates or Representatives except to the extent the Board of Directors of
the Company determines in good faith, after consultation with outside
nationally recognized legal counsel (which may be its current outside legal
counsel) that failure to grant such waiver or release would be inconsistent
with its fiduciary duties under applicable law; provided, that so long
as there has been no breach of this Section 6.3(a), prior to obtaining the
Shareholder Approvals contemplated by Section 6.6, in response to a
written Acquisition Proposal that was not solicited after the date hereof and
otherwise in compliance with its obligations under Section 6.3(c), the Company
may (1) request clarifications from, or furnish information to, (but not
enter into discussions with) any Person which makes such Acquisition Proposal
if (A) such action is taken subject to a confidentiality agreement with
the Company containing customary terms and conditions; provided, that if
such confidentiality agreement contains provisions that are less restrictive
than the comparable provisions of the Confidentiality Agreement, or omits
restrictive provisions contained in the Confidentiality Agreement, then the
Confidentiality Agreement shall be deemed to be automatically amended to
contain in substitution for such comparable provisions such less restrictive
provisions, or to omit such restrictive provisions, as the case may be, and in
connection with the foregoing, the Company agrees not to waive any of the
provisions in any such confidentiality agreement without waiving the similar
provisions in the Confidentiality Agreement to the same extent, (B) such
action is taken solely for the purpose of obtaining information reasonably
necessary to ascertain whether such Acquisition Proposal is, or is reasonably
likely to lead to, a Superior Proposal, and (C) the

 

52

 

Board of
Directors of the Company reasonably determines in good faith, after
consultation with outside nationally recognized legal counsel (which may be its
current outside legal counsel), that failure to take such actions would be
inconsistent with its fiduciary duties under applicable Law or (2) participate
in discussions or negotiations with, request clarifications from, or furnish
information to, any Person which makes such Acquisition Proposal if (x) such
action is taken subject to a confidentiality agreement with the Company
containing customary terms and conditions; provided, that if such
confidentiality agreement contains provisions that are less restrictive than
the comparable provisions of the Confidentiality Agreement, or omits
restrictive provisions contained in the Confidentiality Agreement, then the
Confidentiality Agreement shall be deemed to be automatically amended to
contain in substitution for such comparable provisions such less restrictive
provisions, or to omit such restrictive provisions, as the case may be, and in
connection with the foregoing, the Company agrees not to waive any of the
provisions in any such confidentiality agreement without waiving the similar
provisions in the Confidentiality Agreement to the same extent, (y) the
Board of Directors of the Company reasonably determines in good faith, after
consultation with outside nationally recognized legal counsel (which may be its
current outside legal counsel) and financial advisor (which may be its current
outside financial advisor), that such Acquisition Proposal is a Superior
Proposal and (z) the Board of Directors of the Company reasonably
determines in good faith, after consultation with outside nationally recognized
legal counsel (which may be its current outside nationally recognized legal
counsel), that failure to take such actions would be inconsistent with its
fiduciary duties under applicable Law. 
Without limiting the foregoing, Parent, Subco and the Company agree that
any violation of the restrictions set forth in this Section 6.3(a) by any
Representative of the Company or any of its Subsidiaries or their respective
Affiliates (other than any such Person who is an Affiliate or employee of
Parent or of any of its Affiliates), whether or not such Person is purporting
to act on behalf of the Company or any of its Subsidiaries or their respective
Affiliates, shall constitute a breach by the Company of this Section
6.3(a).  It is understood that no
discussions with any Person shall give rise to a violation of this Section
6.3(a) if (i) the Company, its Subsidiaries or its Representatives, as
applicable, did not know or have reason to know that such discussion related to
an Acquisition Proposal and (ii) such discussion was immediately ceased once
the Company, its Subsidiary or Representatives, as applicable, knew or had
reason to know it related to an Acquisition Proposal.

 

(b)                                 Neither
the Board of Directors of the Company nor any committee thereof shall (i)
withdraw, modify or amend, or propose to withdraw, modify or amend, in a manner
adverse to Parent or Subco, the approval, adoption or recommendation, as the
case may be, of the Transactions, this Agreement or any of the other
transactions contemplated hereby, (ii) approve or recommend, or propose to
approve or recommend, any Acquisition Proposal, (iii) cause the Company to
accept such Acquisition Proposal and/or enter into any acquisition agreement,
or (iv) resolve to do any of the foregoing; provided, that the Board of
Directors of the Company may withdraw, modify or amend such recommendation prior
to obtaining the Shareholder Approval contemplated by Section 6.6 if (x) the
Company has complied with its obligations under this Section 6.3, (y) the
Board of Directors of the Company reasonably determines in good faith, after
consultation with outside nationally recognized legal counsel (which may be its
current outside legal counsel), that failure to take such actions would be
inconsistent with its fiduciary duties under applicable Law, and (z) prior to
taking such actions, the Board of Directors of the Company shall have given
Parent at least 48 hours notice  of its intention to take such action and
the opportunity to meet with the Company and its outside counsel and financial

 

53

 

advisor.  Any such withdrawal, modification or change
shall not change the approval of the Board of Directors of the Company for
purposes of causing any state takeover statute or other similar Law to be
inapplicable to the Transactions. 
During the term of this Agreement, nothing contained in this Section
6.3(b) shall limit the Company’s obligation to hold and convene the Company
Meeting referred to in Section 6.6 and to submit this Agreement and the
Transactions for adoption and approval by the Company Shareholders (including, without
limitation, regardless of whether the recommendation of the Board of Directors
of the Company of this Agreement or the Transactions shall have been withdrawn
or modified).

 

(c)                                  In
addition to the obligations of the Company set forth in Section 6.3(a), the
Company shall as promptly as practicable (and in any event within 24 hours)
advise Parent of any request for information with respect to any Acquisition
Proposal or of any Acquisition Proposal, or any inquiry, proposal, discussions
or negotiation with respect to any Acquisition Proposal, the terms and
conditions of such request, Acquisition Proposal, inquiry, proposal, discussion
or negotiation and the Company shall, within 24 hours of the receipt thereof,
promptly provide to Parent copies of any written materials received by the
Company in connection with any of the foregoing, and the identity of the Person
making any such Acquisition Proposal or such request, inquiry or proposal or
with whom any discussions or negotiations are taking place.  The Company shall keep Parent fully informed
of the status and material details (including amendments or proposed
amendments) of any such request or Acquisition Proposal and keep Parent fully
informed as to the material details of any information requested of or provided
by the Company and as to the details of all discussions or negotiations with
respect to any such request, Acquisition Proposal, inquiry or proposal, and
shall provide to Parent within 24 hours of receipt thereof all written
materials received by the Company with respect thereto.  The Company shall promptly provide to Parent
any non-public information concerning the Company provided to any other Person
in connection with any Acquisition Proposal, which was not previously provided
to Parent.  If an event that is not
caused by the Company, its Subsidiaries or any of their Affiliates or
Representatives occurs which prevents the Company from complying with the
timing of the information delivery requirements set forth in this Section
6.3(c), the Company shall not be deemed to be in violation of this Section
6.3(c) provided that (i) the Company acts reasonably and in good faith to
supply the required information as soon as possible and (ii) such delay in the
receipt of information does not adversely affect Parent in any material
respect.

 

(d)                                 Nothing
contained in this Section 6.3 shall prohibit the Board of Directors of the
Company nor any committee thereof from making any disclosure to the Company
Shareholders if the Board of Directors of the Company determines in good faith,
after consultation with outside nationally-recognized legal counsel (which may
be its current outside legal counsel), that failure to make such disclosure
pursuant to this clause (c) would be inconsistent with its fiduciary duties under
applicable Law.

 

(e)                                  The
Company shall promptly (and in any event within three Business Days following
the date hereof) request in writing each Person which has heretofore executed a
confidentiality agreement in connection with its consideration of acquiring the
Company or any portion thereof to return all confidential information
heretofore furnished to such Person by or on behalf of the Company, and the
Company shall use its commercially reasonable efforts to have

 

54

 

such
information returned or destroyed (to the extent destruction of such
information is permitted by such confidentiality agreement).

