\nARTICLE VI CONDITIONS PRECEDENT………………………………………………………….. 38
\n 6.1 Conditions to Each Party’s Obligations…………………………………………….. 38
\n 6.2 Conditions to Obligations of Parent and Acquisition Sub……………………………… 38
\n 6.3 Conditions to Obligations of the Company…………………………………………… 40
\nARTICLE VII ADDITIONAL AGREEMENTS………………………………………………………… 41
\n 7.1 Certain Information Required by the Code…………………………………………… 41
\n 7.2 Restriction on Transfer………………………………………………………….. 41
\n 7.3 Confidentiality…………………………………………………………………. 42
\n 7.4 Registration Rights……………………………………………………………… 43
\n 7.5 Collection by Parent…………………………………………………………….. 43
\n 7.6 Directors and Officers Insurance………………………………………………….. 43
\n 7.7 Fee to Janney Montogomery Scott LLC……………………………………………….. 44
\n 7.8 Manufacturer Consents……………………………………………………………. 44
\nARTICLE VIII INDEMNIFICATION…………………………………………………………….. 44
\n 8.1 Definitions…………………………………………………………………….. 44
\n 8.2 Indemnification Generally………………………………………………………… 45
\n 8.3 Assertion of Claims……………………………………………………………… 46
\n 8.4 Notice and Defense of Third Party Claims…………………………………………… 46
\n 8.5 Survival of Representations and Warranties…………………………………………. 47
\n 8.6 Stockholders’ Committee………………………………………………………….. 47
\nARTICLE IX TERMINATION; AMENDMENT, MODIFICATION AND WAIVER………………………………….. 48
\n 9.1 Termination…………………………………………………………………….. 48
\n 9.2 Effect of Termination……………………………………………………………. 48
\n 9.3 Specific Performance…………………………………………………………….. 49
\nARTICLE X MISCELLANEOUS…………………………………………………………………. 49
\n 10.1 Expenses……………………………………………………………………….. 49
\n 10.2 Entire Agreement………………………………………………………………… 49
\n 10.3 Descriptive Headings…………………………………………………………….. 49
\n 10.4 Notices………………………………………………………………………… 50
\n 10.5 Counterparts……………………………………………………………………. 51
\n 10.6 Governing Law…………………………………………………………………… 51
\n 10.7 Benefits of Agreement……………………………………………………………. 51
\n 10.8 Pronouns……………………………………………………………………….. 51
\n 10.9 Amendment, Modification and Waiver………………………………………………… 51
\n 10.10 No Third Party Beneficiaries……………………………………………………… 51
\n 10.11 Consents……………………………………………………………………….. 52
\n 10.12 Interpretation………………………………………………………………….. 52
\n 10.13 No Joint Venture………………………………………………………………… 52<\/p>\n<\/s><\/c><\/table>\n
ii<\/p>\n
AGREEMENT AND PLAN OF REORGANIZATION dated as of September 6, 2000, among
\nCYBERIAN OUTPOST, INC., a Delaware corporation (“Parent”), SYDNEY ACQUISITION
\nSUB, INC., a Delaware corporation and wholly-owned subsidiary of Parent
\n(“Acquisition Sub”), CMPEXPRESS.COM, INC., a Pennsylvania corporation (the
\n“Company”) and the stockholders of the Company identified on Schedule I attached
\nhereto (collectively, the “Stockholders”).<\/p>\n
WHEREAS, the Boards of Directors of each of the Parent, Acquisition Sub and
\nthe Company have determined that it is in the best interests of their respective
\nstockholders for Parent to acquire the Company upon the terms and subject to the
\nconditions set forth herein.<\/p>\n
WHEREAS, in furtherance of such acquisition, the Boards of Directors of
\neach of the Parent, Acquisition Sub and the Company have duly approved and
\nadopted this Agreement and Plan of Reorganization (this “Agreement”) and the
\nproposed merger of Acquisition Sub with and into the Company in accordance with
\nthis Agreement, the Delaware General Corporation Law (the “Delaware Statute”)
\nand the Pennsylvania Business Corporation Law (the “Pennsylvania Statute”),
\nwhereby, among other things, the issued and outstanding shares of (i) Common
\nStock, no par value, of the Company (the “Common Stock”) and (ii) Series A
\nConvertible Preferred Stock, $1.00 par value per share, of the Company (the
\n“Series A Stock” or the “Preferred Stock” and together with the Common Stock,
\nthe “Company Stock” (other than shares held by Dissenting Stockholders (as
\ndefined herein)) will be exchanged and converted into shares of common stock,
\n$.01 par value, of Parent (the “Parent Common Stock”) in the manner set forth in
