{"id":43142,"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-vantive-corp-and-innovative.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"agreement-and-plan-of-merger-vantive-corp-and-innovative","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/planning\/agreement-and-plan-of-merger-vantive-corp-and-innovative.html","title":{"rendered":"Agreement and Plan of Merger &#8211; Vantive Corp. and Innovative Computer Concepts Inc."},"content":{"rendered":"<pre>\n                          AGREEMENT AND PLAN OF MERGER\n\n\n                                  by and among\n\n\n                             THE VANTIVE CORPORATION\n                             a Delaware corporation,\n\n\n                         IGLOO ACQUISITION CORPORATION,\n                    a Delaware corporation and a wholly-owned\n                      subsidiary of The Vantive Corporation\n\n\n                                       and\n\n\n                       INNOVATIVE COMPUTER CONCEPTS, INC.\n                             a Delaware corporation,\n\n\n\n\n\n\n\n\n\n                           Dated as of August 13, 1997\n\n\n\n   2\n\n\n                                TABLE OF CONTENTS\n\n\n                                                                                          Page\n                                                                                          ----\n                                                                                        \nARTICLE I             THE MERGER...........................................................  1\n        Section 1.1   The Merger...........................................................  1\n        Section 1.2   Closing; Effective Time of the Merger................................  1\n        Section 1.3   Effects of Merger....................................................  2\n        Section 1.4   Directors and Officers...............................................  2\n\nARTICLE II            CONVERSION OF SECURITIES.............................................  2\n        Section 2.1   Conversion of Capital Stock..........................................  2\n        Section 2.2   Exchange of Certificates.............................................  4\n        Section 2.3   Escrow...............................................................  6\n\nARTICLE III    REPRESENTATIONS AND WARRANTIES OF TARGET....................................  7\n        Section 3.1   Organization, Standing and Power; Qualification;\n                      Subsidiaries.........................................................  7\n        Section 3.2   Target Capital Structure.............................................  7\n        Section 3.3   Authority............................................................  8\n        Section 3.4   Financial Statements.................................................  9\n        Section 3.5   Absence of Liabilities...............................................  9\n        Section 3.6   Accounts Receivable..................................................  9\n        Section 3.7   Inventory............................................................ 10\n        Section 3.8   Absence of Certain Changes or Events................................. 10\n        Section 3.9   Taxes................................................................ 11\n        Section 3.10  Tangible Assets and Real Property.................................... 12\n        Section 3.11  Intellectual Property................................................ 13\n        Section 3.12  Bank Accounts........................................................ 15\n        Section 3.13  Contracts............................................................ 15\n        Section 3.14  Labor Difficulties................................................... 16\n        Section 3.15  Trade Regulation..................................................... 16\n        Section 3.16  Environmental Matters................................................ 17\n        Section 3.17  Employee Benefit Plans............................................... 17\n        Section 3.18  Compliance with Laws................................................. 18\n        Section 3.19  Employees and Consultants............................................ 18\n        Section 3.20  Litigation........................................................... 18\n        Section 3.21  Restrictions on Business Activities.................................. 19\n        Section 3.22  Governmental Authorization........................................... 19\n        Section 3.23  Insurance............................................................ 19\n        Section 3.24  Indemnification Claims............................................... 19\n        Section 3.25  No Brokers........................................................... 19\n        Section 3.26  Real Property Holding Corporation.................................... 20\n        Section 3.27  Certain Documents.................................................... 20\n        Section 3.28  Payments Resulting from Mergers...................................... 20\n        Section 3.29  No Misrepresentation................................................. 20\n\n\n\n                                           i\n\n\n   3\n\n\n\n\n                                                                                        \nARTICLE IV     REPRESENTATIONS AND WARRANTIES OF BUYER\n               AND SUB..................................................................... 20\n        Section 4.1   Organization......................................................... 20\n        Section 4.2   Buyer Capital Structure.............................................. 21\n        Section 4.3   Authority; No Conflict; Required Filings and Consents................ 21\n        Section 4.4   SEC Filings; Financial Statements.................................... 23\n        Section 4.5   Absence of Undisclosed Liabilities................................... 23\n        Section 4.6   Absence of Certain Changes or Events................................. 24\n        Section 4.7   Interim Operations of Sub............................................ 24\n        Section 4.8   Litigation........................................................... 24\n\nARTICLE V             CONDUCT OF BUSINESS.................................................. 24\n        Section 5.1   Covenants of Target.................................................. 24\n        Section 5.2   Cooperation.......................................................... 27\n\nARTICLE VI     ADDITIONAL AGREEMENTS....................................................... 27\n        Section 6.1   No Solicitation...................................................... 27\n        Section 6.2   Approval of Stockholders............................................. 27\n        Section 6.3   Consents............................................................. 28\n        Section 6.4   Access to Information................................................ 28\n        Section 6.5   Legal Conditions to Merger........................................... 28\n        Section 6.6   Public Disclosure.................................................... 28\n        Section 6.7   Tax-Free Reorganization.............................................. 29\n        Section 6.8   Affiliate Agreements................................................. 29\n        Section 6.9   Additional Agreements; Reasonable Efforts............................ 29\n        Section 6.10  Stock Options........................................................ 29\n        Section 6.11  Registration......................................................... 31\n        Section 6.12  Expenses............................................................. 31\n        Section 6.13  Employee Arrangements................................................ 31\n        Section 6.14  Voting Agreements.................................................... 31\n        Section 6.15  Notification of Certain Matters...................................... 32\n        Section 6.16  Repayment of Indebtedness............................................ 32\n\nARTICLE VII           CONDITIONS TO MERGER................................................. 32\n        Section 7.1   Conditions to Each Party's Obligation to Effect the Merger........... 32\n        Section 7.2   Additional Conditions to Obligations of Buyer and Sub................ 32\n        Section 7.3   Additional Conditions to Obligations of Target....................... 34\n\nARTICLE VIII          TERMINATION AND AMENDMENT............................................ 34\n        Section 8.1   Termination.......................................................... 34\n        Section 8.2   Effect of Termination................................................ 35\n        Section 8.3   Fees and Expenses.................................................... 35\n        Section 8.4   Amendment............................................................ 36\n        Section 8.5   Extension; Waiver.................................................... 36\n\n\n\n                                       ii\n\n\n\n   4\n\n\n\n\n                                                                                        \nARTICLE IX     ESCROW AND INDEMNIFICATION.................................................. 37\n        Section 9.1   Survival of Representations, Warranties, Covenants and\n                      Agreements........................................................... 37\n        Section 9.2   Indemnification by Target Stockholders............................... 37\n        Section 9.3   Procedures for Indemnification....................................... 38\n        Section 9.4   Defense of Third Party Claims........................................ 38\n        Section 9.5   Settlement of Third Party Claims..................................... 39\n        Section 9.6   Tax Claims........................................................... 39\n        Section 9.7   Deposit of Escrow Shares; Release from Escrow........................ 40\n        Section 9.8   Resolution of Indemnification Claim; Transfer of Escrow\n                      Shares............................................................... 41\n        Section 9.9   Escrow Expenses...................................................... 43\n        Section 9.10  Stockholder Representative........................................... 43\n        Section 9.11  Sole Remedy.......................................................... 44\n\nARTICLE X             GENERAL PROVISIONS................................................... 44\n        Section 10.1  Notices.............................................................. 44\n        Section 10.2  Interpretation....................................................... 46\n        Section 10.3  Counterparts......................................................... 47\n        Section 10.4  Severability......................................................... 47\n        Section 10.5  Nonsurvival of Representations, Warranties and\n                      Agreements........................................................... 47\n        Section 10.6  Entire Agreement..................................................... 47\n        Section 10.7  Governing Law........................................................ 47\n        Section 10.8  Assignment........................................................... 47\n        Section 10.9  Third Party Beneficiary.............................................. 48\n\n\n\n\n\n\n<caption>\nAnnexes\n- -------\n             \nAnnex 6.8        Affiliate Agreement(s)\nAnnex 6.11       Declaration of Registration Rights\nAnnex 6.13       Schedule of Option Grants\nAnnex 6.14       Voting Agreements\nAnnex 7.2(e)     Confidentiality and Inventions Assignment Agreement\nAnnex 7.2(f)     Non Competition and Non Solicitation Agreement\nAnnex 7.2(g)     Optionee Agreement\n\n\n\n\n                                       iii\n\n\n\n   5\n\n\n                          AGREEMENT AND PLAN OF MERGER\n\n\n        AGREEMENT AND PLAN OF MERGER (the \"Agreement\"), dated as of August 13,\n1997, by and among The Vantive Corporation, a Delaware corporation (\"Buyer\"),\nIgloo Acquisition Corporation, a Delaware corporation and a wholly-owned\nsubsidiary of Buyer (\"Sub\"), and Innovative Computer Concepts, Inc., a Delaware\ncorporation (\"Target\").\n\n        WHEREAS, the Boards of Directors of Buyer, Sub and Target deem it\nadvisable and in the best interests of each corporation and its respective\nstockholders that Buyer and Target combine in order to advance the long-term\nbusiness interests of Buyer and Target;\n\n        WHEREAS, the combination of Buyer and Target shall be effected by the\nterms of this Agreement through a transaction in which Sub will merge with and\ninto Target, Target will become a wholly-owned subsidiary of Buyer and the\nTarget stockholders will become stockholders of Buyer; and\n\n        WHEREAS, for federal income tax purposes, the parties to this Agreement\nintend, by approving resolutions authorizing this Agreement, to adopt this\nAgreement as a plan of reorganization within the meaning of Section 368(a) of\nthe Internal Revenue Code of 1986, as amended, and the regulations thereunder\n(the \"Code\"), and that the merger of Sub with and into Target shall qualify as a\nreorganization within the meaning of Section 368(a) of the Code.\n\n        NOW, THEREFORE, in consideration of the foregoing and the respective\nrepresentations, warranties, covenants and agreements set forth below, the\nparties agree as follows:\n\n\n                                    ARTICLE I\n\n                                   THE MERGER\n\n        Section 1.1 The Merger. Subject to the provisions of this Agreement and\nin accordance with the Delaware General Corporation Law, Sub shall be merged\nwith and into Target (the \"Merger\"). As a result of the Merger, the outstanding\nshares of capital stock of Sub and Target shall be converted or canceled in the\nmanner provided in Article II of this Agreement; the separate corporate\nexistence of Sub shall cease; and Target shall be the surviving corporation in\nthe Merger and shall become a subsidiary of Buyer (the \"Surviving Corporation\").\n\n        Section 1.2 Closing; Effective Time of the Merger. The closing of the\nMerger (the \"Closing\") will take place at 10:00 a.m., California time, on a date\nto be specified by Buyer and Target (the \"Closing Date\"), which shall be no\nlater than the second business day after satisfaction of all conditions set\nforth in Sections 7.1, 7.2(b) (other than the delivery of the officers'\n\n\n                                        1\n\n\n\n   6\n\n\n\ncertificate referred to therein) and 7.3(b) (other than the delivery of the\nofficers' certificate referred to therein), at the offices of Gray Cary Ware &amp; Freidenrich, A Professional Corporation, 400 Hamilton Avenue, Palo Alto, CA\n94301, unless another date or place is agreed to in writing by Buyer and Target.\nOn the Closing Date, a certificate of merger in accordance with Section 251 (and\nother applicable provisions) of the Delaware General Corporation Law (the\nCertificate of Merger\") shall be duly signed by the Surviving Corporation and\nshall be filed with the Secretary of State of the State of Delaware (the\n\"Secretary of State\"). The Merger shall become effective upon the filing of the\nCertificate of Merger with the Secretary of State (the date and time of such\nfiling being referred to herein as the \"Effective Time\").\n\n        Section 1.3   Effects of Merger.\n\n               (a) At the Effective Time: (i) the separate existence of Sub\nshall cease and Sub shall be merged with and into Target (Sub and Target are\nsometimes referred to herein as the \"Constituent Corporations;\" (ii) the\nCertificate of Incorporation of Sub as in effect immediately prior to the\nEffective Time shall be the Certificate of Incorporation of the Surviving\nCorporation; and (iii) the Bylaws of Sub as in effect immediately prior to the\nEffective Time shall be the Bylaws of the Surviving Corporation.\n\n               (b) From and after the Effective Time, (i) the Surviving\nCorporation shall possess all the rights, privileges, immunities, powers and\npurposes of each of the Constituent Corporations; (ii) all the property, real\nand personal, including subscriptions to shares, causes of action and every\nother asset of each of the Constituent Corporations, shall vest in the Surviving\nCorporation without further act or deed; (iii) the Surviving Corporation shall\nassume and be liable for all the liabilities, obligations and penalties of each\nof the Constituent Corporations; and (iv) the Merger shall have the further\neffects set forth in this Agreement and in the Delaware General Corporation Law.\n\n        Section 1.4 Directors and Officers. The directors and officers of Sub\nimmediately prior to the Effective Time shall be the initial directors and\nofficers of the Surviving Corporation, and shall hold office in accordance with\nthe Certificate of Incorporation and Bylaws of the Surviving Corporation, in\neach case until their respective successors are duly elected or appointed.\n\n                                   ARTICLE II\n\n                 CONVERSION OF SECURITIES; MERGER CONSIDERATION\n\n        Section 2.1 Conversion of Capital Stock. As of the Effective Time, by\nvirtue of the Merger and without any action on the part of the holder of any\nshares of common stock, par value $.01 per share, of Target (\"Target Common\nStock\") or capital stock of Sub:\n\n               (a) Capital Stock of Sub. Each issued and outstanding share of\nthe capital stock of Sub shall be converted into and become one fully paid and\nnonassessable share of common stock of the Surviving Corporation.\n\n\n                                        2\n\n\n\n   7\n\n\n               (b) Cancellation of Buyer-Owned Stock. All shares of Target\nCommon Stock owned by Target as treasury shares or by Buyer, Sub or any other\nwholly-owned subsidiary of Buyer shall be canceled and retired and shall cease\nto exist, and no stock of Buyer or other consideration shall be delivered in\nexchange therefor.\n\n               (c) Conversion of Target Stock. Subject to Section 2.2, each\nissued and outstanding share of Target Common Stock (other than shares to be\ncanceled in accordance with Section 2.1(b) and Dissenting Shares as defined\nbelow) shall be converted automatically into the right to receive a number of\nshares of fully paid and nonassessable common stock, $.001 par value, of Buyer\n(\"Buyer Common Stock\") equal to the Conversion Number (as defined below). For\npurposes of this Agreement:\n\n                   (i) \"Conversion Number\" shall be the fraction (A) having a\nnumerator equal to the Aggregate Shares of Buyer Stock (as defined below) and\n(B) having a denominator equal to the sum of the number of shares of Target\nCommon Stock issued and outstanding immediately prior to the Effective Time plus\nthe number of shares of Common Stock issuable upon the exercise or conversion of\nall other securities issued by the Target that are outstanding immediately prior\nto the Effective Time (including, but not limited to, the Target Options (as\ndefined below)).\n\n                   (ii) \"Aggregate Shares of Buyer Stock\" shall be that number\nof shares of Buyer Common Stock determined by dividing (A) Twenty Million\nDollars ($20,000,000) minus the sum of (x) the amount of any indebtedness owed\nby Target to Buyer on the Closing Date and (y) the amount by which the\nliabilities (other than deferred revenue and indebtedness owed by Target to\nBuyer) on the balance sheet of Target as of the Closing Date exceed $600,000, by\n(B) the average of the closing sale prices of a share of Buyer Common Stock as\nreported on the Nasdaq National Market (\"NNM\") for each of the five (5)\nconsecutive trading days ending on the trading day preceding the date of this\nAgreement.\n\nAll such shares of Target Common Stock, when so converted, shall no longer be\noutstanding and shall automatically be canceled and retired and shall cease to\nexist, and each holder of a certificate representing any such shares shall cease\nto have any rights with respect thereto, except the right to receive the shares\nof Buyer Common Stock and any cash in lieu of fractional shares of Buyer Common\nStock to be issued or paid in consideration therefor upon the surrender of such\ncertificate in accordance with Section 2.2, without interest.\n\n               (d) Target Options. At the Effective Time, all then outstanding\noptions to purchase Target Common Stock (\"Target Options\") will be assumed by\nBuyer in accordance with Section 6.10.\n\n               (e) Dissenting Shares.