 

Section 6.4.                                   Access
to Information.  The Company shall
(and shall cause each of its Subsidiaries to) afford to Parent and its
Representatives and financing sources reasonable access, upon reasonable
advance notice, during normal business hours during the period from the date of
this Agreement and the earlier of the termination of this Agreement and the
Amalgamation becoming effective, to all of the properties, books, contracts,
commitments, personnel and records and accountants of the Company and its
Subsidiaries and, during such period, the Company shall (and shall cause each
of its Subsidiaries to) furnish to Parent all information concerning the
business, properties, assets and personnel of the Company and its Subsidiaries
as Parent may reasonably request. 
Parent, Subco and their Affiliates, Representatives and financing
sources will hold any such information that is non-public in confidence in
accordance with the Confidentiality Agreement. 
No information or knowledge obtained in any investigation pursuant to
this Section 6.4 or otherwise shall affect or be deemed to modify any
representation or warranty contained in this Agreement or the conditions to the
obligations of the Parties to consummate the Transactions.

 

Section 6.5.                                   Company
Circular Amendments.  If at any time
prior to the date of the Company Meeting any event occurs which should be
described in an amendment or supplement to the Company Circular, the Company
will file and disseminate, as required, an amendment or supplement which
complies in all material respects with the BCA and any other applicable Laws.

 

Section 6.6.                                   Company
Meeting.  As promptly as practicable
after the execution and delivery of this Agreement, the Company, acting through
its Board of Directors, shall, in accordance with the Company Articles, the
Company By-laws, the Shareholders Agreement, the BCA and other applicable Law,
duly call, give notice of, convene and hold the Company Meeting, which meeting
shall be held as promptly as practicable following the preparation and delivery
of the Company Circular, and the Company agrees that the Articles of Amendment
and the Amalgamation Agreement shall be submitted at such meeting for
Shareholder Approval by the Company Shareholders.  The Company shall use its reasonable best efforts to solicit and
obtain from the Company Shareholders proxies, and shall take all other action
necessary and advisable to secure the Shareholder Approval required by the
Company Articles, the Company By-laws, the Shareholders Agreement, the BCA and
other applicable Law to obtain their approval of the Articles of Amendment and
the Amalgamation Agreement, and the Board of Directors of the Company shall
recommend that the Company Shareholders vote in favor of the approval of the
Articles of Amendment and the Amalgamation Agreement (including the election to
treat the Amalgamation as a deemed liquidation, dissolution or winding up to
the Company) at the Company Meeting and the Company agrees that it shall
include in the Company Circular such recommendation of the Board of Directors
of the Company that the Company Shareholders approve the Articles of Amendment
and the Amalgamation Agreement (including the election to treat the
Amalgamation as a deemed liquidation, dissolution or winding up to the
Company).  Without limiting the
generality of the foregoing, the Company agrees that its obligations pursuant
to the first sentence of this Section 6.6 during the term of this Agreement
shall not be affected by (a) the commencement, public proposal, public
disclosure or communication to the Company, any of its Subsidiaries or any of
their respective Affiliates (or

 

55

 

any of their
respective Representatives) of any Acquisition Proposal or (b) the
withdrawal or modification by the Board of Directors of the Company of its
recommendation of this Agreement or the Amalgamation.

 

Section 6.7.                                   Commercially
Reasonable Efforts.  Subject to the
terms and conditions provided herein, each of the Company, Parent and Subco
shall, and the Company shall cause each of its Subsidiaries to, cooperate and
use their commercially reasonable efforts to take, or cause to be taken, all
appropriate action, and do, or cause to be done, and assist and cooperate with
the other Parties in doing, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious manner practicable, the
Transactions (including the satisfaction of the respective conditions set forth
in Article VII), and to make, or cause to be made, all filings necessary,
proper or advisable under applicable Laws, rules and regulations to consummate
and make effective the transactions contemplated by this Agreement.  Without limiting the generality of the
foregoing, each of the Company, Parent and Subco shall, and the Company shall
cause each of its Subsidiaries to, cooperate and use their commercially
reasonable efforts to promptly:

 

(a)                                  make
any and all filings, recordations, declarations or registrations with, obtain
any and all actions or non-actions, licenses, permits, consents, approvals,
waivers, authorizations, qualifications and orders of, give any and all notices
to, take reasonable steps to avoid an Action or Proceeding by, any and all
Governmental Entities and parties to contracts with the Company and its
Subsidiaries, in each case prior to the Closing Date, as are necessary, proper
or advisable to consummate and make effective, in the most expeditious manner
practicable, the Transactions; it being understood and agreed that:

 

(i)                                     the
Company and its Subsidiaries shall use their reasonable best efforts to
cooperate with Parent in any manner reasonably requested by Parent in
connection with obtaining at or prior to the Closing all Required Consents (no
such Required Consent to be conditioned on any increase in the amount payable
under the applicable Company Material Contract or any reduction in the term
thereof or any other material changes in the provisions thereof, except as may
be required by the express terms of the applicable Company Material Contract,
and such Required Consent shall otherwise be on terms and conditions reasonably
satisfactory to Parent); in connection with the foregoing, neither the Company
nor any of its Subsidiaries shall, without the prior written consent of Parent,
make (or commit to make) any payment or otherwise provide (or commit to
provide) any value or benefit to any Person in connection with obtaining any
Required Consent (except as may be required by the express terms of the
respective Company Material Contracts); provided, that, notwithstanding
anything to the contrary set forth in Section 6.1, with the prior written
consent of Parent (not to be unreasonably withheld or delayed), the Company
shall be permitted to enter into one or more Contracts (collectively, the “Replacement
Contracts”) to replace or refinance any Company Material Contract on
terms not materially less favorable (after taking into account any and all fees
and expenses incurred in connection with such replacement or refinancing) to
the Company (or the applicable Subsidiary) or Amalco than the terms of such
Company Material Contract, whereupon the respective Replacement Contract shall
be provided to Parent and shall be deemed to be disclosed in 6.7(a)(i) of the
Company Disclosure Letter and to constitute a Company Material Contract for
purposes of this 6.7(a)(i);

 

56

 

(ii)                                  each
of the Parties shall expeditiously give and make any and all notices and
reports required to be made by such Party to the appropriate Persons with
respect to Company Permits and each of the Parties shall, prior to the
Amalgamation becoming effective, use its reasonable best efforts to cooperate
with the other in any manner reasonably requested by the other in connection
with obtaining at or prior to the Closing the regulatory approvals or consents
as may be required by any Governmental Entities in order to obtain and maintain
in effect at all times following the Amalgamation becoming effective all
Company Permits and other Governmental Approvals necessary to maintain
continuity of its relationships with all customers and clients; without
limiting the foregoing, each of the Parties shall, to the extent necessary of
such Party, (A) duly and promptly file and process any and all applications
necessary to obtain all required regulatory approvals or consents as a result
of the consummation of the transactions contemplated by this Agreement,
including the amendment of any and all documents required to be amended with
respect to the existing licensees under the Company Permits and (B) duly and
promptly file with all appropriate Governmental Entities, and thereafter duly
process renewal applications for all of the Company’s licensed Subsidiaries
whose licenses will expire during the period from the date of this Agreement
and until all of the respective applications shall have been approved; and

 

(iii)                               the
Company and its Board of Directors shall, if any “fair price”, “moratorium”,
“control share acquisition”, “business combination” or other federal,
provincial, territorial or state takeover statute or similar statute, rule or
regulation becomes applicable to this Agreement or the Transactions, take all
action within its power to ensure that the Transactions may be consummated as
promptly as practicable on the terms contemplated by this Agreement and
otherwise to minimize the effect of such statute, rule or regulation on the
Transactions;

 

(b)                                 defend
any lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of any of the Transactions
(including seeking to have any stay or temporary restraining order entered by
any court or other Governmental Entity vacated or reversed); it being
understood and agreed that the Company shall promptly notify Parent of any
litigation or threatened litigation (including any stockholder litigation),
other than where Parent is the adverse party, against the Company and/or its
directors relating to any of the transactions contemplated by this Agreement
and the Company shall give Parent the opportunity to participate, in the
defense or settlement of any such litigation; provided, that no
settlement with respect to any such litigation shall be agreed to without
Parent’s prior consent (not to be unreasonably withheld or delayed); and

 

(c)                                  execute
and deliver any additional instruments necessary to consummate the Transactions
and to fully carry out the purposes of this Agreement.