\nArticle II hereof, upon the terms and subject to the conditions set forth in
\nthis Agreement.<\/p>\n
WHEREAS, as a condition to the willingness of, and as an inducement to,
\nParent and Acquisition Sub to enter into this Agreement, contemporaneously with
\nthe execution and delivery of this Agreement, the Company, certain stockholders
\nof the Company and certain other parties are entering into the Related
\nAgreements.<\/p>\n
WHEREAS, for federal income tax purposes, it is intended that the Merger
\nshall qualify as a tax-free reorganization within the meaning of Section 368(a)
\nof the Internal Revenue Code of 1986, as amended (the “Code”).<\/p>\n
NOW, THEREFORE, in consideration of the mutual benefits to be derived from
\nthis Agreement and the representations, warranties, covenants, agreements,
\nconditions and promises contained herein and therein, the parties hereby agree
\nas follows:<\/p>\n
ARTICLE I<\/p>\n
GENERAL<\/p>\n
1.1 THE MERGER. In accordance with the provisions of this Agreement, the
\nDelaware Statute and the Pennsylvania Statute, Acquisition Sub shall be merged
\nwith and into the Company (the “Merger”), which at and after the Effective Time
\nshall be, and is sometimes herein referred to as, the “Surviving Corporation.”
\nAcquisition Sub and the Company are sometimes referred to as the “Constituent
\nCorporations.”<\/p>\n
1.2 THE EFFECTIVE TIME OF THE MERGER. This Agreement shall be executed by
\neach of the Constituent Corporations and delivered to and filed (or in the
\nalternative, a certificate or articles of merger may be filed in lieu thereof)
\nwith (i) the Secretary of State of the State of Delaware on the Closing Date (as
\ndefined below) in the manner provided under Section 252 of the Delaware Statute
\nand (ii) the Secretary of State of the Commonwealth of Pennsylvania in the
\nmanner provided under Section 1927 of the Pennsylvania Statute. The Merger shall
\nbecome effective (the “Effective Time”) upon the later of (i) the time of
\nconfirmation by the Secretary of State of the State of Delaware of the filing of
\nthis Agreement or a certificate of merger or (ii) the time of confirmation by
\nthe Pennsylvania Corporation Bureau of the filing of this Agreement or articles
\nof merger.<\/p>\n
1.3 EFFECT OF MERGER. At the Effective Time the separate existence of
\nAcquisition Sub shall cease and Acquisition Sub shall be merged with and into
\nthe Corporation, and the Surviving Corporation shall succeed, without other
\ntransfer, to all rights and property of each of the Constituent Corporations and
\nshall be subject to all the debts and liabilities of the Constituent
\nCorporations in the same manner as if the Surviving Corporation had itself
\nincurred them, and be subject to all the restrictions, disabilities and duties
\nof each of the Constituent Corporations as provided in (i) Section 252 of the
\nDelaware Statute and (ii) Section 1929 of the Pennsylvania Statute.<\/p>\n
1.4 CHARTER AND BY-LAWS OF SURVIVING CORPORATION. From and after the
\nEffective Time, (i) the Charter of the Surviving Corporation shall be amended
\nand restated in the form of the Charter of Acquisition Sub, unless and until
\naltered, amended or repealed as provided in the Pennsylvania Statute, (ii) the
\nby-laws of Acquisition Sub shall be the by-laws of the Surviving Corporation,
\nunless and until altered, amended or repealed as provided in the Pennsylvania
\nStatute, the Charter or such by-laws, (iii) the directors of Acquisition Sub
\nshall be the directors of the Surviving Corporation, unless and until removed,
\nor until their respective terms of office shall have expired, in accordance with
\nthe Pennsylvania Statute, the Charter and the by-laws of the Surviving
\nCorporation, as applicable and (iv) the officers of Acquisition Sub shall be the
\nofficers of the Surviving Corporation, unless and until removed, or until their