\n\n                   (i) Notwithstanding any provision of this Agreement to the\ncontrary, each outstanding share of Target Common Stock held by a holder seeking\npayment of the fair\n\n\n                                        3\n\n\n\n   8\n\n\nvalue of such shares pursuant to Section 262 or other applicable provisions of\nthe Delaware General Corporation Law (including any holder who has not assented\nto the Merger and has filed written objection or notice of election to dissent\nwith respect to the Merger), who has not effectively withdrawn or lost the right\nto payment of fair value (a \"Dissenting Share\"), shall not be converted into or\nrepresent a right to receive shares of Buyer Common Stock pursuant to this\nArticle II, but the holder thereof shall be entitled only to such rights as are\ngranted by the applicable provisions of the Delaware General Corporation Law;\nprovided, however, that each Dissenting Share held by a person at the Effective\nTime who shall, after the Effective Time, withdraw such demand for payment of\nfair value or lose the right to payment of fair value, in either case pursuant\nto the Delaware General Corporation Law, shall be deemed to be converted, as of\nthe Effective Time, into the right to receive shares of Buyer Common Stock\npursuant to this Article II.\n\n                   (ii) Target shall give Buyer (A) prompt notice and copies of\nall written demands for payment of fair value, withdrawals of demands for\npayment of fair value and other instruments received by Target relating to\ndemands for payment of fair value received by Target and (B) the opportunity to\ndirect all negotiations and proceedings with respect to demands for payment of\nfair value under the Delaware General Corporation Law. Target will not\nvoluntarily make any payment with respect to any demands for payment of fair\nvalue and will not, except with the prior written consent of Buyer, settle or\noffer to settle any such demands.\n\n               (f) Certificate Legends. The shares of Buyer Common Stock to be\nissued pursuant to this Article II shall not have been registered and shall be\ncharacterized as \"restricted securities\" under the federal securities laws, and\nunder such laws such shares may be resold without registration under the\nSecurities Act of 1933, as amended (the \"Securities Act\"), only in certain\nlimited circumstances. Each certificate evidencing shares of Buyer Common Stock\nto be issued pursuant to this Article II shall bear the following legend:\n\n        \"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR\n        INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF\n        1933. SUCH SHARES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE\n        ABSENCE OF SUCH REGISTRATION WITHOUT AN EXEMPTION UNDER THE SECURITIES\n        ACT OR AN OPINION OF LEGAL COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY\n        THAT SUCH REGISTRATION IS NOT REQUIRED.\"\n\n        Section 2.2 Exchange of Certificates. The procedures for exchanging\noutstanding shares of Target Common Stock for Buyer Common Stock pursuant to the\nMerger are as follows:\n\n               (a) Exchange Agent. Promptly after the Effective Time, Buyer\nshall deposit with an exchange agent designated by Buyer (the \"Exchange Agent\"),\nfor the benefit of the holders of shares of Target Common Stock, for exchange in\naccordance with this Section 2.2, \n\n\n                                        4\n\n\n\n   9\n\n\nthrough the Exchange Agent, certificates representing the shares of Buyer Common\nStock issuable pursuant to Section 2.1, less the Escrow Shares, as defined in\nSection 2.3. The shares of Buyer Common Stock deposited with the Exchange Agent,\ntogether with any dividends or distributions with respect thereto, hereinafter\nshall be referred to as the \"Exchange Fund\".\n\n               (b) Exchange Procedures. As soon as reasonably practicable after\nthe Effective Time, the Exchange Agent shall mail to each holder of record of a\ncertificate that immediately prior to the Effective Time represented outstanding\nshares of Target Common Stock (\"Target Certificate\") (i) a letter of transmittal\n(which shall specify that delivery shall be effected, and risk of loss and title\nto the Target Certificates shall pass, only upon delivery of the Target\nCertificates to the Exchange Agent and shall be in such form and have such other\nprovisions as Buyer and Target may reasonably specify) and (ii) instructions for\nuse in effecting the surrender of the Target Certificates in exchange for\ncertificates representing shares of Buyer Common Stock (\"Buyer Certificates\").\nUpon surrender of a Target Certificate for cancellation to the Exchange Agent\n(or such other agent or agents as may be appointed by Buyer), together with a\nduly executed letter of transmittal, the holder of such Target Certificate shall\nbe entitled to receive in exchange therefor a Buyer Certificate representing\nthat number of whole shares of Buyer Common Stock which such holder has the\nright to receive pursuant to the provisions of Section 2.1, less such holder's\npro rata portion of the Escrow Shares, as defined in Section 2.3, and the Target\nCertificate so surrendered shall immediately be canceled. In the event of a\ntransfer of ownership of Target Common Stock which is not registered in the\ntransfer records of Target, a Buyer Certificate representing the proper number\nof shares of Buyer Common Stock may be issued to a transferee if the Target\nCertificate representing such Target Common Stock is presented to the Exchange\nAgent, accompanied by all documents reasonably required to evidence and effect\nsuch transfer and by evidence that any applicable stock transfer taxes have been\npaid. Until surrendered as contemplated by this Section 2.2, each Target\nCertificate shall be deemed at any time after the Effective Time to represent\nonly the right to receive upon such surrender a Buyer Certificate as\ncontemplated by this Agreement.\n\n               (c) Distributions with Respect to Unexchanged Shares. No\ndividends or other distributions declared or made after the Effective Time with\nrespect to Buyer Common Stock with a record date after the Effective Time shall\nbe paid to the holder of any unsurrendered Target Certificate with respect to\nthe shares of Buyer Common Stock represented thereby until the holder of record\nof such Target Certificate shall surrender such Target Certificate. Subject to\nthe effect of applicable laws, following surrender of any such Target\nCertificate, there shall be paid to the record holder of the Buyer Certificates\nissued in exchange therefor, without interest, (i) the amount of dividends or\nother distributions with a record date after the Effective Time previously paid\nwith respect to such whole shares of Buyer Common Stock, and (ii) at the\nappropriate payment date, the amount of dividends or other distributions with a\nrecord date after the Effective Time but prior to surrender and a payment date\nsubsequent to surrender payable with respect to such whole shares of Buyer\nCommon Stock.\n\n\n                                        5\n\n\n\n   10\n\n\n               (d) No Further Ownership Rights in Target Common Stock. All\nshares of Buyer Common Stock issued upon the surrender for exchange of shares of\nTarget Common Stock in accordance with the terms hereof (including any cash paid\npursuant to subsection (c) of this Section 2.2 and the Escrow Shares) shall be\ndeemed to have been issued in full satisfaction of all rights pertaining to such\nshares of Target Common Stock, and there shall be no further registration of\ntransfers on the stock transfer books of the Surviving Corporation of the shares\nof Target Common Stock which were outstanding immediately prior to the Effective\nTime. If, after the Effective Time, Target Certificates are presented to Buyer\nor the Surviving Corporation for any reason, they shall be canceled and\nexchanged as provided in this Section 2.2.\n\n               (e) No Fractional Shares. No certificate or scrip representing\nfractional shares of Buyer Common Stock shall be issued upon the surrender for\nexchange of Target Certificates, and such fractional share interests will not\nentitle the owner thereof to vote or to any rights of a stockholder of Buyer.\nNotwithstanding any other provision of this Agreement, the number of shares to\nbe issued to each holder of shares of Target Common Stock exchanged pursuant to\nthe Merger who would otherwise have been entitled to receive a fraction of a\nshare of Buyer Common Stock (after taking into account all Target Certificates\ndelivered by such holder) shall be rounded up to the nearest whole share.\n\n               (f) Termination of Exchange Fund. Any portion of the Exchange\nFund which remains undistributed to the stockholders of Target one year after\nthe Effective Time shall be delivered to Buyer, upon demand, and any\nstockholders of Target who have not previously complied with this Section 2.2\nshall thereafter look only to Buyer for payment of their claim for Buyer Common\nStock and any dividends or distributions with respect to Buyer Common Stock.\n\n               (g) No Liability. Neither Buyer nor Target shall be liable to any\nholder of shares of Target Common Stock or Buyer Common Stock, as the case may\nbe, for such shares (or dividends or distributions with respect thereto)\ndelivered to a public official pursuant to any applicable abandoned property,\nescheat or similar law.\n\n        Section 2.3 Escrow. At the Closing, Buyer will deduct from the number of\nshares of Buyer Common Stock deliverable to the stockholders of Target pursuant\nto Section 2.1, and will deposit into escrow (the \"Escrow\") certificates\nrepresenting twenty-five percent (25%) of the shares of the Buyer Common Stock\nissuable to the stockholders of Target in the Merger on a pro rata basis. Upon\nthe exercise of any Target Options between the Effective Time and the expiration\nof the Escrow Period (as defined in Section 9.7(c)), twenty-five percent (25%)\nof the shares of Buyer Common Stock issued upon such exercise shall be added to\nand deposited in the Escrow. Further, upon the expiration of the Escrow Period,\nany Target Options not so exercised as of such date shall be adjusted in\naccordance with Section 6.10(a). All such shares of Target Common Stock\ndeposited in Escrow (\"Escrow Shares\") shall be held by Gray Cary Ware &amp; Freidenrich, A Professional Corporation (the \"Escrow Agent\"), in accordance with\nand subject to the provisions of Article IX of this Agreement.\n\n\n                                        6\n\n\n\n   11\n\n\n                                   ARTICLE III\n\n                    REPRESENTATIONS AND WARRANTIES OF TARGET\n\n        Except as set forth in the disclosure schedule (which disclosure\nschedule shall be organized into numbered sections corresponding with the\nsection numbers of this Agreement) delivered by Target to Buyer on or before the\ndate of this Agreement and attached hereto (the \"Target Disclosure Schedule\"),\nTarget represents and warrants to Buyer as follows:\n\n        Section 3.1 Organization, Standing and Power; Qualification;\nSubsidiaries. Target is a corporation duly organized, validly existing and in\ngood standing under the laws of the State of Delaware; has all requisite\ncorporate power to own, lease and operate its properties and to carry on its\nbusiness as currently being conducted and as currently proposed to be conducted;\nis duly qualified to do business and is in good standing in each jurisdiction in\nwhich the failure to be so qualified and in good standing would have a material\nadverse effect on the business, assets (including intangible assets),\nproperties, liabilities (contingent or otherwise), financial condition,\noperations, or results of operation (a \"Material Adverse Effect\") of Target; and\nTarget does not directly or indirectly own any equity or similar interest in, or\nany interest convertible or exchangeable or exercisable for any equity or\nsimilar interest in, any corporation, partnership, joint venture or other\nbusiness association or entity. Target has delivered true and correct copies of\nthe Certificate of Incorporation and Bylaws of Target, each as amended to date,\nto Buyer. Target is not in violation of any of the provisions of its Certificate\nof Incorporation or Bylaws.\n\n        Section 3.2   Target Capital Structure.\n\n               (a) The authorized capital stock of Target consists of 6,000,000\nshares of Target Common Stock of which 4,891,448 shares of Target Common Stock\nare issued and outstanding and are held of record by those persons set forth in\nSection 3.2 of the Target Disclosure Schedule (which list sets forth the amount\nof Target Common Stock held by each such person). All outstanding shares of\nTarget Common Stock have been duly authorized and validly issued, are fully paid\nand nonassessable, were issued in compliance with state and federal securities\nlaws, and are subject to no preemptive rights or rights of first refusal created\nby statute, the Certificate of Incorporation or Bylaws of Target or any\nagreement to which Target is a party or by which it is bound.\n\n               (b) Except as set forth in Section 3.2(a) or Section 3.2 of the\nTarget Disclosure Schedule, there are (i) no equity securities of any class of\nTarget or any securities exchangeable into or exercisable for such equity\nsecurities issued, reserved for issuance, or outstanding and (ii) no outstanding\nsubscriptions, options, warrants, puts, calls, rights, or other commitments or\nagreements of any character to which Target is a party or by which it is bound\nobligating Target to issue, deliver, sell, repurchase or redeem, or cause to be\nissued, delivered, sold, repurchased or redeemed, any equity securities of\nTarget or obligating Target to grant, extend, accelerate the vesting of, change\nthe price of, or otherwise amend or enter into any such option, warrant, call,\nright, commitment or agreement. Section 3.2 of the \n\n\n                                        7\n\n\n\n   12\n\n\nTarget Disclosure Schedule sets forth the names of all holders of Target\nOptions, together with the number of shares of Target capital stock for which\neach such option may be exercised, and the exercise price and vesting schedule\n(including acceleration provisions, if any) for each such option. There are no\ncontracts, commitments or agreements relating to voting, purchase or sale of\nTarget capital stock (i) between or among Target and any of its stockholders or\nTarget Option holders or (ii) to the best of Target's knowledge, between or\namong any Target stockholders or Target Option holders.\n\n        Section 3.3   Authority.\n\n               (a) Target has all requisite corporate power and authority to\nenter into this Agreement and the other documents required to be executed and\ndelivered by Target hereunder (collectively, the \"Target Transaction Documents\")\nand to consummate the transactions contemplated hereby and thereby. The\nexecution and delivery of this Agreement and the other Target Transaction\nDocuments and the consummation of the transactions contemplated hereby and\nthereby have been duly authorized by all necessary corporate action on the part\nof Target. This Agreement and the other Target Transaction Documents have been\nduly executed and delivered by Target and constitute the valid and binding\nobligations of Target, enforceable against Target in accordance with their\nterms, except as such enforceability may be limited by bankruptcy, insolvency,\nmoratorium or other similar laws affecting or relating to creditors' rights\ngenerally, and general principles of equity.\n\n               (b) The execution and delivery by Target of this Agreement and\nthe other Target Transaction Documents do not, and the consummation of the\ntransactions contemplated hereby and thereby will not, (i) conflict with, or\nresult in any violation or breach of any provision of the Certificate of\nIncorporation or Bylaws of Target, (ii) result in any violation or breach of, or\nconstitute (with or without notice or lapse of time, or both) a default under,\nor give rise to a right of termination, cancellation or acceleration of any\nmaterial obligation or loss of any benefit under any note, mortgage, indenture,\nlease, contract or other agreement or obligation to which Target is a party or\nby which Target or any of its properties or assets may be bound, or (iii)\nconflict with or violate any permit, concession, franchise, license, judgment,\norder, decree, statute, law, ordinance, rule or regulation applicable to Target\nor any of its properties or assets, except in the case of (ii) and (iii) for any\nsuch conflicts, violations, defaults, terminations, cancellations or\naccelerations which would not be reasonably likely to have a Material Adverse\nEffect on Target or to interfere with the consummation by Target of its\nobligations under this Agreement and the other Target Transaction Documents.\n\n               (c) The outstanding shares of Target Common Stock are the only\nshares of Target capital stock entitled to vote with respect to the Merger, and\nthe approval of this Agreement by the holders of a majority of the issued and\noutstanding shares of Target Common Stock is the only approval of Target\nstockholders required for the consummation of the Merger, no other class vote of\nany series or class of Target capital stock being required. No consent,\napproval, order or authorization of, or registration, declaration or filing\nwith, any Governmental Entity (as defined in Section 10.2) is required by or\nwith respect to Target in connection with the execution and delivery of this\nAgreement or the other Target Transaction\n\n\n                                        8\n\n\n\n   13\n\n\nDocuments or the consummation of the transactions contemplated hereby or thereby\nexcept for (i) the filing of the Delaware Certificate of Merger in accordance\nwith the Delaware General Corporation Law, (ii) items described in Section 3.3\nof the Target Disclosure Schedule, and (iii) such other consents,\nauthorizations, filings, approvals and registrations which, if not obtained or\nmade, would not be reasonably likely to have a Material Adverse Effect on Target\nor materially and adversely affect the ability of Target to consummate the\ntransactions contemplated by this Agreement in accordance with its terms.\n\n        Section 3.4 Financial Statements. Target has delivered to Buyer copies\nof Target's unaudited financial statements (balance sheet, income statement and\nstatement of cash flows) for the years ended December 31, 1994, 1995 and 1996\nand unaudited interim financial statements as at, and for the six-month period\nended, June 30, 1997 (collectively, the \"Target Financial Statements\"). The\nTarget Financial Statements were prepared in accordance with generally accepted\naccounting principles (\"GAAP\") applied on a consistent basis throughout the\nperiods involved, except for the absence of required footnotes. The Target\nFinancial Statements present fairly in all material respects the financial\nposition of Target as of the respective dates and the results of Target's\noperations and cash flows for the periods indicated, except that the interim\nTarget Financial Statements are subject to normal and recurring year-end audit\nadjustments which will not be material in amount. Target maintains a standard\nsystem of accounting established and administered in accordance with GAAP.\n\n        Section 3.5 Absence of Liabilities. Target does not have any\nliabilities, either accrued or contingent (whether or not required to be\nreflected in financial statements in accordance with GAAP), and whether due or\nto become due, except for (i) the deferred revenue reflected on Target's balance\nsheet as of June 30, 1997 (\"Target Balance Sheet\"), (ii) the indebtedness of\nTarget to Buyer pursuant to that certain Loan Agreement dated July 24, 1997,\n(iii) loans payable to the security holders of Target listed in Section 3.5 of\nthe Target Disclosure Schedule and (iv) other liabilities listed in Section 3.5\nof the Target Disclosure Schedule.\n\n        Section 3.6 Accounts Receivable. The accounts receivable shown on the\nTarget Balance Sheet arose in the ordinary course of business and have been\ncollected or are reasonably expected to be collectible in the book amounts\nthereof, less an amount not in excess of the allowance for doubtful accounts and\nreturns provided for in the Target Balance Sheet. The accounts receivable of\nTarget arising after the date of the Target Balance Sheet and prior to the\nClosing Date arose, or will arise, in the ordinary course of business and have\nbeen collected or will be collectible in the book amounts thereof, less\nallowances for doubtful accounts and returns determined in accordance with the\npast practices of Target. Except as set forth in Section 3.6 of the Target\nDisclosure Schedule, none of such accounts receivables is subject to any valid\nand material claim of offset or recoupment or counterclaim, and Target has no\nknowledge of any specific facts that would be likely to give rise to any such\nclaim; no material amount of such accounts receivable are contingent upon the\nperformance by Target of any obligation; and no agreement for deduction or\ndiscount has been made with respect to any such accounts receivable.