 

Section 6.8.                                   Public
Disclosure.  Any press release
announcing the execution of this Agreement shall be issued only in such form as
shall be mutually agreed upon by the Company and Parent and each of the Company
and Parent shall consult with, and obtain the consent of, the other Party
(which shall not be unreasonably withheld or delayed) before issuing any press
release or otherwise making any public statement with respect to the
Amalgamation or this Agreement and shall not issue any such press release or
make any such public statement prior to consulting with and obtaining the prior
consent of the other Party (which shall not be unreasonably withheld or
delayed); provided, that a Party may, without consulting with or

 

57

 

obtaining the
prior consent of the other Party, issue such press release or make such public
statement as may be required by applicable Law, if such Party has used
reasonable best efforts to consult with the other Party and to obtain such
other Party’s consent, but has been unable to do so in a timely manner.

 

Section 6.9.                                   Notification
of Certain Matters.  The Company
shall give prompt notice to Parent and Parent shall give prompt written notice
to the Company, of (a) the occurrence or non-occurrence of any event known
to such Party, the occurrence or non-occurrence of which has resulted in, or is
reasonably likely to result in, any representation or warranty set forth in
this Agreement made by such Party to be untrue or inaccurate (taking into
account any materiality qualification, to the extent applicable); (b) any
material failure by such Party to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder; or (c)
any action, suit, proceeding, inquiry or investigation pending or, to the
Knowledge of such Party, threatened which questions or challenges or relates to
this Agreement or the consummation of any of the transactions contemplated hereby;
provided, that the delivery of any notice pursuant to this Section 6.9
shall not limit or otherwise affect the remedies available hereunder to the
Party receiving such notice and that no such notification shall modify the
representations or warranties of any Party or the conditions to the obligations
of any Party hereunder.  Each of the
Company, Parent and Subco shall give prompt notice to the other Parties of any
written notice from any third party alleging that the consent of such third
party is or may be required in connection with the transactions contemplated by
this Agreement.

 

Section 6.10.                             Communication
to Employees.  The Company and
Parent will cooperate with each other with respect to, and endeavor in good
faith to agree in advance upon the method and content of, all written or oral
communications or disclosure to employees of the Company or any of its
Subsidiaries with respect to the Transactions.

 

Section 6.11.                             Company
Warrants.  The Company shall use its
best efforts to ensure that all outstanding Company Warrants have been
cancelled or exercised at or prior to Closing.

 

Section 6.12.                             Escrow
Agreement/Paying Agent Agreement. 
The Parties shall use their best efforts to cause (i) the Escrow Agent
and the Shareholders’ Representative to enter into the Escrow Agreement in
substantially the form attached hereto as Exhibit D and (ii) the Paying
Agent and the Shareholder’s Representative to enter into the Paying Agent
Agreement in substantially the form attached hereto as Exhibit E.

 

Section 6.13.                             Shareholder
Agreement and Waiver.  The Company
shall use its best efforts to cause each Company Participating Preferred
Shareholder to enter into a Shareholder Agreement and Waiver in substantially
the form attached hereto as Exhibit A.

 

Section 6.14.                             Indemnification
of Officers and Directors; Exculpation.

 

(a)                                  From
and after the time the Amalgamation becomes effective, Parent shall, to the
fullest extent permitted by law, cause Amalco, for a period of three years from
the Effective Time, to indemnify and hold harmless each present and former
director and officer of the Company (the “Indemnified Parties”), against any costs or
expenses (including attorneys’

 

58

 

fees),
judgments, fines, losses, claims, damages, liabilities or amounts paid in
settlement incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative,
arising out of or pertaining to matters existing or occurring at or prior to
the Amalgamation becoming effective, whether asserted or claimed prior to, at
or after the Amalgamation becomes effective, to the fullest extent that the
Company would have been permitted under the BCA and the Company Articles or the
Company By-laws in effect on the date hereof to indemnify an Indemnified Party
(and Parent and Amalco shall also advance expenses to each Indemnified Party as
incurred to the fullest extent permitted under applicable Law, provided the
Indemnified Party to whom expenses are advanced provides an undertaking to
repay such advances if it is ultimately determined that such Indemnified Party
is not entitled to indemnification).

 

(b)                                 The
provisions of this Section 6.14 are intended to be in addition to the rights
otherwise available to the current officers and directors of the Company by
law, charter, statute, bylaw or agreement, and shall operate for the benefit
of, and shall be enforceable by, each of the Indemnified Parties, their heirs
and their representatives.  The
provisions of this Section 6.14 may not be amended, altered or repealed without
the prior written consent of the affected Indemnified Parties.

 

Section 6.15.                             Paying
Agent Agreement.  The Parties shall
use their best efforts to cause the Paying Agent and the Shareholders’
Representative to enter into the Paying Agent Agreement in substantially the
form attached hereto as Exhibit E.

 

ARTICLE
VII

 

CONDITIONS TO EFFECT THE AMALGAMATION

 

Section 7.1.                                   Conditions
to Each Party’s Obligation to Effect the Transactions.  The respective obligations of each Party to
this Agreement to effect the Transactions shall be subject to the satisfaction
or waiver (to the extent permitted by applicable Law) on or prior to the
Closing Date of each of the following conditions:

 

(a)                                  Shareholder
Approval.  The Articles of Amendment
and the Amalgamation Agreement shall have been duly approved by the requisite
Shareholder Approval in accordance with the Company Articles, the Company
By-laws, the Shareholders Agreement, the BCA and other applicable Law.

 

(b)                                 Governmental
Approvals.  Other than the filing of
the Articles of Amendment and the Articles of Amalgamation and all other
filings or recordings required under the BCA as contemplated by Section 2.1 and
Section 2.2, all authorizations, consents, orders or approvals of, or
declarations or filings with, or expirations of waiting periods imposed by, any
Governmental Entity in connection with the Transactions, the failure of which
to file, obtain or occur, individually or in the aggregate, would make the
consummation of the Transactions illegal or result or would reasonably be
likely to result in a Company Material Adverse Effect, shall have been filed,
been obtained or occurred and shall not have expired or been withdrawn; provided,
that the right to assert this condition shall not be available to a Party whose
material

 

59

 

failure to
fulfill any obligation under this Agreement has been the principal cause of or
resulted in the failure of this condition to be satisfied.

 

(c)                                  No
Restraints.  There shall be no
preliminary or permanent order or injunction of a court or other Governmental
Entity of competent jurisdiction precluding, restraining, enjoining or
prohibiting consummation of the Transactions, there shall not be instituted,
pending or threatened in writing any Action or Proceeding by any Governmental
Entity seeking to preclude, restrain, enjoin or prohibit consummation of the
Transactions.

 

(d)                                 Illegality.  There shall have been no action taken, or statute,
rule, regulation, judgment or executive order promulgated, entered, enforced,
enacted, issued or deemed applicable to the Transactions by any Governmental
Entity that directly or indirectly prohibits or makes illegal the consummation
of the Transactions.

 

Section 7.2.                                   Conditions
to Parent’s and Subco’s Obligation to Effect the Transactions.  The obligation of Parent and Subco to effect
the Transactions shall be subject to the satisfaction on or prior to the
Closing Date of each of the following conditions, any and all of which may be
waived in whole or in part by Parent or Subco to the extent permitted by
applicable Law:

 

(a)                                  Performance
of Obligations; Representations and Warranties.  (i) The representations and warranties of the Company in this
Agreement shall be true and correct in all material respects (except for such
representations and warranties that are qualified by their terms by a reference
to materiality or Company Material Adverse Effect, which representations and
warranties as so qualified shall be true in all respects) on and as of the date
of this Agreement and on and as of the time the Amalgamation becomes effective
as though such representations and warranties were made on and as of such time,
except to the extent that any representations and warranties expressly relate
to an earlier date in which case such representations and warranties shall be
as of such earlier date, (ii) the Company shall have performed and complied in
all material respects with all covenants, obligations and conditions of this
Agreement required to be performed and complied with by the Company as of the
time the Amalgamation becomes effective and (iii) Parent shall have received a
certificate signed on behalf of the Company by its Chief Executive Officer or
its Chief Financial Officer to such effect.

 

(b)                                 Amalgamation
Agreement and other Ancillary Agreements. 
Each of the Amalgamation Agreement and the other Ancillary Agreements to
which the Company is or will be a party shall be valid, in full force and
effect, and the Company shall have complied with each such Ancillary Agreement
in all material respects.

 

(c)                                  Shareholder
Agreements and Waivers.  Each
Shareholder Agreement and Waiver executed and delivered to Parent on or prior
to the Closing Date shall be valid, in full force and effect, and each of the
Company Shareholders party thereto shall have complied with such Shareholder
Agreement and Waiver in all respects.