\nterms of office shall have expired, in accordance with the Pennsylvania Statute,
\nthe Charter and the by-laws of the Surviving Corporation, as applicable.<\/p>\n
1.5 TAKING OF NECESSARY ACTION. Prior to the Effective Time, the parties
\nhereto shall do or cause to be done all such acts and things as may be necessary
\nor appropriate in order to effectuate the Merger as expeditiously as reasonably
\npracticable, in accordance with this Agreement, the Delaware Statute and the
\nPennsylvania Statute.<\/p>\n
1.6 TAX-FREE REORGANIZATION. For Federal income tax purposes, the parties
\nintend that the Merger be treated as a tax-free reorganization within the
\nmeaning of Section 368(a) of the Code. Except for cash paid in lieu of
\nfractional shares, no consideration that could constitute “other property”
\nwithin the meaning of Section 356 of the Code is being transferred by Parent for
\nthe Company Stock in the Merger. The parties shall not take a position on any
\ntax return or take any action inconsistent with this Section 1.6 unless
\notherwise required by a taxing authority.<\/p>\n
1.7 CLOSING. Unless this Agreement shall have been terminated and the
\ntransactions contemplated by this Agreement abandoned pursuant to the provisions
\nof Article IX, and subject<\/p>\n
2<\/p>\n
to the provisions of Article V, the closing of the Merger (the “Closing”) will
\ntake place at 10:00 a.m. (Eastern time) on a date (the “Closing Date”) to be
\nmutually agreed upon by the parties, which date shall be not later than the
\nthird Business Day after all the conditions set forth in Article VI shall have
\nbeen satisfied (or waived in accordance with Section 10.9, to the extent the
\nsame may be waived), unless another date is agreed to in writing by the parties.
\nThe Closing shall take place at the offices of Mintz, Levin, Cohn, Ferris,
\nGlovsky and Popeo, P.C. 666 Third Avenue, New York, New York, unless another
\nplace is agreed to in writing by the parties. As used herein, the term “Business
\nDay” shall mean any day other than a Saturday, Sunday or day on which banks are
\npermitted to close in the City and State of New York.<\/p>\n
ARTICLE II<\/p>\n
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS;
\n EXCHANGE OF CERTIFICATES<\/p>\n
2.1 TOTAL CONSIDERATION; EFFECT ON CAPITAL STOCK. The entire consideration
\n(the “Aggregate Consideration”) payable by Parent with respect to all
\noutstanding shares of capital stock of the Company (the “Outstanding Shares”)
\nand for all options (whether vested or unvested), warrants, rights, calls,
\ncommitments or agreements of any character to which the Company is a party or by
\nwhich it is bound calling for the issuance of shares of capital stock of the
\nCompany or any securities convertible into or exercisable or exchangeable for,
\nor representing the right to purchase or otherwise receive, directly or
\nindirectly, any such capital stock, or other arrangement to acquire, at any time
\nor under any circumstance, capital stock of the Company or any such other
\nsecurities (the “Convertible Securities”) shall be an aggregate of the number of
\nshares of Parent Common Stock (subject to adjustment as hereinafter provided in
\nthis Section 2.1) (the “Total Parent Share Amount”) as is obtained by dividing
\n(A) the sum of $11,820,000 and $3,600 (representing the aggregate exercise
\namount of all Company Options with an exercise price greater than the fair
\nmarket value of a share of Company Common Stock) by (B) the average closing
\nprice of a share of Parent Common Stock on The Nasdaq Stock Market as reported
\nin the Wall Street Journal for the twenty (20) most recent trading days ending
\non the day immediately preceding the Closing Date (the “Stipulated Price”);
\nprovided, however, that if the average closing price of a share of Parent Common
\nStock shall be less than $3.00, the average closing price shall be deemed to be
\n$3.00 for purposes of the calculation of the Stipulated Price.<\/p>\n