\n\n\n                                        9\n\n\n\n   14\n\n\n        Section 3.7   Inventory.  Target has no inventory.\n\n        Section 3.8 Absence of Certain Changes or Events. Except as set forth in\nSection 3.8 of the Target Disclosure Schedule, and except as reflected in the\nTarget Financial Statements, since June 30, 1997, Target has conducted its\nbusiness in the ordinary course and in a manner consistent with past practices,\nand has not:\n\n               (a) to its knowledge, suffered any event or occurrence that has\nhad or could reasonably be expected to have a Material Adverse Effect on Target;\n\n               (b) suffered any damage, destruction or loss, whether covered by\ninsurance or not, adversely affecting its properties or business;\n\n               (c) granted any increase in the compensation payable or to become\npayable by Target to its officers or employees;\n\n               (d) declared, set aside or paid any dividend or made any other\ndistribution on or in respect of the shares of its capital stock or declared any\ndirect or indirect redemption, retirement, purchase or other acquisition of such\nshares;\n\n               (e) issued any shares of its capital stock or any warrants,\nrights, or options for, or entered into any commitment relating to such capital\nstock except for exercises and conversions of employee stock options.\n\n               (f) made any change in the accounting methods or practices it\nfollows, whether for general financial or tax purposes, or any change in\ndepreciation or amortization policies or rates;\n\n               (g) sold, leased, abandoned or otherwise disposed of any real\nproperty or machinery, equipment or other operating property;\n\n               (h) sold, assigned, transferred, licensed or otherwise disposed\nof any patent, trademark, trade name, brand name, copyright (or pending\napplication for any patent, trademark or copyright), invention, work of\nauthorship, process, know-how, formula or trade secret or interest thereunder or\nother material intangible asset, except for non-exclusive licenses which were\ngranted in the ordinary course of business and in a manner consistent with past\npractices;\n\n               (i) entered into any material commitment or transaction\n(including without limitation any borrowing or capital expenditure);\n\n               (j) incurred any liability, except in the ordinary course of\nbusiness and consistent with past practice;\n\n\n                                       10\n\n\n\n   15\n\n\n               (k) permitted or allowed any of its property or assets to be\nsubjected to any mortgage, deed of trust, pledge, lien, security interest or\nother encumbrance of any kind, except for liens for current taxes not yet due\nand purchase money security interests incurred in the ordinary course of\nbusiness;\n\n               (l) made any capital expenditure or commitment for additions to\nproperty, plant or equipment individually in excess of ten thousand dollars\n($10,000) or in the aggregate in excess of forty thousand dollars ($40,000);\n\n               (m) paid, loaned or advanced any amount to, or sold, transferred\nor leased any properties or assets to, or entered into any agreement or\narrangement with any of its officers, directors or stockholders or any affiliate\nof any of the foregoing, other than employee compensation and benefits and\nreimbursement of employment related business expenses incurred in the ordinary\ncourse of business;\n\n               (n) agreed to take any action described in this Section 3.8 or\nwhich to its knowledge would constitute a breach of any of the representations\nor warranties of Target contained in this Agreement; or\n\n               (o) taken any other action that would have required the consent\nof Buyer pursuant to Section 5.1 of this Agreement (and which has not been\nobtained) had such action occurred after the date of this Agreement.\n\n        Section 3.9 Taxes. As used in this Agreement, the terms \"Tax\" and,\ncollectively, \"Taxes\" mean any and all federal, state and local taxes of any\ncountry, assessments and other governmental charges, duties, impositions and\nliabilities, including taxes based upon or measured by gross receipts, income,\nprofits, sales, use and occupation, and value added, ad valorem, transfer,\nfranchise, withholding, payroll, recapture, employment, excise and property\ntaxes, together with all interest, penalties and additions imposed with respect\nto such amounts and any obligations under any agreements or arrangements with\nany other person with respect to such amounts and including any liability for\ntaxes of a predecessor entity.\n\n               (a) Target has prepared and timely filed all returns, estimates,\ninformation statements and reports required to be filed prior to the Closing\nDate with any taxing authority (\"Returns\") relating to any and all Taxes\nconcerning or attributable to Target or its operations, and such Returns are\ntrue and correct in all material respects.\n\n               (b) Target, as of the Closing Date: (i) will have paid all Taxes\nshown to be payable on such Returns covered by Section 3.9(a) and (ii) will have\nwithheld with respect to its employees all Taxes required to be withheld.\n\n               (c) There is no Tax deficiency outstanding or assessed or, to the\nbest of Target's knowledge, proposed against Target that is not reflected as a\nliability on the Target Balance Sheet nor has Target executed any agreements or\nwaivers extending any statute of limitations on or extending the period for the\nassessment or collection of any Tax.\n\n\n                                       11\n\n\n\n   16\n\n\n               (d) Target has no material liabilities for unpaid Taxes that have\nnot been accrued for or reserved on the Target Balance Sheet, whether asserted\nor unasserted, contingent or otherwise.\n\n               (e) Target is not a party to any tax-sharing agreement or similar\narrangement with any other party, or any contractual obligation to pay any Tax\nobligations of, or with respect to any transaction relating to, any other person\nor to indemnify any other person with respect to any Tax.\n\n               (f) Section 3.9 of the Target Disclosure Schedule sets forth the\ndate or dates through which the Internal Revenue Service (\"IRS\") has examined\nthe federal tax returns of Target and the date or dates through which any\nforeign, state, local or other taxing authority has examined any other tax\nreturns of Target. Section 3.9 of the Target Disclosure Schedule also contains a\ncomplete list of each year for which any federal, state, local or foreign tax\nauthority has obtained or has requested an extension of the statute of\nlimitations from Target and lists each tax case of Target currently pending in\naudit, at the administrative appeals level or in litigation. Section 3.9 of the\nTarget Disclosure Schedule further lists the date and issuing authority of each\nstatutory notice of deficiency, notice of proposed assessment and revenue\nagent's report issued to Target within the last twelve (12) months. Except as\nset forth in Section 3.9 of the Target Disclosure Schedule, neither the IRS nor\nany foreign, state, local or other taxing authority has, since Target's\ninception, examined or is in the process of examining any federal, foreign,\nstate, local or other tax returns of Target. To the knowledge of Target, neither\nthe IRS nor any foreign, state, local or other taxing authority is now asserting\nor threatening to assert any deficiency or claim for additional taxes (or\ninterest thereon or penalties in connection therewith) except as set forth on\nSection 3.9 of the Target Disclosure Schedule.\n\n        Section 3.10  Tangible Assets and Real Property.\n\n               (a) Target owns or leases all tangible assets and properties\nwhich are necessary for the conduct of its business as currently conducted or\nwhich are reflected on the Target Balance Sheet or acquired since the date of\nthe Target Balance Sheet (\"Material Tangible Assets\"). The Material Tangible\nAssets are in good operating condition and repair.\n\n               (b) Target has good and marketable title to all Material Tangible\nAssets that it owns, free and clear of all mortgages, liens, pledges, charges or\nencumbrances of any kind or character, except for liens for current taxes not\nyet due and payable and purchase money security interests.\n\n               (c) Assuming the due execution and delivery thereof by the other\nparties thereto, all leases of Material Tangible Assets to which Target is a\nparty are in full force and effect and are valid, binding and enforceable in\naccordance with their respective terms, except as such enforceability may be\nlimited by (i) bankruptcy laws and other similar laws affecting creditors'\nrights generally and (ii) general principles of equity, regardless of whether\nasserted \n\n\n                                       12\n\n\n\n   17\n\n\nin a proceeding in equity or at law. True and correct copies of all such leases\nhave been provided to Buyer.\n\n               (d) Target owns no real property. The Target Disclosure Schedule\nsets forth a true and complete list of all real property leased by Target.\nAssuming the due execution and delivery thereof by the other parties thereto,\nall such real property leases are in full force and effect and are valid,\nbinding and enforceable in accordance with their respective terms, except as\nsuch enforceability may be limited by (i) bankruptcy laws and other similar laws\naffecting creditors' rights generally and (ii) general principles of equity,\nregardless of whether asserted in a proceeding in equity or at law. True and\ncorrect copies all such of real property leases have been provided to Buyer.\n\n        Section 3.11  Intellectual Property.\n\n               (a) Target owns, or is licensed or otherwise possesses legally\nenforceable rights to use, all patents, trademarks, trade names, service marks,\ncopyrights and mask works, and any applications for and registrations of such\npatents, trademarks, trade names, service marks, copyrights and mask works, and\nall processes, formulae, methods, schematics, technology, know-how, computer\nsoftware programs or applications and tangible or intangible proprietary\ninformation or materials that are necessary to conduct the business of Target as\ncurrently conducted or as currently planned to be conducted with respect to both\nthe current version and the version currently under development by Target of\nTarget's procurement and materials management software known as \"Pinnacle\" (all\nof which are referred to as the \"Target Intellectual Property Rights\").\n\n               (b) Section 3.11 of the Target Disclosure Schedule contains an\naccurate and complete description of (i) all patents and patent applications and\nall registered trademarks, trade names, service marks and copyrights included in\nthe Target Intellectual Property Rights, including the jurisdictions in which\neach such Target Intellectual Property Right has been issued or registered or in\nwhich any such application for such issuance and registration has been filed,\n(ii) all licenses, sublicenses, distribution agreements and other agreements to\nwhich Target is a party and pursuant to which any person is granted rights with\nrespect to any Target Intellectual Property Rights or has the right to\nmanufacture, reproduce, market or exploit any product of Target (a \"Target\nProduct\") or any adaptation, translation or derivative work based on any Target\nProduct or any portion thereof, (iii) all licenses, sublicenses and other\nagreements to which Target is a party and pursuant to which Target is authorized\nto use any third party technology, trade secret, know-how, process, patent,\ntrademark or copyright, including software (\"Licensed Intellectual Property\"),\nexcept for freely transferable \"shrink wrap\" software for which no royalties are\ncurrently owed or in the future may be owed, (iv) all joint development\nagreements to which Target is a party, and (v) all agreements with Governmental\nEntities or other third parties pursuant to which Target has obtained funding\nfor research and development activities.\n\n               (c) Target is not, nor will it be as a result of the execution\nand delivery of this Agreement or the performance of its obligations under this\nAgreement, in breach of any \n\n\n                                       13\n\n\n\n   18\n\n\nlicense, sublicense or other agreement relating to the Target Intellectual\nProperty Rights or Licensed Intellectual Property.\n\n               (d) Target (i) has not received notice that it has been sued in\nany suit, action or proceeding which involves a claim of infringement of any\npatent, trademark, service mark, copyright, trade secret or other proprietary\nright of any third party; (ii) has no knowledge that the manufacturing,\nmarketing, licensing or sale of any Target Product (including the current\nversion and the version currently under development by Target of Target's\nsoftware known as \"Pinnacle\") or the provision of services in the course of\nTarget's business infringes any patent, trademark, service mark, copyright,\ntrade secret or other proprietary right of any third party; and (iii) has no\nknowledge of any claim challenging or questioning the validity or effectiveness\nof any license or agreement relating to any Target Intellectual Property Rights\nor Licensed Intellectual Property.\n\n               (e) All designs, drawings, specifications, source code, object\ncode, documentation, flow charts and diagrams incorporating, embodying or\nreflecting any Target Product (including the current version and the version\ncurrently under development by Target of Target's software known as \"Pinnacle\")\nat any stage of its development or created in the course of providing services\nto customers of Target (the \"Target Components\") were written, developed and\ncreated solely and exclusively by employees of Target without the assistance of\nany third party or were created by third parties who assigned ownership of their\nrights with respect thereto to Target by means of valid and enforceable\nagreements, copies of which have been provided to Buyer. Target has at all times\nused commercially reasonable efforts to treat the Target Products (including the\ncurrent version and the version currently under development by Target of\nTarget's software known as \"Pinnacle\") and Target Components as containing trade\nsecrets and has not disclosed or otherwise dealt with such items in such a\nmanner as to cause the loss of such trade secrets by their release into the\npublic domain.\n\n               (f) Each person currently or formerly employed by Target\n(including independent contractors, if any) that has or had access to\nconfidential information of Target has executed and delivered to Target a\nconfidentiality and non-disclosure agreement in the form previously provided to\nBuyer. Each person currently or formerly employed by Target (including\nindependent contractors, if any) has executed and delivered to Target an\ninventions agreement in the form previously provided to Buyer. To the best of\nTarget's knowledge, neither the execution or delivery of any such agreement, nor\nthe carrying on of Target's business as currently conducted and as currently\nproposed to be conducted by any such person, as an employee or independent\ncontractor, has conflicted or will conflict with or result in a breach of the\nterms, conditions or provisions of, or constitute a default under, any contract,\ncovenant or instrument under which any of such persons is obligated.\n\n        Section 3.12 Bank Accounts. Section 3.12 of the Target Disclosure\nSchedule sets forth the names and locations of all banks and other financial\ninstitutions at which Target maintains accounts of any nature, the type of\naccounts maintained at each such institution and the names of all persons\nauthorized to draw thereon or make withdrawals therefrom.\n\n\n                                       14\n\n\n\n   19\n\n\n        Section 3.13  Contracts.\n\n               (a) Except as set forth in Section 3.13 of the Target Disclosure\nSchedule, Target is not a party or subject to any agreement, obligation or\ncommitment, written or oral:\n\n                   (i) that calls for any fixed and\/or contingent payment or\nexpenditure or any related series of fixed and\/or contingent payments or\nexpenditures by or to Target totaling more than $25,000 in any calendar year;\n\n                   (ii) with agents, advisors, salesmen, sales representatives,\nindependent contractors or consultants that are not cancelable by it on no more\nthan thirty (30) days' notice and without liability, penalty or premium;\n\n                   (iii) that restricts Target from carrying on anywhere in the\nworld its business or any portion thereof as currently conducted;\n\n                   (iv) to provide funds to or to make any investment in any\nother person or entity (in the form of a loan, capital contribution or\notherwise);\n\n                   (v) with respect to obligations as guarantor, surety,\nco-signer, endorser, co-maker, indemnitor or otherwise in respect of the\nobligation of any other person or entity;\n\n                   (vi) for any line of credit, standby financing, revolving\ncredit or other similar financing arrangement;\n\n                   (vii) with any distributor, original equipment manufacturer,\nvalue added remarketer or other person for the distribution of any of the Target\nProducts; or\n\n                   (viii) that is otherwise material to the business, financial\nresults of operations or prospects of Target.\n\n               (b) To the best of Target's knowledge, no party to any such\ncontract, agreement or instrument has expressed its intention to cancel,\nwithdraw, modify or amend such contract, agreement or instrument.\n\n               (c) Target is not in material default under or in material breach\nor violation of, nor is there any valid basis for any claim of material default\nby Target under, or material breach or violation by Target of, any contract,\ncommitment or restriction to which Target is a party or by which Target or any\nof its properties or assets is bound or affected. To the best of Target's\nknowledge, no other party is in material default under or in material breach or\nviolation of, nor, to the best of Target's knowledge, is there any valid basis\nfor any claim of material default by any other party under, or any material\nbreach or violation by any other party of, any contract, commitment, or\nrestriction to which Target is a party or by which Target or any of its\nproperties or assets is bound or affected.\n\n\n                                       15\n\n\n   20\n\n\n        Section 3.14 Labor Difficulties. Target is not engaged in any unfair\nlabor practice or in violation of any applicable laws respecting employment,\nemployment practices or terms and conditions of employment. There is no unfair\nlabor practice complaint against Target pending, or to the best of Target's\nknowledge threatened, before any Governmental Entity. There is no strike, labor\ndispute, slowdown, or stoppage pending, or to the best of Target's knowledge\nthreatened, against Target. Target is not now and has never been subject to any\nunion organizing activities. Target has never experienced any work stoppage or\nother labor difficulty. To the best of Target's knowledge, except as set forth\nin Section 3.14 of the Target Disclosure Schedule, no Target employees intend to\nleave their employment, whether as a result of the transactions contemplated by\nthis Agreement or otherwise.\n\n        Section 3.15 Trade Regulation. Target has not terminated its\nrelationship with or refused to ship Target Products to any dealer, distributor,\nthird party marketing entity or customer which had theretofore paid or been\nobligated to pay Target in excess of ten thousand dollars ($10,000) over any\nconsecutive twelve (12) month period. To the best of Target's knowledge, all of\nthe prices charged by Target in connection with the marketing or sale of any\nTarget products or services have been in compliance with all applicable laws and\nregulations. No claims have been asserted or, to the best of Target's knowledge,\nthreatened against Target with respect to the wrongful termination of any\ndealer, distributor or any other marketing entity, discriminatory pricing, price\nfixing, unfair competition, false advertising, or any other material violation\nof any laws or regulations relating to anti-competitive practices or unfair\ntrade practices of any kind, and, to the best of Target's knowledge, no specific\nsituation, set of facts, or occurrence provides any basis for any such claim.\n\n        Section 3.16  Environmental Matters.