 

(d)                                 No
Litigation.  There shall not be
instituted, pending or threatened any Action or Proceeding by any Governmental
Entity relating to this Agreement, the Amalgamation Agreement, any of the other
Ancillary Agreements to which the Company, Parent or Subco is a

 

60

 

party or any
of the transactions contemplated herein or therein.  No requirement of Law shall have been issued, enacted, enabled,
promulgated or enforced by any Government Entity which would have materially
reduced the benefits of the transactions contemplated hereby to Parent or
Amalco in a manner that Parent, in its good faith reasonable judgment, would
not have entered into this Agreement had such condition or requirement been
known on the date hereof.

 

(e)                                  Company
Material Adverse Effect.  There
shall not have occurred any event having or resulting in, or which would
reasonably be expected to result in, a Company Material Adverse Effect.  The Company shall have delivered to Parent
and Subco a certificate, signed on behalf of the Company by the Chief Executive
Officer of the Company, to such effect.

 

(f)                                    Consents.  The Company shall have obtained each consent
or approval described in Section 7.2(f) of the Company Disclosure Letter.

 

(g)                                 Resignations.  All of the directors of the Company and its
Subsidiaries in office immediately prior to the Amalgamation becoming effective
shall have provided executed, undated forms of resignation, which shall not
have been revoked, from their positions as directors of the Company and each of
its Subsidiaries as applicable.

 

(h)                                 Dissenting
Shareholders.  The Dissent Shares
shall include no more than 15% of the Company Shares (calculated on an as
converted basis) outstanding immediately prior to the Amalgamation becoming
effective.

 

(i)                                     Leases.  (A) At or prior to the Closing, the Company
shall have entered into an agreement relating to the Markham premises with the
owner thereof, providing for the surrender thereof by the Company and the
release by such owner of the Company from its obligations under such lease on
terms and conditions set forth on Schedule 7.2(i)(A) hereof.

 

(B)                                At
or prior to the Closing, the Company shall have (i) surrendered the lease
agreement covering the Pleasanton premises, (ii) obtained a full, unconditional
release from the owner of such premises and (iii) entered into arrangements
satisfying to Parent and its counsel governing the continued occupancy by the
Amalco of such premises for up to one month after the Closing Date.

 

(j)                                     Escrow
Agreement.  The Escrow Agent and the
Shareholders’ Representative shall have executed and delivered to Parent and
the Company the Escrow Agreement and such agreement shall remain in full force
and effect.

 

(k)                                  Transaction
Expenses.  Parent shall have
received a certificate signed on behalf of the Company by its Chief Executive
Officer or its Chief Financial Officer which itemizes in sufficient detail the
aggregate amount of all Transaction Expenses incurred by or on behalf of the
Company or reimbursable by the Company to other Persons; and appropriate
supporting documentation shall be delivered along with such certificate.

 

(l)                                     Paying
Agent Agreement.  The Paying Agent
and the Shareholders’ Representative shall have executed and delivered to
Parent and the Company the Paying Agent Agreement and such agreement shall
remain in full force and effect.

 

61

 

Section 7.3.                                   Conditions
to the Company’s Obligation to Effect the Transactions.  The obligation of the Company to effect the
Amalgamation shall be subject to the satisfaction on or prior to the Closing
Date of each of the following conditions, any and all of which may be waived in
whole or in part by the Company, to the extent permitted by applicable Law:

 

(a)                                  Performance
of Obligations; Representations and Warranties.  The representations and warranties of each of Parent and Subco in
this Agreement shall be true and correct in all material respects (except for
such representations and warranties that are qualified by their terms by a
reference to materiality, which representations and warranties as so qualified
shall be true in all respects) on and as of the date of this Agreement and on
and as of the time the Amalgamation becomes effective as though such
representations and warranties were made on and as of such time, except to the
extent that any representations and warranties expressly relate to an earlier
date in which case such representations and warranties shall be as of such
earlier date, (ii) each of Parent and Subco shall have performed and complied
in all material respects with all covenants, obligations and conditions of this
Agreement required to be performed and complied with by each of Parent and
Subco as of the time the Amalgamation becomes effective and (iii) the Company
shall have received a certificate signed on behalf of Parent and Subco by an
officer to such effect.

 

(b)                                 Ancillary
Agreements.  Each of the Ancillary
Agreements to which Parent and/or Subco is or will be a Party shall be valid,
in full force and effect, and Parent and/or Subco as the case may be, shall
have complied with each Ancillary Agreement in all material respects.

 

(c)                                  Escrow
Agreement.  The Escrow Agent and the
Shareholders’ Representative shall have executed and delivered to Parent and
the Company the Escrow Agreement and such agreement shall remain in full force
and effect.

 

(d)                                 Paying
Agent Agreement.  The Paying Agent
and the Shareholders’ Representative shall have executed and delivered to
Parent and the Company the Paying Agent Agreement and such agreement shall
remain in full force and effect.

 

 

ARTICLE
VIII

 

INDEMNIFICATION

 

Section
8.1.                                   Indemnification of Parent. 
Parent, Subco, Amalco (following the Closing as the successor
corporation of Subco) and their respective officers, directors, employees,
agents and affiliates (collectively, the “Parent Indemnitees”) shall be indemnified
and held harmless by the former Company Participating Preferred Shareholders
from and against any and all liabilities, obligations, losses, assessments,
damages, deficiencies, demands, claims, actions, causes of action, costs and
expenses (including, without limitation, interest, penalties, court costs and
reasonable attorneys’ fees and expenses and any reasonable amounts paid in
investigation, defense or settlement of any of the foregoing) of any kind,
manner or nature whatsoever, whether arising out of third-party claims or
claims by one or more parties hereto

 

62

 

against any other Party(ies) hereto (collectively, “Losses”),
as and when incurred, based upon, arising out of or otherwise in respect of:

 

(a)                                  any
misrepresentation or breach of warranty by the Company contained herein, in any
Ancillary Agreement or in any document or agreement delivered pursuant hereto
or thereto, or any claim by a third party which would constitute such a
misrepresentation or breach; and

 

(b)                                 any
breach of or failure to perform any covenant or agreement by the Company
contained herein, in any Ancillary Agreement or in any document or agreement
delivered pursuant hereto or thereto, or any claim by a third party which would
constitute such a breach or failure.

 

Section 8.2.                                   General
Indemnification Provisions.

 

(a)                                  For
the purposes of this Section 8.2, the term “Indemnitee” shall refer to
the Parent Indemnitee indemnified or entitled, or claiming to be entitled, to
be indemnified pursuant to the provisions of Section 8.1, and the term “Indemnitors”
shall refer to the former Company Participating Preferred Shareholders.

 

(b)                                 The
Indemnitee shall promptly give the Shareholders’ Representative notice of any
matter which the Indemnitee has determined has given or could give rise to a
right of indemnification under this Agreement (a “Claim”), stating the amount
of the Losses (whether actual or reasonably estimated), the method of
computation thereof and the basis for the Claim and shall specify the provision
or provisions of this Agreement under which the Claim is asserted, in each case
with reasonable particularity.  Failure
to give timely notice of a matter that may give rise to a Claim shall not
affect the rights of the Indemnitee to collect such Claim from the Indemnitors
except to the extent that it materially adversely affects the Indemnitor’s
ability to defend such Claim against a third party.  The obligations and liabilities of the Indemnitors under this
Article VIII with respect to Losses arising from Claims of any third party that
are subject to the indemnification provided for in this Article VIII (“Third-Party
Claims”) shall be governed by the following additional terms and
conditions:

 

(i)                                     if
the Indemnitee shall receive notice of any Third-Party Claim, the Indemnitee
shall give the Shareholders’ Representative prompt notice of such Third-Party
Claim and shall permit the Shareholders’ Representative, at its option, to
assume the defense and/or management of such Third-Party Claim at the
Indemnitors’ expense and through counsel of its choice if the Shareholders’
Representative gives prompt notice of its intention to do so to the Indemnitee
and does so promptly thereafter;

 

(ii)                                  if
the Shareholders’ Representative exercises its right to undertake the defense
and/or management of any such Third-Party Claim, the Indemnitee shall cooperate
with the Shareholders’ Representative in such defense and/or management and
make available to the Shareholders’ Representative all witnesses, pertinent
records, materials and information in the Indemnitee’s possession or under its
control relating thereto as is reasonably required by the Shareholders’
Representative;