For purposes of the calculation of the exchange ratios for Company Stock
\nunder Section 2.1(c) hereof, it is assumed that the number of Fully Diluted
\nCompany Shares is 14,931,178 shares of capital stock of the Company, which
\nnumber excludes all Company Options which have an exercise price greater than
\nthe fair market value of a share of Company Common Stock, and which number shall
\nbe confirmed or updated at the Closing and reflected in the certificate of the
\nChief Executive Officer or Chief Financial Officer of the Company that is being
\nprovided to Parent and Acquisition Sub pursuant to Section 6.2(a) (the “Fully
\nDiluted Company Share Amount”). At the Effective Time, subject and pursuant to
\nthe terms and conditions of this Agreement by virtue of the Merger and without
\nany action on the part of the Constituent Corporations or the holders of the
\ncapital stock of the Constituent Corporations:<\/p>\n
3<\/p>\n
(a) CAPITAL STOCK OF ACQUISITION SUB. Each issued and outstanding share
\nof common stock, $.01 par value per share, of Acquisition Sub shall be converted
\ninto one share of common stock, no par value per share, of the Surviving
\nCorporation.<\/p>\n
(b) CANCELLATION OF CERTAIN SHARES OF COMPANY STOCK. Each share of
\nCompany Stock that is (A) owned by the Company as treasury stock, (B) authorized
\nbut unissued, (C) owned by any subsidiary of the Company or (D) owned by Parent
\nor any subsidiary of Parent, shall be canceled and no Parent Common Stock or
\nother consideration shall be delivered in exchange therefor. As used herein, a
\ncorporation is a “subsidiary” of any corporation if the parent corporation owns
\ndirectly or indirectly an amount of voting securities of the other corporation
\nsufficient to elect at least a majority of its Board of Directors.<\/p>\n
(c) CONVERSION AND EXCHANGE RATIOS FOR COMPANY STOCK. Subject to Section
\n2.2, (A) each share of Common Stock issued and outstanding immediately prior to
\nthe Effective Time (other than shares canceled pursuant to Section 2.1(b) and
\nshares held by Dissenting Stockholders, if any) shall be converted into a number
\nof shares of Parent Common Stock equal to the Common Exchange Ratio and (B) each
\nshare of Series A Stock issued and outstanding immediately prior to the
\nEffective Time (other than shares canceled pursuant to Section 2.1(b) and shares
\nheld by Dissenting Stockholders, if any) shall be converted into a number of
\nshares of Parent Common Stock equal to the Series A Exchange Ratio.<\/p>\n
(i) “Common Exchange Ratio” means the quotient obtained by dividing
\n (x) the amount by which the Total Parent Share Amount exceeds the
\n Liquidation Preference Shares by (y) the Fully Diluted Company Share
\n Amount;<\/p>\n
(ii) “Liquidation Preference Amount” means the number of shares of the
\n Series A Stock outstanding as of the Effective Time multiplied by $1.00.<\/p>\n
(iii) “Liquidation Preference Shares” means the quotient obtained by
\n dividing (i) the Liquidation Preference Amount by (ii) the Stipulated
\n Price;<\/p>\n
(iv) “Series A Exchange Ratio” means the sum of (A) the product of (i)
\n the number of shares of Common Stock that are issuable upon the conversion
\n of a share of Series A Stock and (ii) the Common Exchange Ratio, and (B)
\n the quotient obtained by dividing (i) $1.00 by (ii) the Stipulated Price.<\/p>\n
As of the Effective Time, all shares of Common Stock and Series A Stock
\nshall no longer be outstanding and shall automatically be canceled and retired
\nand shall cease to exist, and each holder of a certificate representing any such
\nshares shall cease to have any rights with respect thereof, except the right to
\nreceive Parent Common Stock and any cash in lieu of fractional shares of Parent
\nCommon Stock to be issued or paid in consideration therefore upon surrender of
\nsuch certificate in accordance with Section 2.2 hereof.<\/p>\n