\n\n               (a) Except as set forth in the Target Disclosure Schedule, no\nmaterial amount of any substance that has been designated by applicable law or\nregulation to be radioactive, toxic, hazardous or otherwise a danger to health\nor the environment (a \"Hazardous Material\"), excluding office, janitorial and\nother supplies held in very limited quantities, is present, as a result of the\nactions of Target or, to the best of Target's knowledge, as a result of any\nactions of any third party or otherwise, in, on or under any property, including\nthe land and the improvements, ground water and surface water, that Target has\nat any time owned, operated, occupied or leased. To the best of Target's\nknowledge, no underground storage tanks are present under any property that\nTarget has at any time owned, operated, occupied or leased.\n\n               (b) At no time has Target transported, stored, used,\nmanufactured, disposed of, released or exposed its employees or others to\nHazardous Materials in violation of any law, rule, regulation or treaty\npromulgated by any Governmental Entity (collectively, \"Hazardous Materials\nActivities\").\n\n\n                                       16\n\n\n\n   21\n\n\n               (c) Target currently holds all environmental approvals, permits,\nlicenses, clearances and consents (the \"Environmental Permits\") necessary for\nthe conduct of its business as such businesses is currently being conducted.\n\n               (d) No action, proceeding, writ, injunction or claim is pending\nor, to the best of Target's knowledge, threatened concerning any Environmental\nPermit or any Hazardous Materials Activity of Target. Target is not aware of any\nfact or circumstance which could involve Target in any material environmental\nlitigation or impose upon Target any material liability concerning Hazardous\nMaterials Activities.\n\n        Section 3.17  Employee Benefit Plans.\n\n               (a) Section 3.17 of the Target Disclosure Schedule lists (i) all\nemployee benefit plans (as defined in Section 3(3) of the Employee Retirement\nIncome Security Act of 1974, as amended), (ii) all bonus, stock option, stock\npurchase, incentive, deferred compensation, supplemental retirement, severance\nand other similar employee benefit plans, and (iii) all unexpired severance\nagreements, written or otherwise, for the benefit of, or relating to, any\ncurrent or former employee of Target or any trade or business (whether or not\nincorporated) which is a member or which is under common control with Target\nwithin the meaning of Section 414 of the Code (together, the \"Target Employee\nPlans\").\n\n               (b) With respect to each Target Employee Plan, Target has made\navailable to Buyer a true and correct copy of (i) such Target Employee Plan and\n(ii) each trust agreement and group annuity contract, if any, relating to such\nTarget Employee Plan.\n\n               (c) With respect to the Target Employee Plans, individually and\nin the aggregate, no event has occurred, and to the best of Target's knowledge,\nthere exists no condition or set of circumstances in connection with which \nTarget could be subject to any material liability.\n\n               (d) With respect to the Target Employee Plans, individually and\nin the aggregate, there are no funded benefit obligations for which\ncontributions have not been made or properly accrued and there are no unfunded\nbenefit obligations which have not been accounted for by reserves on the\nfinancial statements or books of Target.\n\n               (e) Target is not a party to any oral or written (i) union or\ncollective bargaining agreement, (ii) agreement with any officer or other key\nemployee of Target, the benefits of which are contingent, or the terms of which\nare materially altered, upon the occurrence of a transaction involving Target of\nthe nature contemplated by this Agreement, (iii) agreement with any officer of\nTarget providing any term of employment or compensation guarantee extending for\na period longer than six months from the date hereof or for the payment of\ncompensation in excess of sixty thousand dollars ($60,000) per annum, or (iv)\nagreement or plan, including any stock option plan, stock appreciation right\nplan, restricted stock plan or stock purchase plan, any of the benefits of which\nwill be increased, or the vesting of the benefits of which will be accelerated,\nby the occurrence of any of the \n\n\n                                       17\n\n\n\n   22\n\n\ntransactions contemplated by this Agreement or the value of any of the benefits\nof which will be calculated on the basis of any of the transactions contemplated\nby this Agreement.\n\n               (f) Except as set forth in Section 3.17 of the Target Disclosure\nSchedule, all Target Employee Plans comply with and are and have been operated\nin accordance with each applicable provision of ERISA, the Code, other federal\nstatutes, state law (including, without limitation, state insurance law) and the\nregulations and rules promulgated pursuant thereto or in connection therewith.\nEach Target Employee Plan which is a group health plan (within the meaning of\nSection 5000(b)(1) of the Code) complies with and has been maintained and\noperated in accordance with each of the requirements of Section 4980B of the\nCode and Part 6 of Subtitle B of Title I of ERISA.\n\n        Section 3.18 Compliance with Laws. Target has complied in all material\nrespects with, is not in material violation of, and has not received any notices\nof violation with respect to, any statute, law or regulation applicable to the\nownership or operation of its business, including, without limitation, United\nStates statutes, laws and regulations governing the license and delivery of\ntechnology and products abroad by persons subject to the jurisdiction of the\nUnited States.\n\n        Section 3.19 Employees and Consultants. Section 3.19 of the Target\nDisclosure Schedule or a letter delivered to Buyer by Target contains a list of\nthe names of all employees and consultants of Target, their salaries or wages,\nother compensation and dates of employment and positions.\n\n        Section 3.20 Litigation. Except as set forth in Section 3.20 of the\nTarget Disclosure Schedule, there is no action, suit, proceeding, claim,\narbitration or investigation pending before any agency, court or tribunal, or to\nthe best of Target's knowledge, threatened, against Target or any of its\nproperties or officers or directors (in their capacities as such). There is no\njudgment, decree or order against Target or, to the best of Target's knowledge,\nany of its directors or officers (in their capacities as such) that could\nprevent, enjoin or materially alter or delay any of the transactions\ncontemplated by this Agreement, or that could reasonably be expected to have a\nMaterial Adverse Effect on Target.\n\n        Section 3.21 Restrictions on Business Activities. There is no agreement,\njudgment, injunction, order or decree binding upon Target which has or could\nreasonably be expected to have the effect of prohibiting or materially impairing\nany current or future business practice of Target, any acquisition of property\nby Target, or the conduct of business by Target as currently conducted or as\ncurrently proposed to be conducted.\n\n        Section 3.22 Governmental Authorization. Other than with respect to\nTarget Intellectual Property Rights, Target has obtained each governmental\nconsent, license, permit, grant or other authorization of a Governmental Entity\nthat is required for the operation of the business of Target as currently\nconducted (collectively, the \"Target Authorizations\"), and all such Target\nAuthorizations are in full force and effect.\n\n\n                                       18\n\n\n   23\n\n\n        Section 3.23 Insurance. Section 3.23 of the Target Disclosure Schedule\ncontains a list and description of all insurance policies of Target. There is no\nmaterial claim pending under any of such policies as to which coverage has been\nquestioned, denied or disputed by the underwriters of such policies. All\npremiums due and payable under all such policies have been paid, and Target is\notherwise in compliance with the terms of such policies. Target has no knowledge\nof any threatened termination of, or material premium increase with respect to,\nany of such policies.\n\n        Section 3.24 Indemnification Claims. Section 3.24 of the Target\nDisclosure Schedule sets forth a list of all persons who are parties to\ndirector, officer and\/or employee indemnification agreements with Target (the\n\"Indemnification Agreements\"). Except as set forth in Section 3.24 of the Target\nDisclosure Schedule, there are no outstanding claims under any of the\nIndemnification Agreements or under any indemnification rights granted pursuant\nto the Certificate of Incorporation or Bylaws of Target (as currently in\neffect); and to the best of Target's knowledge, there are no facts or\ncircumstances that either now, or with the passage of time, could reasonably be\nexpected to provide a basis for a claim under any such Indemnification Agreement\nor under any indemnification rights granted pursuant to the Certificate of\nIncorporation or Bylaws of Target.\n\n        Section 3.25 No Brokers. Except as set forth in Section 3.25 of the\nTarget Disclosure Schedule, Target is not obligated for the payment of fees or\nexpenses of any broker, finder or other person in connection with the\norigination, negotiation or execution of this Agreement or the other Target\nTransaction Documents or any transaction contemplated hereby or thereby. Target\nagrees to indemnify and hold Buyer and its affiliates harmless from and against\nany and all claims, liabilities or obligations with respect to any such fees,\ncommissions or expenses.\n\n        Section 3.26 Real Property Holding Corporation. Target is not a \"United\nStates real property holding corporation\" within the meaning of Section\n897(c)(2) of the Code.\n\n        Section 3.27 Certain Documents. Target has made available to Buyer, or\nits representatives, for its examination: (i) Target's minute book; (ii) all\npermits, orders, and consents issued by any Governmental Entity with respect to\nTarget; and (iii) all documents requested by Buyer in written \"due diligence\"\nrequests. Target has delivered or made available to Buyer true and complete\ncopies of all documents which are referred to in this Article III or in the\nTarget Disclosure Schedule.\n\n\n                                       19\n\n\n\n   24\n\n\n        Section 3.28 Payments Resulting from Mergers. Neither the consummation\nnor announcement of any transaction contemplated by this Agreement will (either\nalone or upon the occurrence of any additional or further acts or events) result\nin any material payment (whether of severance pay or otherwise) becoming due\nfrom Target to any director, officer, employee or former employee thereof under\n(i) any management, employment, deferred compensation, severance (including any\npayment, right or benefit resulting from a change in control), bonus or other\ncontract for personal services with any officer, director or employee or any\nplan, agreement or understanding similar to any of the foregoing, or any \"rabbi\ntrust\" or similar arrangement, or (ii) material benefit under any Target\nEmployee Plan being established or becoming accelerated, vested or payable.\n\n        Section 3.29 No Misrepresentation. No representation or warranty by\nTarget in this Agreement, and no statement, certificate or schedule furnished or\nto be furnished by or on behalf of Target pursuant to this Agreement, when taken\ntogether, contains any untrue statement of a material fact or omits to state a\nmaterial fact required to be stated therein or necessary in order to make such\nstatements, in light of the circumstances under which they were made, not\nmisleading.\n\n                                   ARTICLE IV\n\n                 REPRESENTATIONS AND WARRANTIES OF BUYER AND SUB\n\n        Except as set forth in the disclosure schedule delivered by Buyer to\nTarget on or before the date of this Agreement and attached hereto (the \"Buyer\nDisclosure Schedule\"), or in the Buyer SEC Reports (as defined herein), Buyer\nand Sub represent and warrant to Target as follows:\n\n        Section 4.1 Organization. Each of Buyer, Sub and Buyer's other\nSubsidiaries is a corporation duly organized, validly existing and in good\nstanding under the laws of the jurisdiction of its incorporation, has all\nrequisite corporate power to own, lease and operate its property and to carry on\nits business as now being conducted and as proposed to be conducted, and is duly\nqualified to do business and is in good standing as a foreign corporation in\neach jurisdiction in which the failure to be so qualified would have a Material\nAdverse Effect on Buyer and its Subsidiaries, taken as a whole.\n\n        Section 4.2   Buyer Capital Structure.\n\n               (a) The authorized capital stock of Buyer consists of fifty\nmillion (50,000,000) shares of Buyer Common Stock and two million (2,000,000)\nshares of preferred stock, $0.001 par value (\"Buyer Preferred Stock\"). As of\nAugust 4, 1997: (i) 24,327,681 shares of Buyer Common Stock were issued and\noutstanding, all of which are duly authorized, validly issued, fully paid and\nnonassessable; (ii) no shares of Buyer Common Stock were held in the treasury of\nBuyer or by Subsidiaries of Buyer; (iii) approximately 4,048,424 shares of Buyer\nCommon Stock were reserved for future issuance pursuant to stock options granted\nand outstanding under Buyer's stock option plans (the \"Buyer Option Plans\") and\nrights \n\n\n                                       20\n\n\n\n   25\n\n\noutstanding under Buyer's employee stock purchase plan (the \"Buyer Purchase\nPlan\"). As of the date of this Agreement, none of the shares of Buyer Preferred\nStock are issued and outstanding. The authorized capital stock of Sub consists\nof one thousand (1,000) shares of common stock, par value $.001 per share (\"Sub\nCommon Stock\"), of which one hundred (100) shares are or will be issued and\noutstanding as of the Closing Date. All of the outstanding shares of capital\nstock of Sub are duly authorized, validly issued, fully paid and nonassessable,\nand all such shares are owned by Buyer free and clear of all security interests,\nliens, claims, pledges, agreements, limitations on Buyer's voting rights,\ncharges or other encumbrances of any nature.\n\n               (b) Except as set forth in Section 4.2(a) or as reserved for\nfuture grants of options under the Buyer Option Plans or the Buyer Purchase\nPlan, there are no equity securities of any class of Buyer, or any security\nexchangeable into or exercisable for such equity securities, issued, reserved\nfor issuance or outstanding. Except as set forth in this Section 4.2, there are\nno options, warrants, equity securities, calls, rights, commitments or\nagreements of any character to which Buyer is a party or by which it is bound\nobligating Buyer to issue, deliver or sell, or cause to be issued, delivered or\nsold, additional shares of capital stock of Buyer or obligating Buyer to grant,\nextend, accelerate the vesting of or enter into any such option, warrant, equity\nsecurity, call, right, commitment or agreement. To the best knowledge of Buyer,\nthere are no voting trusts, proxies or other agreements or understandings with\nrespect to the shares of capital stock of Buyer.\n\n               (c) The shares of Buyer Common Stock to be issued pursuant to the\nMerger, when issued, will be duly authorized, validly issued, fully paid, and\nnonassessable, and free of and not subject to any preemptive rights or rights of\nfirst refusal.\n\n        Section 4.3   Authority; No Conflict; Required Filings and Consents.\n\n               (a) Buyer and Sub have all requisite corporate power and\nauthority to enter into this Agreement and the other documents required to be\nexecuted and delivered by Buyer or Sub hereunder (collectively, the \"Buyer\nTransaction Documents\") and to consummate the transactions contemplated hereby\nand thereby. The execution and delivery of this Agreement and the other Buyer\nTransaction Documents and the consummation of the transactions contemplated\nhereby and thereby have been duly authorized by all necessary corporate action\non the part of Buyer and Sub, respectively. This Agreement and the Buyer\nTransaction Documents to which they are parties have been duly executed and\ndelivered by Buyer and Sub and constitute the valid and binding obligations of\nBuyer and Sub, respectively, enforceable in accordance with their terms, except\nas such enforceability may be limited by (i) bankruptcy laws and other similar\nlaws affecting creditors' rights generally and (ii) general principles of\nequity, regardless of whether asserted in a proceeding in equity or at law.\n\n               (b) The execution and delivery of this Agreement by Buyer and Sub\nand the other Buyer Transaction Documents do not, and the consummation of the\ntransactions contemplated hereby or thereby will not, (i) conflict with, or\nresult in \n\n\n                                       21\n\n\n\n   26\n\n\nany violation or breach of any provision of the Certificate of Incorporation or\nBylaws of Buyer or Sub, (ii) result in any violation or breach of, or constitute\n(with or without notice or lapse of time, or both) a default (or give rise to a\nright of termination, cancellation or acceleration of any obligation or loss of\nany material benefit) under any of the terms, conditions or provisions of any\nnote, bond, mortgage, indenture, lease, contract or other agreement, instrument\nor obligation to which Buyer or Sub is a party or by which either of them or any\nof their properties or assets may be bound, or (iii) conflict with or violate\nany permit, concession, franchise, license, judgment, order, decree, statute,\nlaw, ordinance, rule or regulation applicable to Buyer or Sub or any of its or\ntheir properties or assets, except in the case of (ii) and (iii) for any such\nconflicts, violations, defaults, terminations, cancellations or accelerations\nwhich would not be reasonably likely to have a Material Adverse Effect on Buyer\nand its Subsidiaries, taken as a whole, or that would not interfere with the\nconsummation by Buyer and Sub of its obligations under this Agreement and the\nother Buyer Transaction Documents.\n\n               (c) The outstanding shares of Sub Common Stock are the only\nshares of Sub capital stock entitled to vote with respect to the Merger, and the\napproval of this Agreement by the holders of a majority of the issued and\noutstanding shares of Sub Common Stock is the only approval of Sub stockholders\nrequired for the consummation of the Merger, no other class vote of any series\nor class of Sub capital stock being required. No consent, approval, order or\nauthorization of, or registration, declaration or filing with, any Governmental\nEntity is required by or with respect to Buyer or any of its Subsidiaries in\nconnection with the execution and delivery of this Agreement or the consummation\nof the transactions contemplated hereby, except for (i) the filing of the\nDelaware Certificate of Merger in accordance with the Delaware General\nCorporation Law, (ii) such consents, approvals, orders, authorizations,\nregistrations, declarations and filings as may be required under applicable\nfederal and state securities laws and the laws of any foreign country or which\nBuyer is obligated to file pursuant to the Declaration of Rights attached hereto\nas Annex 6.11 and (iii) such other consents, authorizations, filings, approvals\nand registrations which, if not obtained or made, would not be reasonably likely\nto have a Material Adverse Effect on Buyer and its Subsidiaries, taken as a\nwhole.\n\n        Section 4.4   SEC Filings; Financial Statements.\n\n               (a) Buyer has filed and made available to Target all forms,\nreports and documents required to be filed by Buyer with the SEC since December\n31, 1995 other than registration statements on Form S-8 (collectively, the\n\"Buyer SEC Reports\"). The Buyer SEC Reports (i) at the time filed, complied in\nall material respects with the applicable requirements of the Securities Act and\nthe Securities Exchange Act of 1934, as amended (the \"Exchange Act\"), as the\ncase may be, and (ii) did not at the time they were filed (or if amended or\nsuperseded by a filing prior to the date of this Agreement, then on the date of\nsuch filing) contain any untrue statement of a material fact or omit to state a\nmaterial fact required to be stated in such Buyer SEC Reports or necessary in\norder to make the statements in such Buyer SEC Reports, in the light of the\ncircumstances under which they were made, not misleading. None of Buyer's\nSubsidiaries is required to file any forms, reports or other documents with the\nSEC.