{"id":43124,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/agreement-and-plan-of-merger-the-thomson-corp-and-computer.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"agreement-and-plan-of-merger-the-thomson-corp-and-computer","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/planning\/agreement-and-plan-of-merger-the-thomson-corp-and-computer.html","title":{"rendered":"Agreement and Plan of Merger &#8211; The Thomson Corp. and Computer Language Research Inc."},"content":{"rendered":"<pre>================================================================================\n\n\n                          AGREEMENT AND PLAN OF MERGER\n\n                                      Among\n\n                            THE THOMSON CORPORATION,\n\n                             SABRE ACQUISITION, INC.\n\n                                       and\n\n                        COMPUTER LANGUAGE RESEARCH, INC.\n\n\n                          Dated as of January 12, 1998\n\n\n================================================================================\n   2\n\n                            Glossary of Defined Terms\n                          (Not Part of This Agreement)\n\nDefined Term                                             Location of Definition\n------------                                             ----------------------\n\naffiliate............................................        ss. 9.03(a)\nAgreement............................................        Preamble\nbeneficial owner.....................................        ss. 9.03(b)\nBlue Sky Laws........................................        ss. 3.05(b)\nBoard................................................        Recitals\nbusiness day.........................................        ss. 9.03(c)\nCertificate of Merger................................        ss. 2.02\nCertificates.........................................        ss. 2.09(b)\nCode.................................................        ss. 3.10(a)\nCompany..............................................        Preamble\nCompany Common Stock.................................        Recitals\nCompany Preferred Stock..............................        ss. 3.03\nConditional Optionees................................        ss. 2.07(e)\nConditional Options..................................        ss. 2.07(e)\nConfidentiality Agreement............................        ss. 6.04(b)\ncontrol..............................................        ss. 9.03(d)\nDelaware Law.........................................        Recitals\nDisclosure Schedule..................................        ss. 3.01(a)\nDissenting Shares....................................        ss. 2.08(a)\nEffective Time.......................................        ss. 2.02\nEnvironmental Laws...................................        ss. 3.16(a)\nEnvironmental Permits................................        ss. 3.16(b)\nERISA................................................        ss. 3.10(a)\nERISA Affiliate......................................        ss. 3.10(a)\nExchange Act.........................................        ss. 1.02(b)\nHazardous Substances.................................        ss. 3.16(a)\nHSR Act..............................................        ss. 3.05(b)\nIndemnified Parties..................................        ss. 6.07(b)\nIntellectual Property................................        ss. 9.03(f)\nIRS..................................................        ss. 3.10(a)\nLicensed Intellectual Property.......................        ss. 9.03(f) and (g)\nLiens................................................        ss. 3.13(b)\nMajority Shareholders................................        Recitals\nMaterial Adverse Effect..............................        ss. 3.01(a)\nMaterial Licensed Intellectual Property..............        ss. 3.14(a)\nMaterial Subsidiary..................................        ss. 3.01(b)\nMerger...............................................        Recitals\nMerger Consideration.................................        ss. 2.06(a)\n   3\n\nDefined Term                                             Location of Definition\n------------                                             ----------------------\n\nMinimum Condition....................................        ss. 1.01(a)\nMultiemployer Plan...................................        ss. 3.10(b)\nMultiple Employer Plan...............................        ss. 3.10(b)\n1982 Options.........................................        ss. 2.07(a)\n1982 Plan............................................        ss. 2.07(a)\n1994 Options.........................................        ss. 2.07(c)\n1994 Plan............................................        ss. 2.07(c)\n1996 Balance Sheet...................................        ss. 3.07(c)\n1997 Incentive Plan..................................        ss. 2.07(j)\n1997 Options.........................................        ss. 2.07(b)\n1997 Plan............................................        ss. 2.07(b)\nOffer................................................        Recitals\nOffer Conditions.....................................        ss.1.01(a)\nOffer Documents......................................        ss. 1.01(b)\nOffer to Purchase....................................        ss. 1.01(b)\nOfficers' Incentive Plan.............................        ss. 2.07(j)\nOptionees............................................        ss. 2.07(a)\nOwned Intellectual Property..........................        ss. 3.14(a)\nParent...............................................        Preamble\nPaying Agent.........................................        ss. 2.09(a)\nPer Share Amount.....................................        Recitals\nPermits..............................................        ss. 3.06\nPermitted Liens......................................        ss. 3.13(b)\nperson...............................................        ss. 9.03(e)\nPlans................................................        ss. 3.10(a)\nProxy Statement......................................        ss. 3.12\nRetention Bonus Plan.................................        ss. 2.07(i)\nPurchaser............................................        Preamble\nSchedule 14D-1.......................................        ss. 1.01(b)\nSchedule 14D-9.......................................        ss. 1.02(b)\nScheduled Intellectual Property......................        ss. 3.14(a)\nSEC..................................................        ss. 1.01(a)\nSEC Reports..........................................        ss. 3.07(a)\nSecurities Act.......................................        ss. 3.07(a)\nShares...............................................        Recitals\nSoftware.............................................        ss. 9.03(h)\nStock Purchase Agreement.............................        Recitals\nStockholders' Meeting................................        ss. 6.01(a)\nSubsidiary...........................................        ss. 3.01(a)\nsubsidiary...........................................        ss. 9.03(i)\n\n\n                                       ii\n   4\n\nDefined Term                                             Location of Definition\n------------                                             ----------------------\n\nSurviving Corporation................................        ss. 2.01\nTaxes or taxes.......................................        ss. 3.15\nTexas Law............................................        Recitals\nTransactions.........................................        ss. 3.04\nVested Options.......................................        ss. 2.07(d)\nVested Percentage....................................        ss. 2.07(a)\nWARN.................................................        ss. 3.10(f)\nYear 2000 Compliant..................................        ss. 9.03(j)\n\n\n                                       iii\n   5\n\n                                TABLE OF CONTENTS\n\n                                    ARTICLE I\n\n                                    THE OFFER\n\n      SECTION 1.01.  The Offer.............................................  2\n      SECTION 1.02.  Company Action........................................  3\n                                   \n                                   ARTICLE II\n\n                                   THE MERGER\n\n      SECTION 2.01.  The Merger............................................  5\n      SECTION 2.02.  Effective Time; Closing...............................  5\n      SECTION 2.03.  Effect of the Merger..................................  5\n      SECTION 2.04.  Articles of Incorporation; By-laws....................  5\n      SECTION 2.05.  Directors and Officers................................  6\n      SECTION 2.06.  Conversion of Securities..............................  6\n      SECTION 2.07.  Stock Options; Equity Compensation and Bonus\n                     Arrangements..........................................  6\n      SECTION 2.08.  Dissenting Shares.....................................  9\n      SECTION 2.09.  Surrender of Shares; Stock Transfer Books............. 10\n\n                                   ARTICLE III\n\n                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY\n\n      SECTION 3.01.  Organization and Qualification; Subsidiaries.......... 11\n      SECTION 3.02.  Articles of Incorporation and By-laws................. 12\n      SECTION 3.03.  Capitalization........................................ 12\n      SECTION 3.04.  Authority Relative to This Agreement.................. 13\n      SECTION 3.05.  No Conflict; Required Filings and Consents............ 13\n      SECTION 3.06.  Compliance............................................ 14\n      SECTION 3.07.  SEC Filings; Financial Statements..................... 15\n      SECTION 3.08.  Absence of Certain Changes or Events.................. 16\n      SECTION 3.09.  Absence of Litigation................................. 16\n      SECTION 3.10.  Employee Benefit Plans................................ 17\n      SECTION 3.11.  Labor Matters......................................... 19\n      SECTION 3.12.  Offer Documents; Schedule 14D-9; Proxy Statement...... 19\n      SECTION 3.13.  Real Property and Leases; Personal Property........... 20\n      SECTION 3.14.  Intellectual Property................................. 21\n      SECTION 3.15.  Taxes................................................. 24\n      SECTION 3.16.  Environmental Matters................................. 25\n                                          \n\n                                       iv\n   6\n\n                                                                            Page\n\n      SECTION 3.17.  Brokers............................................... 26\n\n                                   ARTICLE IV\n\n             REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER\n\n      SECTION 4.01.  Corporate Organization................................ 26\n      SECTION 4.02.  Authority Relative to This Agreement.................. 27\n      SECTION 4.03.  No Conflict; Required Filings and Consents............ 27\n      SECTION 4.04.  Financing............................................. 28\n      SECTION 4.05.  Offer Documents; Proxy Statement...................... 28\n      SECTION 4.06.  Brokers............................................... 28\n      SECTION 4.07.  Absence of Litigation................................. 28\n      SECTION 4.08.  No Prior Activities................................... 29\n      SECTION 4.09.  Parent Not an Affiliated Shareholder.................. 29\n\n                                    ARTICLE V\n\n                     CONDUCT OF BUSINESS PENDING THE MERGER\n\n      SECTION 5.01.  Conduct of Business by the Company Pending the Merger. 29\n\n                                   ARTICLE VI\n\n                              ADDITIONAL AGREEMENTS\n\n      SECTION 6.01.  Stockholders' Meeting................................. 31\n      SECTION 6.02.  Proxy Statement....................................... 32\n      SECTION 6.03.  Company Board Representation; Section 14(f)........... 32\n      SECTION 6.04.  Access to Information; Confidentiality................ 33\n      SECTION 6.05.  No Solicitation of Transactions....................... 34\n      SECTION 6.06.  Employee Benefits Matters............................. 34\n      SECTION 6.07.  Directors' and Officers' Indemnification and \n                     Insurance............................................. 35\n      SECTION 6.08.  Notification of Certain Matters....................... 37\n      SECTION 6.09.  Further Action; Reasonable Best Efforts............... 37\n      SECTION 6.10.  Public Announcements.................................. 37\n      SECTION 6.11.  Confidentiality Agreement............................. 37\n\n\n                                        v\n   7\n\n                                                                            Page\n\n                                   ARTICLE VII\n\n                            CONDITIONS TO THE MERGER\n\n      SECTION 7.01.  Conditions to the Merger.............................. 38\n\n                                  ARTICLE VIII\n\n                        TERMINATION, AMENDMENT AND WAIVER\n\n      SECTION 8.01.  Termination........................................... 38\n      SECTION 8.02.  Effect of Termination................................. 40\n      SECTION 8.03.  Fees and Expenses..................................... 40\n      SECTION 8.04.  Amendment............................................. 40\n      SECTION 8.05.  Waiver................................................ 40\n\n                                   ARTICLE IX\n\n                               GENERAL PROVISIONS\n\n      SECTION 9.01.  Non-Survival of Representations, Warranties and\n                     Agreements............................................ 40\n      SECTION 9.02.  Notices............................................... 40\n      SECTION 9.03.  Certain Definitions................................... 42\n      SECTION 9.04.  Severability.......................................... 44\n      SECTION 9.05.  Entire Agreement; Assignment.......................... 44\n      SECTION 9.06.  Parties in Interest................................... 44\n      SECTION 9.07.  Specific Performance.................................. 44\n      SECTION 9.08.  Governing Law......................................... 45\n      SECTION 9.09.  Headings.............................................. 45\n      SECTION 9.10.  Counterparts.......................................... 45\n      SECTION 9.11.  Waiver of Jury Trial.................................. 45\n\nANNEX A   -     Conditions to the Offer\n\n\n                                       vi\n   8\n\n            AGREEMENT AND PLAN OF MERGER, dated as of January 12, 1998 (this\n\"Agreement\"), among THE THOMSON CORPORATION, a corporation incorporated under\nthe laws of Ontario, Canada (\"Parent\"), SABRE ACQUISITION, INC., a Delaware\ncorporation and a wholly owned subsidiary of Parent (\"Purchaser\"), and COMPUTER\nLANGUAGE RESEARCH, INC., a Texas corporation (the \"Company\").\n\n            WHEREAS, the Boards of Directors of Parent, Purchaser and the\nCompany have each determined that it is in the best interests of their\nrespective stockholders for Parent to acquire the Company upon the terms and\nsubject to the conditions set forth herein; and\n\n            WHEREAS, in furtherance of such acquisition, it is proposed that\nPurchaser shall make a cash tender offer (the \"Offer\") to acquire all the issued\nand outstanding shares of Common Stock, par value $.01 per share, of the Company\n(\"Company Common Stock\") (shares of Company Common Stock being hereinafter\ncollectively referred to as \"Shares\") for $22.50 per Share (such amount, or any\ngreater amount per Share paid pursuant to the Offer, being hereinafter referred\nto as the \"Per Share Amount\") net to the seller in cash, upon the terms and\nsubject to the conditions of this Agreement and the Offer; and\n\n            WHEREAS, the Board of Directors of the Company (the \"Board\") has\nunanimously approved the making of the Offer and resolved and agreed, upon the\nterms and subject to the conditions set forth herein, to recommend that holders\nof Shares tender their Shares pursuant to the Offer; and\n\n            WHEREAS, also in furtherance of such acquisition, the Boards of\nDirectors of Parent, Purchaser and the Company have each approved the merger\n(the \"Merger\") of Purchaser with and into the Company in accordance with the\nGeneral Corporation Law of the State of Delaware (\"Delaware Law\") and the Texas\nBusiness Corporation Act (\"Texas Law\") following the consummation of the Offer\nand upon the terms and subject to the conditions set forth herein; and\n\n            WHEREAS, Parent, Purchaser and certain stockholders of the Company\n(the \"Majority Shareholders\") have entered into a Stock Purchase Agreement,\ndated as of the date hereof (the \"Stock Purchase Agreement\"), providing for,\namong other things, each Majority Shareholder to sell to Purchaser, and\nPurchaser to purchase from each Majority Shareholder, all of his, her or its\nShares at the Per Share Amount, subject to the conditions set forth therein, and\nan agreement by each Majority Shareholder to tender all of his, her or its\nShares pursuant to the Offer;\n\n            NOW, THEREFORE, in consideration of the foregoing and the mutual\ncovenants and agreements herein contained, and intending to be legally bound\nhereby, Parent, Purchaser and the Company hereby agree as follows:\n   9\n\n                                    ARTICLE I\n\n                                    THE OFFER\n\n            SECTION 1.01. The Offer. (a) Provided that this Agreement shall not\nhave been terminated in accordance with Section 8.01 and none of the events set\nforth in paragraphs (a) through (g) in Annex A hereto shall have occurred or be\nexisting, Purchaser shall commence the Offer as promptly as reasonably\npracticable after the date hereof, but in no event later than five business days\nafter the initial public announcement of this Agreement. The obligation of\nPurchaser to accept for payment and pay for Shares tendered pursuant to the\nOffer shall be subject to the condition (the \"Minimum Condition\") that at least\ntwo-thirds of the then outstanding Shares on a fully diluted basis (including,\nwithout limitation, all Shares issuable upon the conversion of any convertible\nsecurities or upon the exercise of any options, warrants or rights) shall have\nbeen validly tendered and not withdrawn prior to the expiration of the Offer and\nalso shall be subject to the satisfaction of the other conditions set forth in\nAnnex A hereto (collectively with the Minimum Condition, the \"Offer\nConditions\"). Purchaser expressly reserves the right to waive any of the Offer\nConditions, to increase the price per Share payable in the Offer and to modify\nother terms of the Offer; provided, however, without the prior consent of the\nCompany, Purchaser shall not (i) waive the Minimum Condition or reduce the\nnumber of Shares subject to the Offer, (ii) reduce the price per Share payable\nin the Offer, (iii) extend the Offer or amend or add to the Offer Conditions,\n(iv) change the form of consideration payable in the Offer, or (v) amend, add or\nwaive any other term of the Offer in any manner that would adversely affect the\nCompany or its stockholders. Notwithstanding the foregoing, Purchaser (i) shall\nnot terminate and shall extend the Offer, up to February 28, 1998 if, at the\ninitial scheduled expiration of the Offer (which shall be 20 business days\nfollowing commencement of the Offer), or any extension thereof, any of the Offer\nConditions shall not be satisfied or waived by Purchaser (provided, that if the\nonly unsatisfied Offer Condition shall be the failure of the waiting period\nunder the HSR Act to have expired or been terminated, then Purchaser shall\nextend the Offer, for one or more periods of not more than 10 business days,\npursuant to this clause (i) up to May 15, 1998), (ii) shall extend the Offer for\nany period required by any rule, regulation or interpretation of the Securities\nand Exchange Commission (the \"SEC\") or the staff thereof applicable to the\nOffer, and (iii) may, without the consent of the Company, extend the Offer for\nan aggregate period of not more than 10 business days beyond the latest\napplicable date that would otherwise be permitted under clause (i) or (ii) of\nthis sentence if, as of such date, all of the Offer Conditions are satisfied or\nwaived by Purchaser, but the number of Shares validly tendered and not withdrawn\npursuant to the Offer equals 80% or more, but less than 90%, of the then\noutstanding Shares on a fully diluted basis. The Per Share Amount shall, subject\nto applicable withholding of taxes, be net to the seller in cash, upon the terms\nand subject to the conditions of the Offer. Subject to the terms and conditions\nof the Offer (including, without limitation, the Minimum Condition), Purchaser\nshall accept Shares for payment and shall pay for all Shares validly tendered\nand not withdrawn as soon as it is permitted to do so under applicable law.