All calculations pursuant to this Agreement shall be rounded to the nearest
\none-billionth (.000000001). The shares of Parent Common Stock to be issued upon
\nthe exchange and conversion of Company Stock in accordance with this Section
\n2.1(c) shall sometimes be hereinafter collectively referred to as the “Merger
\nShares.”<\/p>\n
4<\/p>\n
(d) SHARES OF DISSENTING STOCKHOLDERS.<\/p>\n
(i) If provided for under the Pennsylvania Statute, notwithstanding
\n any other provision of this Agreement to the contrary, shares of Company
\n Stock that are outstanding immediately prior to the Effective Time and
\n which are held by stockholders (each, a “Dissenting Stockholder”) who shall
\n not have voted in favor of the Merger or consented thereto in writing and
\n who shall have demanded properly in writing appraisal for such shares in
\n accordance with the Pennsylvania Statute and who shall not have withdrawn
\n such demand or otherwise have forfeited appraisal rights (collectively, the
\n “Dissenting Shares”) shall not be converted into or represent the right to
\n receive Parent Common Stock. Such stockholders shall be entitled to receive
\n payment of the appraised value of such shares of Company Stock held by them
\n in accordance with the provisions of the Pennsylvania Statute, except that
\n all Dissenting Shares held by stockholders who shall have failed to perfect
\n or who effectively shall have withdrawn or lost their rights to appraisal
\n of such shares of Company Stock under the Pennsylvania Statute shall
\n thereupon be deemed to have been converted into and to have become
\n exchangeable, as of the Effective Time, for the right to receive, without
\n any interest thereon, the Parent Common Stock, upon surrender, in the
\n manner provided in Section 2.1(c), of the certificate or certificates that
\n formerly evidenced such shares of Company Stock.<\/p>\n
(ii) Company shall give Parent (A) prompt notice of any demands for
\n appraisal received by Company, withdrawals of such demands, and any other
\n instruments served pursuant to the Pennsylvania Statute and received by
\n Company and (B) the opportunity to direct all negotiations and proceedings
\n with respect to demands for appraisal under the Pennsylvania Statute.
\n Company shall not, except with the prior written consent of Parent, make
\n any payment with respect to any demands for appraisal, or offer to settle,
\n or settle, any such demands.<\/p>\n
(e) ADJUSTMENTS FOR CAPITAL CHANGES. If, prior to the Effective Time,
\nParent or the Company recapitalizes through a subdivision of its outstanding
\nshares into a greater number of shares, or a combination of its outstanding
\nshares into a lesser number of shares, or reorganizes, reclassifies or otherwise
\nchanges its outstanding shares into the same or a different number of shares or
\nother classes, or declares a dividend on its outstanding shares payable in
\nshares of its capital stock or securities convertible into shares of its capital
\nstock, then the Exchange Ratios will be adjusted appropriately so as to maintain
\nthe relative proportionate interests of the holders of shares of Company Stock
\nand the holders of shares of Parent Common Stock.<\/p>\n
2.2 ESCROW DEPOSIT; EXCHANGE OF CERTIFICATES.<\/p>\n
(a) GENERAL AND SPECIFIC INDEMNITY ESCROW AGREEMENTS. Reference is made
\nto the escrow agreements to be dated as of the Effective Date among the
\nStockholders’ Committee, Parent and State Street Bank and Trust Company (the
\n“Indemnity Escrow Agent”) in the forms of (1) EXHIBIT B-1 hereto (the “General
\nIndemnity Escrow Agreement”), pursuant to which, among other things, the
\nStockholders shall secure the indemnification obligations of the Indemnifying
\nPersons pursuant to Section 8.2(a) hereof and (2) EXHIBIT B-2 hereto (the
\n“Specific Indemnity Escrow Agreement”), pursuant to which the Stockholders shall
\nsecure liabilities related to or arising from the case of MicroWarehouse, Inc.