 

63

 

(iii)                               if
the Shareholders’ Representative does not exercise its right to assume the
defense and/or management of any Third-Party Claim as provided above, the
Indemnitee may, directly or indirectly, conduct the defense and/or management
of any such Third-Party Claim in any manner it reasonably may deem appropriate
and at the expense of Indemnitors, for which the Indemnitee may seek
reimbursement from the Escrow Account, and the Shareholders’ Representative
shall cooperate with the Indemnitee in such defense and/or management and make
available to the Indemnitee all witnesses, pertinent records, materials and
information in the Shareholders’ Representative’s possession or under its
control relating thereto as is reasonably required by the Indemnitee;

 

(iv)                              the
Shareholders’ Representative will not consent to the entry of any judgment or
enter into any settlement with respect to a Third-Party Claim unless the
judgment or proposed settlement includes as an unconditional term thereof the
giving by the claimant or plaintiff to the Indemnitee of an unconditional
release from all liability in respect of such Third-Party Claim; and

 

(v)                                 if
the Shareholders’ Representative does not exercise its right to assume the
defense and/or management of a Third-Party Claim, as provided above, the
Indemnitee shall not consent to the entry of any judgment or enter into any
settlement with respect to such Third Party Claim unless the judgment or
proposed settlement includes as an unconditional term thereof the giving by the
claimant or plaintiff to the Shareholder’s Representative of an unconditional
release of the former Company Participating Preferred Shareholders from all
liability in respect of such Third-Party Claim.

 

Section 8.3.                                   Certain
Limits on Indemnification.

 

(a)                                  For
purposes of this Article VIII, the amount of any Losses shall be determined (A)
without giving effect to any Company Material Adverse Effect standard or any
other materiality or similar materiality qualification contained in any
representation, warranty or covenant herein or in any Ancillary Agreement and
(B) net of any insurance proceeds actually received by the Parent Indemnitees
in connection with the matter out of which such Losses shall arise.

 

(b)                                 Subject
to the proviso of this Section 8.3(b), no claim under this Article VIII shall
be made after the expiration of the Survival Period, provided, however,
that if written notice of a claim is made in good faith prior to the expiration
of the Survival Period (such notice setting forth in reasonable detail the
basis for such Claim), then the relevant representation, warranty or covenant
shall survive as to such claim only until the claim has been fully and finally
resolved.

 

Section
8.4.                                   Satisfaction
of Indemnification Obligations; Exclusive Remedy. Subject to Section 8.3 and in compliance with the terms of the Escrow
Agreement, the Parent Indemnitees shall, in satisfaction of any claims for
indemnification arising under Section 8.1 above, be entitled to receive from
the Escrow Account (and delivered by the Escrow Agent) an amount of cash equal
to the value of the Losses as to which the Parent Indemnitees are entitled to
indemnification, as determined pursuant to the terms of the Escrow
Agreement.  The sole recourse and
exclusive post-Closing remedy that the Parent Indemnitees shall have against
the

 

64

 

Company, the former Company Participating Preferred Shareholders, or
any of their respective affiliates to satisfy any claims for Losses pursuant to
this Article VIII shall be the Escrow Account established pursuant to the
Escrow Agreement, other than in connection with any claim for fraud or
intentional misrepresentation; provided, however, that no Company
Participating Preferred Shareholder shall be liable for the fraud or
intentional misrepresentation of any other Company Participating Preferred
Shareholder; provided, further, that in no event (even in the
case of fraud or intentional misrepresentation by the Company) shall the
indemnification obligation of any Company Participating Preferred Shareholder
exceed the aggregate Redemption Consideration he, she or it is entitled to
receive in connection with the Transactions. 
Notwithstanding anything in this Agreement to the contrary, the
indemnification liability of each Company Participating Preferred Shareholder
shall be several, and not joint and several, in proportion to his, her or its
Pro Rata Interest.

 

 

ARTICLE
IX

 

TERMINATION

 

Section 9.1.                                   Termination.  This Agreement may be terminated and the
Transactions may be abandoned at any time prior to the Amalgamation becoming
effective, by written notice by the terminating Party to the other Parties,
whether before or after the Shareholder Approvals have been obtained, as
follows:

 

(a)                                  by
mutual written consent duly authorized by the Boards of Directors of Parent and
the Company;

 

(b)                                 by
either Parent or the Company, if the Transactions shall not have been
consummated on or prior to 180 days after the signing of this Agreement (or
such later date as may be agreed to in writing by Parent and the Company) (as
the same may be extended from time to time as contemplated below, the “Termination
Date”), unless the Transactions shall not have been consummated
because of a material breach of any representation, warranty, obligation,
covenant or agreement set forth in this Agreement on the part of the Party
seeking to terminate this Agreement;

 

(c)                                  by
either Parent or the Company, if a Governmental Entity or court of competent
jurisdiction shall have issued a nonappealable final order, decree or ruling or
taken any other nonappealable final action, in each case having the effect of
permanently restraining, enjoining or otherwise prohibiting the Transactions (provided,
that the right to terminate this Agreement under this Section 9.1(c) shall not
be available to any Party whose material failure to fulfill any obligation
under this Agreement has been the principal cause of or resulted in such order,
decree ruling or action);

 

(d)                                 by
either Parent or the Company, if at the Company Meeting (including any
adjournment or postponement thereof permitted by this Agreement) the requisite
Shareholder Approval shall not have been obtained upon a vote taken thereon;

 

65

 

(e)                                  by
Parent, if (i) the Company shall have (A) withdrawn, modified or amended, or
proposed to withdraw, modify or amend, in a manner adverse to Parent or Subco,
the approval, adoption or recommendation, as the case may be, of this Agreement
or any of the Transactions or (B) approved or recommended, or proposed to
approve or recommend, or entered into any agreement, arrangement or
understanding with respect to, any Acquisition Proposal; (ii) the Company’s
Board of Directors or any committee thereof shall have resolved to take any of
the actions set forth in preceding subclause (i); (iii) if after an Acquisition
Proposal has been made, the Board of Directors of the Company fails to affirm
its recommendation and approval of this Agreement and the Transactions within
three Business Days of any request by Parent to do so; or (iv) if a tender
offer or exchange offer constituting an Acquisition Proposal is commenced and
the Board of Directors of the Company does not recommend against acceptance of
such offer by the Company Shareholders (including by taking no position or a
neutral position with respect thereto);

 

(f)                                    by
the Company, if a Superior Proposal is received by the Company and the Board of
Directors of the Company reasonably determines in good faith, after
consultation with outside nationally recognized legal counsel (which may be its
current outside legal counsel), that it is necessary to terminate this
Agreement and enter into an agreement to effect the Superior Proposal in order
to comply with its fiduciary duties under applicable Law; provided, that
the Company may not terminate this Agreement pursuant to this Section 9.1(f)
unless the Company has complied with its obligations under Section 6.3 and
until (x) five Business Days have elapsed following delivery to Parent of a
written notice of such determination by the Board of Directors of the Company
and during such five Business Day period the Company has fully cooperated with
Parent (including informing Parent of the terms and conditions of such Superior
Proposal and the identity of the Person making such Superior Proposal) with the
intent of enabling the Parties to agree to a modification of the terms and
conditions of this Agreement so that the transactions contemplated hereby may
be effected on such adjusted terms, (y) at the end of such five Business
Day period, the Acquisition Proposal continues to constitute a Superior
Proposal, and the Board of Directors of the Company continues to reasonably
determine in good faith, after consultation with outside nationally recognized
legal counsel (which may be its current outside legal counsel), that it is
necessary to terminate this Agreement and enter into an agreement to effect the
Superior Proposal in order to comply with its fiduciary duties under applicable
Law and (z) (A) no later than the effective time of such termination, Parent
has received the Termination Fee as set forth in Section 9.3(b)(iii) by wire
transfer in same day funds and (B) simultaneously or substantially
simultaneously with such termination the Company enters into a definitive
acquisition, merger or similar agreement to effect the Superior Proposal;

 

(g)                                 by
Parent, if there shall have been a breach by the Company of any provision of
Section 6.3;

 

(h)                                 by
Parent, if there has been a breach of or failure to perform any representation,
warranty, covenant or agreement on the part of the Company set forth in this
Agreement, which breach or failure to perform (i) would cause the
conditions set forth in Section 7.2(a) not to be satisfied, and (ii) either
cannot be cured or has not been cured prior to the earlier of (x) the thirtieth
calendar day following receipt by the Company of written notice of such breach
from Parent and (y) the Termination Date; or

 

66

 

(i)                                     by
the Company, if there has been a breach of or failure to perform any
representation, warranty, covenant or agreement on the part of Parent or Subco
set forth in this Agreement, which breach or failure to perform (i) would
cause the conditions set forth in Section 7.3(a) or 7.3(b) not to be satisfied,
and (ii) either cannot be cured or has not been cured prior to the earlier of
(x) the thirtieth calendar day following receipt by Parent of written notice of
such breach from the Company and (y) the Termination Date.