\n\n\n                                       2\n   10\n\n            (b) As promptly as reasonably practicable on the date of\ncommencement of the Offer, Purchaser shall file with the SEC a Tender Offer\nStatement on Schedule 14D-1 (together with all amendments and supplements\nthereto, the \"Schedule 14D-1\") with respect to the Offer. The Schedule 14D-1\nshall contain or shall incorporate by reference an offer to purchase (the \"Offer\nto Purchase\") and forms of the related letter of transmittal and any related\nsummary advertisement (the Schedule 14D-1, the Offer to Purchase and such other\ndocuments, together with all supplements and amendments thereto, being referred\nto herein collectively as the \"Offer Documents\"). The Company and its counsel\nshall be given a reasonable opportunity to review and comment upon the Offer\nDocuments prior to the filing thereof with the SEC. Parent, Purchaser and the\nCompany agree to correct promptly any information provided by any of them for\nuse in the Offer Documents which shall have become false or misleading, and\nParent and Purchaser further agree to take all steps necessary to cause the\nSchedule 14D-1 as so corrected to be filed with the SEC and the other Offer\nDocuments as so corrected to be disseminated to holders of Shares, in each case\nas and to the extent required by applicable federal securities laws. Parent and\nPurchaser agree to provide the Company and its counsel with any comments Parent,\nPurchaser or their counsel may receive from the SEC or its staff with respect to\nthe Offer Documents promptly after receipt of such comments.\n\n            (c) Parent shall provide or cause to be provided to Purchaser on a\ntimely basis the funds necessary to accept for payment, and pay for, any Shares\nthat Purchaser becomes obligated to accept for payment, and pay for, pursuant to\nthe Offer.\n\n            SECTION 1.02. Company Action. (a) The Company hereby approves of and\nconsents to the Offer and represents that (i) the Board, at a meeting duly\ncalled and held on January 12, 1998, unanimously adopted resolutions (A)\ndetermining that this Agreement and the transactions contemplated hereby,\nincluding each of the Offer and the Merger, are fair to and in the best\ninterests of the holders of Shares, (B) approving and adopting this Agreement\nand the transactions contemplated hereby and (C) recommending that the\nstockholders of the Company accept the Offer and, if required, approve and adopt\nthis Agreement and the transactions contemplated hereby, and (ii) Goldman, Sachs\n&amp; Co. has delivered to the Board its opinion (which will be confirmed in\nwriting) to the effect that the consideration to be received by the holders of\nShares pursuant to each of the Offer and the Merger is fair to the holders of\nShares from a financial point of view. The Company hereby consents to the\ninclusion in the Offer Documents of the recommendation of the Board described in\nthe immediately preceding sentence. The Company has been advised by each of its\ndirectors and executive officers that they intend either to tender all Shares\nbeneficially owned by them to Purchaser pursuant to the Offer or to vote such\nShares in favor of the approval and adoption by the stockholders of the Company\nof this Agreement and the transactions contemplated hereby.\n\n            (b) As promptly as reasonably practicable on the date of\ncommencement of the Offer, the Company shall file with the SEC a\nSolicitation\/Recommendation Statement on Schedule 14D-9 (together with all\namendments and supplements thereto, the\n\n\n                                       3\n   11\n\n\"Schedule 14D-9\") containing, subject to the following sentence, the\nrecommendation of the Board described in Section 1.02(a) and shall disseminate\nthe Schedule 14D-9 to the extent required by Rule 14d-9 promulgated under the\nSecurities Exchange Act of 1934, as amended (the \"Exchange Act\"), and any other\napplicable federal securities laws. Subject to the fiduciary duties of the Board\nunder applicable law as determined by the Board in good faith after consultation\nwith the Company's outside counsel, and subject to the terms of this Agreement,\nthe Schedule 14D-9 shall contain the recommendation of the Board described in\nSection 1.02(a) above. The Company hereby agrees that no failure of the Schedule\n14D-9 to contain the recommendation of the Board described in Section 1.02(a)\nabove, nor any withdrawal of such recommendation by the Board, shall render\ninvalid or otherwise vacate the approval of the Board for purposes of Article\n13.03 of Texas Law and the Company shall not otherwise take any action that\nwould result in a breach of the Company's representation and warranty, as of the\ndate of such action, set forth in the last sentence of Section 3.04 of this\nAgreement. Parent and its counsel shall be given an opportunity to review and\ncomment upon the Schedule 14D-9 prior to the filing thereof with the SEC. The\nCompany, Parent and Purchaser agree to correct promptly any information provided\nby any of them for use in the Schedule 14D-9 which shall have become false or\nmisleading, and the Company further agrees to take all steps necessary to cause\nthe Schedule 14D-9 as so corrected to be filed with the SEC and disseminated to\nholders of Shares, in each case as and to the extent required by applicable\nfederal securities laws. The Company agrees to provide Parent and Purchaser and\ntheir counsel with any comments the Company or its counsel may receive from the\nSEC or its staff with respect to the Schedule 14D-9 promptly after the receipt\nof such comments.\n\n            (c) The Company shall promptly furnish Purchaser with mailing labels\ncontaining the names and addresses of all record holders of Shares and with\nsecurity position listings of Shares held in stock depositories, each as of a\nrecent date, together with all other available listings and computer files\ncontaining names, addresses and security position listings of record holders and\nbeneficial owners of Shares. The Company shall furnish Purchaser with such\nadditional information, including, without limitation, updated listings and\ncomputer files of stockholders, mailing labels and security position listings,\nand such other assistance as Parent, Purchaser or their agents may reasonably\nrequest in communicating the Offer to the Company's stockholders. Subject to the\nrequirements of applicable law, and except for such steps as are necessary to\ndisseminate the Offer Documents and any other documents necessary to consummate\nthe Offer or the Merger, Parent and Purchaser and their agents shall hold in\nconfidence the information contained in such labels, listings and files, shall\nuse such information only in connection with the Offer and the Merger, and, if\nthis Agreement shall be terminated in accordance with Section 8.01, shall\ndeliver to the Company all copies of such information then in their possession\nor control.\n\n\n                                       4\n   12\n\n                                   ARTICLE II\n\n                                   THE MERGER\n\n            SECTION 2.01. The Merger. Upon the terms and subject to the\nconditions set forth in Article VII, and in accordance with Delaware Law and\nTexas Law, at the Effective Time (as hereinafter defined) Purchaser shall be\nmerged with and into the Company. As a result of the Merger, the separate\ncorporate existence of Purchaser shall cease and the Company shall continue as\nthe surviving corporation of the Merger (the \"Surviving Corporation\").\nNotwithstanding anything to the contrary contained in this Section 2.01, Parent\nmay elect instead, at any time after consummation of the Offer and prior to the\ndate on which the Proxy Statement (as hereinafter defined) is mailed initially\nto the Company's stockholders, to merge the Company into Purchaser or another\ndirect or indirect wholly owned subsidiary of Parent. In such event, the parties\nagree to execute an appropriate amendment to this Agreement in order to reflect\nthe foregoing and to provide, as the case may be, that Purchaser or such other\nwholly owned subsidiary of Parent shall be the Surviving Corporation.\n\n            SECTION 2.02. Effective Time; Closing. As promptly as practicable\nafter the satisfaction or, if permissible, waiver of the conditions set forth in\nArticle VII, the parties hereto shall cause the Merger to be consummated by\nfiling this Agreement or a certificate of merger or certificate of ownership and\nmerger with the Secretary of State of the State of Delaware and articles of\nmerger with the Secretary of State of the State of Texas (collectively, the\n\"Certificate of Merger\"), in such forms as are required by, and executed in\naccordance with the relevant provisions of, Delaware Law and Texas Law (the date\nand time of such filing being the \"Effective Time\"). Prior to such filing, a\nclosing shall be held at the offices of Shearman &amp; Sterling, 599 Lexington\nAvenue, New York, New York 10022, or such other place as the parties shall\nagree, for the purpose of confirming the satisfaction or waiver, as the case may\nbe, of the conditions set forth in Article VII.\n\n            SECTION 2.03. Effect of the Merger. The effect of the Merger shall\nbe as provided in the applicable provisions of Delaware Law and Texas Law.\nWithout limiting the generality of the foregoing, and subject thereto, at the\nEffective Time all the property, rights, privileges, powers and franchises of\nthe Company and Purchaser shall vest in the Surviving Corporation, and all\ndebts, liabilities, obligations, restrictions, disabilities and duties of the\nCompany and Purchaser shall become the debts, liabilities, obligations,\nrestrictions, disabilities and duties of the Surviving Corporation.\n\n            SECTION 2.04. Articles of Incorporation; By-laws. (a) Unless\notherwise determined by Parent prior to the Effective Time, at the Effective\nTime the Articles of Incorporation of the Company, as in effect immediately\nprior to the Effective Time, shall be the Articles of Incorporation of the\nSurviving Corporation until thereafter amended as provided by law and such\nArticles of Incorporation; provided, however, that, at the Effective Time,\nsubject to Section 6.07 hereof, the Articles of Incorporation of the Surviving\n\n\n                                       5\n   13\n\nCorporation shall be amended in their entirety to be substantially identical to\nPurchaser's Certificate of Incorporation.\n\n            (b) Unless otherwise determined by Parent prior to the Effective\nTime, but subject to Section 6.07 hereof, the By-laws of the Company, as in\neffect immediately prior to the Effective Time, shall be the By-laws of the\nSurviving Corporation until thereafter amended as provided by law, the Articles\nof Incorporation of the Surviving Corporation and such By-laws.\n\n            SECTION 2.05. Directors and Officers. The directors of Purchaser\nimmediately prior to the Effective Time shall be the initial directors of the\nSurviving Corporation, each to hold office in accordance with the Articles of\nIncorporation and By-laws of the Surviving Corporation, and the officers of the\nCompany immediately prior to the Effective Time shall be the initial officers of\nthe Surviving Corporation, in each case until their respective successors are\nduly elected or appointed and qualified.\n\n            SECTION 2.06. Conversion of Securities. At the Effective Time, by\nvirtue of the Merger and without any action on the part of Purchaser, the\nCompany or the holders of any of the following securities:\n\n                  (a) Each Share issued and outstanding immediately prior to the\n      Effective Time (other than any Shares to be cancelled pursuant to Section\n      2.06(b) and any Dissenting Shares (as hereinafter defined)) shall be\n      cancelled and shall be converted automatically into the right to receive\n      an amount equal to the Per Share Amount in cash (the \"Merger\n      Consideration\") payable, without interest, to the holder of such Share,\n      upon surrender, in the manner provided in Section 2.09, of the certificate\n      that formerly evidenced such Share;\n\n                  (b) Each Share held in the treasury of the Company and each\n      Share owned by Purchaser, Parent or any direct or indirect wholly owned\n      subsidiary of Parent or of the Company immediately prior to the Effective\n      Time shall be cancelled without any conversion thereof and no payment or\n      distribution shall be made with respect thereto; and\n\n                  (c) Each share of Common Stock, par value $.01 per share, of\n      Purchaser issued and outstanding immediately prior to the Effective Time\n      shall be converted into and exchanged for one validly issued, fully paid\n      and nonassessable share of Common Stock, par value $.01 per share, of the\n      Surviving Corporation.\n\n            SECTION 2.07. Stock Options; Equity Compensation and Bonus\nArrangements. (a) With respect to those individuals whose names appear in the\nlist referred to in Section 2.07(f) who were awarded stock options (the\n\"Optionees\") that were granted by the Company under the 1982 Stock Option Plan\nof the Company (the \"1982 Plan\") prior to the Effective Time (the \"1982\nOptions\"), each such Optionee, as of the Effective Time, shall\n\n\n                                       6\n   14\n\nbe vested in the aggregate 1982 Options awarded to such Optionee in accordance\nwith the following table:\n\n      Date 1982 Option Awarded       Vested Percentage (the \"Vested Percentage\")\n      ------------------------       -------------------------------------------\n\n      Prior to March 1, 1995                         100%\n\n      On or after March 1, 1995 but\n      prior to March 1, 1996                          80%\n\n      On or after March 1, 1996                       60%\n\n            (b) With respect to Optionees who were granted stock options under\nthe Company's 1997 Stock Incentive Plan (the \"1997 Plan\") prior to the Effective\nTime (the \"1997 Options\"), each such Optionee, as of the Effective Time, shall\nbe vested in 60% of the 1997 Options awarded to such Optionee.\n\n            (c) With respect to the stock options that were granted by the\nCompany under the 1994 Non-Employee Director Company Plan (the \"1994 Plan\")\nprior to the Effective Time (the \"1994 Options\"), as of the Effective Time, all\n1994 Options shall be fully vested.\n\n            (d) Subject to the next two sentences, each Optionee who holds any\nvested and unexercised 1982 Options, 1994 Options or 1997 Options as of the\nEffective Time (the \"Vested Options\") shall receive from the Company,\nimmediately after the Effective Time, in settlement and cancellation of each\nVested Option, a lump sum amount in cash equal to the product of (i) the\ndifference between the Per Share Amount and the per share exercise price of a\nVested Option and (ii) the number of shares of Company Common Stock subject to\nsuch Vested Option. In the event that the amount provided to any individual\npursuant to this Section 2.07(d) (without giving effect to any other payments or\nbenefits to such individual, and assuming the allocation of such individual's\n\"base amount\" in its entirety to the payment provided in this paragraph (d))\nconstitutes a \"parachute payment\" within the meaning of Section 280G of the\nCode, and, but for this sentence, would be subject to the excise tax imposed by\nSection 4999 of the Code, the Company shall reduce the aggregate number of\nVested Options of such individual (such reduction, the \"Excess Options\") (in\nsuch manner as the Company, in its reasonable discretion, shall deem\nappropriate) such that the present value thereof (as determined by the Code and\nthe applicable regulations) is equal to 2.99 times such individual's \"base\namount\" as defined in Section 280G(b)(3) of the Code. The Excess Options shall\nimmediately lapse and become void.\n\n            (e) With respect to the individuals who shall be identified by the\nCompany to Parent in writing prior to the Effective Time (the \"Conditional\nOptionees\"), to whom the Company had granted stock options that were conditional\nupon the approval by the Board and the shareholders of the Company of an\namendment to the 1997 Plan (the \"Conditional\n\n\n                                       7\n   15\n\nOptions\"), the Company agrees to pay each holder of a Conditional Option,\nimmediately after the Effective Time, a lump sum amount in cash equal to 60% of\nthe product of (i) the Per Share Amount minus the exercise price per share of\nCompany Common Stock subject to a Conditional Option and (ii) the number of\nshares of Company Common Stock subject to such Conditional Option.\n\n            (f) The Company has provided to Parent in writing a full and\ncomplete list of (i) the name of each Optionee and Conditional Optionee, (ii)\nthe number of the 1982 Options, 1994 Options, 1997 Options and Conditional\nOptions held by each Optionee and Conditional Optionee, the number of shares of\nCompany Common Stock subject to each stock option and Conditional Option as of\nthe date of this Agreement and the portion of such stock options that will\nbecome Vested Options with respect to each Optionee as of the Effective Time,\n(iii) the exercise price of each 1982 Option, 1994 Option, 1997 Option and\nConditional Option held by each Optionee and Conditional Optionee as of the date\nof this Agreement and (iv) the lump-sum amount that each Optionee and\nConditional Optionee will receive pursuant to the formula set forth in Sections\n2.07(d) and (e) above. A list of additional stock options, if any, that the\nCompany may award prior to the Effective Time (which shall not be exercisable\nfor more than 25,000 shares of Company Common Stock and which shall be awarded\naccording to terms and conditions that are identical to those applicable to the\nConditional Options) shall be provided in writing by the Company to the Parent\nprior to the Effective Time (the \"Additional Awards\"). Except for the Additional\nAwards, the Company agrees that no additional stock options will be awarded\nunder any of the Plans prior to the Effective Time. The Company further agrees\nto update the information provided to Parent concerning Optionees and\nConditional Optionees contemplated by paragraphs (e) and (f) in the event any of\nthe information included therein changes during the period between the date of\nthis Agreement and the Effective Time.\n\n            (g) As of the Effective Time, the Company shall have taken all\nnecessary actions to terminate the 1982 Plan, the 1997 Plan, the 1994 Plan and\nsuch plans shall be terminated as of the Effective Time.\n\n            (h) The Company agrees that all unvested 1997 Options and 1982\nOptions shall lapse and become void as of the Effective Time and any obligation\nexpress or implied that the Company shall have incurred with respect to the\nConditional Options shall lapse and become void as of the Effective Time. The\nCompany agrees to take all actions that may be necessary pursuant to this\nSection 2.07(h). After the Effective Time, the Rent Roll, Inc. 1997 Stock\nIncentive Plan and any awards thereunder shall continue in effect according to\nthe terms of such plan and awards.\n\n            (i) On or before the Effective Time, the Company shall adopt a\nRetention Bonus Plan (the \"Retention Bonus Plan\") for employees of the Company\nsubstantially in the form set forth on Section 2.07(i) of the Disclosure\nSchedule. The Company shall provide Parent in writing a list of the employees\nwho shall participate in the Retention Bonus Plan,\n\n\n                                       8\n   16\n\nand the retention bonus for which each such employee shall be eligible. Parent\nagrees that the Retention Bonus Plan will offer the selected participants an\naggregate of $7,785,389 in benefits thereunder.\n\n            (j) As soon as practicable after the Effective Time, Parent shall\nadopt a 1998 incentive bonus program, which shall replace the 1997 Annual\nIncentive Plan of the Company (the \"1997 Incentive Plan\") and the 1997 Officers'\nAnnual Incentive Plan of the Company (the \"Officers' Incentive Plan\"), pursuant\nto which annual bonuses will be calculated according to certain measures of the\nperformance of the Company, including, without limitation, annual increases in\nprofit and revenue compared with the preceding year. As of the Effective Time,\nthe Company shall have taken all necessary actions to terminate the 1997\nIncentive Plan and the Officers' Incentive Plan and such plans shall be\nterminated as of the Effective Time.\n\n            (k) On or before the Effective Time, the Company shall adopt a\nseverance plan for those of its employees who are at grade level E-16 or above\nas of the date hereof that shall become effective as of the Effective Time. Such\nplan will provide for payment of severance to any of such employees terminated\nother than for Cause (as defined in the Retention Bonus Plan) prior to the\nsecond anniversary of the Effective Time and to any of such employees who resign\nfor Good Reason (as defined in the Retention Bonus Plan) prior to the second\nanniversary of the Effective Time equal to a minimum of six months' base salary,\nplus an additional two weeks' base salary per full year of tenure with the\nCompany. The maximum severance benefit pursuant to such plan shall equal 12\nmonths' salary. On or before the Effective Time, the Company shall offer written\nagreements (substantially in the forms set forth in Section 2.07(k) of the\nDisclosure Schedule) to certain employees of the Company identified to the\nPurchaser in writing providing for severance benefits in lieu of participating\nin the severance plan. On or before the Effective Time, the Company shall offer\nwritten agreements to its officers providing that, in the event it is determined\nthat any payment by the Company or any affilitate to or for the benefit of such\nofficers (a \"Payment\") would be subject to the excise tax imposed by Section\n4999 of the Code or any interest or penalties are incurred by such officers with\nrespect to such excise tax (collectively, the \"Excise Tax\"), then the officers\nshall be entitled to receive an additional payment (a \"Gross-up Payment\") in an\namount such that after payment by such officer of all taxes, interest and\npenalties, including, without limitation, any income taxes and Excise Tax\nimposed upon the Gross-up Payment, the officer retains an amount of the Gross-up\nPayment equal to the Excise Tax imposed upon the Payment; provided, however,\nthat each such agreement will require each officer who is entitled to a Gross-up\nPayment to cooperate with a tax advisor of the Company's choice in the\ndetermination of such Gross-up Payment.