\nv. CMPExpress.com, Inc.<\/p>\n
5<\/p>\n
(Docket Number OCN-C-210-999 in the Superior Court of New Jersey, Ocean County)
\nand any additional litigation or liabilities involving MicroWarehouse, Inc. or
\nits former employees (the “MicroWarehouse Litigation”), pursuant to Section
\n8.2(b) hereof<\/p>\n
(b) DELIVERY OF PARENT COMMON STOCK. As soon as practicable after the
\nEffective Time, Parent shall instruct its transfer agent, American Stock
\nTransfer & Trust Co. or its successor, to deliver a certificate for eight-five
\n(85%) of the Merger Shares issuable to each Stockholder of the Company pursuant
\nto Section 2.1 and a check for any fractional share amount associated with such
\nMerger Shares calculated according to Section 2.2(c) below to each such
\nStockholder in exchange for such Stockholder’s outstanding shares of Company
\nStock, provided Parent has received such Stockholder’s certificate for Company
\nStock prior to such time. As soon as practicable after the Effective Time,
\nParent shall cause to be delivered to the Indemnity Escrow Agent, to be held in
\nthe name of the Indemnity Escrow Agent as nominee, (1) ten percent (10%) of the
\nMerger Shares issuable to each Stockholder of the Company pursuant to Section
\n2.1 in exchange for outstanding shares of Company Stock (collectively, the
\n“General Indemnity Escrow Shares”) along with cash for fractional shares
\nassociated with the General Indemnity Escrow Shares calculated according to
\nSection 2.2(c) below and (2) five percent (5%) of the Merger Shares issuable to
\neach Stockholder of the Company pursuant to Section 2.1 in exchange for
\noutstanding shares of Company Stock (collectively, the “Specific Indemnity
\nEscrow Shares”) along with cash for fractional shares associated with the
\nSpecific Indemnity Escrow Shares calculated according to Section 2.2(c) below.
\nBoth the General Indemnity Escrow Shares and the Specific Indemnity Escrow
\nShares may collectively be referred to as the “Indemnity Escrow Shares.” The
\nStockholders of the Company, by their execution and delivery of this Agreement
\nand\/or their approval of the Merger, hereby authorize and direct Parent to make
\nsuch deposit of the General Indemnity Escrow Shares and the Specific Indemnity
\nEscrow Shares with the Indemnity Escrow Agent on their behalf. All calculations
\nto determine the number of Merger Shares to be delivered to the Stockholders and
\nIndemnity Escrow Agent as aforesaid shall be rounded to the nearest whole share.
\nAll Indemnity Escrow Shares shall be held by, and distributed in accordance
\nwith, the terms and provisions of the General Indemnity Escrow Agreement and the
\nSpecific Indemnity Escrow Agreement, as applicable.<\/p>\n
(c) FRACTIONAL SHARES. No fractional shares of Parent Common Stock shall
\nbe issued in connection with the Merger, but in lieu thereof each holder of
\nCompany Stock who would otherwise be entitled to receive a fraction of a share
\nof Parent Common Stock will receive from Parent, at such time as such holder has
\nthe right to receive a certificate representing Merger Shares as contemplated by
\nSection 2.2(b) (but for the escrow requirements of Section 2.2(a) and Section
\n2.2(b) hereof), an amount of cash (without interest), rounded to the nearest
\ncent, equal to (i) the Stipulated Price multiplied by (ii) the fraction of a
\nshare of Parent Common Stock otherwise issuable to such holder. The fractional
\ninterests of each Stockholder of the Company will be aggregated so that no
\nStockholder of the Company will receive cash in an amount equal to or greater
\nthan the Stipulated Price.<\/p>\n
(d) NO FURTHER OWNERSHIP RIGHTS IN COMPANY STOCK. All Merger Shares
\nissued upon the surrender for exchange of shares of Company Stock in accordance
\nwith the terms of this Article II shall be deemed to have been issued in full
\nsatisfaction of all rights pertaining to such shares of Company Stock. If, after
\nthe Effective Time, any Company certificate is presented to the Surviving
\nCorporation, Parent shall instruct its transfer agent to deliver to such
\nStockholder a<\/p>\n
6<\/p>\n
certificate representing the number of shares of Parent Common Stock such holder