\n\n\n                                       22\n\n\n\n   27\n\n\n               (b) Each of the consolidated financial statements (including, in\neach case, any related notes) contained in the Buyer SEC Reports, including any\nBuyer SEC Reports filed after the date of this Agreement until the Closing,\ncomplied or will comply as to form in all material respects with the applicable\npublished rules and regulations of the SEC with respect thereto, was or will be\nprepared in accordance with GAAP applied on a consistent basis throughout the\nperiods involved (except as may be indicated in the notes to such financial\nstatements or, in the case of unaudited statements, as permitted by Form 10-Q\npromulgated by the SEC) and fairly presented or will present the consolidated\nfinancial position of Buyer and its Subsidiaries as at the respective dates and\nthe consolidated results of its operations and cash flows for the periods\nindicated, except that the unaudited interim financial statements do not contain\nnotes and were or are subject to normal and recurring year-end adjustments which\nwere not or are not expected to be material in amount. The unaudited\nconsolidated balance sheet of Buyer as of June 30, 1997 is referred to herein as\nthe \"Buyer Balance Sheet.\"\n\n               (c) The Buyer is eligible to utilize Form S-3 under the\nSecurities Act for purposes of registering the shares of Buyer Common Stock\nbeing issued in the Merger, and Buyer is not aware of any circumstance or event\nwhich would cause Buyer to become ineligible to utilize such Form S-3 for such\npurpose.\n\n        Section 4.5 Absence of Undisclosed Liabilities. Except as disclosed in\nwriting to Target or as otherwise disclosed in the Buyer SEC Reports, Buyer and\nits Subsidiaries do not have any liabilities, either accrued or contingent\n(whether or not required to be reflected in financial statements in accordance\nwith GAAP), and whether due or to become due, which individually or in the\naggregate would be reasonably likely to have a Material Adverse Effect on Buyer\nand its Subsidiaries, taken as a whole, other than (i) liabilities reflected in\nthe Buyer Balance Sheet, (ii) liabilities specifically described in this\nAgreement, and (iii) normal or recurring liabilities incurred since June 30,\n1997, in the ordinary course of business consistent with past practices.\n\n        Section 4.6 Absence of Certain Changes or Events. Since June 30, 1997,\nBuyer has conducted its business only in the ordinary course and in a manner\nconsistent with past practice and, since such date, there has not been: (i) any\nevent or occurrence that has had a Material Adverse Effect on Buyer and its\nSubsidiaries, taken as a whole; (ii) any damage, destruction or loss (whether or\nnot covered by insurance) with respect to Buyer having a Material Adverse Effect\non Buyer and its Subsidiaries, taken as a whole; (iii) any material change by\nBuyer in its accounting methods, principles or practices to which Target has not\npreviously consented in writing; or (iv) any revaluation by Buyer of any of its\nassets having a Material Adverse Effect on Buyer and its Subsidiaries, taken as\na whole.\n\n        Section 4.7 Interim Operations of Sub. Sub was formed solely for the\npurpose of engaging in the transactions contemplated by this Agreement, has\nengaged in no other business activities and has conducted its operations only as\ncontemplated by this Agreement.\n\n        Section 4.8 Litigation. There is no action, suit, proceeding, claim,\narbitration or investigation pending, or to the best knowledge of Buyer,\nthreatened, against Buyer or Sub \n\n                                       23\n\n   28\nwhich in any manner challenges or seeks to prevent, enjoin, alter or materially\ndelay any of the transactions contemplated by this Agreement.\n\n                                    ARTICLE V\n\n                               CONDUCT OF BUSINESS\n\n        Section 5.1 Covenants of Target. During the period from the date of this\nAgreement and continuing until the earlier of the termination of this Agreement\nor the Effective Time, Target agrees (except to the extent that Buyer shall\notherwise consent or request, in each case in writing) to carry on its business\nin the usual, regular and ordinary course in substantially the same manner as\npreviously conducted, to pay its debts and taxes when due, subject to good faith\ndisputes over such debts or taxes, to pay or perform its other obligations when\ndue, and, to the extent consistent with such business, to use all reasonable\nefforts consistent with past practices and policies to (i) preserve intact its\npresent business organization, (ii) keep available the services of its present\nofficers and key employees and (iii) preserve its relationships with customers,\nsuppliers, distributors, licensors, licensees and others having business\ndealings with it. Target shall promptly notify Buyer of any event or occurrence\nnot in the ordinary course of business of Target where such event or occurrence\nwould result in a breach of any covenant of Target set forth in this Agreement\nor cause any representation or warranty of Target set forth in this Agreement to\nbe untrue as of the date of, or giving effect to, such event or occurrence.\nExcept as expressly contemplated by this Agreement, Target shall not, without\nthe prior written consent of Buyer:\n\n                (a)     transfer or license to any person or entity or otherwise\nextend, amend or modify any rights to the Target Intellectual Property Rights\nother than in the ordinary course of business consistent with past practices;\n\n                (b)     declare or pay any dividends on or make any other\ndistributions (whether in cash, stock or property) in respect of any of its\ncapital stock, or split, combine or reclassify any of its capital stock or issue\nor authorize the issuance of any other securities in respect of, in lieu of or\nin substitution for shares of its capital stock, or purchase or otherwise\nacquire, directly or indirectly, any shares of its capital stock except from\nformer employees, directors and consultants in accordance with agreements\nproviding for the repurchase of shares in connection with any termination of\nservice by such party;\n\n                (c)     issue, deliver or sell or authorize or propose the\nissuance, delivery or sale of, any shares of its capital stock or securities\nconvertible into shares of its capital stock, or subscriptions, rights, warrants\nor options to acquire, or other agreements or commitments of any character\nobligating it to issue any such shares or other convertible securities (except\nfor exercises and conversions of securities outstanding on the date of this\nAgreement);\n\n                (d)     acquire or agree to acquire by merging or consolidating\nwith, or by purchasing a substantial equity interest in or substantial portion\nof the assets of, or by any other manner, any business or any corporation,\npartnership or other business organization or \n\n\n                                       24\n\n   29\ndivision, or otherwise acquire or agree to acquire any assets other than\nacquisitions involving aggregate consideration of not more than ten thousand\ndollars ($10,000) and inventory purchased in the ordinary course of business\nconsistent with past practices;\n\n                (e)     sell, lease, license or otherwise dispose of any of its\nproperties or assets except for transactions entered into in the ordinary course\nof business consistent with past practice;\n\n                (f)     take any action to: (i) increase or agree to increase\nthe compensation payable or to become payable to its officers or employees, (ii)\ngrant any severance or termination pay to, or enter into any employment or\nseverance agreements with, any officer or employee, (iii) enter into any\ncollective bargaining agreement, or (iv) establish, adopt, enter into or amend\nin any material respect any bonus, profit sharing, thrift, compensation, stock\noption, restricted stock, pension, retirement, deferred compensation,\nemployment, termination, severance or other plan, trust, fund, policy or\narrangement for the benefit of any directors, officers or employees;\n\n                (g)     revalue any of its assets, including writing down the\nvalue of inventory or writing off notes or accounts receivable other than in the\nordinary course of business;\n\n                (h)     incur any indebtedness for borrowed money or guarantee\nany such indebtedness or issue or sell any debt securities or warrants or rights\nto acquire any debt securities or guarantee any debt securities of others, other\nthan indebtedness incurred under outstanding lines of credit in the ordinary\ncourse of business consistent with past practice;\n\n                (i)     amend or propose to amend its Certificate of\nIncorporation or Bylaws;\n\n                (j)     incur or commit to incur any individual capital\nexpenditure other than to the existing commitments set forth in the Target\nDisclosure Schedule;\n\n                (k)     enter into or amend any agreements pursuant to which any\nthird party is granted exclusive marketing or manufacturing rights with respect\nto any Target Product;\n\n                (l)     amend or terminate any material contract, agreement or\nlicense to which it is a party except in the ordinary course of business;\n\n                (m)     waive or release any material right or claim, except in\nthe ordinary course of business;\n\n                (n)     initiate any litigation or arbitration proceeding;\n\n                (o)     make any cash distribution to Target securityholders;\n\n\n                                       25\n\n   30\n                (p)     accelerate, amend or change the period of exercisability\nof options or restricted stock granted to employees of Target or authorize cash\npayments in exchange for any options granted under any of such plans;\n\n                (q)     compromise or otherwise settle or adjust any assertion\nor claim of a deficiency in taxes (or interest thereon or penalties in\nconnection therewith), extend the statute of limitations with any tax authority\nor file any pleading in court in any tax litigation or any appeal from an\nasserted deficiency;\n\n                (r)     change any of Target's accounting policies and\npractices, except such changes as may be required in the reasonable opinion of\nTarget's management to respond to economic or market conditions or as may be\nrequired by the rules of the Institute of Certified Public Accountants or\nFinancial Accounting Standards Board or by applicable governmental authorities;\n\n                (s)     change its personnel policies;\n\n                (t)     grant any person a power of attorney or similar\nauthority; or\n\n                (u)     take, or agree in writing or otherwise to take, any of\nthe actions described in subsections (a) through (t) above, or any action which\nis reasonably likely to make any of its representations or warranties contained\nin this Agreement untrue or incorrect in any material respect on the date made\n(to the extent so limited) or as of the Effective Time.\n\n        Section 5.2 Cooperation. Subject to compliance with applicable law, from\nthe date hereof until the Effective Time, each of Buyer and Target shall confer\non a regular and frequent basis with one or more representatives of the other\nparty to report operational matters of materiality and the general status of\nongoing operations and shall promptly provide the other party or its counsel\nwith copies of all filings made by such party with any Governmental Entity in\nconnection with this Agreement, the Merger and the other transactions\ncontemplated hereby.\n\n                                   ARTICLE VI\n\n                              ADDITIONAL AGREEMENTS\n\n        Section 6.1 No Solicitation.\n\n                (a)     From and after the date of this Agreement until the\nEffective Time, Target shall not, directly or indirectly through any officer,\ndirector, employee, representative or agent of Target or otherwise, (i) solicit,\ninitiate, or encourage any inquiries or proposals that constitute, or could\nreasonably be expected to lead to, a proposal or offer for a merger,\nconsolidation, share exchange, business combination, sale of all or\nsubstantially all assets, sale of shares of capital stock (including without\nlimitation by way of a tender offer) or similar transactions involving Target\nother than the transactions contemplated by this Agreement (any of the foregoing\ninquiries or proposals being referred to in this Agreement as an \"Acquisition\n\n\n                                       26\n\n   31\nProposal\"), (ii) engage or participate in negotiations or discussions\nconcerning, or provide any non-public information to any person or entity\nrelating to, any Acquisition Proposal, or (iii) agree to, enter into, accept,\napprove or recommend any Acquisition Proposal.\n\n                (b)     Target shall notify Buyer immediately (and no later than\n24 hours) after receipt by Target (or its advisors) of any Acquisition Proposal\nor any request for nonpublic information in connection with an Acquisition\nProposal or for access to the properties, books or records of Target by any\nperson or entity that informs Target that it is considering making, or has made,\nan Acquisition Proposal. Such notice shall be made orally and in writing and\nshall indicate in reasonable detail the identity of the offeror and the terms\nand conditions of such proposal, inquiry or contact.\n\n        Section 6.2 Approval of Stockholders. Target shall promptly after the\ndate hereof take all action necessary in accordance with the law of the State of\nDelaware and its Certificate of Incorporation to obtain the approval of the\nMerger by Target stockholders as soon as possible. As promptly as practicable\nafter the execution of this Agreement, under the direction and subject to the\nreview and approval of Buyer, Target shall prepare and, after receiving the\nauthorization of Buyer, distribute an information statement to its stockholders\nfor the purpose of soliciting the Target Stockholders. The information statement\nshall include the recommendation of the Board of Directors of Target in favor of\nthe Merger and this Agreement. Whenever any event occurs which is required to be\nset forth in an amendment or supplement to the information statement, Target\nshall promptly inform Buyer of such occurrence and cooperate in mailing to\nstockholders of Target, such amendment or supplement. Target shall take all\nother action necessary or advisable to secure the vote or consent of\nstockholders required to effect the Merger.\n\n        Section 6.3 Consents. Each of Buyer and Target shall use all reasonable\nefforts to obtain all necessary consents, waivers and approvals under its\nrespective material agreements, contracts, licenses and leases as may be\nnecessary or advisable to consummate the Merger and the other transactions\ncontemplated by this Agreement.\n\n        Section 6.4 Access to Information. Upon reasonable notice, Target shall\nafford to the officers, employees, accountants, counsel and other\nrepresentatives of Buyer, reasonable access, during normal business hours during\nthe period prior to the Effective Time, to all its properties, books, contracts,\ncommitments and records and, during such period, Target shall furnish promptly\nto Buyer (i) a copy of each report, schedule, registration statement and other\ndocument filed by it with or received by it from any Governmental Entity and\n(ii) all other information concerning its business, properties and personnel as\nBuyer may reasonably request. No information or knowledge obtained in any\ninvestigation pursuant to this Section 6.4 shall affect or be deemed to modify\nany representation or warranty contained in this Agreement or the conditions to\nthe obligations of the parties to consummate the Merger.\n\n        Section 6.5 Legal Conditions to Merger. Each of Buyer and Target will\ntake all reasonable actions necessary to comply promptly with all legal\nrequirements which may be imposed on itself with respect to the Merger (which\nactions shall include, without limitation, \n\n\n                                       27\n\n   32\nfurnishing all information in connection with approvals of or filings with any\nGovernmental Entity) and will promptly cooperate with and furnish information to\neach other in connection with any such requirements imposed upon either of them\nin connection with the Merger. Each of Buyer and Target will take all reasonable\nactions necessary to obtain (and will cooperate with each other in obtaining)\nany consent, authorization, order or approval of, or any exemption by, any\nGovernmental Entity or other third party, required to be obtained or made by\nTarget, Buyer or Sub in connection with the Merger or the taking of any action\ncontemplated thereby or by this Agreement.\n\n        Section 6.6 Public Disclosure. Except with the prior written consent of\nBuyer, Target shall issue no press release or other public statement with\nrespect to the Merger or this Agreement. Prior to the Effective Time, Buyer\nshall not make, or cause to be made, any press release or public announcement in\nrespect of this Agreement or the transaction contemplated hereby without prior\nconsultation with Target, subject to Buyer's obligations to comply with\napplicable securities laws and NASD listing requirements.\n\n        Section 6.7 Tax-Free Reorganization. Buyer and Target shall each use its\nbest efforts to cause the Merger to be treated as a reorganization within the\nmeaning of Section 368(a) of the Code.\n\n        Section 6.8 Affiliate Agreements. Target has identified Marc Gilman,\nMort Goulder and David Jodoin as those persons who are, in Target's reasonable\njudgment, \"affiliates\" of Target within the meaning of Rule 145 (each such\nperson who is an \"affiliate\" of Target within the meaning of Rule 145 is\nreferred to herein as an \"Affiliate\") promulgated under the Securities Act\n(\"Rule 145\"). Target shall provide Buyer such information and documents as Buyer\nshall reasonably request for purposes of reviewing such list and shall notify\nBuyer in writing regarding any change in the identity of Target's Affiliates\nprior to the Closing Date. Target shall deliver or cause to be delivered to\nBuyer by the Closing Date from each of the Affiliates, an executed agreement, in\nthe form attached as Annex 6.8 (\"Affiliate Agreement\"). Buyer shall be entitled\nto place appropriate legends on the certificates evidencing any Buyer Common\nStock to be received by such Affiliates of Target pursuant to the terms of this\nAgreement, and to issue appropriate stop transfer instructions to the transfer\nagent for the Buyer Common Stock, consistent with the terms of the Affiliate\nAgreements.\n\n        Section 6.9 Additional Agreements; Reasonable Efforts. Subject to the\nterms and conditions of this Agreement, each of the parties agrees to use all\nreasonable efforts to take, or cause to be taken, all action and to do, or cause\nto be done, all things necessary, proper or advisable under applicable laws and\nregulations to consummate and make effective the transactions contemplated by\nthis Agreement, including cooperating fully with the other party, including by\nprovision of information. In case at any time after the Effective Time any\nfurther action is necessary or desirable to carry out the purposes of this\nAgreement or to vest the Surviving Corporation with full title to all\nproperties, assets, rights, approvals, immunities and franchises of either of\nthe Constituent Corporations, the proper officers and directors of each party to\nthis Agreement shall take all such necessary action.\n\n\n                                       28\n\n   33\n        Section 6.10 Stock Options.\n\n                (a)     At the Effective Time, each outstanding Target Option,\nwhether vested or unvested, shall be, in connection with the Merger, assumed by\nBuyer. Each Target Option so assumed by Buyer shall continue to have, and be\nsubject to, the same terms and conditions set forth in the Target Option plan\nand\/or as provided in the respective option agreements governing such Target\nOption, except that such option shall be deemed to constitute an option\n(\"Assumed Option\") to acquire such number of shares of Buyer Common Stock as the\nholder of such Target Option would have been entitled to receive pursuant to the\nMerger had such holder exercised such option in full immediately prior to the\nEffective Time (rounded down to the nearest whole share), at a price per share\n(rounded up to the nearest whole cent) equal to (x) the exercise price per share\nof Target Common Stock otherwise purchasable pursuant to such Target Option\nimmediately prior to the Effective Time divided by (y) the Conversion Number.\nFurther, in the case of any Assumed Option that remains unexercised as of the\nexpiration of the Escrow Period (as defined in Section 9.7(c)), the number of\nshares of Buyer Common Stock issuable upon the exercise of such assumed Target\nOption shall be reduced in proportion to any reduction in the number of shares\nof Buyer Common Stock received by holders of the Target Options assumed by Buyer\nwhich are exercised prior to the expiration of the Escrow Period as a result of\nany distribution made to Buyer pursuant to Article IX of this Agreement.\n\n                (b)     Buyer shall take all corporate action necessary to\nreserve for issuance a sufficient number of shares of Buyer Common Stock to\nsatisfy the exercise of the Assumed Options in full.