\n\n            SECTION 2.08. Dissenting Shares. (a) Notwithstanding any provision\nof this Agreement to the contrary, Shares that are outstanding immediately prior\nto the Effective Time and which are held by stockholders who shall have not\nvoted in favor of the Merger or consented thereto in writing and who shall have\ndemanded properly in writing appraisal for such Shares in accordance with\nArticle 5.11 of Texas Law (collectively, the \"Dissenting\n\n\n                                       9\n   17\n\nShares\") shall not be converted into or represent the right to receive the\nMerger Consideration. Such stockholders shall be entitled to receive payment of\nthe appraised value of such Shares held by them in accordance with the\nprovisions of such Article 5.11, except that all Dissenting Shares held by\nstockholders who shall have failed to perfect or who effectively shall have\nwithdrawn or lost their rights to appraisal of such Shares under such Article\n5.11 shall thereupon be deemed to have been converted into and to have become\nexchangeable for, as of the Effective Time, the right to receive the Merger\nConsideration, without any interest thereon, upon surrender, in the manner\nprovided in Section 2.09, of the certificate or certificates that formerly\nevidenced such Shares.\n\n            (b) The Company shall give Parent (i) prompt notice of any demands\nfor appraisal received by the Company, withdrawals of such demands, and any\nother instruments served pursuant to Texas Law and received by the Company and\n(ii) the opportunity to direct all negotiations and proceedings with respect to\ndemands for appraisal under Texas Law. The Company shall not, except with the\nprior written consent of Parent, make any payment with respect to any demands\nfor appraisal or offer to settle or settle any such demands.\n\n            SECTION 2.09. Surrender of Shares; Stock Transfer Books. (a) Prior\nto the Effective Time, Purchaser shall designate a bank or trust company (which\nshall be reasonably acceptable to the Company) to act as agent (the \"Paying\nAgent\") for the holders of Shares in connection with the Merger to receive the\nfunds to which holders of Shares shall become entitled pursuant to Section\n2.06(a). Such funds shall be invested by the Paying Agent as directed by the\nSurviving Corporation with interest and earnings thereon accruing for the\nbenefit of the Surviving Corporation.\n\n            (b) Promptly after the Effective Time, the Surviving Corporation\nshall cause to be mailed to each person who was, at the Effective Time, a holder\nof record of Shares entitled to receive the Merger Consideration pursuant to\nSection 2.06(a) a form of letter of transmittal (which shall specify that\ndelivery shall be effected, and risk of loss and title to the certificates\nevidencing such Shares (the \"Certificates\") shall pass, only upon proper\ndelivery of the Certificates to the Paying Agent) and instructions for use in\neffecting the surrender of the Certificates pursuant to such letter of\ntransmittal. Upon surrender to the Paying Agent of a Certificate, together with\nsuch letter of transmittal, duly completed and validly executed in accordance\nwith the instructions thereto, and such other documents as may be required\npursuant to such instructions, the holder of such Certificate shall be entitled\nto receive in exchange therefor the Merger Consideration for each Share formerly\nevidenced by such Certificate, and such Certificate shall then be cancelled. No\ninterest shall accrue or be paid on the Merger Consideration payable upon the\nsurrender of any Certificate for the benefit of the holder of such Certificate.\nIf payment of the Merger Consideration is to be made to a person other than the\nperson in whose name the surrendered Certificate is registered on the stock\ntransfer books of the Company, it shall be a condition of payment that the\nCertificate so surrendered shall be endorsed properly or otherwise be in proper\nform for transfer and that the person requesting such payment shall have paid\nall transfer and other taxes required by reason of the payment of the Merger\nConsideration to a person other than\n\n\n                                       10\n   18\n\nthe registered holder of the Certificate surrendered or shall have established\nto the satisfaction of the Surviving Corporation that such taxes either have\nbeen paid or are not applicable.\n\n            (c) At any time following the sixth month after the Effective Time,\nthe Surviving Corporation shall be entitled to require the Paying Agent to\ndeliver to it any funds which had been made available to the Paying Agent and\nnot disbursed to holders of Shares (including, without limitation, all interest\nand other income received by the Paying Agent in respect of all funds made\navailable to it), and thereafter such holders shall be entitled to look to the\nSurviving Corporation (subject to abandoned property, escheat and other similar\nlaws) only as general creditors thereof with respect to any Merger Consideration\nthat may be payable upon due surrender of the Certificates held by them.\nNotwithstanding the foregoing, neither the Surviving Corporation nor the Paying\nAgent shall be liable to any holder of a Share for any Merger Consideration\ndelivered in respect of such Share to a public official pursuant to any\nabandoned property, escheat or other similar law.\n\n            (d) At the close of business on the day of the Effective Time, the\nstock transfer books of the Company shall be closed and thereafter there shall\nbe no further registration of transfers of Shares on the records of the Company.\nFrom and after the Effective Time, the holders of Shares outstanding immediately\nprior to the Effective Time shall cease to have any rights with respect to such\nShares except as otherwise provided herein or by applicable law.\n\n                                   ARTICLE III\n\n                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY\n\n            The Company hereby represents and warrants to Parent and Purchaser\nthat:\n\n            SECTION 3.01. Organization and Qualification; Subsidiaries. (a) Each\nof the Company and each subsidiary of the Company (a \"Subsidiary\") is a\ncorporation duly organized, validly existing and in good standing under the laws\nof the jurisdiction of its incorporation and has the requisite power and\nauthority and all necessary governmental approvals to own, lease and operate its\nproperties and to carry on its business as it is now being conducted, except\nwhere the failure to be so organized, existing or in good standing or to have\nsuch power, authority and governmental approvals would not, individually or in\nthe aggregate, have a Material Adverse Effect (as defined below). The Company\nand each Subsidiary is duly qualified or licensed as a foreign corporation to do\nbusiness, and is in good standing, in each jurisdiction where the character of\nthe properties owned, leased or operated by it or the nature of its business\nmakes such qualification or licensing necessary, except for such failures to be\nso qualified or licensed and in good standing that would not, individually or in\nthe aggregate, have a Material Adverse Effect. When used in connection with the\nCompany or any Subsidiary, the term \"Material Adverse Effect\" means any change\n\n\n                                       11\n   19\n\nor effect that, when taken together with all other adverse changes and effects,\nis or is reasonably likely to be materially adverse to the business, results of\noperations (on an annualized basis), financial condition or assets of the\nCompany and the Subsidiaries taken as a whole. A true and complete list of all\nthe Subsidiaries, together with the jurisdiction of incorporation of each\nSubsidiary and the percentage of the outstanding capital stock of each\nSubsidiary owned by the Company and each other Subsidiary, is set forth in\nSection 3.01 of the Disclosure Schedule delivered in connection with this\nAgreement by the Company to Parent and Purchaser (the \"Disclosure Schedule\").\nExcept as disclosed in such Section 3.01, the Company does not directly or\nindirectly own any equity or similar interest in, or any interest convertible\ninto or exchangeable or exercisable for, any equity or similar interest in, any\ncorporation, partnership, joint venture or other business association or other\nentity.\n\n            (b) Each Subsidiary that is material to the business, results of\noperations (on an annualized basis), financial condition or assets of the\nCompany and the Subsidiaries taken as a whole is so identified in Section 3.01\nof the Disclosure Schedule and is referred to herein as a \"Material Subsidiary\".\n\n            SECTION 3.02. Articles of Incorporation and By-laws. The Company has\nheretofore furnished to Parent a complete and correct copy of the Articles of\nIncorporation and the By-laws or equivalent organizational documents, each as\namended to date, of the Company and each Material Subsidiary. Such Articles of\nIncorporation, By-laws and equivalent organizational documents are in full force\nand effect. Neither the Company nor any Material Subsidiary is in violation of\nany of the provisions of their respective Certificate of Incorporation, Articles\nof Incorporation, By-laws or equivalent organizational documents in any material\nrespect.\n\n            SECTION 3.03. Capitalization. The authorized capital stock of the\nCompany consists of 40,000,000 Shares and 10,000,000 shares of Preferred Stock,\npar value $1.00 per share (\"Company Preferred Stock\"). As of the date hereof,\n(i) 14,463,844 Shares are issued and outstanding, all of which are validly\nissued, fully paid and nonassessable, (ii) 810,019 Shares are held in the\ntreasury of the Company, (iii) no Shares are held by the Subsidiaries, and (iv)\n1,646,150 Shares are reserved for future issuance pursuant to employee stock\noptions or stock incentive rights granted (or permitted to be granted in\naccordance with the terms of this Agreement) pursuant to the Company's stock\noption Plans. As of the date hereof, no shares of Company Preferred Stock are\nissued and outstanding. Except as set forth in this Section 3.03 or in Section\n3.03 of the Disclosure Schedule, there are no options, warrants or other rights,\nagreements, arrangements or commitments to which the Company or any Subsidiary\nis a party of any character relating to the issued or unissued capital stock of\nthe Company or any Subsidiary or obligating the Company or any Subsidiary to\nissue or sell any shares of capital stock of, or other equity interests in, the\nCompany or any Subsidiary. All Shares subject to issuance as aforesaid, upon\nissuance on the terms and conditions specified in the instruments or resolutions\npursuant to which they are issuable, will be duly authorized, validly issued,\nfully paid and nonassessable. Except as set forth in Section 3.03 of the\nDisclosure Schedule, there are no outstanding contractual obligations of\n\n\n                                       12\n   20\n\nthe Company or any Subsidiary to repurchase, redeem or otherwise acquire any\nShares or any capital stock of any Subsidiary or to provide funds to, or make\nany investment (in the form of a loan, capital contribution or otherwise) in,\nany Subsidiary or any other person, other than guarantees by the Company or any\nof its Subsidiaries of the obligations of one another in the ordinary course of\nbusiness, none of which is material to the Company and its Subsidiaries, taken\nas a whole. Each outstanding share of capital stock of each Subsidiary is duly\nauthorized, validly issued, fully paid and nonassessable and each such share\nowned by the Company or another Subsidiary is free and clear of all security\ninterests, liens, claims, pledges, options, rights of first refusal, agreements,\nlimitations on the Company's or such other Subsidiary's voting rights, charges\nand other encumbrances of any nature whatsoever.\n\n            SECTION 3.04. Authority Relative to This Agreement. The Company has\nall necessary power and authority to execute and deliver this Agreement, to\nperform its obligations hereunder and to consummate the transactions\ncontemplated hereby (such transactions, together with the transactions\ncontemplated by the Stock Purchase Agreement, being the \"Transactions\"). The\nexecution and delivery of this Agreement by the Company and the consummation by\nthe Company of the Transactions have been duly and validly authorized by all\nnecessary corporate action and no other corporate proceedings on the part of the\nCompany are necessary to authorize this Agreement or to consummate the\nTransactions (other than, with respect to the Merger, the approval and adoption\nof this Agreement by the holders of two-thirds of the then outstanding Shares if\nand to the extent required by applicable law, and the filing and recordation of\nappropriate merger documents as required by Delaware Law and Texas Law). This\nAgreement has been duly and validly executed and delivered by the Company and,\nassuming the due authorization, execution and delivery by Parent and Purchaser,\nconstitutes the legal, valid and binding obligation of the Company. The Company\nhas taken all actions necessary to satisfy or render inapplicable the\nrestrictions on business combinations contained in Article 13.03 of Texas Law\nwith respect to the Transactions and with respect to a merger or other business\ncombination of Parent, Purchaser or any affiliate thereof with the Company after\nthe acquisition by Purchaser of Shares pursuant to the Offer or the Stock\nPurchase Agreement.\n\n            SECTION 3.05. No Conflict; Required Filings and Consents. (a) The\nexecution and delivery of this Agreement by the Company do not, and the\nperformance of this Agreement by the Company will not, (i) conflict with or\nviolate the Articles of Incorporation or By-laws or equivalent organizational\ndocuments of the Company or any Subsidiary, (ii) conflict with or violate any\nlaw, rule, regulation, order, judgment or decree applicable to the Company or\nany Subsidiary or by which any property or asset of the Company or any\nSubsidiary is bound or affected, or (iii) result in any breach of or constitute\na default (or an event which with notice or lapse of time or both would become a\ndefault) under, or give to others any right of termination, amendment,\nacceleration or cancellation of, or result in the creation of a lien or other\nencumbrance on any property or asset of the Company or any Subsidiary pursuant\nto, any note, bond, mortgage, indenture, contract, agreement, lease, license,\npermit, franchise or other instrument or obligation to which the Company or any\nSubsidiary is a party or by which the Company or any Subsidiary or any\n\n\n                                       13\n   21\n\nasset or property of any of them is bound or affected, except as set forth in\nSection 3.05 of the Disclosure Schedule and except, with respect to clauses (ii)\nand (iii), for any such conflicts, violations, breaches, defaults or other\noccurrences which would not, individually or in the aggregate, have a Material\nAdverse Effect.\n\n            (b) The execution and delivery of this Agreement by the Company do\nnot, and the performance of this Agreement by the Company will not, require any\nconsent, approval, authorization or permit of, or filing with or notification\nto, any governmental or regulatory authority, domestic or foreign, except (i)\nfor applicable requirements, if any, of the Exchange Act, state securities or\n\"blue sky\" laws (\"Blue Sky Laws\") and state takeover laws, the pre-merger\nnotification requirements of the Hart-Scott-Rodino Antitrust Improvements Act of\n1976, as amended, and the rules and regulations thereunder (the \"HSR Act\"), and\nfiling and recordation of appropriate merger documents as required by Delaware\nLaw and Texas Law and (ii) where failure to obtain such consents, approvals,\nauthorizations or permits, or to make such filings or notifications, would not\nprevent or materially delay consummation of the Offer or the Merger, or\notherwise prevent the Company from performing its obligations under this\nAgreement in all material respects, and would not, individually or in the\naggregate, have a Material Adverse Effect. Section 3.05(b) of the Disclosure\nSchedule sets forth a list of all notes, bonds, mortgages, indentures,\ncontracts, agreements, leases, licenses, permits, franchises and other material\ninstruments material to the Company and the Subsidiaries, taken as a whole,\nwhich contain restrictions or prohibitions on or are, pursuant to the provisions\nthereof, adversely affected by a change of control of the Company or any\nSubsidiary.\n\n            SECTION 3.06. Compliance. Each of the Company and the Subsidiaries\nis in possession of all franchises, grants, authorizations, licenses, permits,\neasements, variances, exceptions, consents, certificates, approvals and orders\nof any governmental or regulatory authority necessary for the Company or the\nSubsidiaries to own, lease and operate its properties or to carry on its\nbusiness as it is now being conducted, except where the failure to have, or the\nsuspension or cancellation of, any of the Permits would not, individually or in\nthe aggregate, have a Material Adverse Effect (the \"Permits\"). As of the date\nhereof, no suspension or cancellation of any of the Permits is pending or, to\nthe knowledge of the Company, threatened, except where the failure to have, or\nthe suspension or cancellation of, any of the Permits would not, individually or\nin the aggregate, have a Material Adverse Effect. A list of the material Permits\nis set forth in Section 3.06 of the Disclosure Schedule. Neither the Company nor\nany Subsidiary is in conflict with, or in default, breach or violation of, (i)\nany law, rule, regulation, order, judgment or decree applicable to the Company\nor any Subsidiary or by which any property or asset of the Company or any\nSubsidiary is bound or affected, or (ii) any note, bond, mortgage, indenture,\ncontract, agreement, lease, license, Permit, franchise or other instrument or\nobligation to which the Company or any Subsidiary is a party or by which the\nCompany or any Subsidiary or any property or asset of the Company or any\nSubsidiary is bound or affected, except for any such conflicts, defaults,\nbreaches or violations that would not, individually or in the aggregate, have a\nMaterial Adverse Effect. To the Company's\n\n\n                                       14\n   22\n\nknowledge, no other party is in material breach or material violation of, or\nmaterial default under, any contract or agreement that is material to the\nCompany and its Subsidiaries, taken as a whole. The Company has made available\nor furnished to Parent complete and accurate copies of all contracts and\nagreements material to the Company and its Subsidiaries, taken as a whole,\nincluding, without limitation, all loan agreements.\n\n            SECTION 3.07. SEC Filings; Financial Statements. (a) The Company has\nfiled all forms, reports and documents required to be filed by it with the SEC\nsince December 31, 1993, and has heretofore delivered or made available to\nParent, in the form filed with the SEC, (i) its Annual Reports on Form 10-K for\nthe fiscal years ended December 31, 1994, 1995 and 1996, respectively, (ii) its\nQuarterly Reports on Form 10-Q for the periods ended March 31, 1997, June 30,\n1997 and September 30, 1997, (iii) all proxy statements relating to the\nCompany's meetings of stockholders (whether annual or special) held since\nDecember 31, 1993 and (iv) all other forms, reports and other registration\nstatements filed by the Company with the SEC since December 31, 1996 (the forms,\nreports and other documents referred to in clauses (i), (ii), (iii) and (iv)\nabove being referred to herein, collectively, as the \"SEC Reports\"). The SEC\nReports (i) were prepared, in all material respects, in accordance with the\nrequirements of the Securities Act of 1933, as amended (the \"Securities Act\"),\nand the Exchange Act, as the case may be, and the rules and regulations\nthereunder and (ii) did not at the time they were filed contain any untrue\nstatement of a material fact or omit to state a material fact required to be\nstated therein or necessary in order to make the statements made therein, in the\nlight of the circumstances under which they were made, not misleading. No\nSubsidiary is required to file any form, report or other document with the SEC.\n\n            (b) Each of the consolidated financial statements (including, in\neach case, any notes thereto) contained in the SEC Reports was prepared in\naccordance with generally accepted accounting principles applied on a consistent\nbasis throughout the periods indicated (except as may be indicated in the notes\nthereto) and each fairly presented the consolidated financial position, results\nof operations and changes in financial position of the Company and the\nconsolidated Subsidiaries as at the respective dates thereof and for the\nrespective periods indicated therein except as otherwise noted therein (subject,\nin the case of unaudited statements, to normal and recurring year-end\nadjustments which were not and are not expected, individually or in the\naggregate, to have a Material Adverse Effect).