 

The right of any Party to
terminate this Agreement pursuant to this Section 9.1 shall remain operative
and in full force and effect regardless of any investigation made by or on
behalf of any Party, any Person controlling any such Party or any of their
respective officers or directors, whether prior to or after the execution of
this Agreement.

 

Section 9.2.                                   Effect
of Termination.  In the event of
termination of this Agreement as provided in Section 9.1, written notice
thereof shall forthwith be given to the other Party or Parties specifying the
provision hereof pursuant to which such termination is made, and this Agreement
shall immediately become void and there shall be no liability or obligation on
the part of Parent, the Company, Subco or their respective officers, directors,
stockholders or Affiliates; provided, that any such termination shall
not relieve any Party from liability for any willful breach of this Agreement
and the provisions of Section 6.2, this Section 9.2, Section 9.3 and Article X
shall remain in full force and effect and survive any termination of this
Agreement.

 

Section 9.3.                                   Fees
and Expenses.

 

(a)                                  (i)
Except as otherwise specifically provided in this Agreement, if the
Amalgamation is not consummated, all costs and expenses incurred in connection
with the negotiation of this Agreement and the Ancillary Agreements, the taking
of all actions (including, without limitation, any due diligence
investigations) contemplated hereby and thereby, and the consummation of the
Amalgamation, including, without limitation, attorneys’ and accountants’ fees
and fees of any brokers, financial advisors, investment bankers or finders
(collectively, the “Transaction Expenses”), shall be paid by
the Party incurring such Transaction Expenses. 
The Company shall cause all persons (including, without limitation,
attorneys, accountants, brokers, financial advisors, investment bankers and
finders), who have provided or will provide the Company with services in
connection with this Agreement, the Ancillary Agreements and the transactions
contemplated hereby and thereby, to submit to the Company, no less than one
Business Day prior to the Amalgamation becoming effective, invoices with
respect to all such services.  If the
Amalgamation is consummated, to the extent Transaction Expenses exceed the amount
set forth on the Certificate contemplated by Section 7.2(k) hereof (the “Transaction
Expenses Excess”), Parent may seek payment of, and shall be entitled
to, the amount of such excess from the Escrow Fund.  For purposes of clarification, (i) all fees and expenses to be
paid to the Paying Agent pursuant to the Paying Agent Agreement shall be borne
by the former Company Participating Preferred Shareholders and shall be
considered a Transaction Expense and (ii) the initial fee to be paid to the
Escrow Agent shall be borne by the former Company Participating Preferred
Shareholders and shall be considered a Transaction Expense.

 

(ii)                                  On
or before the last day of the second full month (the “Determination Date”)  after
the Closing Date, Parent shall prepare and deliver to the Shareholders’
Representative a statement setting forth the Transaction Expenses Excess, if
any,

 

67

 

based on
information available to it as of such date, as of the close of business on the
Closing Date (such statement, the “Transaction Expenses Excess Statement”).  The Shareholders’ Representative shall
cooperate with Parent in connection with, and shall furnish to Parent all such
information as Parent may reasonably require, in the preparation of the
Transaction Expenses Excess.  Each Party
shall provide the other Party and its representatives with reasonable access to
books and records and relevant personnel during the preparation of the
Transaction Expenses Excess and the resolution of any disputes that may arise
under this Section 9.3(a)(ii).  If the
Shareholders’ Representative disagrees with the determination of the
Transaction Expenses Excess as shown on the Transaction Expenses Excess
Statement, the Shareholders’ Representative shall notify Parent in writing of
such disagreement within 15 calendar days after delivery of the Transaction
Expenses Excess Statement, which notice shall describe the nature of any such
disagreement in reasonable detail, identify the specific items involved and the
dollar amount of each such disagreement and provide reasonable supporting
documentation for each such disagreement. 
After the end of such 15 calendar day period, neither the Shareholders’
Representative nor Parent may introduce additional disagreements with respect
to any item in the Transaction Expenses Excess Statement or increase the amount
of any disagreement, and any item not so identified shall be deemed to be
agreed to by the Shareholders’ Representative and Parent and will be final and
binding upon the parties.  During the 15
calendar day period of its review, the Shareholders’ Representative shall have
reasonable access to any documents, schedules or workpapers used in the
preparation of the Transaction Expenses Excess.  The Shareholders’ Representative and Parent agree to negotiate in
good faith to resolve any such disagreement. 
If the Shareholders’ Representative and parent are unable to resolve all
disagreements properly identified by the Shareholders’ Representative pursuant
to this Section 9.3(a)(ii), within 15 calendar days after delivery to Parent of
written notice of such disagreement, then such disagreements shall be submitted
for final and binding resolution to a neutral accounting firm of national
recognized standing to resolve such disagreements (the “Accounting Arbitrator”).  The Accounting Arbitrator shall be a
selected by mutual agreement of Parent and the Shareholders’
Representative.  The Accounting
Arbitrator will only consider those items and amounts set forth in the
Transaction Expenses Excess Statement as to which Parent have disagreed within
the time periods and on the terms specified above and must resolve the matter
in accord and with the terms and provisions of this Agreement.  The Accounting Arbitrator shall deliver to
the Shareholders’ Representative and Parent, as promptly as practicable and in
any event within 30 calendar days after its appointment, a written report
setting forth the resolution of any such disagreement determined in accordance
with the terms of this Agreement.  The
Accounting Arbitrator shall select as a resolution the position of either the
Shareholders’ Representative or Parent for each item of disagreement and may
not impose an alternative resolution. The Accounting Arbitrator shall make its
determination based exclusively on presentations and supporting material
provided by the parties and not pursuant to any independent review.  The determination of the Accounting
Arbitrator shall be final and binding upon the Shareholders’ Representative and
Parent.  The fees, expenses and costs of
the Accounting Arbitrator shall be borne by the party whose position the
Accounting Arbitrator does not select. 
Other than such fees and expenses of the Accounting Arbitrator, Parent
and the Shareholders’ Representative shall each be responsible for their own
costs and expenses incurred in connection with any actions taken pursuant to
this Section 9.3(ii).  If there exists
any Transaction Expenses Excess, such excess amount plus interest on the amount
of such excess from the Closing Date to the date of such payments, shall be
immediately paid to Parent from the

 

68

 

Escrow Account
as finally determined in accordance with this Section 9.3(ii) on a
dollar-for-dollar basis by the amount of such excess.  Notwithstanding anything herein to the contrary, delivery and
resolution of the Transaction Expenses Excess Statement is without prejudice to
any additional Transaction Expenses discovered after the Determination Date to
the extent Parent asserts claims in accordance with the dispute resolution
process of this Section 9.3.(a)(ii).