\nis entitled to receive pursuant to Section 2.1 above (subject to the escrow
\nrequirements of Section 2.2) together with a check for any fractional share
\namount associated with such Merger Shares.<\/p>\n
(e) NO LIABILITY. Neither Parent, Acquisition Sub nor the Company shall
\nbe liable to any holder of shares of Company Stock or Parent Common Stock, as
\nthe case may be, for Merger Shares (or dividends or distributions with respect
\nthereto) to be issued in exchange for Company Stock pursuant to this Section
\n2.2, if, on or after the expiration of six months following the Effective Date,
\nsuch shares are delivered to a public official pursuant to any applicable
\nabandoned property, escheat or similar law.<\/p>\n
(f) LOST, STOLEN OR DESTROYED COMPANY CERTIFICATES. In the event any
\nCompany certificate shall have been lost, stolen or destroyed, upon the making
\nof an affidavit to that effect by the person claiming such Company certificate
\nto be lost, stolen or destroyed and, if required by Parent, the posting by such
\nperson of a bond in such amount as Parent may reasonably direct as indemnity
\nagainst any claim that may be made against it with respect to such Company
\ncertificate, Parent will issue in exchange for such lost, stolen or destroyed
\nCompany certificate the Merger Shares and cash in lieu of fractional shares
\ndeliverable in respect thereof pursuant to this Agreement.<\/p>\n
2.3 CONVERSION OF THE COMPANY EMPLOYEE OPTIONS; OTHER SECURITIES. At the
\nEffective Time, each of the Company’s then outstanding employee stock options
\n(collectively the “Company Options”) which have not been terminated, exercised
\nor otherwise converted as of the Effective Time, by virtue of the Merger and
\nwithout any further action on the part of any holder thereof, shall be assumed
\nby Parent and automatically converted into an option to purchase a number of
\nshares of Parent Common Stock determined by multiplying the number of shares of
\nCompany Stock covered by such Company Option immediately prior to the Effective
\nTime by the Common Exchange Ratio (rounded down to the nearest whole number of
\nshares), at an exercise price per share of Parent Common Stock equal to the
\nexercise price in effect under such Company Option immediately prior to the
\nEffective Time divided by the Common Exchange Ratio (rounded up to the nearest
\ncent), which option to purchase Parent Common Stock shall contain the same term,
\nstatus as an “incentive stock option” under Section 422 of the Code or status as
\na non-qualified stock option, as the case may be (if such Company Option was
\ntheretofore a Company incentive stock option or non-qualified stock option, as
\nthe case may be), vesting schedule and otherwise be on substantially the same
\nterms and conditions as set forth in the assumed Company Option (any such
\nassumed Company Option being herein referred to as an “Assumed Option”). The
\nparties intend that the assumption and conversion of Company Options under this
\nSection 2.3 shall meet the requirements of Section 424(a) of the Code and this
\nSection 2.3 shall be interpreted in a manner consistent with such
\ninterpretation. Parent shall take all corporate action necessary to reserve for
\nissuance a sufficient number of shares of Parent Common Stock for delivery upon
\nexercise of the Assumed Options in accordance with this Section 2.3.<\/p>\n
2.4 AUTHORIZATION OF THE MERGER, THIS AGREEMENT, THE GENERAL INDEMNITY
\nESCROW AGREEMENT, THE SPECIFIC INDEMNITY ESCROW AGREEMENT, THE INDEMNITY ESCROW
\nAGENT, AND THE STOCKHOLDERS’ COMMITTEE. In the event the Merger shall be
\napproved by the Stockholders of the Company, as required by the Delaware Statute
\nand the Pennsylvania Statute and as<\/p>\n
7<\/p>\n
contemplated by this Agreement, such approval shall constitute approval and
\nratification by the Stockholders of the Company of the (i) Merger, as required
\nby the Delaware Statute and the Pennsylvania Statute, (ii) provisions of this
\nAgreement, (iii) designation of the Indemnity Escrow Agent and the approval and
\nratification by the Stockholders of the Company of the terms and provisions of