\n\n            (c) Except as and to the extent set forth on the consolidated\nbalance sheet of the Company and the consolidated Subsidiaries as at December\n31, 1996, including the notes thereto (the \"1996 Balance Sheet\"), neither the\nCompany nor any Subsidiary has any liability or obligation of any nature\n(whether accrued, absolute, contingent or otherwise) which would be required to\nbe reflected on a balance sheet, or in the notes thereto, prepared in accordance\nwith generally accepted accounting principles, except (i) for liabilities and\nobligations incurred in the ordinary course of business consistent with past\npractice since December 31, 1996 which would not, individually or in the\naggregate, have a Material\n\n\n                                       15\n   23\n\nAdverse Effect, (ii) as contemplated by, or disclosed pursuant to, this\nAgreement or (iii) as disclosed in SEC Reports filed prior to the date of this\nAgreement.\n\n            SECTION 3.08. Absence of Certain Changes or Events. Since December\n31, 1996, except as contemplated by, or disclosed pursuant to, this Agreement or\ndisclosed in any SEC Report filed since December 31, 1996 and prior to the date\nof this Agreement, the Company and the Subsidiaries have conducted their\nbusinesses only in the ordinary course and in a manner consistent with past\npractice and there has not been (i) any Material Adverse Effect, (ii) any\ndamage, destruction or loss (whether or not covered by insurance) with respect\nto any property or asset of the Company or any Subsidiary and having,\nindividually or in the aggregate, a Material Adverse Effect, (iii) any change by\nthe Company in its accounting methods, principles or policies, (iv) any material\nrevaluation by the Company of any asset (including, without limitation, any\nwriting down of the value of inventory or writing off of notes or accounts\nreceivable), other than in the ordinary course of business consistent with past\npractice, (v) any entry by the Company or any Subsidiary into any commitment or\ntransaction material to the Company and the Subsidiaries taken as a whole, (vi)\nany declaration, setting aside or payment of any dividend or distribution in\nrespect of any capital stock of the Company or any redemption, purchase or other\nacquisition of any of its securities other than regular quarterly dividends on\nthe Shares not in excess of $.10 per Share, (vii) any increase in or\nestablishment of any bonus, insurance, severance, deferred compensation,\npension, retirement, profit sharing, stock option (including, without\nlimitation, the granting of stock options, stock appreciation rights,\nperformance awards, or restricted stock awards), stock purchase or other\nemployee benefit plan, or any other increase in the compensation payable or to\nbecome payable to any officers or key employees of the Company or any\nSubsidiary, except in the ordinary course of business consistent with past\npractice, or (viii) any disclosure by the Company or the Subsidiaries of any\nsecret or confidential Intellectual Property material to the Company and the\nSubsidiaries, taken as a whole, except pursuant to appropriate, valid and\nenforceable confidentiality agreements or any lapse or abandonment of any\nIntellectual Property material to the Company and Subsidiaries, taken as a\nwhole.\n\n            SECTION 3.09. Absence of Litigation. Except as disclosed in the SEC\nReports filed prior to the date of this Agreement, there is no litigation, suit,\nclaim, action, proceeding or investigation pending or, to the knowledge of the\nCompany, threatened against the Company or any Subsidiary, or any property or\nasset of the Company or any Subsidiary, before any court, arbitrator or\nadministrative, governmental or regulatory authority or body, domestic or\nforeign, which (i) individually or in the aggregate, is reasonably likely to\nhave a Material Adverse Effect or (ii) seeks to materially delay or prevent the\nconsummation of any Transaction. Except as disclosed in SEC Reports filed prior\nto the date of this Agreement, neither the Company nor any Subsidiary nor any\nproperty or asset of the Company or any Subsidiary is subject to any continuing\norder of, consent decree, settlement agreement or similar written agreement\nwith, or, to the knowledge of the Company, continuing investigation by, any\ngovernmental or regulatory authority, domestic or foreign, or any order, writ,\njudgment, injunction, decree, determination or award of any governmental or\n\n\n                                       16\n   24\n\nregulatory authority or any arbitrator having, individually or in the aggregate,\na Material Adverse Effect.\n\n            SECTION 3.10. Employee Benefit Plans. (a) Section 3.10 of the\nDisclosure Schedule contains a true and complete list of all employee benefit\nplans (within the meaning of Section 3(3) of the Employee Retirement Income\nSecurity Act of 1974, as amended (\"ERISA\")) and all bonus, stock option, stock\npurchase, restricted stock, incentive, deferred compensation, retiree medical or\nlife insurance, supplemental retirement, severance or other benefit plans,\nprograms or arrangements, and all employment, termination, severance or other\ncontracts or agreements to which the Company, any Subsidiary or any entity that\nis a member of a controlled group of the Company for purposes of Section\n4001(a)(14) of ERISA (an \"ERISA Affiliate\") is a party, with respect to which\nthe Company, any Subsidiary or any ERISA Affiliate has any obligation or which\nare maintained, contributed to or sponsored by the Company, any Subsidiary or\nany ERISA Affiliate for the benefit of any current or former employee, officer\nor director of the Company, any Subsidiary or any ERISA Affiliate (collectively,\nthe \"Plans\"). Except as set forth in Section 3.10 of the Disclosure Schedule,\neach Plan is in writing and the Company has previously made available to or\nfurnished Parent with a true and complete copy of (i) each trust or other\nfunding arrangement, (ii) each summary plan description and summary of material\nmodifications, (iii) the most recently filed Internal Revenue Service (\"IRS\")\nForm 5500, (iv) the most recently received IRS determination letter for each\nsuch Plan, and (v) the most recently prepared financial statement in connection\nwith each such Plan. Except for sales incentives and employment arrangements\nentered into in the ordinary course of business consistent with past practice,\nneither the Company nor any Subsidiary has any express or implied commitment (i)\nto create, incur liability with respect to or cause to exist any other employee\nbenefit plan, program or arrangement, (ii) to enter into any contract or\nagreement to provide compensation or benefits to any individual or (iii) to\nmodify, change or terminate any Plan, other than with respect to a modification,\nchange or termination required by ERISA or the Internal Revenue Code of 1986, as\namended (the \"Code\").\n\n            (b) None of the Company, any Subsidiary or any ERISA Affiliate is or\nhas been within the last six years, obligated to contribute, on behalf of any\ncurrent or former employee, to a multiemployer plan (as defined in Section 3(37)\nor 4001(a)(3) of ERISA or Section 412 of the Code (a \"Multiemployer Plan\")) and\nno such ERISA Affiliate is liable or reasonably expected to be liable for any\nwithdrawal liability under Section 4201 of ERISA. None of the Plans is a\nMultiemployer Plan or a single employer pension plan, within the meaning of\nSection 4001(a)(15) of ERISA, for which the Company or any Subsidiary could\nincur liability under Section 4063 or 4064 of ERISA (a \"Multiple Employer\nPlan\"). None of the Company, any Subsidiary or any ERISA Affiliate has had any\nobligation under, nor has maintained, contributed to or sponsored for the\nbenefit of any current or former employee, officer or director of the Company,\nany Subsidiary or any ERISA Affiliate, any single employer pension plan within\nthe meaning of Section 4001(a)(15) of ERISA or any plan subject to the minimum\nfunding requirements of Section 412 of the Code. Except as disclosed in Section\n3.10 of the Disclosure Schedule, none of the Plans (i) provides for the\n\n\n                                       17\n   25\n\npayment of separation, severance, termination or similar-type benefits to any\nperson, (ii) obligates the Company or any Subsidiary to pay separation,\nseverance, termination or other benefits as a result of any Transaction or (iii)\nobligates the Company or any Subsidiary to make any payment or provide any\nbenefit that could be subject to a tax under Section 4999 of the Code. None of\nthe Plans provides for or promises retiree or postemployment medical, disability\nor life insurance benefits to any current or former employee, officer or\ndirector of the Company or any Subsidiary, except as required under Section\n4980B of the Code.\n\n            (c) Each Plan which is intended to be qualified under Section 401(a)\nof the Code has received a favorable determination letter from the IRS that such\nPlan is so qualified, and each trust established in connection with any Plan\nwhich is intended to be exempt from federal income taxation under Section 501(a)\nof the Code has received a determination letter from the IRS that such trust is\nso exempt. No fact or event has occurred since the date of any such\ndetermination letter from the IRS that could adversely affect the qualified\nstatus of any such Plan or the exempt status of any such trust. Neither the\nCompany nor any Subsidiary has, within the past six years, maintained or\ncontributed to a trust which is intended to be qualified as a voluntary\nemployees' beneficiary association exempt from federal income taxation under\nSections 501(a) and 501(c)(9) of the Code.\n\n            (d) There has been no prohibited transaction (within the meaning of\nSection 406 of ERISA or Section 4975 of the Code) with respect to any Plan.\nNeither the Company nor any Subsidiary is currently liable or has previously\nincurred any liability for any tax or penalty arising under Section 4971, 4972,\n4979, 4980 or 4980B of the Code or Section 502(c) of ERISA, and no fact or event\nexists which could give rise to any such liability.\n\n            (e) Except as set forth on Section 3.10(e) of the Disclosure\nSchedule, each Plan is now and has been operated (i) in all respects in\naccordance with the requirements of ERISA and the Code and (ii) in all material\nrespects in accordance with the requirements of all other applicable laws, and\nthe Company and each Subsidiary have performed all obligations required to be\nperformed by them under any Plan. Except as set forth in Section 3.10(e) of the\nDisclosure Schedule, all contributions, premiums or payments required to be made\nwith respect to any Plan are fully deductible for income tax purposes and no\nsuch deduction previously claimed has been challenged by any government entity.\nThe 1996 Balance Sheet reflects an accrual of all material amounts of employer\ncontributions and premiums accrued but unpaid with respect to the Plans as of\nits date.\n\n            (f) The Company and the Subsidiaries have not incurred any liability\nunder, and have complied in all respects with, the Worker Adjustment Retraining\nNotification Act and the regulations promulgated thereunder (\"WARN\") and do not\nreasonably expect to incur any such liability as a result of actions taken or\nnot taken prior to the Effective Time. Section 3.10(f) of the Disclosure\nSchedule lists (i) all the employees terminated or laid off by the Company or\nany Subsidiary during the 90 days prior to the date hereof and (ii) all the\nemployees of the Company or any Subsidiary who have experienced a\n\n\n                                       18\n   26\n\nreduction in hours of work of more than 50% during any month during the 90 days\nprior to the date hereof and describes all notices given by the Company and the\nSubsidiaries in connection with WARN. The Company will, by written notice to\nParent and Purchaser, update Section 3.10(f) of the Disclosure Schedule to\ninclude any such terminations, layoffs and reductions in hours from the date\nhereof through the Effective Time and will provide Parent and Purchaser with any\nrelated information which they may reasonably request.\n\n            (g) With respect to the Rent Roll, Inc. Stock Incentive Plan (the\n\"Rent Roll Plan\"), the only awards that have been granted under the Rent Roll\nPlan have been in the form of stock options and the terms of each such grant\nhave been reflected in stock option agreements. Each of such stock option\nagreements are identical to the form of such stock option agreement provided to\nParent by the Company and are all identitical to each other, except, in each\ncase, with respect to the number of shares subject to the stock option granted\nthereunder and the exercise price thereof.\n\n            SECTION 3.11. Labor Matters. Except as set forth in Section 3.11 of\nthe Disclosure Schedule, (i) there are no legal actions pending or, to the best\nknowledge of the Company, threatened between the Company or any Subsidiary and\nany of their respective employees, which legal actions have or could reasonably\nbe expected to have a Material Adverse Effect; (ii) neither the Company nor any\nSubsidiary is or has ever been a party to any collective bargaining agreement or\nother labor union contract applicable to persons employed by the Company or any\nSubsidiary, nor, to the best knowledge of the Company, are there any activities\nor proceedings of any labor union to organize any such employees; (iii) there\nare no unfair labor practice complaints pending against the Company or any\nSubsidiary before the National Labor Relations Board or any current union\nrepresentation questions involving employees of the Company or any Subsidiary;\nand (iv) there is no strike, slowdown, work stoppage or lockout, or, to the best\nknowledge of the Company, threat thereof, by or with respect to any employees of\nthe Company or any Subsidiary.\n\n            SECTION 3.12. Offer Documents; Schedule 14D-9; Proxy Statement.\nNeither the Schedule 14D-9 nor any information supplied by the Company for\ninclusion in the Offer Documents shall, at the respective times the Schedule\n14D-9, the Offer Documents or any amendments or supplements thereto are filed\nwith the SEC or are first published, sent or given to stockholders of the\nCompany, as the case may be, contain any untrue statement of a material fact or\nomit to state any material fact required to be stated therein or necessary in\norder to make the statements made therein, in the light of the circumstances\nunder which they are made, not misleading. Neither the proxy statement to be\nsent to the stockholders of the Company in connection with the Stockholders'\nMeeting (as hereinafter defined) or the information statement to be sent to such\nstockholders, as appropriate (such proxy statement or information statement, as\namended or supplemented, being referred to herein as the \"Proxy Statement\"),\nshall, at the date the Proxy Statement (or any amendment or supplement thereto)\nis first mailed to stockholders of the Company, at the time of the Stockholders'\nMeeting and at the Effective Time, be false or misleading with respect to any\nmaterial fact, or omit to state any material fact required to be stated therein\nor necessary in order to make\n\n\n                                       19\n   27\n\nthe statements made therein, in the light of the circumstances under which they\nare made, not misleading or necessary to correct any statement in any earlier\ncommunication with respect to the solicitation of proxies for the Stockholders'\nMeeting which shall have become false or misleading. The Schedule 14D-9 and the\nProxy Statement shall comply in all material respects as to form with the\nrequirements of the Exchange Act and the rules and regulations thereunder.\n\n            SECTION 3.13. Real Property and Leases; Personal Property. (a) The\nCompany and the Subsidiaries have sufficient title to all their properties and\nassets to conduct their respective businesses as currently conducted or as\ncontemplated to be conducted, with only such exceptions as, individually or in\nthe aggregate, would not have a Material Adverse Effect.\n\n            (b) Each parcel of real property owned or leased by the Company or\nany Subsidiary which is material to the Company and the Subsidiaries, taken as a\nwhole, (i) is listed in Section 3.13(b) of the Disclosure Schedule, (ii) is\nowned or leased free and clear of all mortgages, pledges, liens, security\ninterests, conditional and installment sale agreements, encumbrances, charges or\nother claims of third parties of any kind (collectively, \"Liens\"), other than\n(A) Liens for current taxes and assessments not yet past due, (B) inchoate\nmechanics' and materialmen's Liens for construction in progress, (C) workmen's,\nrepairmen's, warehousemen's and carriers' Liens arising in the ordinary course\nof business of the Company or such Subsidiary consistent with past practice, and\n(D) all matters of record, Liens and other imperfections of title and\nencumbrances which, individually or in the aggregate, would not have a Material\nAdverse Effect (collectively, \"Permitted Liens\"), and (iii) is neither subject\nto any governmental decree or order to be sold nor is being condemned,\nexpropriated or otherwise taken by any public authority with or without payment\nof compensation therefor, nor, to the best knowledge of the Company, has any\nsuch condemnation, expropriation or taking been proposed.\n\n            (c) All leases of real property leased for the use or benefit of the\nCompany or any Subsidiary to which the Company or any Subsidiary is a party\nwhich are material to the Company and the Subsidiaries, taken as a whole, and\nall material amendments and modifications thereto (i) are described in Section\n3.13(c) of the Disclosure Schedule (and true, complete and correct copies of all\nof such leases, amendments and modifications have been provided or made\navailable by the Company to Parent) and (ii) are in full force and effect and\nhave not been modified or amended in any material respect. There exists no\ndefault under any such lease by the Company or any Subsidiary, nor any event\nwhich with notice or lapse of time or both would constitute a default thereunder\nby the Company or any Subsidiary, except for such defaults as would not,\nindividually or in the aggregate, have a Material Adverse Effect, and, to the\nCompany's knowledge, there exists no default under any such lease by any other\nparty to such lease, nor, to the Company's knowledge, any event which with\nnotice or lapse of time or both would constitute a default thereunder by such\nother party.\n\n\n                                       20\n   28\n\n            (d) All tangible personal property and equipment which is material\nto the operations or business of the Company and its Subsidiaries, taken as a\nwhole, is in good working order, ordinary and reasonable wear and tear (and\nobsolescence) excepted, and has been maintained in accordance with good and\nreasonable business practices.\n\n            SECTION 3.14. Intellectual Property. (a) Section 3.14 of the\nDisclosure Schedule sets forth a true and complete list of all registered\npatents and patent applications, registered trademarks and trademark\napplications, registered copyrights and copyright applications, and Software\nowned by the Company or a Subsidiary and material to the business or operation\nof the Company or a Material Subsidiary (the \"Scheduled Intellectual Property\")\n(the Scheduled Intellectual Property together with any other Intellectual\nProperty owned by the Company or a Subsidiary and material to the business or\noperation of the Company or a Material Subsidiary, hereinafter the \"Owned\nIntellectual Property\"). Section 3.14 of the Disclosure Schedule also sets forth\na true and complete list of all Licensed Intellectual Property which is material\nto the business or operation of the Company or a Material Subsidiary (the\n\"Material Licensed Intellectual Property\"). The Owned Intellectual Property and\nthe Material Licensed Intellectual Property collectively constitute all of the\nIntellectual Property material to the continued operation of the Company and\neach Material Subsidiary in a manner consistent with past practice.\n\n            (b) For any registered or registration pending Scheduled\nIntellectual Property held by assignment, such assignment has been duly recorded\nwith the governmental or regulatory authority from which such Scheduled\nIntellectual Property issued or before which such Scheduled Intellectual\nProperty is pending.\n\n            (c) The rights of the Company or any Subsidiary in or to the\nIntellectual Property do not conflict with or infringe upon the rights of any\nthird party, and no claim has been asserted to the Company or a Subsidiary that\nthe use of such Intellectual Property does or may infringe upon the rights of\nany third party, except for such infringements as would not, individually or in\nthe aggregate, have a Material Adverse Effect.\n\n            (d) The Company or a Subsidiary is the exclusive owner of the entire\nand unencumbered right, title and interest in and to all Owned Intellectual\nProperty and is entitled to use all such Owned Intellectual Property in the\ncontinued operation of the Company or any Subsidiary in a manner consistent with\npast practice.\n\n            (e) The Company or a Subsidiary has the right to use all Material\nLicensed Intellectual Property in the continued operation of the Company in\naccordance with the terms of the respective license agreement.\n\n            (f) Except as would not, individually or in the aggregate, have a\nMaterial Adverse Effect, the Owned Intellectual Property is valid and\nenforceable, and has not been adjudged invalid or unenforceable in whole or in\npart.\n\n\n                                       21\n   29\n\n            (g) Except as would not, individually or in the aggregate, have a\nMaterial Adverse Effect, the Company and the Subsidiaries have performed all\nacts and have paid all required fees and taxes to (i) maintain all registered\nOwned Intellectual Property in full force and effect in its country of issuance\nor registration, and (ii) to maintain all applications for registration of Owned\nIntellectual Property in full force and effect in the country in which such\napplication has been filed.