\n\n                (c)     Notwithstanding anything to the contrary herein, if a\nholder of Target Options is an employee of Buyer or the Surviving Corporation\nimmediately prior to the Effective Time, and the employment of such holder with\nBuyer or the Surviving Corporation is terminated by Buyer or the Surviving\nCorporation, and such termination is not For Cause (as defined below), at any\ntime prior to the six (6) month anniversary of the Effective Time, then\n(notwithstanding the terms of such Target options) the Target Options held by\nsuch holder will become fully vested and exercisable on the date of such\ntermination and shall remain exercisable thereafter for a period of not less\nthan ninety (90) days. For the purposes of this Section 6.10(c), a termination\nis for cause (\"For Cause\") if such holder's employment is terminated for any of\nthe following reasons:\n\n                        i.      theft, dishonesty, or falsification of any\nemployment or corporate records;\n\n                        ii.     improper disclosure of Target's or Buyer's\nconfidential or proprietary information which has a material detrimental effect\non Buyer or Target;\n\n                        iii.    any intentional act by such holder which has a\nmaterial detrimental effect on Target's or Buyer's reputation or business; or\n\n\n                                       29\n\n   34\n                        iv.     failure of holder to perform assigned duties\nconsistent with his or her duties at Target prior to the Effective Time after\nwritten notice of such failure (including a statement that the failure to\ncorrect such failure could result in termination) and the reasonable opportunity\nto correct such failure.\n\nIn addition, a termination by holder of his or her employment shall be\nconsidered termination by Buyer not For Cause if (x) without such holder's\nwritten consent, Buyer or Surviving Corporation requires holder to change the\nlocation of holder's job or office, such that holder will be based at a location\nmore than thirty (30) miles from Target's Manchester, New Hampshire facility or\noutside of the State of New Hampshire, or (y) if without holder's written\nconsent, Buyer or Surviving Corporation substantially reduces holder's job\nresponsibilities.\n\n                        (d)     Buyer shall prepare and file with the SEC and\nshall use its best efforts to cause to become effective, a registration\nstatement on Form S-8 with respect to the shares of Buyer Common Stock issuable\nupon exercise of the Assumed Options not later than ninety (90) days after the\nClosing Date.\n\n        Section 6.11 Registration. The shares of Buyer Common Stock issued in\nthe Merger shall be registered pursuant to the Securities Act of 1933, as\namended, subject to the terms and conditions set forth in Annex 6.11 hereto.\n\n        Section 6.12 Expenses. The parties shall each pay their own legal,\naccounting and financial advisory fees and other out-of-pocket expenses related\nto the negotiation, preparation and carrying out of this Agreement and the\ntransactions herein contemplated. In the event the Merger is consummated, legal,\naccounting and financial advisory fees and other out-of-pocket expenses incurred\nby Target and the Target stockholders relating to the negotiation, preparation\nand carrying out of this Agreement and the transactions herein contemplated\nshall be borne by the Target securityholders pro rata.\n\n        Section 6.13 Employee Arrangements.\n\n                (a)     Buyer shall offer, or cause the Surviving Corporation to\noffer, employment with the Surviving Corporation after the Closing to all of the\nemployees of Target. All such Target employees accepting employment with the\nSurviving Corporation shall be eligible for the same employee benefit plans, on\nthe same terms, as other employees of Buyer of comparable rank and length of\nservice. In determining eligibility for benefits which depend on length of\nservice, Buyer shall provide each such Target employee with full credit for the\nperiod of such employee's service with Target (other than with respect to\noptions, if any, granted by Buyer to such Target employees). Except as set forth\nin this Section 6.13, the terms of employment of such Target employees shall be\ndetermined by agreement of Buyer (or the Surviving Corporation, as the case may\nbe) and each such employee. At the Effective Time, Buyer shall issue options to\npurchase an aggregate of 100,000 shares of Buyer's Common Stock to the\nindividuals and in the amounts set forth on Annex 6.13 hereto, which options\nshall vest monthly over a four (4) year period and shall have an exercise price\nequal to the fair market value of the Buyer Common Stock on the date of grant.\n\n\n                                       30\n\n   35\n                (b)     Buyer shall provide a severance package, which will be\ncomparable to the severance package that would be made available to a similarly\nsituated Buyer employee, to each Target employee (i) who is either not offered\nemployment with Buyer or (ii) whose employment with Buyer or the Surviving\nCorporation is terminated by Buyer within six (6) months after the Effective\nTime if such termination is not For Cause as defined in Section 6.10(c).\n\n        Section 6.14 Voting Agreements. Target shall cause each of Marc Gilman,\nMort Goulder and David Jodoin to execute and deliver to Buyer, by the date of\nthis Agreement, voting agreements and irrevocable proxies in the forms annexed\nhereto as Annex 6.14 (the \"Voting Agreements\"), agreeing, among other things, to\nvote in favor of the Merger. Such directors, officers, affiliates and other\nstockholders will own, in the aggregate, no less than sixty-six percent (66%) of\nthe outstanding Target Common Stock as of the date of this Agreement.\n\n        Section 6.15 Notification of Certain Matters. Target shall give prompt\nnotice to Buyer, and Buyer and Sub shall give prompt notice to Target, of the\noccurrence, or failure to occur, of any event, which occurrence or failure to\noccur, if uncured, would be likely to cause the failure of any of the conditions\nset forth in Article VII of this Agreement.\n\n        Section 6.16 Repayment of Indebtedness. At the Effective Time, Buyer\nwill repay the indebtedness of Target owed to the individuals listed in Section\n3.5 of the Target Disclosure Schedule.\n\n                                   ARTICLE VII\n\n                              CONDITIONS TO MERGER\n\n        Section 7.1 Conditions to Each Party's Obligation to Effect the Merger.\nThe respective obligations of each party to this Agreement to effect the Merger\nshall be subject to the satisfaction prior to the Closing Date of the following\nconditions:\n\n                (a)     Governmental Approvals. All authorizations, consents,\norders or approvals of, or declarations or filings with, or expirations of\nwaiting periods imposed by, any Governmental Entity shall have been obtained or\nfiled, or shall have occurred as the case may be.\n\n                (b)     No Injunctions or Restraints; Illegality. No temporary\nrestraining order, preliminary or permanent injunction or other order issued by\nany court of competent jurisdiction or other legal or regulatory restraint or\nprohibition preventing the consummation of the Merger or limiting or restricting\nBuyer's conduct or operation of the business of Buyer or Target after the Merger\nshall have been issued, nor shall any proceeding brought by a domestic\nadministrative agency or commission or other domestic Governmental Entity,\nseeking any of the foregoing be pending; nor shall there be any action taken, or\nany statute, rule, regulation \n\n\n                                       31\n\n   36\nor order enacted, entered, enforced or deemed applicable to the Merger which\nmakes the consummation of the Merger illegal or prevents or prohibits the\nMerger.\n\n        Section 7.2 Additional Conditions to Obligations of Buyer and Sub. The\nobligations of Buyer and Sub to effect the Merger are subject to the\nsatisfaction of each of the following additional conditions, any of which may be\nwaived in writing exclusively by Buyer and Sub:\n\n                (a)     Representations and Warranties. The representations and\nwarranties of Target set forth in this Agreement shall be true and correct in\nall material respects as of the date of this Agreement and as of the Closing\nDate as though made on and as of the Closing Date, except for changes\ncontemplated by this Agreement, and Buyer shall have received a certificate\nsigned on behalf of Target by an executive officer of Target to such effect.\n\n                (b)     Performance Obligations. Target shall have performed in\nall material respects all obligations required to be performed by it under this\nAgreement at or prior to the Closing Date, and Buyer shall have received a\ncertificate signed on behalf of Target by an executive officer of Target to such\neffect.\n\n                (d)     Affiliates Agreements. Buyer shall have received from\neach of the Affiliates of Target an executed Affiliate Agreement.\n\n                (e)     Confidentiality and Inventions Agreements. Buyer shall\nhave received confidentiality and inventions assignment agreements signed by\neach employee in substantially the form annexed hereto as Annex 7.2(e), and each\nsuch confidentiality and inventions assignment agreement shall be in full force\nand effect.\n\n                (f)     Non-Compete Agreements. Buyer shall have received from\neach of David Jodoin, Mark Gilman, Jim St. Jean, Tim Flanders, Michell Defeo,\nJay Grubb and John Grozier (collectively, the \"Key Employees\"), a\nnon-competition and nonsolicitation agreement in substantially the form annexed\nhereto as Annex 7.2(f).\n\n                (g)     Optionee Agreements. Buyer shall have received from each\nholder of Target Options an agreement in substantially the form annexed hereto\nas Annex 7.2(g) pursuant to which each optionee agrees (i) not to resell Buyer\nCommon Stock received upon exercise of Target Options prior to the effectiveness\nof the registration statement filed pursuant to Section 6.11 and (ii) not to\nsell more than twenty five percent (25%) of all such Buyer Common Stock issuable\npursuant to such optionee's Target Options prior to the first anniversary of the\nClosing Date.\n\n                (h)     Tax Opinion. Buyer shall have received a written opinion\nfrom Gray Cary Ware &amp; Freidenrich, A Professional Corporation, counsel to Buyer,\nto the effect that the Merger will be treated for federal income tax purposes as\na reorganization within the meaning of Section 368(a) of the Code.\n\n\n                                       32\n\n   37\n                (i)     Legal Opinion. Buyer shall have received a written\nopinion from Hale &amp; Dorr LLP, counsel to Target, reasonably satisfactory in form\nand substance to Buyer.\n\n                (j)     No Material Adverse Effect. Since June 30, 1997, there\nhas been no event or occurrence that had a Material Adverse Effect on Target.\n\n                (k)     Third-Party Consents and Waivers. Target shall have\nprovided all notices to third parties, and shall have received all third-party\nconsents or waivers, required for or in connection with the consummation of the\ntransactions contemplated by this Agreement under any contract set forth (or\nrequired to be set forth) in Section 3.4 of the Target Disclosure Schedule or to\nbe obtained pursuant to Section 6.3.\n\n                (l)     Stockholder Approval. This Agreement and the Merger\nshall have been approved and adopted by the requisite vote of the\nsecurityholders of Target.\n\n                (m)     Final Balance Sheet. Target shall deliver to Buyer a\nbalance sheet for Target as of the Closing Date.\n\n                (n)     Holders of not more than five percent (5%) of Target\nCommon Stock shall have elected to have their shares treated as dissenting\nshares under Section 2.1(e).\n\n        Section 7.3 Additional Conditions to Obligations of Target. The\nobligation of Target to effect the Merger is subject to the satisfaction of each\nof the following additional conditions, any of which may be waived, in writing,\nexclusively by Target:\n\n                (a)     Representations and Warranties. The representations and\nwarranties of Buyer and Sub set forth in this Agreement shall be true and\ncorrect in all material respects as of the date of this Agreement and as of the\nClosing Date as though made on and as of the Closing Date, except for changes\ncontemplated by this Agreement, and Target shall have received a certificate\nsigned on behalf of Buyer by an executive officer of Buyer to such effect.\n\n                (b)     Performance Obligations. Buyer and Sub shall have\nperformed in all material respects all obligations required to be performed by\nthem under this Agreement at or prior to the Closing Date; and Target shall have\nreceived a certificate signed on behalf of Buyer by an executive officer of\nBuyer to such effect.\n\n                (c)     Tax Opinion. Target shall have received the opinion of\nHale and Dorr LLP, counsel to Target, to the effect that the Merger will be\ntreated for federal income tax purposes as a reorganization within the meaning\nof Section 368(a) of the Code.\n\n                (d)     Legal Opinion. Target shall have received a written\nopinion from Gray Cary Ware &amp; Freidenrich, A Professional Corporation, counsel\nto Buyer, reasonably satisfactory in form and substance to Target.\n\n                                  ARTICLE VIII\n\n\n                                       33\n\n   38\n                            TERMINATION AND AMENDMENT\n\n        Section 8.1 Termination. This Agreement may be terminated at any time\nprior to the Effective Time (with respect to Sections 8.1(b) through 8.1(g), by\nwritten notice by the terminating party to the other party), whether before or\nafter approval of the matters presented in connection with the Merger by the\nstockholders of Target:\n\n                (a)     by mutual written consent of Buyer or Target; or\n\n                (b)     by either Buyer or Target if the Merger shall not have\nbeen consummated by August 31, 1997 (provided that the right to terminate this\nAgreement under this Section 8.1(b) shall not be available to any party whose\nfailure to fulfill any material obligation under this Agreement has been the\ncause of or resulted in the failure of the Merger to occur on or before such\ndate); or\n\n                (c)     by either Buyer or Target, if a court of competent\njurisdiction or other Governmental Entity shall have issued a nonappealable\nfinal order, decree or ruling or taken any other action, in each case having the\neffect of permanently restraining, enjoining or otherwise prohibiting the\nMerger, except, if the party relying on such order, decree or ruling or other\naction has not materially complied with its obligations under Article VI of this\nAgreement; or\n\n                (d)     by Target, if there has been a material breach of any\nrepresentation, warranty, covenant or agreement on the part Buyer of Sub, which\nbreach shall not have been cured, in the case of a representation or warranty,\nprior to the Closing or, in the case of a covenant or agreement, within 10\nbusiness days following receipt by the breaching party of written notice of such\nbreach from the other party; or\n\n                (e)     by Buyer, if there has been a material breach of any\nrepresentation, warranty, covenant or agreement on the part of Target, which\nbreach shall not have been cured, in the case of a representation or warranty,\nprior to the Closing or, in the case of a covenant or agreement, within 10\nbusiness days following receipt by the breaching party of written notice of such\nbreach from the other party; or\n\n                (f)     by Buyer, if (i) the Board of Directors of Target shall\nhave withdrawn or modified in a manner adverse to Buyer its recommendation of\nthis Agreement and the Merger in a manner adverse to Buyer or shall have\nresolved to do either of the foregoing; or (ii) the Board of Directors of Target\nshall have recommended to the stockholders of Target an Acquisition Proposal; or\n\n                (g)     by Buyer, if for any reason Target stockholders fail to\napprove this Agreement and the transaction contemplated hereby by August 20,\n1997.\n\n\n                                       34\n\n   39\n        Section 8.2 Effect of Termination. In the event of termination of this\nAgreement as provided in Section 8.1, this Agreement shall immediately become\nvoid and there shall be no liability or obligation on the part of Buyer, Target,\nSub or their respective officers, directors, stockholders or Affiliates, except\n(a) as set forth in Section 8.3 and (b) to the extent that such termination\nresults from the intentional breach by a party of any of its representations,\nwarranties or covenants set forth in this Agreement; provided that, the\nprovisions of Sections 6.6, 6.12 and 8.3 of this Agreement shall remain in full\nforce and effect and survive any termination of this Agreement.\n\n        Section 8.3 Fees and Expenses.\n\n                (a)     If (i) the Merger is consummated or (ii) this Agreement\nis terminated other than as described in Section 8.3(b), then all costs and\nexpenses incurred in connection with this Agreement and the transactions\ncontemplated hereby shall be paid in accordance with Section 6.12.\n\n                (b)     If this Agreement is terminated as provided in Sections\n8.1(e), 8.1(f) (but only to the extent there has not been (i) a material breach\nof this Agreement by Buyer that has not been cured, in the case of a\nrepresentation or warranty, prior to the Closing or, in the case of a covenant\nor agreement, within ten (10) business days following receipt by Buyer of\nwritten notice of such breach from Target, or (ii) an event or occurrence that\nhas a Material Adverse Effect on Buyer) or 8.1(g) hereof, then Target shall pay\nto Buyer, within five (5) business days after receipt of a written request\ntherefor, in same day funds, an amount equal to (A) a termination fee of Three\nMillion Dollars ($3,000,000) and (B) all costs and expenses reasonably incurred\nby Buyer in connection with this Agreement and the transactions contemplated\nhereby, including all reasonable legal, accounting, financial advisory and other\nprofessional and service fees and expenses. The parties agree that the foregoing\namounts shall be deemed liquidated damages and, after payment of such liquidated\ndamages, Buyer shall be entitled to no other right or remedy against Target in\nconnection with this Agreement under contract, at law or in equity.\n\n                (c)     If this Agreement is terminated by Target pursuant to\nSection 8.1(b), and at the time of such termination all of the conditions of\nTarget's obligation to effect the Merger pursuant to Section 7.1 and 7.3 have\nbeen satisfied, and if within six (6) months following such termination Target\nor Target securityholders enter into an agreement or series of agreements that\nwill result in the sale of all or substantially all of the assets of Target or a\nmerger, consolidation, combination or stock exchange involving Target where the\nshareholders of Target before such merger, consolidation, combination or stock\nexchange will own less than a majority of the stock of the surviving\ncorporation, then Target shall pay to Buyer, within five (5) business days after\nexecution of such agreement(s), in same day funds, an amount equal to Three\nMillion Dollars ($3,000,000).\n\n\n                                       35\n\n   40\n        Section 8.4 Amendment. This Agreement may be amended by the parties\nhereto, by action taken or authorized by their respective Boards of Directors,\nat any time before or after approval of the matters presented in connection with\nthe Merger by the stockholders of Target, but, after any such approval, no\namendment shall be made which by law requires further approval by such\nstockholders without such further approval. This Agreement may not be amended\nexcept by an instrument in writing signed on behalf of each of the parties\nhereto.\n\n        Section 8.5 Extension; Waiver. At any time prior to the Effective Time,\nthe parties hereto, by action taken or authorized by their respective Boards of\nDirectors, may, to the extent legally allowed, (i) extend the time for the\nperformance of any of the obligations or other acts of the other parties hereto,\n(ii) waive any inaccuracies in the representations and warranties contained\nherein or in any document delivered pursuant hereto and (iii) waive compliance\nwith any of the agreements or conditions contained herein. Any agreement on the\npart of a party hereto to any such extension or waiver shall be valid only if\nset forth in a written instrument signed on behalf of such party.