 

(b)                                 If
this Agreement is terminated:

 

(i)                                     by
either Parent or the Company, pursuant to Section 9.1(d), and if (A) on or
before the date of the Company Meeting an Acquisition Proposal (or an intention
to make an Acquisition Proposal) has been publicly made, proposed, communicated
or disclosed in a manner which is or otherwise becomes public (including being
known to unaffiliated shareholders of the Company) and in each case shall not
have been formally and publicly withdrawn, and (B) within one year following
the date of such termination the Company enters into an agreement, arrangement
or understanding (including a letter of intent) with respect to or consummates
any Acquisition Proposal, then the Company shall within one Business Day
following the date the Company enters into such agreement arrangement or
understanding, pay to Parent an amount equal to $187,500 (the “Termination
Fee”);

 

(ii)                                  by
the Company in accordance with Section 9.1(b) and, within twelve months of such
termination, the Company enters into an agreement, arrangement or understanding
(including a letter of intent) with respect to or consummates any Acquisition
Proposal, the Company shall, within one Business Day following the date the
Company enters into such agreement, arrangement or understanding, pay to Parent
the Termination Fee;

 

(iii)                               by
Parent, pursuant to Section 9.1(e), if on or before the date of such
termination an Acquisition Proposal shall have been publicly disclosed,
announced, commenced, submitted or made and in each case shall not have been
formally and publicly withdrawn then the Company shall, within one business day
following such termination, pay to Parent the Termination Fee;

 

(iv)                              by
the Company, pursuant to Section 9.1(f), the Company shall, no later than the
date on which the Company terminates this Agreement pursuant to Section 9.1(f),
pay to Parent the Termination Fee;

 

(v)                                 by
Parent, pursuant to Section 9.1(g), in connection with an intentional breach of
by the Company of Section 6.3, then the Company shall, within one Business Day
following the date on which Parent terminates this Agreement pursuant to
Section 9.1(g), pay to Parent the Termination Fee;

 

(vi)                              by
Parent, pursuant to Section 9.1(h), in connection with an intentional
misrepresentation or breach of warranty, or breach of any agreement or covenant
by the Company, then the Company shall, within one Business Day following the
date on which Parent terminates this Agreement pursuant to Section 9.1(h), pay
to Parent the Termination Fee; or

 

(vii)                           by
Parent, pursuant to Section 9.1(b), and if all of the conditions set forth in
Section 7.2 shall have been fulfilled at or prior to the Termination Date, then
Parent

 

69

 

shall, within
one Business Day following the day on which Parent terminates this Agreement
pursuant to Section 9.1(b), pay to the Company the Termination Fee.

 

(c)                                  Any
payment made pursuant to clauses (i) through (vi) of Section 9.3(b) shall serve
as liquidated damages and shall obviate any obligation to make a payment under
any other clause of Section 9.3(b).  It
is expressly agreed that the remedies of Parent and the Company set forth in
Section 9.3(b) shall be its exclusive remedies for any termination of this
Agreement pursuant to Section 9.1(b), (d), (e), (f), (g) or (h) hereof, as the
case may be, (and there shall be no other remedy for any other basis for
termination hereunder) and only after any payment called for by this Section
9.3 is made, shall all other obligations of the Company or Parent, as
applicable (except as provided in Section 9.3(a) hereof) terminate.

 

Section 9.4.                                   Amendment.  To the extent permitted by applicable Law,
this Agreement may be amended by the Parties, by action taken or authorized by
their respective Boards of Directors, at any time before or after approval of
the matters presented in connection with the Transactions by the Company
Shareholders; provided, that after any such approval, no material
amendment shall be made without further approval by the Company
Shareholders.  This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
Parties.

 

Section 9.5.                                   Extension;
Waiver.  At any time prior to the
Amalgamation becoming effective, the Parties, by action taken or authorized by
their respective Boards of Directors, may, to the extent legally allowed, (a)
extend the time for the performance of any of the obligations or other acts of
the other Parties, (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto and
(c) waive compliance with any of the agreements or conditions contained herein.  Any agreement on the part of a Party to any
such extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such Party. 
The failure of any Party to assert any of its rights under this
Agreement or otherwise shall not constitute a waiver of such rights.

 

ARTICLE
X

 

MISCELLANEOUS

 

Section 10.1.                             Survival
of Representations and Warranties. 
The respective representations and warranties of the Company, on the one
hand, and each of Parent and Subco, on the other hand, contained in this
Agreement, any Ancillary Agreement or in any document or certificate or
instrument delivered prior to or at the Closing (i) shall not be deemed waived
or otherwise affected by any investigation made by any Party and (ii) shall
survive following the Amalgamation becoming effective until the eighteen month
anniversary of the Amalgamation becoming effective, (the “Survival Period”).  This Section 10.1 shall have no effect upon
any other obligations of the Parties, whether to be performed before or after
the Amalgamation becoming effective.

 

Section 10.2.                             Notices.  All notices, requests, claims and demands
and other communications hereunder shall be in writing and shall be deemed duly
delivered (i) four Business Days after being sent by registered or certified
mail, return receipt requested, postage

 

70

 

prepaid, or
(ii) one Business Day after being sent for next business day delivery, fees
prepaid, via a reputable nationwide overnight courier service, in each case to
the intended recipient as set forth below:

 

(a)                                  if
to Parent or Subco, to:

 

SSA Global Technologies Inc.

110 Sheppard Avenue East, Suite 701

Toronto, ON M2N 6Y8

Attention:  Shelly R. Isenberg

Telephone:  (416) 228-2242

Facsimile:  (416) 221-0994

 

with a copy to:

 

Schulte Roth & Zabel LLP

919 Third Avenue

New York, NY  10022

Attention:                 Robert
B. Loper, Esq. 

Telephone:             (212)
756-2138

Facsimile:                   (212)
593-5955

 

(b)                                 if
to the Company, to:

 

Ironside Technologies, Inc.

7077 Koll Center Parkway, 2nd Floor

Pleasanton, CA 94566

Attention:  Daniel Fairfax

Telephone:  (925) 600-8822

Facsimile:  (925) 600-8816

 

with a copy to:

 

Venture Law Group

2775 Sand Hill Road

Menlo Park, CA 94025

Attention: Steven J. Tonsfeldt, Esq.

Telephone: (650) 854-4488

Facsimile:  (650) 233-8386

 

(c)                                  if
to the Shareholders’ Representative, to

 

Joel Kallett

Updata Capital, Inc.

2100 Reston Parkway, Suite 430

Reston, Virginia 20191

Telephone:  (703) 736-0020

Facsimile:  (703) 736-0022

 

71

 

Any Party may give any notice
or other communication hereunder using any other means (including personal
delivery, messenger service, facsimile or ordinary mail), but no such notice or
other communication shall be deemed to have been duly given unless and until it
actually is received by the Party for whom it is intended.  Any Party may change the address to which
notices and other communications hereunder are to be delivered by giving the
other Parties to this Agreement notice in the manner herein set forth.

 

Section 10.3.                             Entire
Agreement.  This Agreement
(including the Company Disclosure Letter and the other documents and
instruments referred to herein that are to be delivered at the Closing), and
the Confidentiality Agreement, constitutes the entire agreement among the Parties
and supersedes any prior understandings, agreements or representations by or
among the Parties, or any of them, written or oral, with respect to the subject
matter hereof.

 

Section 10.4.                             No
Third Party Beneficiaries.  This
Agreement is not intended, and shall not be deemed, to confer any rights or
remedies upon any Person other the Parties and their respective successors and
permitted assigns, to create any agreement of employment with any Person or to
otherwise create any third-party beneficiary hereto, except as otherwise
provided in Section 6.14 of this Agreement.

 

Section 10.5.                             Assignment.  Neither this Agreement nor any of the
rights, interests or obligations under this Agreement may be assigned or
delegated, in whole or in part, by operation of Law or otherwise by any of the
Parties without the prior written consent of the other Parties, and any such
assignment without such prior written consent shall be null and void, except
that, prior to the approval of this Agreement and the Transactions by the
Company’s shareholders, Parent  may substitute any direct or indirect
wholly-owned subsidiary of Parent for Subco without consent of the Company, and
Parent may assign its rights and obligations under this Agreement to a newly
formed Affiliate of Parent; provided, that Parent and/or Subco, as the
case may be, shall remain liable for all of its obligations under this
Agreement.  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 assigns.

 

Section 10.6.                             Interpretation.  When a reference is made in this Agreement
to Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated.  Whenever the words
“include”, “includes” or “including” are used in this Agreement they shall be
deemed to be followed by the words “without limitation”.

 

Section 10.7.                             Counterparts.  This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed by
each of the Parties and delivered to the other Parties.

 

Section 10.8.                             Severability.  If any term, provision, agreement, covenant
or restriction of this Agreement is held by a court of competent jurisdiction
or other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, agreements, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated so long as the economic or legal substance of the transactions
contemplated hereby is not effected in any manner materially adverse to any
Party.  Upon such a

 

72

 

determination, the Parties
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the Parties as closely as possible in an acceptable manner
in order that the transactions contemplated hereby be consummated as originally
contemplated to the fullest extent possible.

 

Section 10.9.                             Governing
Law.  This Agreement shall be
governed by and construed in accordance with the internal laws of the Province
of Ontario and the laws of Canada applicable therein  (without reference to its
choice of law rules).