\n\n            (h) Except as would not, individually or in the aggregate, have a\nMaterial Adverse Effect, and except as disclosed in the SEC Reports filed prior\nto the date of this Agreement, to the Company's best knowledge, no litigation,\nclaims, actions, suits or proceedings have been asserted, are pending or\nthreatened against the Company or any Subsidiary (i) based upon or challenging\nor seeking to deny or restrict the use by the Company or any Subsidiary of any\nOwned Intellectual Property, or of any Material Licensed Intellectual Property,\nor (ii) alleging that any services provided, or products manufactured or sold by\nthe Company or any Subsidiary, infringe any patent, trademark, or any other\nright of any third party. Except as would not, individually or in the aggregate,\nhave a Material Adverse Effect, to the best knowledge of the Company, no person\nis engaging in any activity that infringes upon the Intellectual Property or\nupon the rights of the Company or any Subsidiary therein. Except as disclosed in\nSection 3.14 of the Disclosure Schedule, and except with respect to licenses\ndirectly or indirectly to end users in the ordinary course of business, neither\nthe Company nor any Subsidiary has granted any license or other right to any\nthird party with respect to Owned Intellectual Property, or with respect to any\nMaterial Licensed Intellectual Property. Except as would not, individually or in\nthe aggregate, have a Material Adverse Effect, the consummation of the\nTransactions will not result in the termination or impairment of any of the\nIntellectual Property material to the business or operation of the Company or\nany Material Subsidiary.\n\n            (i) The Company and its Subsidiaries have delivered or made\navailable to Purchaser correct and complete copies of all the licenses and\nsublicenses, and any amendments thereto, for the Material Licensed Intellectual\nProperty. With respect to each such license and sublicense (except as would not,\nindividually or in the aggregate, have a Material Adverse Effect):\n\n            (1) such license or sublicense, together with any associated\n      agreements related to the subject matter thereof, if applicable, is valid\n      and binding and in full force and effect and represents the entire\n      agreement between the respective licensor and licensee with respect to the\n      subject matter of such license or sublicense;\n\n            (2) except as set forth in Section 3.05(b) of the Disclosure\n      Schedule, such license or sublicense will not cease to be valid and\n      binding and in full force and effect on terms identical to those currently\n      in effect as a result of the consummation of the Transactions, nor will\n      the consummation of the Transactions constitute a breach or default under\n      such license or sublicense or otherwise give the licensor or sublicensor a\n      right to terminate such license or sublicense;\n\n\n                                       22\n   30\n\n            (3) with respect to each such license and sublicense: (A) neither\n      the Company nor any Subsidiary has received any notice of termination or\n      cancellation under such license or sublicense which has not been cured or\n      waived, (B) neither the Company nor any Subsidiary has received any notice\n      of a breach or default under such license or sublicense, which breach has\n      not been cured, and (C) neither the Company nor any Subsidiary has granted\n      to any other third party any rights, adverse or otherwise, under such\n      license or sublicense that would constitute a breach of such license or\n      sublicense;\n\n            (4) to the Company's best knowledge, neither the Company, any\n      Subsidiary, nor any other party to such license or sublicense is in breach\n      or default in any material respect, and, to the Company's best knowledge,\n      no event has occurred that, with notice or lapse of time would constitute\n      such a breach or default or permit termination, modification or\n      acceleration under such license or sublicense; and\n\n            (5) to the Company's best knowledge, no claim, action, suit or\n      proceeding before any governmental or regulatory authority has been\n      asserted, is pending, or threatened against the Company or any Subsidiary\n      (A) challenging or seeking to deny or restrict the use by the Company or\n      any Subsidiary of any such Material Licensed Intellectual Property, or (B)\n      alleging that such Material Licensed Intellectual Property is being\n      licensed, sublicensed or used in violation of any patent, trademark, or\n      any other right of any third party.\n\n            (j) Except as would not, individually or in the aggregate, have a\nMaterial Adverse Effect, solely with respect to Software that is material to the\nbusiness or operation of the Company or any Material Subsidiary: (i) to the best\nknowledge of the Company, such Software, including Third Party Software\ncontained in such Software, is free of all viruses, worms, trojan horses and\nother known contaminants, except for such trojan horses and other contaminants\nin such Software by design of the Company or a Subsidiary, and such Software,\nincluding Third Party Software contained in such Software, does not contain a\nfeature to disable the operation of all or any part of such Software that arises\nautomatically, through passage of time, or through any act of a user of such\nSoftware, except for such disabling features in such Software by design of the\nCompany or a Subsidiary; (ii) the final release of such Software for any given\nproduct year substantially conforms to the published specifications and user\ndocumentation for such Software, and does not contain any bugs, errors, or\nproblems that materially disrupt its operation or have a material adverse impact\non the operation of other software programs or operating systems; (iii) the\nsource code of such Software contains comments regarding operation and revision\nhistory in accordance with standard industry practices; (iv) such Software,\nincluding Third Party Software contained in such Software, to the best knowledge\nof the Company, does not contain any bugs, errors, or problems that materially\ndisrupt its operation or have a material adverse impact on the operation of\nother software programs or operating systems that would not be curable within\nthe cure period of any license agreement pertaining to such Software; (v) the\nCompany has not received notice by telephone, writing, e-mail or other means\nthat such Software, including Third Party Software contained in such Software,\ncontains any bugs, errors, or\n\n\n                                       23\n   31\n\nproblems that materially disrupt its operation or have a material adverse impact\non the operation of other software programs or operating systems, except for\nsuch bugs, errors, or problems that the Company has provided a fix, patch, or\nrevision in or to the Software, or that would be curable within the cure period\nof any license agreement pertaining to such Software; (vi) to the extent\ncurrently contractually required, the Software is Year 2000 Compliant; (vii) the\nCompany and each Subsidiary are making commercially reasonable efforts to make\nYear 2000 Compliant that Software that the Company, in the exercise of\nreasonable judgment, believes requires Year 2000 Compliance, and are aware of\nno facts or circumstances that would prevent the Company or a Subsidiary from\nmaking such Software Year 2000 Compliant; and (viii) the Company has obtained\nall approvals necessary for exporting such Software outside the United States\nand importing such Software into any country in which such Software is now sold\nor licensed for use by the Company or its Subsidiaries, directly or indirectly,\nand to the knowledge of the Company, all such export and import approvals in the\nUnited States and throughout the world are valid, current, outstanding and in\nfull force and effect.\n\n            (k) Except as would not, individually or in the aggregate, have a\nMaterial Adverse Effect, no rights in any Software that is material to the\nbusiness or operation of the Company or any Material Subsidiary have been\ntransferred to any customer or other third party by the Company or its\nSubsidiaries except to the customers of the Company or the Subsidiaries to whom\nthe Company or its Subsidiaries have licensed such Software in the ordinary\ncourse of business. To the best knowledge of the Company, all source code,\nsoftware tools, library functions, and other Software developed by the Company\nor any Subsidiary, or by any third party on behalf of the Company or a\nSubsidiary, that is or was utilized by the Company or a Subsidiary within the\npast five (5) years in the development of any Software that is material to the\nbusiness or operation of the Company or any Material Subsidiary, or that is\nrequired to operate or modify the Software, is in the possession of the Company\nor a Subsidiary. To the best knowledge of the Company, the Company or a\nSubsidiary has the right to use such source code, software tools, library\nfunctions, and other Software to the extent necessary to conduct and to continue\nto conduct the business and operations of the Company and the Subsidiaries\nconsistent with past practice.\n\n            SECTION 3.15. Taxes. Except for such matters as would not,\nindividually or in the aggregate, have a Material Adverse Effect or as set forth\nin Section 3.15 of the Disclosure Schedule, (i) the Company and the Subsidiaries\nhave timely filed or will timely file all returns and reports required to be\nfiled by them with any taxing authority with respect to Taxes, taking into\naccount any extension of time to file granted to or obtained on behalf of the\nCompany and the Subsidiaries, (ii) all Taxes that are due have been paid or will\nbe paid (other than Taxes which (1) are not yet delinquent or (2) are being\ncontested in good faith and have not been finally determined), (iii) no\ndeficiency for any Tax has been asserted or assessed by a taxing authority\nagainst the Company or any of the Subsidiaries (or against any consolidated,\ncombined, unitary or other group for Tax purposes of which the Company or any\nSubsidiary is or has been a member and for which deficiency the Company or any\nSubsidiary could have liability) which deficiency has not been paid other than\nany deficiency being contested in good faith, (iv) the Company and the\nSubsidiaries have provided adequate\n\n\n                                       24\n   32\n\nreserves (in accordance with generally accepted accounting principles) in their\nfinancial statements for any Taxes that have not been paid, whether or not shown\nas being due on any returns, (v) the Company and the Subsidiaries have complied\nwith all withholding obligations and reporting requirements in respect thereof,\n(vi) there are no Tax Liens upon any property or assets of the Company or any of\nthe Subsidiaries except Liens for current Taxes not yet due, (vii) neither the\nCompany nor any of its Subsidiaries has been required to include in income any\nadjustment pursuant to section 481 of the Code by reason of a voluntary change\nin accounting method initiated by the Company or any of its Subsidiaries, and\nthe IRS has not initiated or proposed any such adjustment or change in\naccounting method, (viii) except as set forth in the financial statements\ndescribed in Section 3.07, neither the Company nor any Subsidiary has entered\ninto a transaction which is being accounted for under the installment method of\nsection 453 of the Code, and (ix) neither the Company nor any Subsidiary has\nfiled a consent pursuant to section 341(f) of the Code or agreed to have section\n341(f)(2) of the Code apply. Neither the Company nor any Subsidiary has been\nrequested in writing to give any currently effective waivers extending the\nstatutory period of limitation applicable to any federal or state income tax\nreturn for any period which disputes, claims, assessments or waivers are\nreasonably likely to have a Material Adverse Effect. The consolidated federal\nincome tax returns of Company and the Subsidiaries for each taxable year through\nDecember 31, 1992 have been examined by the IRS, and either no material\ndeficiencies were asserted as a result of such examination for which the Company\ndoes not have adequate reserves (in accordance with generally accepted\naccounting principles) or all such deficiencies were satisfied. As used in this\nAgreement, \"Taxes\" or \"taxes\" shall mean any and all taxes, fees, levies,\nduties, tariffs, imposts and other charges of any kind (together with any and\nall interest, penalties, additions to tax and additional amounts imposed with\nrespect thereto) imposed by any governmental or regulatory authority or body,\ndomestic or foreign, or taxing authority, including, without limitation: taxes\nor other charges on or with respect to income, franchise, windfall or other\nprofits, gross receipts, property, sales, use, capital stock, payroll,\nemployment, social security, workers' compensation, unemployment compensation or\nnet worth; taxes or other charges in the nature of excise, withholding, ad\nvalorem, stamp, transfer, value-added or gains taxes; license, registration and\ndocumentation fees; and customers' duties, tariffs and similar charges.\n\n            SECTION 3.16. Environmental Matters. (a) For purposes of this\nAgreement, the following terms shall have the following meanings: (i) \"Hazardous\nSubstances\" means (A) those substances defined in or regulated under the\nfollowing federal statutes and their state counterparts, as each may be amended\nfrom time to time, and all regulations thereunder: the Hazardous Materials\nTransportation Act, the Resource Conservation and Recovery Act, the\nComprehensive Environmental Response, Compensation and Liability Act, the Clean\nWater Act, the Safe Drinking Water Act, the Atomic Energy Act, the Federal\nInsecticide, Fungicide, and Rodenticide Act and the Clean Air Act; (B) petroleum\nand petroleum products including crude oil and any fractions thereof; (C)\nnatural gas, synthetic gas, and any mixtures thereof; (D) radon; (E) any other\ncontaminant; and (F) any substance with respect to which a federal, state or\nlocal agency requires environmental investigation, monitoring, reporting or\nremediation; and (ii) \"Environmental Laws\" means any federal, state or local law\nrelating to (A) releases or\n\n\n                                       25\n   33\n\nthreatened releases of Hazardous Substances or materials containing Hazardous\nSubstances; (B) the manufacture, handling, transport, use, treatment, storage or\ndisposal of Hazardous Substances or materials containing Hazardous Substances;\nor (C) otherwise relating to pollution of the environment or the protection of\nhuman health.\n\n            (b) Except as described in Section 3.16 of the Disclosure Schedule\nor as would not, individually or in the aggregate, have a Material Adverse\nEffect: (i) neither the Company nor any Subsidiary has violated and neither is\nin violation of any Environmental Law; (ii) to the best knowledge of the\nCompany, none of the properties (including, without limitation, soils and\nsurface and ground waters) currently owned or leased by the Company or any\nSubsidiary are contaminated with any Hazardous Substance; (iii) to the best\nknowledge of the Company, none of the properties (including, without limitation,\nsoils and surface and ground waters) formerly owned or leased by the Company or\nany Subsidiary, as of the date of the transfer of conveyance of any such\nproperty, were contaminated with any Hazardous Substance; (iv) to the best\nknowledge of the Company, neither the Company nor any Subsidiary is actually,\npotentially or allegedly liable for any off-site contamination; (v) to the best\nknowledge of the Company, neither the Company nor any Subsidiary is actually,\npotentially or allegedly liable under any Environmental Law (including, without\nlimitation, pending or threatened Liens); (vi) the Company and the Subsidiaries\nhave all permits, licenses and other authorizations required under any\nEnvironmental Law (\"Environmental Permits\"); and (vii) the Company and each\nSubsidiary has always been and is in compliance with its Environmental Permits.\n\n            SECTION 3.17. Brokers. No broker, finder or investment banker (other\nthan Goldman, Sachs &amp; Co.) is entitled to any brokerage, finder's or other fee\nor commission in connection with the Transactions based upon arrangements made\nby or on behalf of the Company. The Company has heretofore furnished to Parent a\ncomplete and correct copy of all agreements between the Company and Goldman,\nSachs &amp; Co. pursuant to which such firm would be entitled to any payment\nrelating to the Transactions.\n\n                                   ARTICLE IV\n\n             REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER\n\n            Parent and Purchaser hereby, jointly and severally, represent and\nwarrant to the Company that:\n\n            SECTION 4.01. Corporate Organization. Each of Parent and Purchaser\nis a corporation duly organized, validly existing and in good standing under the\nlaws of the jurisdiction of its incorporation and has the requisite power and\nauthority and all necessary governmental approvals to own, lease and operate its\nproperties and to carry on its business as it is now being conducted, except\nwhere the failure to be so organized, existing or in good standing or to have\nsuch power, authority and governmental approvals would not,\n\n\n                                       26\n   34\n\nindividually or in the aggregate, have a material adverse effect on the business\nor operations of Parent and Purchaser and their respective subsidiaries taken as\na whole.\n\n            SECTION 4.02. Authority Relative to This Agreement. Each of Parent\nand Purchaser has all necessary corporate power and authority to execute and\ndeliver this Agreement, to perform its obligations hereunder and to consummate\nthe Transactions. The execution and delivery of this Agreement by Parent and\nPurchaser and the consummation by Parent and Purchaser of the Transactions have\nbeen duly and validly authorized by all necessary corporate action and no other\ncorporate proceedings on the part of Parent or Purchaser are necessary to\nauthorize this Agreement or to consummate the Transactions (other than, with\nrespect to the Merger, the filing and recordation of appropriate merger\ndocuments as required by Delaware Law and Texas Law). This Agreement has been\nduly and validly executed and delivered by Parent and Purchaser and, assuming\nthe due authorization, execution and delivery by the Company, constitutes a\nlegal, valid and binding obligation of each of Parent and Purchaser enforceable\nagainst each of Parent and Purchaser in accordance with its terms.\n\n            SECTION 4.03. No Conflict; Required Filings and Consents. (a) The\nexecution and delivery of this Agreement by Parent and Purchaser do not, and the\nperformance of this Agreement by Parent and Purchaser will not, (i) conflict\nwith or violate the Certificate of Incorporation or By-laws of either Parent or\nPurchaser, (ii) conflict with or violate any law, rule, regulation, order,\njudgment or decree applicable to Parent or Purchaser or by which any property or\nasset of either of them is bound or affected, or (iii) result in any breach of\nor constitute a default (or an event which with notice or lapse of time or both\nwould become a default) under, or give to others any rights of termination,\namendment, acceleration or cancellation of, or result in the creation of a lien\nor other encumbrance on any property or asset of Parent or Purchaser pursuant\nto, any note, bond, mortgage, indenture, contract, agreement, lease, license,\npermit, franchise or other instrument or obligation to which Parent or Purchaser\nis a party or by which Parent or Purchaser or any property or asset of either of\nthem is bound or affected, except, with respect to clauses (ii) and (iii), for\nany such conflicts, violations, breaches, defaults or other occurrences which\nwould not, individually or in the aggregate, have a material adverse effect on\nthe ability of Parent and Purchaser to perform their obligations under this\nAgreement and to consummate the Transactions.\n\n            (b) The execution and delivery of this Agreement by Parent and\nPurchaser do not, and the performance of this Agreement by Parent and Purchaser\nwill not, require any consent, approval, authorization or permit of, or filing\nwith or notification to, any governmental or regulatory authority, domestic or\nforeign, except (i) for applicable requirements, if any, of the Exchange Act,\nBlue Sky Laws and state takeover laws, the HSR Act and filing and recordation of\nappropriate merger documents as required by Delaware Law and Texas Law and (ii)\nwhere failure to obtain such consents, approvals, authorizations or permits, or\nto make such filings or notifications, would not prevent or materially delay\nconsummation of the Offer or the Merger, or otherwise prevent Parent or\nPurchaser from\n\n\n                                       27\n   35\n\nperforming their respective obligations under this Agreement and consummating\nthe Transactions.\n\n            SECTION 4.04. Financing. Parent has, or will have, immediately prior\nto the expiration of the Offer, sufficient funds to permit Purchaser to acquire\nall the outstanding Shares in the Offer and the Merger.