\n\n\n                                       36\n\n   41\n                                   ARTICLE IX\n\n                           ESCROW AND INDEMNIFICATION\n\n        Section 9.1 Survival of Representations, Warranties, Covenants and\nAgreements. The representations, warranties, covenants and agreements of Target\ncontained in this Agreement or any instrument delivered pursuant to this\nAgreement shall survive the Closing Date and shall continue in full force and\neffect until the second anniversary of the Closing Date. The second anniversary\nof the Closing is sometimes referred to as the \"Termination Date\".\n\n        Section 9.2 Indemnification by Target Stockholders.\n\n                (a)     Subject to the terms and conditions contained herein,\nthe stockholders and option holders of Target immediately prior to the Effective\nTime hereby agree to indemnify, defend and hold harmless Buyer, its\nstockholders, officers, directors, employees and attorneys, all Subsidiaries and\nAffiliates of Buyer, and the respective officers, directors, employees and\nattorneys of such entities (all such persons and entities being collectively\nreferred to as the \"Buyer Group\") from, against, for and in respect of any and\nall claims, losses, liabilities, damages, costs and expenses (including\nreasonable legal fees and expenses and expenses of investigation and defense)\nwhich any member of the Buyer Group may sustain or incur (collectively, \"Buyer\nLosses\") which are caused by or arise out of (i) any inaccuracy in or breach of\nany of the representations, warranties, covenants or agreements made by Target\nin this Agreement, the Target Disclosure Schedule or the officer certificates\ndelivered pursuant to Section 7.2, or (ii) any inaccuracy in or breach of any of\nthe representations or warranties made by Target in Sections 3.2, 3.5, 3.9, 3.10\nand 3.16. References to stockholders of Target, Target stockholders or words of\nsimilar import in this Article IX shall be deemed to be references to the\npersons who were holders of securities, including stock, options and warrants,\nof Target immediately prior to the Effective Time.\n\n                (b)     The maximum aggregate liability of the stockholders of\nTarget other than Marc Gilman and David Jodoin pursuant to Section 9.2(a) shall\nbe limited to the shares of Buyer Common Stock deposited in Escrow. The maximum\naggregate liability of each of Marc Gilman and David Jodoin as stockholders of\nTarget pursuant to Section 9.2(a) shall be limited to the lesser of (i) the\nvalue of the Buyer Common Stock he receives in the Merger assuming the value per\nshare equals the average closing sales price of the Buyer Common Stock as\nreported on NNM for the five (5) trading days prior to the date of this\nAgreement, and (ii) the value of the Buyer Common Stock he receives in the\nMerger assuming the value per share equals the average closing sales price of\nthe Buyer Common Stock as reported on NNM for the five (5) trading days prior to\nthe date any payment relating to an Indemnification Claim (as defined in Section\n9.3(b)) is owed by him. Buyer agrees that it will look first to the Escrow\n(including any shares held by Marc Gilman and David Jodoin that are deposited in\nEscrow) for satisfaction of its claims against stockholders of Target pursuant\nto Section 9.2(a), and then to each of Marc Gilman and David Jodoin in\nproportion to their ownership of the Buyer Common Stock received in the Merger\nrelative to one another. Anything in this Agreement to the \n\n\n                                       37\n\n   42\ncontrary notwithstanding, the stockholders of Target shall not be liable for\nindemnification under this Section 9.2 until the aggregate of all amounts for\nwhich indemnity due and payable is more than Fifty Thousand Dollars ($50,000).\n\n                (c)     The obligation of the stockholders of Target to\nindemnify members of the Buyer Group for a Buyer Loss under this Article IX is\nsubject to the condition that the Stockholder Representative (as defined in\nSection 9.10) shall have received an Indemnification Claim (as defined in\nSection 9.3(b)) for such Buyer Loss on or before (i) the first anniversary of\nthe Closing Date, with respect to Buyer Losses arising under Section 9.2(a)(i),\nand (ii) the Termination Date, with respect to Buyer Losses arising under\nSection 9.2(a)(ii).\n\n        Section 9.3 Procedures for Indemnification.\n\n                (a)     As used in this Article IX, the term \"Indemnitor\" means\nthe party or parties against whom indemnification hereunder is sought, and the\nterm \"Indemnitee\" means the member or members of the Buyer Group seeking\nindemnification hereunder.\n\n                (b)     A claim for indemnification hereunder (an\n\"Indemnification Claim\") shall be made by the Indemnitee by delivery of a\nwritten notice to the Stockholder Representative and, during the Escrow Period\n(as defined in Section 9.7(c) below), the Escrow Agent requesting\nindemnification and specifying the basis on which indemnification is sought in\nreasonable detail (and shall include relevant documentation related to the\nIndemnification Claim), the amount of the asserted Buyer Losses and, in the case\nof a Third Party Claim (as defined in Section 9.4), containing (by attachment or\notherwise) such other information as Indemnitee shall have concerning such Third\nParty Claim.\n\n                (c)     If the Indemnification Claim involves a Third Party\nClaim, the procedures set forth in Section 9.4 hereof shall be observed by\nIndemnitee and Indemnitor. If the Indemnification Claim involves a Tax Claim,\nthe procedures set forth in Section 9.6 hereof shall be observed by the\nIndemnitee and Indemnitor.\n\n        Section 9.4 Defense of Third Party Claims. Should any claim be made, or\nsuit or proceeding be instituted against an Indemnitee which, if prosecuted\nsuccessfully, would be a matter for which such Indemnitee is entitled to\nindemnification under this Article IX (a \"Third Party Claim\"), the obligations\nand liabilities of the parties hereunder with respect to such Third Party Claim\n(other than Third Party Claims with respect to Taxes) shall be subject to the\nfollowing terms and conditions:\n\n                (a)     Indemnitee shall give the Stockholder Representative\nand, during the Escrow Period, the Escrow Agent written notice of any such claim\npromptly after receipt by Indemnitee of notice thereof, and Indemnitor may\nundertake control of the defense thereof by counsel of its own choosing\nreasonably acceptable to Indemnitee. Indemnitee may participate in the defense\nthrough its own counsel at its own expense. The assumption of the defense of any\nThird Party Claim by Indemnitor shall be an acknowledgment by Indemnitor that\nsuch Third Party Claim is subject to indemnification under the provisions of\nthis Article IX and that \n\n\n                                       38\n\n   43\nsuch provisions are binding on Indemnitor. If, however, Indemnitor fails or\nrefuses to undertake the defense of such Third Party Claim within ten (10) days\nafter written notice of such claim has been delivered to the Stockholder\nRepresentative by Indemnitee, Indemnitee shall have the right to undertake the\ndefense, compromise and, subject to Section 9.5, settlement of such Third Party\nClaim with counsel of its own choosing. Failure of Indemnitee to furnish written\nnotice to the Stockholder Representative or, during the Escrow Period, the\nEscrow Agent of a Third Party Claim shall not release Indemnitor from\nIndemnitor's obligations hereunder, except to the extent Indemnitor is\nprejudiced by such failure.\n\n                (b)     Indemnitee and Indemnitor shall cooperate with each\nother in all reasonable respects in connection with the defense of any Third\nParty Claim, including making available records relating to such claim and\nfurnishing employees of Indemnitee as may be reasonably necessary for the\npreparation of the defense of any such Third Party Claim or for testimony as\nwitness in any proceeding relating to such claim.\n\n        Section 9.5 Settlement of Third Party Claims. No settlement by\nIndemnitee of a Third Party Claim shall be made without the prior written\nconsent by or on behalf of Indemnitor, which consent shall not be unreasonably\nwithheld or delayed. If Indemnitor has assumed the defense of a Third Party\nClaim as contemplated by Section 9.4(a), no settlement of such Third Party Claim\nmay be made by Indemnitor without the prior written consent by or on behalf of\nIndemnitee, unless such settlement includes a complete release of all claims\nagainst Indemnitee.\n\n        Section 9.6 Tax Claims.\n\n                (a)     Should Buyer or Target receive any notice of a proposed\nassessment or claim in an audit or administrative or judicial proceeding\n(including the issuance of a \"30-Day Letter,\" a \"90-Day Letter\" and a notice of\naudit) involving Indemnitor which, if determined adversely to the taxpayer,\nwould be grounds for indemnification under Section 9.2 with respect to Taxes (a\n\"Tax Claim\"), Buyer or Target shall notify Indemnitor promptly in writing;\nprovided, however, that a failure to give such notice will not affect Buyer or\nTarget's right to indemnification hereunder that unless Indemnitor establishes\n(and then only to the extent) that such failure diminished the ability of\nIndemnitor to avoid the Tax liability in question. In addition, Buyer or Target\nshall request the longest available extension of the time to contest, if there\nare fewer than 30 days to contest.\n\n               (b) In the case of an audit or administrative or judicial\nproceeding that relates to periods ending on or before the Closing Date,\nIndemnitor may, at its election and expense, control the conduct of such audit\nor proceeding, and Buyer or Target, as appropriate, shall provide Indemnitor\nreasonably requested documentation to facilitate Indemnitor in controlling and\nconducting such audit or proceeding; provided, that Indemnitor shall not settle\nany such audit or proceeding without the advance written consent of Buyer, which\nconsent shall not be unreasonably withheld. Buyer or Target also may participate\nin any such audit or proceeding and, if Indemnitor does not assume the defense\nof any such audit or proceeding, Buyer or Target may defend the same in such\nmanner as it may deem appropriate, including, \n\n\n                                       39\n\n   44\nbut not limited to, settling such audit or proceeding after giving five days'\nprior written notice to Indemnitor setting forth the terms and conditions of\nsettlement.\n\n                (c)     Neither Buyer or Target nor Indemnitor shall enter into\nany compromise or agree to settle any claim pursuant to any Tax audit or\nproceeding which would adversely affect the other party for such period without\nthe written consent of the other party, which consent may not be unreasonably\nwithheld. Buyer or Target and Indemnitor shall cooperate in the defense against\nor compromise of any claim in any audit or proceeding.\n\n        Section 9.7 Deposit of Escrow Shares; Release from Escrow.\n\n                (a)     At the Closing, Buyer will deliver the Escrow Shares\nrelating to the Target Common Stock converted at the Closing to the Escrow Agent\nin the form of a duly authorized stock certificate or certificates issued in the\nname of the Escrow Agent or its nominee or in the name of the individual\nstockholders (with an unexecuted stock power with the date and number of shares\nleft blank). In the event Buyer issues any additional shares of stock with\nrespect to the Escrow Shares upon a stock split, stock dividend or\nrecapitalization or additional Escrow Shares upon the exercise of Target Options\n(\"Additional Escrow Shares\"), such shares will be issued in the name of the\nEscrow Agent and delivered to the Escrow Agent in the same manner as the Escrow\nShares delivered at the Closing.\n\n                (b)     Except for Additional Escrow Shares, which shall be\ntreated pursuant to Section 9.7(a) hereof, any cash dividends, or other\ndistributions of any kind made in respect of the Escrow Shares will be delivered\nto the stockholders of Target on a pro rata basis. Each stockholder of Target\nwill have voting rights with respect to the Escrow Shares deposited in the\nEscrow with respect to such stockholder so long as such Escrow Shares are held\nin escrow, and Buyer will take all reasonable steps necessary to allow the\nexercise of such rights. While the Escrow Shares remain in the Escrow Agent's\npossession pursuant to this Agreement, the stockholders of Target will retain\nand will be able to exercise all other incidents of ownership of said Escrow\nShares which are not inconsistent with the terms and conditions of this\nAgreement.\n\n                (c)     The Escrow shall be in existence immediately following\nthe Effective Time and shall terminate at 5:00 p.m., California time, on the\nfirst anniversary of the Closing Date (the \"Escrow Period\"); provided, however,\nthat the Escrow Period shall not terminate with respect to such amount that is\nnecessary in the reasonable judgment of Buyer, subject to the objection of the\nStockholder Representative and the subsequent arbitration of the matter in the\nmanner provided in Section 9.8(2) hereof, to satisfy any unsatisfied claims\nconcerning facts and circumstances existing prior to the expiration of such\nEscrow Period, each as specified in an Indemnification Claim delivered to the\nStockholder Representative and the Escrow Agent prior to the expiration of such\nEscrow Period. As soon as all such claims have been resolved, the Escrow Agent\nshall deliver to the stockholders of Target the remaining portion of the Escrow\nShares not required to satisfy such claims.\n\n\n                                       40\n\n   45\n                (d)     On the expiration of the Escrow Period, the Escrow Agent\nwill deliver to each stockholder of Target the requisite number of Escrow Shares\nto be released on such date as identified by Buyer and the Stockholder\nRepresentative to the Escrow Agent in writing, in the form of stock\ncertificate(s) issued in the name of such stockholder. Escrow Shares shall be\nreleased to the respective stockholders of Target in proportion to their\nrespective ownership interest in Target immediately prior to the Effective Time.\nBuyer will take such action as may be necessary to cause such certificates to be\nissued in the names of the appropriate persons. Certificates representing Escrow\nShares so issued that are subject to resale restrictions under applicable\nsecurities laws will bear a legend to that effect. No fractional shares shall be\nreleased and delivered from Escrow to the stockholders of Target. In lieu of any\nfraction of an Escrow Share to which a Target stockholder would otherwise be\nentitled, the number of shares of Buyer Common Stock released and delivered to\neach Target stockholder pursuant to Section 9.7(c) shall be rounded up to the\nnearest whole share.\n\n                (e)     No Escrow Shares or any beneficial interest therein may\nbe pledged, sold, assigned or transferred, including by operation of law, by any\nstockholder of Target or be taken or reached by any legal or equitable process\nin satisfaction of any debt or other liability of any such stockholder, prior to\nthe delivery to such stockholder of the Escrow Shares by the Escrow Agent.\n\n                (f)     The Escrow Agent is hereby granted the power to effect\nany transfer of Escrow Shares contemplated by this Agreement. Buyer will\ncooperate with the Escrow Agent in promptly issuing stock certificates to effect\nsuch transfers.\n\n        Section 9.8 Resolution of Indemnification Claim; Transfer of Escrow\nShares. Any Indemnification Claim received by the Stockholder Representative\nand, during the Escrow Period, the Escrow Agent pursuant to Section 9.3 above\nand any dispute relating to the release of Escrow Shares pursuant to Section 9.7\nabove will be resolved as follows:\n\n                (a)     During the Escrow Period, in the event that the\nStockholder Representative does not contest an Indemnification Claim in writing\nto the Escrow Agent and Indemnitee within thirty (30) days after receipt of an\nIndemnification Claim by the Escrow Agent, the Escrow Agent will immediately\ndeliver to Buyer for cancellation that number of Escrow Shares having a value\nequal to the amount specified in the Indemnification Claim, as determined\npursuant to Section 9.8(c), and notify the Stockholder Representative of such\ntransfer.\n\n                (b)     In the event that the Stockholder Representative gives\nwritten notice contesting all, or a portion of, an Indemnification Claim to\nIndemnitee and, during the Escrow Period, the Escrow Agent (a \"Contested Claim\")\nwithin the 30-day period provided above in Section 9.8(a), the matter will be\nsettled by binding arbitration pursuant to Section 9.8(d), unless otherwise\nagreed by the Stockholder Representative and the Indemnitee. During the Escrow\nPeriod, any portion of the Indemnification Claim which is not contested shall be\nresolved as set forth above in Section 9.8(a). The final decision of the\narbitrator shall be furnished to the Escrow Agent (during the Escrow Period),\nthe Stockholder Representative and \n\n\n                                       41\n\n   46\nIndemnitee in writing and will constitute a conclusive determination of the\nissue in question, binding upon the stockholders of Target and Indemnitee and\nshall not be contested or appealed by any of them. After notice that the\nIndemnification Claim is contested by the Stockholder Representative, the Escrow\nAgent will continue to hold Escrow Shares having a value sufficient to cover\nsuch Claim, as determined pursuant to Section 9.8(c) (notwithstanding the\nexpiration of the Escrow Period), until the earlier of (i) execution of a\nsettlement agreement by Indemnitee and the Stockholder Representative setting\nforth a resolution of the Indemnification Claim, or (ii) receipt of a copy of\nthe final award of the arbitrator.\n\n                (c)     The number of escrow shares to be delivered or held in\nEscrow pursuant to an Indemnification Claim shall be determined by dividing (i)\nthe aggregate dollar amount of the Indemnification Claim as determined pursuant\nto this Section 9.7 by (ii) the average closing sale price of Buyer Common Stock\nas quoted on the NNM for the five (5) trading days prior to the date of this\nAgreement.\n\n                (d)     Any Contested Claim shall be settled by arbitration at a\nmutually agreeable location in Denver, Colorado and, except as herein\nspecifically stated, in accordance with the commercial arbitration rules of the\nAmerican Arbitration Association (\"AAA Rules\") then in effect. However, in all\nevents, these arbitration provisions shall govern over any conflicting rules\nwhich may now or hereafter be contained in the AAA Rules. Any judgment upon the\naward rendered by the arbitrator may be entered in any court having jurisdiction\nover the subject matter thereof. The arbitrator shall have the authority to\ngrant any equitable and legal remedies that would be available in any judicial\nproceeding instituted to resolve a Contested Claim.\n\n                (e)     The Escrow Agent will incur no liability with respect to\nany action taken or suffered by it in reliance upon any notice, direction,\ninstruction, consent, statement or other document believed by it to be genuine\nand to have been signed by the proper person (and shall have no responsibility\nto determine the authenticity thereof), nor for any other action or inaction,\nexcept its own willful misconduct, bad faith or gross negligence. In all\nquestions arising under this Agreement, the Escrow Agent may rely on the advice\nof counsel, and for anything done, omitted or suffered in good faith by the\nEscrow Agent based on such advice, the Escrow Agent will not be liable to\nanyone. The Escrow Agent will not be required to take any action involving any\nexpense unless the payment of such expense is made or provided for in a manner\nsatisfactory to it. In the event conflicting demands are made or notices are\nserved upon the Escrow Agent with respect to the Escrow Shares, the Escrow Agent\nwill have the absolute right, at the Escrow Agent's election, to resign so a\nsuccessor can be appointed or to file a suit in interpleader and obtain an order\nfrom a court of competent jurisdiction requiring the parties to interplead and\nlitigate in such court their several claims and rights among themselves. In the\nevent such interpleader suit is brought, the Escrow Agent will thereby be fully\nreleased and discharged from all further obligations imposed upon it under the\nthis Agreement, and Buyer will pay the Escrow Agent all costs, expenses and\nreasonable attorney's fees expended or incurred by the Escrow Agent pursuant to\nthe exercise of the Escrow Agent's rights under this Section 9.8(e).\n\n\n                                       42\n\n   47\n        Section 9.9 Escrow Expenses.