 

Section 10.10.                       Submission
to Jurisdiction.  Each Party hereby
irrevocably and unconditionally agrees that any action, suit or proceeding, at
Law or equity, arising out of or relating to this Agreement or any agreements
or transactions contemplated hereby shall only be brought in any court in the
Province of Ontario, and hereby irrevocably and unconditionally expressly
submits to the personal jurisdiction and venue of such courts for the purposes
thereof and hereby irrevocably and unconditionally waives (by way of motion, as
a defense or otherwise) any and all jurisdictional, venue and convenience
objections or defenses that such party may have in such action, suit or
proceeding.  Each Party hereby irrevocably
and unconditionally consents to the service of process of any of the
aforementioned courts.  Nothing herein
contained shall be deemed to affect the right of any Party to serve process in
any manner permitted by Law or commence legal proceedings or otherwise proceed
against any other Party in any other jurisdiction to enforce judgments obtained
in any action, suit or proceeding brought pursuant to this Section 10.10.

 

Section 10.11.                       Remedies;
Specific Performance.  The Parties
acknowledge that money damages would not be an adequate remedy at Law if any
party fails to perform in any material respect any of its obligations hereunder
and accordingly agree that each Party, in addition to any other remedy to which
it may be entitled at Law or in equity shall be entitled to seek to compel specific
performance of the obligations of any other Party under this Agreement, without
the posting of any bond, in accordance with the terms and conditions of this
Agreement in any court of the United States or any State thereof having
jurisdiction, and if any action should be brought in equity to enforce any of
the provisions of this Agreement, none of the Parties hereto shall raise the
defense that there is an adequate remedy at Law.  No remedy shall be exclusive of any other remedy.  All available remedies shall be cumulative.

 

Section 10.12.                       Waiver
of Jury Trial.  EACH OF PARENT,
SUBCO AND THE COMPANY HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THE ACTIONS OF PARENT, SUBCO OR THE COMPANY IN THE
NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT OF THIS AGREEMENT.

 

Section 10.13.                       Appointment
of Shareholders’ Representative.  

 

(a)                                  Each
Company Participating Preferred Shareholder that accepts payment of Redemption
Consideration as contemplated herein shall be deemed, by such acceptance of
payment or by the approval of the Amalgamation Agreement in satisfaction of the
requisite

 

73

 

Shareholder Approvals, as the
case may be, (i) to be bound by Article VIII hereof and (ii) to have thereby
irrevocably constituted and appointed Joel Kallett of Updata (such person and
any successor or successors being the “Shareholders’ Representative”) as
such Company Participating Preferred Shareholder’s true and lawful agent, proxy
and attorney-in-fact pursuant to this Section 10.13.  The Shareholders’ Representative shall have full power and authority
to act for each Company Participating Preferred Shareholder and in each Company
Participating Preferred Shareholder’s name, place and stead, and in any and all
capacities to do and perform every act and thing required or permitted to be
done in connection with the transactions contemplated by this Agreement and
each Ancillary Agreement upon and immediately following the Amalgamation
becoming effective, as fully to all intents and purposes as such Company
Participating Preferred Shareholder might or could do in person, including,
without limitation, all decisions relating to the defense and/or settlement of
any claims for which any Parent Indemnitee may claim to be entitled to
indemnity pursuant to Article VIII hereof, the amendment of this Agreement
(subject to the proviso in Section 9.4), the receipt of all payments and
notices and the giving of all consents and waivers.  All decisions and actions by the Shareholders’ Representative
shall be binding upon all of the Company Participating Preferred Shareholders,
and no Company Participating Preferred Shareholder shall have the right to
object to, dissent from, protest or otherwise contest the same.

 

(b)                                 Each
Company Participating Preferred Shareholder that accepts payment of Redemption
Consideration as contemplated herein shall be deemed, by such acceptance of
payment or by the approval of this Agreement in satisfaction of the requisite
Shareholder Approvals, as the case may be, to have agreed that (i) the
provisions of this Section 10.13 are independent and severable, are irrevocable
and coupled with an interest and shall be enforceable notwithstanding any
rights or remedies any Company Participating Preferred Shareholder may have in
connection with the transactions contemplated by this Agreement, (ii) the
remedy at law for any breach of the provisions of this Section 10.13 would be
inadequate, (iii) Parent shall be entitled to temporary and permanent
injunctive relief without the necessity of proving damages if Parent brings an
action to enforce the provisions of this Section 10.13 and (iv) the provisions
of this Section 10.13 shall be binding upon the successors and assigns of each
Company Participating Preferred Shareholder.

 

(c)                                  By
their approval of this Agreement, the Company Participating Preferred
Shareholders shall be deemed to have waived any claims they may have or assert,
including those that may arise in the future, against the Shareholders’
Representative, and any of its affiliates, for any action or inaction taken or
not taken by the Shareholders’ Representative in connection herewith, provided,
that the Shareholders’ Representative acts at all times in good faith and in
compliance with this Agreement and applicable Laws.

 

(d)                                 Any
notice or communication delivered by Parent, Sub or Amalco to the Shareholders’
Representative shall, as between Parent, Sub and Amalco, on the one hand, and
the Company Participating Preferred Shareholders, on the other, be deemed to
have been delivered to all Company Participating Preferred Shareholders.  Parent, Sub and Amalco shall be entitled to
rely exclusively upon any communications or writings given or executed by the
Shareholders’ Representative and shall not be liable in any manner whatsoever
for any action taken or not taken in reliance upon the actions taken or not
taken or communications or writings given or executed by the Shareholders’
Representative.  Parent, Sub and Amalco
shall be entitled to disregard any

 

74

 

notices or communications given
or made by the Company Participating Preferred Shareholders unless given or
made through the Shareholders’ Representative. 
In addition, each Company Participating Preferred Shareholder agrees to
indemnify and hold harmless the Shareholders’ Representative against any and
all liabilities, losses, damages, claims, costs or expenses (“Shareholder
Representative Expenses”); provided, however, that the
Shareholder Representative Expenses shall not exceed $100,000 without the prior
written consent of each Company Participating Preferred Shareholder.  Each Company Participating Preferred
Shareholder shall reimburse the Shareholders’ Representative for its Pro Rata
Interest of the Shareholder Representative Expenses.

 

(e)                                  The
Shareholders’ Representative may consult with legal counsel, independent public
accountants and other experts selected by him or her and shall not be liable to
any Company Participating Preferred Shareholder for any action taken or omitted
to be taken in good faith by him or her in accordance with the advice of such
counsel, accountants or experts.

 

(f)                                    Prior
to the Amalgamation becoming effective, in the case of the death, disability,
unwillingness to serve or other unavailability of the Shareholders’
Representative, the Company Participating Preferred Shareholders who own a
majority in interest of Company Participating Preferred Shares shall have the
right, exercisable by written notice to Parent, to designate a replacement
Shareholders’ Representative.  Upon and
after the Amalgamation becoming effective, in the case of the death,
disability, unwillingness to serve or other unavailability of the Shareholders’
Representative, the Company Participating Preferred Shareholders who are
entitled to receive a majority of the Redemption Consideration pursuant to
Section 3.1 hereof shall have the right, exercisable by written notice to
Parent and the Escrow Agent, to designate a replacement Shareholders’
Representative.

 

 

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

 

75

 

IN WITNESS
WHEREOF, each of the Parent, Subco, the Company and the Shareholders’
Representative has caused this Agreement to be executed by its duly authorized
officer as of the date first written above.

 

 

	
   

  	
  SSA GLOBAL
  TECHNOLOGIES INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kirk
  Isaacson

  
	
   

  	
   

  	
  Name:  Kirk
  Isaacson 

  
	
   

  	
   

  	
  Title:     Executive
  Vice President, General 

  
	
   

  	
   

  	
  Counsel and
  Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  36338 YUKON
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kirk
  Isaacson

  
	
   

  	
   

  	
  Name:  Kirk
  Isaacson 

  
	
   

  	
   

  	
  Title:    President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  IRONSIDE
  TECHNOLOGIES INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ W.B.
  Lipsin

  
	
   

  	
   

  	
  Name:  W.B.
  Lipsin 

  
	
   

  	
   

  	
  Title:    President
  and CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  JOEL
  KALLETT, in his capacity as the

  Shareholders’ Representative

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joel
  Kallett

  
	
   

  	
   

  	
  Name:  Joel
  Kallett 

  
	
   

  	
   

  	
  Title:    Partner,
  Updata Capital, Inc.

  

 

76

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00070-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00070-of-00352.parquet"}]]