\n\n            SECTION 4.05. Offer Documents; Proxy Statement. The Offer Documents\nwill not, at the time the Offer Documents are filed with the SEC or are first\npublished, sent or given to stockholders of the Company, as the case may be,\ncontain any untrue statement of a material fact or omit to state any material\nfact required to be stated therein or necessary in order to make the statements\nmade therein, in the light of the circumstances under which they are made, not\nmisleading. The information supplied by Parent or its affiliates for inclusion\nin the Proxy Statement will not, on the date the Proxy Statement (or any\namendment or supplement thereto) is first mailed to stockholders of the Company,\nat the time of the Stockholders' Meeting and at the Effective Time, contain any\nstatement which, at such time and in light of the circumstances under which it\nis made, is false or misleading with respect to any material fact, or omit to\nstate any material fact required to be stated therein or necessary in order to\nmake the statements therein not false or misleading or necessary to correct any\nstatement in any earlier communication with respect to the solicitation of\nproxies for the Stockholders' Meeting which shall have become false or\nmisleading. Notwithstanding the foregoing, Parent and Purchaser make no\nrepresentation or warranty with respect to any information supplied by the\nCompany or any of its representatives which is contained in any of the foregoing\ndocuments or the Offer Documents. The Offer Documents shall comply in all\nmaterial respects as to form with the requirements of the Exchange Act and the\nrules and regulations thereunder.\n\n            SECTION 4.06. Brokers. No broker, finder or investment banker is\nentitled to any brokerage, finder's or other fee or commission in connection\nwith the Transactions based upon arrangements made by or on behalf of Parent or\nPurchaser.\n\n            SECTION 4.07. Absence of Litigation. As of the date of this\nAgreement, there is no litigation, suit, claim, action, proceeding or\ninvestigation pending or, to the best knowledge of Parent and Purchaser,\nthreatened against, Parent or Purchaser or any of their respective properties or\nassets before any court, arbitrator or administrator, governmental or regulatory\nauthority or body, domestic or foreign, which seeks to delay or prevent or would\nresult in the material delay of or would prevent the consummation of any\nTransaction. Neither Parent nor Purchaser or any property or asset of Parent or\nPurchaser is subject to any continuing order of, consent decree, settlement\nagreement or similar written agreement with, or, to the knowledge of Parent and\nPurchaser, continuing investigation by, any governmental or regulatory\nauthority, domestic or foreign, or any order, writ, judgment, injunction,\ndecree, determination or award of any governmental or regulatory authority or\nany arbitrator which would prevent Parent or Purchaser from performing their\nrespective material obligations under this Agreement or prevent or materially\ndelay the consummation of any Transaction.\n\n\n                                       28\n   36\n\n            SECTION 4.08. No Prior Activities. Since the date of its\nincorporation, Purchaser has not engaged and will not engage prior to the\nEffective Time or termination of this Agreement in any activities other than in\nconnection with or as contemplated by this Agreement or the Stock Purchase\nAgreement or in connection with arranging any financing required to consummate\nany of the Transactions.\n\n            SECTION 4.09. Parent Not an Affiliated Shareholder. As of the date\nhereof, (i) neither Parent nor any of its affiliates is, with respect to the\nCompany, an \"Affiliated shareholder\" as such term is defined in Part 13 of Texas\nLaw and (ii) except to the extent that Parent or its affiliates may be deemed to\nbeneficially own Shares as a result of this Agreement or the Stock Purchase\nAgreement, Parent and its affiliates collectively do not hold directly or\nindirectly five percent (5%) or more of the outstanding voting shares of the\nCompany.\n\n                                    ARTICLE V\n\n                     CONDUCT OF BUSINESS PENDING THE MERGER\n\n            SECTION 5.01. Conduct of Business by the Company Pending the Merger.\nThe Company covenants and agrees that, between the date of this Agreement and\nthe time at which Purchaser's designees to the Board represent at least a\nmajority of the number of directors on the Board (including all vacancies), the\nbusinesses of the Company and the Subsidiaries shall be conducted only in, and\nthe Company and the Subsidiaries shall not take any action except in, the\nordinary course of business and in a manner consistent with past practice; and\nthe Company shall use its reasonable best efforts to preserve substantially\nintact the business organization of the Company and the Subsidiaries, to keep\navailable the services of the current officers, employees and consultants of the\nCompany and the Subsidiaries and to preserve the current relationships of the\nCompany and the Subsidiaries with customers, suppliers and other persons with\nwhich the Company or any Subsidiary has significant business relations. By way\nof amplification and not limitation, except as contemplated by, or disclosed\npursuant to, this Agreement, neither the Company nor any Subsidiary shall,\nbetween the date of this Agreement and the time at which Purchaser's designees\nto the Board represent at least a majority of the number of directors on the\nBoard (including all vacancies), directly or indirectly do any of the following\nwithout the prior written consent of Parent:\n\n                  (a) amend or otherwise change its Articles of Incorporation or\n      By-laws or equivalent organizational documents;\n\n                  (b) issue, sell, pledge, dispose of, grant, encumber, or\n      authorize the issuance, sale, pledge, disposition, grant or encumbrance of\n      (i) any shares of capital stock of any class of the Company or any\n      Subsidiary, or any options, warrants, convertible securities or other\n      rights of any kind to acquire any shares of such capital stock, or any\n      other ownership interest (including, without limitation, any phantom\n\n\n                                       29\n   37\n\n      interest), of the Company or any Subsidiary (except for the issuance of a\n      maximum of 1,646,150 Shares issuable upon exercise of employee stock\n      options outstanding on the date hereof or as disclosed in the Disclosure\n      Schedule or otherwise in writing to Parent prior to the date hereof) or\n      (ii) any assets of the Company or any Subsidiary, except for transactions\n      in the ordinary course of business and in a manner consistent with past\n      practice;\n\n                  (c) declare, set aside, make or pay any dividend or other\n      distribution, payable in cash, stock, property or otherwise, with respect\n      to any of its capital stock, except for regular quarterly dividends on the\n      Shares declared and paid at times consistent with past practice in an\n      aggregate amount not in excess of $.10 per Share per quarter;\n\n                  (d) reclassify, combine, split, subdivide or redeem, purchase\n      or otherwise acquire, directly or indirectly, any of its capital stock;\n\n                  (e) (i) acquire (including, without limitation, by merger,\n      consolidation, or acquisition of stock or assets) any corporation,\n      partnership, other business organization or any division thereof or any\n      material amount of assets, except for such acquisitions which do not\n      exceed $3,000,000 in the aggregate for all such acquisitions; (ii) incur\n      any indebtedness for borrowed money or issue any debt securities or\n      assume, guarantee or endorse, or otherwise as an accommodation become\n      responsible for, the obligations of any person, or make any loans or\n      advances, except in the ordinary course of business and consistent with\n      past practice; (iii) enter into any contract or agreement other than in\n      the ordinary course of business, consistent with past practice; (iv)\n      authorize any single capital expenditure which is in excess of $1,000,000\n      or capital expenditures which are, in the aggregate, in excess of\n      $5,000,000 for the Company and the Subsidiaries taken as a whole; or (v)\n      enter into or amend any contract, agreement, commitment or arrangement\n      with respect to any matter prohibited by this Section 5.01(e);\n\n                  (f) increase the compensation payable or to become payable to\n      its directors, officers or employees, except for increases in accordance\n      with past practices in salaries or wages of employees of the Company or\n      any Subsidiary who are not officers or directors of the Company, or grant\n      any severance or termination pay to, or enter into any employment or\n      severance agreement with any director, officer or other employee of the\n      Company or any Subsidiary, or establish, adopt, enter into or amend any\n      collective bargaining, bonus, profit sharing, thrift, compensation, stock\n      option, restricted stock, pension, retirement, deferred compensation,\n      employment, termination, severance or other plan, agreement, trust, fund,\n      policy or arrangement for the benefit of any director, officer or\n      employee, except for payments under the 1997 Incentive Plan and the\n      Officers' Incentive Plan up to a maximum of $1.8 million and except in the\n      ordinary course of business consistent with past practices;\n\n\n                                       30\n   38\n\n                  (g) except as may be required by a change in the rules\n      relating to generally accepted accounting principles or if the Company\n      elects early adoption of AICPA Statement of Position No. 97-2, Software\n      Revenue Recognition, take any action, other than reasonable and usual\n      actions in the ordinary course of business and consistent with past\n      practice, with respect to accounting policies or procedures (including,\n      without limitation, procedures with respect to the payment of accounts\n      payable and collection of accounts receivable);\n\n                  (h) make any Tax election or settle or compromise any material\n      federal, state, local or foreign income Tax liability except in the\n      ordinary course of business consistent with past practices;\n\n                  (i) pay, discharge or satisfy any claim, liability or\n      obligation (absolute, accrued, asserted or unasserted, contingent or\n      otherwise), other than the payment, discharge or satisfaction, in the\n      ordinary course of business and consistent with past practice, of\n      liabilities reflected or reserved against in the 1996 Balance Sheet or in\n      SEC Reports filed prior to the date hereof or subsequently incurred in the\n      ordinary course of business and consistent with past practice;\n\n                  (j) amend, modify or consent to the termination of any lease,\n      license, contract or agreement which is material to the Company and its\n      Subsidiaries, taken as a whole, or amend, modify or consent to the\n      termination of the Company's or the Subsidiary's rights thereunder, other\n      than in the ordinary course of business consistent with past practice; or\n\n                  (k) enter into any lease, license, contract or agreement that\n      would be material to the Company and its Subsidiaries taken as a whole,\n      other than in the ordinary course of business consistent with past\n      practice or as otherwise permitted by this Section 5.01.\n\n                                   ARTICLE VI\n\n                              ADDITIONAL AGREEMENTS\n\n            SECTION 6.01. Stockholders' Meeting. (a) If required by applicable\nlaw in order to consummate the Merger, the Company, acting through the Board,\nshall, in accordance with applicable law and the Company's Articles of\nIncorporation and By-laws, (i) duly call, give notice of, convene and hold an\nannual or special meeting of its stockholders as soon as practicable following\neither consummation of the Offer or the purchase by Purchaser of the Shares held\nby the Majority Shareholders pursuant to the Stock Purchase Agreement, whichever\noccurs first, for the purpose of considering and taking action on this Agreement\nand the Transactions (the \"Stockholders' Meeting\") and (ii) subject to the\nfiduciary duties of the Board under applicable law, (A) include in the Proxy\nStatement the unanimous recommendation of the Board that the stockholders of the\nCompany approve and\n\n\n                                       31\n   39\n\nadopt this Agreement and the Transactions and (B) use its reasonable best\nefforts to obtain such approval and adoption. At the Stockholders' Meeting,\nParent and Purchaser shall cause all Shares then owned by them and their\nsubsidiaries to be voted in favor of the approval and adoption of this Agreement\nand the Transactions.\n\n            (b) Notwithstanding the foregoing, in the event that Purchaser shall\nacquire at least 90% of the then outstanding Shares, the parties hereto agree,\nat the request of Purchaser, subject to Article VII, to take all necessary and\nappropriate action to cause the Merger to become effective, in accordance with\nArticle 5.16 of Texas Law, as soon as reasonably practicable after such\nacquisition, without a meeting of the stockholders of the Company.\n\n            SECTION 6.02. Proxy Statement. If required by applicable law, as\nsoon as practicable following either consummation of the Offer or the purchase\nby Purchaser of the Shares held by the Majority Shareholders pursuant to the\nStock Purchase Agreement, whichever occurs first, the Company shall file the\nProxy Statement with the SEC under the Exchange Act, and shall use its\nreasonable best efforts to have the Proxy Statement cleared by the SEC. Parent,\nPurchaser and the Company shall cooperate with each other in the preparation of\nthe Proxy Statement, and the Company shall notify Parent of the receipt of any\ncomments of the SEC with respect to the Proxy Statement and of any requests by\nthe SEC for any amendment or supplement thereto or for additional information\nand shall provide to Parent promptly copies of all correspondence between the\nCompany or any representative of the Company and the SEC. The Company shall give\nParent and its counsel the opportunity to review the Proxy Statement prior to\nits being filed with the SEC and shall give Parent and its counsel the\nopportunity to review all amendments and supplements to the Proxy Statement and\nall responses to requests for additional information and replies to comments\nprior to their being filed with, or sent to, the SEC. Each of the Company,\nParent and Purchaser agrees to use its reasonable best efforts, after\nconsultation with the other parties hereto, to respond promptly to all such\ncomments of and requests by the SEC and to cause the Proxy Statement and all\nrequired amendments and supplements thereto to be mailed to the holders of\nShares entitled to vote at the Stockholders' Meeting at the earliest practicable\ntime.\n\n            SECTION 6.03. Company Board Representation; Section 14(f). (a)\nPromptly upon the purchase by Purchaser of Shares pursuant to the Offer, and\nfrom time to time thereafter, Purchaser shall be entitled to designate up to\nsuch number of directors, rounded up to the next whole number, on the Board as\nshall give Purchaser representation on the Board equal to the product of the\ntotal number of directors on the Board (giving effect to the directors elected\npursuant to this sentence) multiplied by the percentage that the aggregate\nnumber of Shares beneficially owned by Purchaser or any affiliate of Purchaser\nfollowing such purchase bears to the total number of Shares then outstanding,\nand the Company shall, at such time, promptly take all actions necessary to\ncause Purchaser's designees to be elected as directors of the Company, including\nincreasing the size of the Board or securing the resignations of incumbent\ndirectors or both. At such times, the Company shall use its best efforts to\ncause persons designated by Purchaser to constitute the same percentage as\npersons\n\n\n                                       32\n   40\n\ndesignated by Purchaser shall constitute of the Board of (i) each committee of\nthe Board, (ii) each board of directors of each domestic Subsidiary and (iii)\neach committee of each such board, in each case only to the extent permitted by\napplicable law.\n\n            (b) The Company shall promptly take all actions required pursuant to\nSection 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order\nto fulfill its obligations under this Section 6.03 and shall include in the\nSchedule 14D-9 such information with respect to the Company and its officers and\ndirectors as is required under Section 14(f) and Rule 14f-1 to fulfill such\nobligations. Parent or Purchaser shall supply to the Company and be solely\nresponsible for any information with respect to either of them and their\nnominees, officers, directors and affiliates required by such Section 14(f) and\nRule 14f-1.\n\n            (c) Following the election of designees of Purchaser pursuant to\nthis Section 6.03, prior to the Effective Time, any amendment of this Agreement\nor the Articles of Incorporation or By-laws of the Company, any termination of\nthis Agreement by the Company, any extension by the Company of the time for the\nperformance of any of the obligations or other acts of Parent or Purchaser or\nwaiver of any of the Company's rights hereunder shall require the concurrence of\na majority of the directors of the Company then in office who neither were\ndesignated by Purchaser nor are employees of the Company.\n\n            SECTION 6.04. Access to Information; Confidentiality. (a) From the\ndate hereof to the Effective Time, the Company shall, and shall cause the\nSubsidiaries and the officers, directors, employees, auditors and agents of the\nCompany and the Subsidiaries to, afford the officers, employees and agents of\nParent and Purchaser and persons providing or committing to provide Parent or\nPurchaser with financing for the Transactions reasonable access at all\nreasonable times to the officers, employees, agents, properties, offices, plants\nand other facilities, books and records of the Company and each Subsidiary, and\nshall furnish Parent and Purchaser and persons providing or committing to\nprovide Parent or Purchaser with financing for the Transactions with all\nfinancial, operating and other data and information as Parent or Purchaser,\nthrough its officers, employees or agents, may reasonably request.\n\n            (b) All information obtained by Parent or Purchaser or other persons\nacting on their behalf or for their benefit pursuant to this Section 6.04 shall\nbe kept confidential in accordance with the confidentiality agreement, dated\nNovember 21, 1997 (the \"Confidentiality Agreement\"), between Parent and the\nCompany. The Confidentiality Agreement is hereby amended to provide that, upon\nconsummation of the Offer and the purchase by Purchaser of the Shares held by\nthe Majority Shareholders pursuant to the Stock Purchase Agreement or the Offer,\nthe first paragraph on page three of the Confidentiality Agreement (relating to\nacquisition proposals) and the third paragraph on page three of the\nConfidentiality Agreement (relating to solicitation of employees) shall each be\ndeleted in their entirety and be of no force and effect.\n\n\n                                       33\n   41\n\n            (c) No investigation pursuant to this Section 6.04 shall affect any\nrepresentation or warranty in this Agreement of any party hereto or any\ncondition to the obligations of the parties hereto.\n\n            SECTION 6.05. No Solicitation of Transactions. (a) Neither the\nCompany nor any Subsidiary shall, directly or indirectly, through any officer,\ndirector, agent or otherwise, solicit, initiate, encourage the submission of or\naccept any proposal or offer from any person relating to any acquisition or\npurchase of all or (other than in the ordinary course of business) any portion\nof the assets of, or any equity interest in, the Company or any Subsidiary or\nany business combination with the Company or any Subsidiary or participate in\nany negotiations regarding, or furnish to any other person any information with\nrespect to, or otherwise cooperate in any way with, or assist or participate in,\nfacilitate or encourage, any effort or attempt by any other person to do or seek\nany of the foregoing. The Company immediately shall cease and cause to be\nterminated all existing discussions or negotiations with any parties conducted\nheretofore with respect to any of the foregoing. Notwithstanding the foregoing\nprovisions of this Section 6.05, (i) the Company may engage in discussions or\nnegotiations with a third party who seeks to initiate such discussions or\nnegotiations or may furnish such third party information concerning the Company\nand its Subsidiaries, in each case only in response to a request for such\ninformation or access which was not encouraged, solicited or initiated by the\nCompany or any of its affiliates, and pursuant to appropriate confidentiality\nagreements, (ii) the Board may take and disclose to the Company's stockholders a\nposition contemplated by Rule 14e-2 promulgated under the Exchange Act and (iii)\nfollowing receipt of a proposal or offer from a third party, the Board may\nwithdraw or modify its recommendation referred to in Section 1.02, but in each\ncase referred to in the foregoing clauses (i) through (iii) only to the extent\nthat the Board shall conclude in good faith based upon the advice of the\nCompany's outside counsel that such action is required in order for the Board to\nact in a manner which is consistent with its fiduciary obligations under\napplicable law. The Company shall notify Parent promptly if any such proposal or\noffer with any person with respect thereto, is made and shall, in any such\nnotice to Parent, indicate in reasonable detail the identity of the person\nmaking such proposal or offer and the terms and conditions of such proposal or\noffer. In connection with any such proposal or offer, the Company agrees not to\nrelease any third party from, or waive any provision of, any confidentiality or\nstandstill agreement to which the Company is a party.