\n\n                (a)     All fees and expenses of the Escrow Agent incurred in\nthe ordinary course of performing its responsibilities hereunder will be paid by\nBuyer upon receipt of a written invoice by the Escrow Agent. Any extraordinary\nfees and expenses, including without limitation any fees or expenses incurred by\nthe Escrow Agent in connection with a dispute over the distribution of Escrow\nShares or the validity of an Indemnification Claim by Buyer (other than legal\nfees payable to the Escrow Agent), will be paid by the non-prevailing party in\nany such dispute. The Target stockholders' liability for the extraordinary fees\nand expenses of the Escrow Agent will be paid by Buyer and recovered only as an\nIndemnification Claim hereunder out of the Escrow subject to the procedures\nregarding Indemnification Claims set forth in this Agreement. If Buyer has paid\nthe Target stockholders' portion of such fees and expenses as permitted under\nthis Article 9.9 then the Escrow Agent will, upon demand by Buyer, transfer to\nBuyer a number of Escrow Shares having an aggregate per share value equal to\nsuch portion of fees and expenses, as determined pursuant to Section 9.8.\n\n                (b)     In the event the balance in the Escrow is not sufficient\nto pay the extraordinary fees and expenses of the Escrow Agent, as described in\nthe prior paragraph, or in the event the Escrow Agent incur any liability to any\nperson, firm or corporation by reason of its acceptance or administration of the\nEscrow, Buyer agrees to indemnify the Escrow Agent against any such liability or\nfor its extraordinary fees and expenses or costs and expenses, including,\nwithout limitation, counsel fees and expenses, as the case may be.\nNotwithstanding the foregoing, no indemnity need be paid in the event of the\nEscrow Agent's gross negligence, bad faith or willful misconduct.\n\n        Section 9.10 Stockholder Representative. For purposes of this Agreement,\nthe stockholders of Target, without any further action on the part of any such\nstockholder, shall be deemed to have consented to the appointment of Mr. David\nJodoin as the representative of such stockholders (the \"Stockholder\nRepresentative\"), as the attorney-in-fact for and on behalf of each such\nStockholder, and the taking by the Stockholder Representative of any and all\nactions and the making of any decisions required or permitted to be taken by him\nunder this Agreement, including, without limitation, the exercise of the power\nto (i) authorize delivery to Buyer of the Escrow Shares, or any portion thereof,\nin satisfaction of Indemnification Claims, (ii) agree to, negotiate, enter into\nsettlements and compromises of, and demand arbitration and comply with orders of\ncourts and awards of arbitrators with respect to such Indemnification Claims,\n(iii) resolve any Indemnification Claims and (iv) take all actions necessary in\nthe judgment of the Stockholder Representative for the accomplishment of the\nforegoing and all of the other terms, conditions and limitations of this\nAgreement. Accordingly, the Stockholder Representative has unlimited authority\nand power to act on behalf of each stockholder of Target with respect to this\nAgreement and the disposition, settlement or other handling of all\nIndemnification Claims, rights or obligations arising from and taken pursuant to\nthis Agreement. The stockholders of Target will be bound by all actions taken by\nthe Stockholder Representative in connection with this Agreement and Buyer shall\nbe entitled to rely on any action or decision of the Stockholder Representative.\nThe Stockholder Representative will incur no liability with respect to any\naction taken or suffered by it in reliance upon any notice, \n\n\n                                       43\n\n   48\ndirection, instruction, consent, statement or other document believed by it to\nbe genuine and to have been signed by the proper person (and shall have no\nresponsibility to determine the authenticity thereof), nor for any other action\nor inaction, except its own willful misconduct, bad faith or gross negligence.\nIn all questions arising under this Agreement, the Stockholder Representative\nmay rely on the advice of counsel, and for anything done, omitted or suffered in\ngood faith by the Stockholder Representative based on such advice, the\nStockholder Representative will not be liable to anyone. The Stockholder\nRepresentative will not be required to take any action involving any expense\nunless the payment of such expense is made or provided for in a manner\nsatisfactory to it. At any time during the term of this Agreement, holders of a\nmajority of the Escrow Shares can appoint a new Stockholder Representative by\nwritten consent by sending notice and a copy of the written consent appointing\nsuch new Stockholder Representative signed by holders of a majority of the\nEscrow Shares to Buyer and, during the Escrow Period, the Escrow Agent. Such\nappointment will be effective upon the later of the date indicated in the\nconsent or the date such consent is received by Buyer and, during the Escrow\nPeriod, the Escrow Agent.\n\n        Section 9.11 Sole Remedy. This Article IX shall constitute the sole\nremedy of any member of the Buyer Group against Target or any of its\nstockholders or option holders arising under this Agreement.\n\n                                    ARTICLE X\n\n                               GENERAL PROVISIONS\n\n        Section 10.1 Notices. All notices and other communications hereunder\nshall be in writing and shall be deemed given if delivered personally or by\ncommercial overnight delivery service, or mailed by registered or certified mail\n(return receipt requested) or sent via facsimile (with confirmation of receipt)\nto the parties at the following addresses (or at such other address for a party\nas shall be specified by like notice):\n\n        (a)     if to Buyer, to:\n\n                The Vantive Corporation\n                2455 Augustine Drive\n                Santa Clara, CA  95054\n                Attention:  President and Chief Executive Officer\n                Fax:  (408) 982-5711\n\n                with a copy to:\n\n                Gray Cary Ware &amp; Freidenrich, A Professional Corporation\n                400 Hamilton Ave.\n                Palo Alto, CA 94301\n                Attention:  Gregory M. Gallo, Esq.\n                Fax:  (415) 327-3699\n\n\n                                       44\n\n   49\n        (b)     if to Target, to\n\n                Innovative Computer Concepts, Inc.\n                Three Perimeter Road\n                Manchester, NH  03103\n                Attention:  President and Chief Executive Officer\n                Fax:  (603) 623-6102\n\n                with a copy to:\n\n                Hale and Dorr LLP\n                60 State Street\n                Boston, MA  02109\n                Attention: Jeffrey A. Stein, Esq.\n                Fax:  (617) 526-5000\n\n        (c)     If to Stockholder Representative, to:\n\n                Mr. David Jodoin\n                Innovative Computer Concepts\n                Three Perimeter Road\n                Manchester, NH  03103\n                Fax:  (603) 623-6102\n\n                with a copy to:\n\n                Hale and Dorr LLP\n                60 State Street\n                Boston, MA  02109\n                Attention: Jeffrey A. Stein, Esq.\n                Fax:  (617) 526-5000\n\n\n                                       45\n\n   50\n        (d)     If to Escrow Agent, to:\n\n                Gray Cary Ware &amp; Freidenrich, A Professional Corporation\n                400 Hamilton Ave.\n                Palo Alto, CA 94301\n                Attention:  Gregory M. Gallo, Esq.\n                Fax:  (415) 327-3699\n\n        (e)     If to the Stockholders (as defined in Annex 6.11 hereof) to:\n\n                The address of such Holder as set forth in the stock transfer\n                books and other applicable records of Buyer.\n\n        Section 10.2 Interpretation. When a reference is made in this Agreement\nto a section, such reference shall be to a Section of this Agreement unless\notherwise indicated. The words \"include,\" \"includes\" and \"including\" when used\nherein shall be deemed in each case to be followed by the words \"without\nlimitation.\" The phrases \"the date of this Agreement,\" \"the date hereof,\" and\nterms of similar import, unless the context otherwise requires, shall be deemed\nto refer to the first date written above. The table of contents and headings\ncontained in this Agreement are for reference purposes only and shall not affect\nin any way the meaning or interpretation of this Agreement. In determining\nwhether a Material Adverse Effect exists with respect to a party, materiality\nshall be determined on the basis of the applicable party and all of its\nsubsidiaries, taken together as a whole, and not on the basis of the party or\nany single Subsidiary alone. Reference to a party's \"knowledge\" mean actual\nknowledge after reasonable inquiry of such party's directors, officers, and\nother management-level employees who could reasonably be expected to have\nknowledge of such matters. As used in this Agreement, the term \"Governmental\nEntity\" means any (i) nation, state, commonwealth, province, territory, county,\nmunicipality, district or other jurisdiction of any nature; (ii) federal, state,\nlocal, municipal, foreign or other government; or (iii) governmental or\nquasi-governmental authority of any nature (including any governmental division,\ndepartment, agency, commission, official, organization, and any court or other\ntribunal), and the term \"Subsidiary\" means, with respect to any party, any\ncorporation, at least a majority of the securities or other interests having by\ntheir terms ordinary voting power to elect a majority of the board of directors\nor others performing similar functions with respect to such corporation or other\norganization is directly or indirectly owned or controlled by such party or by\nany one or more of its Subsidiaries, or by such party and one or more of its\nSubsidiaries.\n\n        Section 10.3 Counterparts. This Agreement may be executed in one or more\ncounterparts, all of which shall be considered one and the same agreement and\nshall become effective when one or more counterparts have been signed by each of\nthe parties and delivered to the other parties, it being understood that all\nparties need not sign the same counterpart.\n\n        Section 10.4 Severability. In the event that any provision of this\nAgreement, or the application thereof, becomes or is declared by a court of\ncompetent jurisdiction to be illegal, \n\n\n                                       46\n\n   51\nvoid or unenforceable, the remainder of this Agreement will continue in full\nforce and effect and the application of such provision to other persons or\ncircumstances will be interpreted so as reasonably to effect the intent of the\nparties hereto. The parties further agree to replace such void or unenforceable\nprovision of this Agreement with a valid and enforceable provision that will\nachieve, to the extent possible, the economic, business and other purposes of\nsuch void or unenforceable provision.\n\n        Section 10.5 Nonsurvival of Representations, Warranties and Agreements.\nExcept as explicitly set forth in this Agreement, none of the representations,\nwarranties and agreements in this Agreement or in any closing certificate\ndelivered pursuant to this Agreement shall survive the Closing and the Effective\nTime.\n\n        Section 10.6 Entire Agreement. This Agreement (including the documents\nand the instruments referred to herein) and that certain Non-Disclosure\nAgreement dated July 18, 1997 between Target and Buyer constitutes the entire\nagreement and supersedes all prior agreements and understandings, both written\nand oral, among the parties with respect to the subject matter hereof.\n\n        Section 10.7 Governing Law. This Agreement shall be governed and\nconstrued in accordance with the laws of the State of Delaware without regard to\nany applicable conflicts of law.\n\n        Section 10.8 Assignment. Neither this Agreement nor any of the rights,\ninterests or obligations hereunder shall be assigned by any of the parties\nhereto (whether by operation of law or otherwise) without the prior written\nconsent of the other parties. Subject to the preceding sentence, this Agreement\nwill be binding upon, inure to the benefit of and be enforceable by the parties\nand their respective successors and assigns.\n\n        Section 10.9 Third Party Beneficiary. Nothing contained in this\nAgreement is intended to confer upon any person other than the parties hereto\nand their respective successors and permitted assigns, any rights, remedies or\nobligations under, or by reason of this Agreement, except that the persons who\nare stockholders of Target immediately prior to the Effective Time of the Merger\n(and their successors and assigns) are express intended third party\nbeneficiaries of Articles I and II, Section 6.11, Article IX, and, to the extent\nrelevant to any of the foregoing, Article X and as such are entitled to rely on\nthe provisions hereof as if a party hereto.\n\n\n                  [Remainder of Page Intentionally Left Blank]\n\n\n                                       47\n\n   52\n        IN WITNESS WHEREOF, each of Buyer, Sub, Target and the Escrow Agent has\ncaused this Agreement to be signed by its respective officer thereunto duly\nauthorized, and each of the Stockholder Representative, Marc Gilman and David\nJodoin has signed this Agreement, as of the date first written above.\n\nTHE VANTIVE CORPORATION                INNOVATIVE COMPUTER CONCEPTS, INC.  \n                                                                           \n                                                                           \n                                                                           \nBy:________________________________    By:__________________________________\n                                                                           \nTitle:_____________________________    Title:_______________________________\n                                       \n\n\n\nIGLOO ACQUISITION CORPORATION          STOCKHOLDER REPRESENTATIVE\n\n\n\n\nBy:________________________________    By:__________________________________\n                                                                           \nTitle:_____________________________    David Jodoin,\n                                       as Stockholder Representative\n\n\n\nGRAY CARY WARE &amp; FREIDENRICH,\nA Professional Corporation, as         \nEscrow Agent                           _____________________________________\n                                       Marc Gilman\n\n\nBy:________________________________    By:__________________________________\n                                                                           \nTitle:_____________________________    _____________________________________\n                                       David Jodoin\n\n\n\n   53\n                 Amendment No. 1 to Agreement and Plan of Merger\n\n\n        The Agreement and Plan of Merger by and among The Vantive Corporation,\nIgloo Acquisition Corporation and Innovative Computer Concepts, Inc. dated as of\nAugust 13, 1997 (the \"Agreement\") is hereby amended, as of this ______ day of\nAugust, 1997, as follows:\n\n1.      The Second and Third Whereas clauses are hereby deleted, and the\nfollowing shall be substituted in lieu thereof:\n\n         \"WHEREAS, the combination of Buyer and Target shall be effected by the\nterms of this Agreement through a transaction in which Target will merge with\nand into Buyer and the Target stockholders will become stockholders of Buyer;\nand\n\n        WHEREAS, for federal income tax purposes, the parties to this Agreement\nintend, by approving resolutions authorizing this Agreement, to adopt this\nAgreement as a plan of reorganization within the meaning of Section 368(a) of\nthe Internal Revenue Code of 1986, as amended, and the regulations thereunder\n(the \"Code\"), and that the merger of Target with and into Buyer shall qualify as\na reorganization within the meaning of Section 368(a) of the Code.\"\n\n2.      Section 1.1 is hereby deleted and the following shall be substituted in\nlieu thereof:\n\n        \"Section 1.1 The Merger. Subject to the provisions of this Agreement and\nin accordance with the Delaware General Corporation Law, Target shall be merged\nwith and into Buyer (the \"Merger\"). As a result of the Merger, the outstanding\nshares of capital stock of Target shall be converted or canceled in the manner\nprovided in Article II of this Agreement; the separate corporate existence of\nTarget shall cease; and Buyer shall be the surviving corporation in the Merger\n(the \"Surviving Corporation\").\n\n3.      Section 1.3(a) is hereby deleted and the following shall be substituted\nin lieu thereof:\n\n        \"(a) At the Effective Time: (i) the separate existence of Target shall\ncease and Target shall be merged with and into Buyer (Buyer and Target are\nsometimes referred to herein as the \"Constituent Corporations\"); (ii) the\nCertificate of Incorporation of Buyer as in effect immediately prior to the\nEffective Time shall be the Certificate of Incorporation of the Surviving\nCorporation; and (iii) the Bylaws of Buyer as in effect immediately prior to the\nEffective Time shall be the Bylaws of the Surviving Corporation.\"\n\n4.      Section 1.4 is hereby deleted and the following shall be substituted in\nlieu thereof:\n\n        \"Section 1.4 Directors and Officers. The directors and officers of Buyer\nimmediately prior to the Effective Time shall remain as the directors and\nofficers of the Surviving Corporation, and shall hold office in accordance with\nthe Certificate of Incorporation and Bylaws of the Surviving Corporation, in\neach case until their respective successors are duly elected or appointed.\"\n\n\n                                      -1-\n\n   54\n5.      Section 2.1(a) is hereby deleted, and the following shall be substituted\nin lieu thereof: \"[intentionally omitted.]\"\n\n6.      A new Section 6.17 shall be added to the Agreement, which shall read as\nfollows:\n\n        \"Section 6.17 Personal Guarantees. Buyer agrees to use reasonable\nefforts to cause David Jodoin and Marc Gilman to be removed as the personal\nguarantors of any obligations of the Surviving Corporation as promptly as\npracticable following the Effective Time.\"\n\n7.      In all other aspects, the Agreement shall remain in full force and\neffect.\n\n\n\n        [Remainder of Page Intentionally Left Blank]\n\n\n                                      -2-\n\n   55\n        IN WITNESS WHEREOF, each of Buyer, Sub, Target and the Escrow Agent has\ncaused this Amendment No. 1 to be signed by its respective officer thereunto\nduly authorized, and each of the Stockholder Representative, Marc Gilman and\nDavid Jodoin has signed this Amendment No. 1, as of the date first written\nabove.\n\n                                     INNOVATIVE COMPUTER CONCEPTS, INC.\n\n                                     By:  ____________________________________\n\n                                     Title:  _________________________________\n\n\n\n                                     THE VANTIVE CORPORATION\n\n                                     By:  ____________________________________\n\n                                     Title:  _________________________________\n\n\n\n                                     IGLOO ACQUISITION CORPORATION\n\n                                     By:  ____________________________________\n\n                                     Title:  _________________________________\n\n\n\n                                     GRAY CARE WARE &amp; FREIDENRICH,\n                                     A Professional Corporation, as Escrow Agent\n\n                                     By:  ____________________________________\n\n                                     Title:  _________________________________\n\n\n                                     STOCKHOLDERS REPRESENTATIVE\n\n\n                                     -------------------------------------------\n                                     David Jodoin, as Stockholder Representative\n\n\n                                     -------------------------------------------\n                                     David Jodoin\n\n\n                                     -------------------------------------------\n                                     Marc Gilman\n\n\n<\/caption><\/pre>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[9222],"corporate_contracts_industries":[9513],"corporate_contracts_types":[9622,9626],"class_list":["post-43142","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-vantive-corp","corporate_contracts_industries-technology__software","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\/43142","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=43142"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=43142"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=43142"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=43142"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}