\n\n            (b) Notwithstanding anything in paragraph (a) or any other provision\nto the contrary in this Agreement, the Company shall not take any action which\nwould render invalid or ineffective, or otherwise vacate or withdraw, the\napproval of the Transactions by the Board for purposes of Article 13.03 of Texas\nLaw and shall not take any action that would cause the Company to breach its\nrepresentation and warranty, as of the taking of such action, set forth in the\nlast sentence of Section 3.04 of this Agreement.\n\n            SECTION 6.06. Employee Benefits Matters. Following the Effective\nTime, Parent shall cause the current employees of the Company to (i) be eligible\nto participate in the employee benefit plans of a subsidiary of Parent, the\nbenefits under which, in the aggregate, shall be at least as favorable as those\nprovided under the Plans (subject to the\n\n\n                                       34\n   42\n\nprovisions of Section 2.07 hereof), (ii) continue to participate in the Plans as\nin effect immediately prior to the Effective Time or (iii) be eligible to\nparticipate in a benefits package that is a combination of (i) and (ii) and is\nat least as favorable, in the aggregate, as those provided under the Plans,\nprovided that nothing herein shall prevent Parent from terminating the\nemployment of any such employee or modifying or terminating such plans from time\nto time and the choice of alternatives (i), (ii) or (iii) above shall be at the\nsole discretion of Parent. Any group health plan offered to current employees of\nthe Company and their dependents shall not exclude coverage on account of any\npre-existing condition, and in determining deductibles and co-payments under any\ngroup health plan of Parent or its subsidiaries, such employees and their\ndependents shall be credited with any deductibles and co-pays accrued through\nthe Effective Time. For purposes of any length of service requirements, waiting\nperiods, vesting periods, benefit accruals or differential benefits based on\nlength of service in any such plan for which an employee of the Company may be\neligible after the Effective Time, Parent shall ensure that service by such\nemployee with the Company shall be deemed service with Parent; provided,\nhowever, that no such credit shall be given for purposes of any defined benefit\npension plan of Parent or any of its subsidiaries.\n\n            SECTION 6.07. Directors' and Officers' Indemnification and\nInsurance. (a) The Articles of Incorporation and By-laws of the Surviving\nCorporation shall contain provisions no less favorable with respect to\nlimitation of liability and indemnification than are set forth in Article XII of\nthe Articles of Incorporation and Article 11 of the By-laws of the Company,\nwhich provisions shall not be amended, repealed or otherwise modified for a\nperiod of six years from the Effective Time in any manner that would affect\nadversely the rights thereunder of individuals who prior to or at the Effective\nTime were directors, officers or employees of the Company or its Subsidiaries.\n\n            (b) The Company and, following the purchase of any Shares by\nPurchaser or its affiliates pursuant to the Offer or the Stock Purchase\nAgreement, Parent shall, to the fullest extent permitted under applicable law\nand regardless of whether the Merger becomes effective, indemnify and hold\nharmless, and, after the Effective Time, Parent and the Surviving Corporation\nshall, to the fullest extent permitted under applicable law, indemnify and hold\nharmless, each present and former director, officer or employee of the Company\nand each Subsidiary (collectively, the \"Indemnified Parties\") against all costs\nand expenses (including attorneys' fees), judgments, fines, losses, claims,\ndamages, liabilities and settlement amounts paid in connection with any claim,\naction, suit, proceeding or investigation (whether arising before or after the\nEffective Time), whether civil, criminal, administrative or investigative,\narising out of or pertaining to any action or omission in their capacity as an\nofficer, director or employee whether occurring before or after the Effective\nTime (including, without limitation, the Transactions), for a period of six\nyears after the date hereof. Without limiting the generality of the foregoing,\nin the event of any such claim, action, suit, proceeding or investigation, (i)\nthe Company, the Surviving Corporation or Parent, as the case may be, shall pay\nas incurred, each Indemnified Party's legal and other expenses (including costs\nof investigation and preparation), including the fees and expenses of counsel\nselected by the Indemnified Party, which counsel shall be reasonably\nsatisfactory to the Company, the Surviving Corporation or Parent, promptly after\nstatements therefor are\n\n\n                                       35\n   43\n\nreceived and (ii) the Company, the Surviving Corporation and Parent shall\ncooperate in the defense of any such matter; provided, however, that none of the\nCompany, the Surviving Corporation or Parent shall be liable for any settlement\neffected without its written consent (which consent shall not be unreasonably\nwithheld); and provided further that none of the Company, the Surviving\nCorporation or Parent shall be obligated pursuant to this Section 6.07(b) to pay\nthe fees and expenses of more than one counsel for all Indemnified Parties in\nany single action except to the extent that two or more of such Indemnified\nParties shall have conflicting interests in the outcome of such action; and\nprovided further that, in the event that any claim for indemnification is\nasserted or made within such six-year period, all rights to indemnification in\nrespect of such claim shall continue until the disposition of such claim. The\nparties intend, to the extent not prohibited by applicable law, that the\nindemnification provided for in this Section 6.07 shall apply without limitation\nto negligent acts or omissions of any Indemnified Party. Any determination to be\nmade as to whether any Indemnified Party has met any standard of conduct imposed\nby law shall be made by legal counsel reasonably acceptable to such Indemnified\nParty, Parent and the Surviving Corporation, retained at the Surviving\nCorporation's expense. The Company, the Surviving Corporation or Parent shall\npay all expenses, including counsel fees and expenses, that any Indemnified\nParty may incur in enforcing the indemnity and other obligations provided for in\nthis Section 6.07.\n\n            (c) The Surviving Corporation shall use its best efforts to maintain\nin effect for six years from the Effective Time, if available, the current\ndirectors' and officers' liability insurance policies maintained by the Company\n(provided that the Surviving Corporation may substitute therefor policies of at\nleast the same coverage containing terms and conditions which are not materially\nless favorable) with respect to matters occurring prior to the Effective Time;\nprovided however that in no event shall the Surviving Corporation be required to\nexpend pursuant to this Section 6.07(c) more than an amount per year equal to\n200% of current annual premiums paid by the Company for such insurance (which\npremiums the Company represents and warrants to be approximately $139,000 in the\naggregate); provided further that the Surviving Corporation shall obtain the\nmaximum coverage obtainable for such 200% amount.\n\n            (d) In the event the Company, the Surviving Corporation or Parent or\nany of their respective successors or assigns (i) consolidates with or merges\ninto any other person and shall not be the continuing or surviving corporation\nor entity of such consolidation or merger or (ii) transfers all or substantially\nall of its properties and assets to any person, then, and in each such case,\nproper provision shall be made so that the successors and assigns of the\nCompany, the Surviving Corporation or Parent, as the case may be, shall assume\nthe obligations set forth in this Section 6.07.\n\n            (e) This Section 6.07 is intended to benefit the Indemnified Parties\nand their respective heirs, executors and personal representatives and shall be\nbinding on the successors and assigns of Parent, the Company and the Surviving\nCorporation. This Section 6.07 shall not limit or otherwise adversely affect any\nrights any Indemnified Party may have\n\n\n                                       36\n   44\n\nunder any agreement with the Company or any Subsidiary or the Company's or any\nSubsidiary's Articles of Incorporation or By-laws.\n\n            SECTION 6.08. Notification of Certain Matters. The Company shall\ngive prompt notice to Parent, and Parent shall give prompt notice to the\nCompany, of (i) the occurrence, or non-occurrence, of any event the occurrence,\nor non-occurrence, of which would be likely to cause any representation or\nwarranty contained in this Agreement to be untrue or inaccurate and (ii) any\nfailure of the Company, Parent or Purchaser, as the case may be, to comply with\nor satisfy any covenant, condition or agreement to be complied with or satisfied\nby it hereunder; provided, however, that the delivery of any notice pursuant to\nthis Section 6.08 shall not limit or otherwise affect the remedies available\nhereunder to the party receiving such notice.\n\n            SECTION 6.09. Further Action; Reasonable Best Efforts. Upon the\nterms and subject to the conditions hereof, each of the parties hereto shall (i)\nmake promptly its respective filings, and thereafter make any other required\nsubmissions, under the HSR Act with respect to the Transactions and (ii) use its\nreasonable best efforts to take, or cause to be taken, all appropriate action,\nand to do, or cause to be done, all things necessary, proper or advisable under\napplicable laws and regulations to consummate and make effective the\nTransactions, including, without limitation, using its reasonable best efforts\nto obtain all licenses, permits (including, without limitation, Environmental\nPermits), consents, approvals, authorizations, qualifications and orders of\ngovernmental authorities and parties to contracts with the Company and the\nSubsidiaries as are necessary for the consummation of the Transactions and to\nfulfill the conditions to the Offer and the Merger. In case at any time after\nthe Effective Time any further action is necessary or desirable to carry out the\npurposes of this Agreement, the proper officers and directors of each party to\nthis Agreement shall use their reasonable best efforts to take all such action.\n\n            SECTION 6.10. Public Announcements. Parent and the Company shall\nconsult with each other before issuing any press release or otherwise making any\npublic statements with respect to this Agreement or any Transaction and shall\nnot issue any such press release or make any such public statement prior to such\nconsultation, except as may be required by law or any listing agreement with a\nnational securities exchange (including the Nasdaq National Market) to which\nParent or the Company is a party.\n\n            SECTION 6.11. Confidentiality Agreement. The Company hereby waives\nthe provisions of the Confidentiality Agreement as and to the extent necessary\nto permit the consummation of each of the Transactions. Upon the acceptance for\npayment of Shares pursuant to the Offer and the purchase of Shares pursuant to\nthe Stock Purchase Agreement or the Offer, the Confidentiality Agreement shall\nbe deemed to have terminated without further action by the parties thereto.\n\n\n                                       37\n   45\n\n                                   ARTICLE VII\n\n                            CONDITIONS TO THE MERGER\n\n            SECTION 7.01. Conditions to the Merger. The respective obligations\nof each party to effect the Merger shall be subject to the satisfaction at or\nprior to the Effective Time of the following conditions:\n\n                  (a) Stockholder Approval. This Agreement and the transactions\n      contemplated hereby shall have been approved and adopted by the\n      affirmative vote of the stockholders of the Company to the extent required\n      by Texas Law and the Articles of Incorporation of the Company;\n\n                  (b) HSR Act. Any waiting period (and any extension thereof)\n      applicable to the consummation of the Merger under the HSR Act shall have\n      expired or been terminated;\n\n                  (c) No Order. No United States or Canadian federal, state,\n      provincial or local governmental or regulatory authority or other agency\n      or commission or court of competent jurisdiction shall have enacted,\n      issued, promulgated, enforced or entered any law, rule, regulation,\n      executive order, decree, injunction or other order (whether temporary,\n      preliminary or permanent) which is then in effect and has the effect of\n      making the acquisition of Shares by Parent or Purchaser or any affiliate\n      of either of them illegal or otherwise restricting, preventing or\n      prohibiting consummation of the Merger; and\n\n                  (d) Offer. Purchaser or its permitted assignee shall have\n      purchased a minimum two-thirds of the outstanding Shares (on a fully\n      diluted basis) pursuant to the Offer, the Stock Purchase Agreement or\n      otherwise.\n\n                                  ARTICLE VIII\n\n                        TERMINATION, AMENDMENT AND WAIVER\n\n            SECTION 8.01. Termination. This Agreement may be terminated and the\nMerger and the other Transactions may be abandoned at any time prior to the\nEffective Time, notwithstanding any requisite approval and adoption of this\nAgreement and the transactions contemplated hereby by the stockholders of the\nCompany:\n\n                  (a) By mutual written consent duly authorized by the Boards of\n      Directors of Parent, Purchaser and the Company; or\n\n                  (b) By either Parent, Purchaser or the Company if (i) the\n      Effective Time shall not have occurred on or before May 15, 1998;\n      provided, however, that the\n\n\n                                       38\n   46\n\n      right to terminate this Agreement under this Section 8.01(b) shall not be\n      available (A) to any party whose failure to fulfill any obligation under\n      this Agreement has been the cause of, or resulted in, the failure of the\n      Effective Time to occur on or before such date or (B) if Purchaser shall\n      have accepted for payment Shares pursuant to the Offer or shall have\n      purchased Shares of the Majority Stockholders pursuant to the Stock\n      Purchase Agreement or (ii) any United States or Canadian federal, state,\n      provincial or local court or governmental or regulatory authority of\n      competent jurisdiction shall have issued an order, decree, ruling or taken\n      any other action restraining, enjoining or otherwise prohibiting the\n      Merger and such order, decree, ruling or other action shall have become\n      final and nonappealable; or\n\n                  (c) By Parent any time prior to the acceptance of Shares for\n      payment pursuant to the Offer or the purchase of Shares pursuant to the\n      Stock Purchase Agreement if due to an occurrence or circumstance that\n      would result in a failure to satisfy any condition set forth in Annex A\n      hereto, Purchaser shall have (i) failed to commence the Offer within 30\n      days following the date of this Agreement, (ii) terminated the Offer\n      without having accepted any Shares for payment thereunder or (iii) failed\n      to pay for Shares pursuant to the Offer on or prior to February 28, 1998\n      (unless such failure shall have been the result of the failure of the\n      waiting period under the HSR Act to have expired or been terminated, in\n      which case such date shall be May 15, 1998), unless such failure to pay\n      for Shares shall have been caused by or resulted from the failure of\n      Parent or Purchaser to perform in any respect any covenant or agreement of\n      either of them contained in this Agreement or the Stock Purchase Agreement\n      or the breach by Parent or Purchaser of any representation or warranty of\n      either of them contained in this Agreement or the Stock Purchase\n      Agreement; or\n\n                  (d) By the Company, upon approval of the Board, if Purchaser\n      shall have (i) failed to commence the Offer within 30 days following the\n      date of this Agreement, (ii) unless Purchaser shall have otherwise\n      purchased the Shares of the Majority Shareholders pursuant to the Stock\n      Purchase Agreement, terminated the Offer without having accepted any\n      Shares for payment thereunder or (iii) unless Purchaser shall have\n      otherwise purchased the Shares of the Majority Shareholders pursuant to\n      the Stock Purchase Agreement, failed to pay for Shares pursuant to the\n      Offer on or prior to February 28, 1998 (unless such failure shall have\n      been the result of the failure of the waiting period under the HSR Act to\n      have expired or been terminated, in which case such date shall be May 15,\n      1998), unless such failure to pay for Shares shall have been caused by or\n      resulted from the failure of the Company to perform in any respect any\n      covenant or agreement of it contained in this Agreement or the breach by\n      the Company of any representation or warranty of it contained in this\n      Agreement or the failure of any of the Majority Stockholders to perform in\n      any respect any covenant or agreement of any of them contained in the\n      Stock Purchase Agreement or the breach by any of them of any\n      representation or warranty contained in the Stock Purchase Agreement; or\n\n\n                                       39\n   47\n\n                  (e) By the Company if the Stock Purchase Agreement is\n      terminated pursuant to its terms or is otherwise amended in a manner\n      adverse to the Company or its shareholders without the Company's prior\n      written consent.\n\n            SECTION 8.02. Effect of Termination. In the event of the termination\nof this Agreement pursuant to Section 8.01, this Agreement shall forthwith\nbecome void, and there shall be no liability on the part of any party hereto,\nexcept (i) as set forth in Sections 6.04(b), 8.03 and 9.01 and (ii) nothing\nherein shall relieve any party from liability for any breach hereof.\n\n            SECTION 8.03. Fees and Expenses. Except as otherwise provided in\nthis Agreement, all costs and expenses incurred in connection with this\nAgreement and the Transactions shall be paid by the party incurring such\nexpenses, whether or not any Transaction is consummated.\n\n            SECTION 8.04. Amendment. Subject to Section 6.03, this Agreement may\nbe amended by the parties hereto by action taken by or on behalf of their\nrespective Boards of Directors at any time prior to the Effective Time;\nprovided, however, that, after the approval and adoption of this Agreement and\nthe Transactions by the stockholders of the Company, no amendment may be made\nwhich would reduce the amount or change the type of consideration into which\neach Share shall be converted upon consummation of the Merger. This Agreement\nmay not be amended except by an instrument in writing signed by the parties\nhereto.\n\n            SECTION 8.05. Waiver. At any time prior to the Effective Time, any\nparty hereto may (i) extend the time for the performance of any obligation or\nother act of any other party hereto, (ii) waive any inaccuracy in the\nrepresentations and warranties contained herein or in any document delivered\npursuant hereto and (iii) waive compliance with any agreement or condition\ncontained herein. Any such extension or waiver shall be valid if set forth in an\ninstrument in writing signed by the party or parties to be bound thereby.\n\n                                   ARTICLE IX\n\n                               GENERAL PROVISIONS\n\n            SECTION 9.01. Non-Survival of Representations, Warranties and\nAgreements. The representations, warranties and agreements in this Agreement\nshall terminate at the Effective Time or upon the termination of this Agreement\npursuant to Section 8.01, as the case may be, except that the agreements set\nforth in Article II, Section 6.07 and the last sentence of Section 6.09 shall\nsurvive the Effective Time indefinitely and those set forth in Sections 6.04(b)\nand 8.03 shall survive termination indefinitely.\n\n            SECTION 9.02. Notices. All notices, requests, claims, demands,\nconsents and other communications hereunder shall be in writing and shall be\ngiven (and shall be\n\n\n                                       40\n   48\n\ndeemed to have been duly given upon receipt) by delivery in person, by cable,\ntelecopy, telegram or telex or by registered or certified mail (postage prepaid,\nreturn receipt requested) to the respective parties at the following addresses\n(or at such other address for a party as shall be specified in a notice given in\naccordance with this Section 9.02):\n\n            if to Parent or Purchaser:\n\n                  The Thomson Corporation\n                  Metro Center\n                  One Station Plaza\n                  Stamford, Connecticut 06902\n                  Telecopier No: (203) 348-5718\n                  Attention:  General Counsel\n\n            with a copy to:\n\n                  Shearman &amp; Sterling\n                  599 Lexington Avenue\n                  New York, New York  10022\n                  Telecopier No:  (212) 848-7179\n                  Attention:  David W. Heleniak, Esq.\n\n            if to the Company:\n\n                  Computer Language Research, Inc.\n                  2395 Midway Road\n                  Carrollton, Texas 75006\n                  Telecopier No:  (972) 250-8423\n                  Attention: Stephen T. Winn\n                            Chief Executive Officer\n\n            with a copy to:\n\n                  Locke Purnell Rain Harrell\n                  (A Professional Corporation)\n                  2200 Ross Avenue, Suite 2200\n                  Dallas, Texas 75201\n                  Telecopier No:  (214) 740-8800\n                  Attention:  Guy Kerr, Esq.\n\n                  and\n\n\n                                       41\n   49\n\n                  Skadden, Arps, Slate, Meagher &amp; Flom LLP\n                  One Beacon Street\n                  Boston, Massachusetts 02108-3194\n                  Telecopier No:  (617) 573-4822\n                  Attention:  Louis A. Goodman, Esq.\n\n            SECTION 9.03. Certain Definitions. For purposes of this Agreement,\nthe term:\n\n                  (a) \"affiliate\" of a specified person means a person who\n      directly or indirectly through one or more intermediaries controls, is\n      controlled by, or is under common control with, such specified person;\n\n                  (b) \"beneficial owner\" with respect to any Shares means a\n      person who shall be deemed to be the beneficial owner of such Shares (i)\n      which such person or any of its affiliates or associates (as such term is\n      defined in Rule 12b-2 promulgated under the Exchange Act) beneficially\n      owns, directly or indirectly, (ii) which such person or any of its\n      affiliates or associates has, directly or indirectly, (A) the right to\n      acquire (whether such right is exercisable immediately or subject only to\n      the passage of time), pursuant to any agreement, arrangement or\n      understanding or upon the exercise of consideration rights, exchange\n      rights, warrants or options, or otherwise, or (B) the right to vote\n      pursuant to any agreement, arrangement or understanding or (iii) which are\n      beneficially owned, directly or indirectly, by any other persons with whom\n      such person or any of its affiliates or associates or person with whom\n      such person or any of its affiliates or associates has any agreement,\n      arrangement or understanding for the purpose of acquiring, holding, voting\n      or disposing of any Shares;\n\n                  (c) \"business day\" means any day on which the principal\n      offices of the SEC in Washington, D.C. are open to accept filings, or, in\n      the case of determining a date when any payment is due, any day on which\n      banks are not required or authorized to close in The City of New York;\n\n                  (d) \"control\" (including the terms \"controlled by\" and \"under\n      common control with\") means the possession, directly or indirectly or as\n      trustee or executor, of the power to direct or cause the direction of the\n      management and policies of a person, whether through the ownership of\n      voting securities, as trustee or executor, by contract or credit\n      arrangement or otherwise;\n\n                  (e) \"person\" means an individual, corporation, partnership,\n      limited partnership, limited liability company, syndicate, person\n      (including, without limitation, a \"person\" as defined in Section 13(d)(3)\n      of the Exchange Act), trust, association or entity or government,\n      political subdivision, agency or instrumentality of a government; and\n\n\n                                       42\n   50\n\n                  (f) \"Intellectual Property\" means any and all of the following\n      used by the Company or any Subsidiary in connection with their respective\n      businesses or operations: (i) inventions, ideas and conceptions of\n      inventions, whether or not patentable, whether or not reduced to practice,\n      and whether or not yet made the subject of a patent application or\n      applications, (ii) all United States, international, and foreign patents,\n      patent applications and statutory invention registrations, including,\n      without limitation, reissues, divisions, continuations, continuations in\n      part, extensions and reexaminations thereof, all rights therein provided\n      by international treaties or conventions and all improvements thereto,\n      (iii) trademarks, service marks, certification marks, collective marks,\n      trade dress, logos, domain names, product configurations, trade names,\n      business names, corporate names, and other source identifiers, whether or\n      not registered, whether currently in use or not, including all common law\n      rights, and registrations and applications for registration thereof,\n      including, but not limited to, all marks registered in the United States\n      Patent and Trademark Office or in any office or agency of any State or\n      Territory thereof or any foreign country, and all rights therein provided\n      by international treaties or conventions, all reissues, extensions and\n      renewals of any of the foregoing, (iv) copyrightable works, copyrights,\n      whether or not registered, and registrations and applications for\n      registration thereof in the United States and any foreign country, and all\n      rights therein provided by international treaties or conventions, (v) the\n      Software, (vi) confidential and proprietary information, including trade\n      secrets, (vii) copies and tangible embodiments of all the foregoing, in\n      whatever form or medium, (viii) licenses or sublicenses to the Company or\n      any Subsidiary, or by the Company or any Subsidiary to a third party, in\n      connection with any of the foregoing (collectively, \"Licensed Intellectual\n      Property\"), and (ix) all rights to sue or recover and retain damages and\n      costs and attorneys' fees for past, present and future infringement or\n      breach of any of the foregoing.\n\n                  (g) \"knowledge\" or \"best knowledge\" with respect to the\n      Company means the actual knowledge of the persons listed in Section\n      9.03(g) of the Disclosure Schedule.\n\n                  (h) \"Licensed Intellectual Property\" shall have the meaning\n      set forth in the definition of Intellectual Property.\n\n                  (i) \"Software\" means all material computer software and\n      subsequent versions thereof developed or currently being developed, by or\n      on behalf of the Company or any Subsidiary, or manufactured, sold or\n      marketed by the Company or any Subsidiary, including source code, object\n      code, objects, comments, screens, user interfaces, report formats,\n      templates, menus, buttons and icons, and all files, data, materials,\n      manuals, design notes and other items and documentation related thereto or\n      associated therewith, but excluding Third Party Software.\n\n\n                                       43\n   51\n\n                  (j) \"subsidiary\" or \"subsidiaries\" of the Company, the\n      Surviving Corporation, Parent or any other person means an affiliate\n      controlled by such person, directly or indirectly, through one or more\n      intermediaries.\n\n                  (k) \"Third Party Software\" means all computer software\n      contained in the Software developed by a third party that was not\n      developed by or on behalf of the Company or any Subsidiary.\n\n                  (l) \"Year 2000 Compliant\" or \"Year 2000 Compliance\" means that\n      the Software provides uninterrupted millennium functionality in that the\n      Software will record, store, process and present calendar dates falling on\n      or after January 1, 2000, in the same manner and with the same\n      functionality as the Software records, stores, processes, and presents\n      calendar dates falling on or before December 31, 1999.\n\n            SECTION 9.04. Severability. If any term or other provision of this\nAgreement is determined by a court of competent jurisdiction to be invalid,\nillegal or unenforceable, all other terms and provisions of this Agreement shall\nnevertheless remain in full force and effect so long as the economic or legal\nsubstance of the Transactions is not affected in any manner materially adverse\nto any party. Upon such determination that any term or other provision is\ninvalid, illegal or incapable of being enforced, the parties hereto shall\nnegotiate in good faith to modify this Agreement so as to effect the original\nintent of the parties as closely as possible in a mutually acceptable manner in\norder that the Transactions be consummated as originally contemplated to the\nfullest extent possible.\n\n            SECTION 9.05. Entire Agreement; Assignment. This Agreement\nconstitutes the entire agreement among the parties with respect to the subject\nmatter hereof and supersedes, except as set forth in Sections 6.04(b) and 6.11,\nall prior agreements and undertakings, both written and oral, among the parties,\nor any of them, with respect to the subject matter hereof. This Agreement shall\nnot be assigned by operation of law or otherwise, except that Parent and\nPurchaser may assign all or any of their rights and obligations hereunder to any\naffiliate of Parent provided that no such assignment shall relieve the assigning\nparty of its obligations hereunder if such assignee does not perform such\nobligations.\n\n            SECTION 9.06. Parties in Interest. This Agreement shall be binding\nupon and inure solely to the benefit of each party hereto, and nothing in this\nAgreement, express or implied, is intended to or shall confer upon any other\nperson any right, benefit or remedy of any nature whatsoever under or by reason\nof this Agreement, other than Article II and Section 6.07 (which are intended to\nbe for the benefit of the persons covered thereby and their heirs, executors and\npersonal representatives and may be enforced by such persons and their heirs,\nexecutors and personal representatives).\n\n            SECTION 9.07. Specific Performance. The parties hereto agree that\nirreparable damage would occur in the event any provision of this Agreement was\nnot\n\n\n                                       44\n   52\n\nperformed in accordance with the terms hereof and that the parties shall be\nentitled to specific performance of the terms hereof, in addition to any other\nremedy at law or equity.\n\n            SECTION 9.08. Governing Law. This Agreement shall be governed by,\nand construed in accordance with, the laws of the State of Delaware applicable\nto contracts executed in and to be performed in that State. All actions and\nproceedings arising out of or relating to this Agreement shall be heard and\ndetermined in any Delaware state court or federal court sitting in Delaware;\nprovided that the foregoing provisions of this Section 9.08 shall not preclude\nthe application of Texas law as to those matters which are by their subject\nmatter to be governed by and construed in accordance with Texas law.\n\n            SECTION 9.09. Headings. The descriptive headings contained in this\nAgreement are included for convenience of reference only and shall not affect in\nany way the meaning or interpretation of this Agreement.\n\n            SECTION 9.10. Counterparts. This Agreement may be executed in one or\nmore counterparts, and by the different parties hereto in separate counterparts,\neach of which when executed shall be deemed to be an original but all of which\ntaken together shall constitute one and the same agreement.\n\n            SECTION 9.11. Waiver of Jury Trial. EACH PARTY HERETO HEREBY\nIRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR\nCOUNTERCLAIM (WHETHER BASED IN CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR\nRELATING TO THIS AGREEMENT OR THE ACTIONS OF ANY PARTY IN THE NEGOTIATION,\nADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF.\n\n\n                                       45\n   53\n\n            IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused\nthis Agreement to be executed as of the date first written above by their\nrespective officers thereunto duly authorized.\n\n                                          THE THOMSON CORPORATION\n\n\n                                          By     \/s\/  Michael S. Harris\n                                              --------------------------------\n                                              Name: Michael S. Harris\n                                              Title: Assistant Secretary\n\n\n                                          SABRE ACQUISITION, INC.\n\n\n                                          By     \/s\/  Michael S. Harris\n                                              --------------------------------\n                                              Name: Michael S. Harris\n                                              Title: President\n\n\n                                          COMPUTER LANGUAGE RESEARCH, INC.\n\n\n                                          By     \/s\/  Stephen T. Winn\n                                              --------------------------------\n                                              Name: Stephen T. Winn\n                                              Title: President and CEO\n\n\n                                       46\n   54\n\n                                                                         ANNEX A\n\n                             Conditions to the Offer\n\n            Notwithstanding any other provision of the Offer, but subject to the\nterms of this Agreement, Purchaser shall not be required to accept for payment\nor pay for any Shares tendered pursuant to the Offer, and may terminate or amend\nthe Offer and may postpone the acceptance for payment of and payment for Shares\ntendered, if (i) the Minimum Condition shall not have been satisfied, (ii) any\napplicable waiting period under the HSR Act shall not have expired or been\nterminated prior to the expiration of the Offer, or (iii) at any time on or\nafter the date of this Agreement, and prior to the acceptance for payment of\nShares, any of the following conditions shall exist:\n\n                  (a) there shall have been instituted or be pending any action\n      or proceeding before any United States or Canadian federal, state,\n      provincial or local court or governmental, administrative or regulatory\n      authority or agency of competent jurisdiction which is reasonably likely\n      (i) to make illegal or otherwise directly or indirectly prohibit the\n      making of the Offer, the acceptance for payment of, or payment for, any\n      Shares by Parent, Purchaser or any other affiliate of Parent, the purchase\n      of Shares pursuant to the Stock Purchase Agreement, or the consummation of\n      the Merger, or to require the Company, Parent, Purchaser or any other\n      affiliate of Parent to pay, as a result of the Transactions, damages that\n      would be material to the Company and its Subsidiaries, taken as a whole;\n      (ii) to prohibit or limit materially and adversely the ownership or\n      operation by the Company, Parent or any of their subsidiaries of all or\n      any material portion of the business or assets of the Company and its\n      Subsidiaries, taken as a whole, or Parent and its subsidiaries, taken as a\n      whole, or to compel the Company, Parent or any of their subsidiaries to\n      dispose of or hold separate all or any material portion of the business or\n      assets of the Company and its Subsidiaries, taken as a whole, or Parent\n      and its subsidiaries, taken as a whole, in any case as a result of the\n      Transactions; (iii) to impose or confirm limitations on the ability of\n      Parent, Purchaser or any other affiliate of Parent to exercise effectively\n      full rights of ownership of any Shares, including, without limitation, the\n      right to vote any Shares acquired by Purchaser pursuant to the Offer, the\n      Stock Purchase Agreement or otherwise on all matters properly presented to\n      the Company's stockholders, including, without limitation, the approval\n      and adoption of this Agreement and the Transactions; or (iv) to require\n      divestiture by Parent, Purchaser or any other affiliate of Parent of any\n      Shares;\n\n                  (b) there shall have been issued any preliminary or permanent\n      injunction or law, rule, regulation, order, decree or ruling by any United\n      States or Canadian federal, state, provincial or local court or\n      governmental or regulatory\n   55\n\n      authority of competent jurisdiction resulting, directly or indirectly, in\n      any of the consequences referred to in clauses (i) through (iv) of\n      paragraph (a) above;\n\n                  (c) any representation or warranty of the Company in this\n      Agreement or of any of the Majority Shareholders in the Stock Purchase\n      Agreement which is qualified as to materiality shall not have been true\n      and correct or any such representation or warranty that is not so\n      qualified shall not have been true and correct in any material respect, in\n      each case as of the date of this Agreement, except in the case of any\n      representation or warranty that speaks as of a particular date, which\n      shall have been true and correct or true and correct in all material\n      respects, as applicable, as of such date;\n\n                  (d) the Company shall have failed to perform in any material\n      respect any obligation or to comply in any material respect with any\n      agreement or covenant of the Company to be performed or complied with by\n      it under this Agreement or any Majority Shareholder shall have failed to\n      perform in any material respect any obligation or to comply in any\n      material respect with any agreement or covenant of such Majority\n      Shareholder to be performed by him, her or it under the Stock Purchase\n      Agreement;\n\n                  (e) this Agreement shall have been terminated in accordance\n      with its terms;\n\n                  (f) Purchaser and the Company shall have mutually agreed that\n      Purchaser shall terminate the Offer or postpone the acceptance for payment\n      of or payment for Shares thereunder; or\n\n                  (g) there shall have occurred after the date of this Agreement\n      any events or circumstances which, individually or in the aggregate,\n      result in a material adverse change in the business, results of operations\n      (on an annualized basis), financial condition or assets of the Company and\n      the Subsidiaries taken as a whole, other than any change constituting or\n      relating to any of the following: (i) the United States economy or\n      securities markets in general, (ii) this Agreement or the transactions\n      contemplated hereby or the announcement hereof, or (iii) the tax\n      compliance or accounting software businesses generally and not\n      specifically relating to the Company and the Subsidiaries; provided, that\n      Purchaser shall give the Company advance written notice of any intention\n      by Purchaser to assert the nonsatisfaction of the condition set forth in\n      this paragraph (g), which notice shall describe in reasonable detail the\n      basis for Purchaser's belief that such condition has not been satisfied;\n      and provided, further, that if any such material adverse change is capable\n      of being cured through the exercise by the Company of its reasonable best\n      efforts and for so long as the Company continues to use such reasonable\n      best efforts to cure such material adverse change, the Purchaser shall not\n      terminate the Offer under this paragraph (g) or exercise any related right\n      to terminate this Agreement;\n\n\n                                      A-2\n   56\n\nwhich, in the reasonable judgment of Purchaser in any such case, and regardless\nof the circumstances (including any action or inaction by Parent or any of its\naffiliates other than a material breach of the Agreement by Parent or Purchaser)\ngiving rise to any such condition, makes it inadvisable to proceed with such\nacceptance for payment or payment.\n\n            The foregoing conditions are for the sole benefit of Purchaser and\nParent and may be asserted by Purchaser or Parent regardless of the\ncircumstances giving rise to any such condition or, subject to the terms of this\nAgreement, may be waived by Purchaser or Parent in whole or in part at any time\nand from time to time in their sole discretion. The failure by Parent or\nPurchaser at any time to exercise any of the foregoing rights shall not be\ndeemed a waiver of any such right; the waiver of any such right with respect to\nparticular facts and other circumstances shall not be deemed a waiver with\nrespect to any other facts and circumstances; and each such right shall be\ndeemed an ongoing right that may be asserted at any time and from time to time.\n\n\n                                      A-3\n<\/pre>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[9052],"corporate_contracts_industries":[9468],"corporate_contracts_types":[9622,9626],"class_list":["post-43124","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-thomson-corp","corporate_contracts_industries-media__other","corporate_contracts_types-planning","corporate_contracts_types-planning__merger"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/43124","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=43124"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=43124"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=43124"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=43124"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}