\nthe General Indemnity Escrow Agreement and the Specific Indemnity Escrow
\nAgreement and (iv) designation of the Stockholders’ Committee.<\/p>\n
ARTICLE III<\/p>\n
REPRESENTATIONS AND WARRANTIES<\/p>\n
3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
\nand warrants to Parent and Acquisition Sub that, except as disclosed in the
\ndisclosure schedule dated the date hereof, certified by the Executive Officers
\nof the Company and delivered by the Company to Parent and Acquisition Sub
\nsimultaneously herewith and except as disclosed in the addendum to the
\ndisclosure schedule dated as of the Closing Date, certified by the Executive
\nOfficers of the Company and delivered by the Company to Parent and Acquisition
\nSub on the Closing Date (which disclosure schedules shall contain specific
\nreferences to the sections of this Agreement to which the disclosures contained
\ntherein relate) (together, the “Company Disclosure Schedule”):<\/p>\n
(a) ORGANIZATION; GOOD STANDING; QUALIFICATION AND POWER. The Company (i)
\nis a corporation duly organized, validly existing and in good standing under the
\nlaws of the Commonwealth of Pennsylvania, (ii) has all requisite corporate power
\nand authority to own, lease and operate its properties and assets and to carry
\non its business as now being conducted, and as proposed to be conducted, to
\nenter into this Agreement and the Related Agreements (as defined below) to which
\nthe Company is a party, to perform its obligations hereunder and thereunder, and
\nto consummate the transactions contemplated hereby and thereby and (iii) is duly
\nqualified and in good standing to do business in those jurisdictions listed in
\nSection 3.1(a) of the Company Disclosure Schedule and in all other jurisdictions
\nwhere the failure to be so qualified and in good standing would have a material
\nadverse effect on the Company or its business, results of operations or
\nfinancial condition (a “Company Material Adverse Effect”). The Company has
\ndelivered to Parent true and complete copies of the Charter and by-laws of the
\nCompany, in each case as amended to the date hereof. As used herein, “Charter”
\nshall mean, with respect to any corporation, those instruments that at the time
\nconstitute its corporate charter as filed or recorded under the general
\ncorporation law of the jurisdiction of its incorporation, including the articles
\nor certificate of incorporation or organization, and any amendments thereto, as
\nthe same may have been restated, and any amendments thereto (including any
\narticles or certificates of merger or consolidation, certificate of correction
\nor certificates of designation or similar instruments which effect any such
\namendment) which became effective after the most recent such restatement.<\/p>\n
(b) SUBSIDIARIES; EQUITY INVESTMENTS. Except for CMPExpress.com Internet
\nDevelopment Private Limited, incorporated under the Indian Companies Act, the
\nCompany has never had, nor does it currently have, any subsidiaries, nor has it
\never owned, nor does it currently own, any capital stock or other proprietary
\ninterest, directly or indirectly, in any corporation, association, trust,
\npartnership, joint venture or other entity.<\/p>\n
8<\/p>\n
(c) Capital Stock; Securities.<\/p>\n
(i) The authorized capital stock of the Company consists of (A)
\n 20,000,000 shares of Common Stock, no par value per share, of which
\n 13,069,111 shares are issued and outstanding and (B) 10,000,000 shares of
\n Preferred Stock, of which 4,500,000 shares have been designated Series A
\n Convertible Preferred Stock, $1.00 par value per share, and of which
\n 4,000,000 are issued and outstanding. The Company has reserved (A) 220,500
\n shares of Common Stock for issuance upon the exercise of Company Options,
\n of which 220,500 are currently outstanding and (B) 2,055,000 shares of
\n Common Stock for issuance upon conversion of the Series A Stock. All
\n outstanding shares of Company Stock are duly authorized, validly issued and
\n outstanding, fully paid and non-assessable. Section 3.1(c) of the Company
\n Disclosure Schedule sets forth a true and complete list of the holders of
\n record shares of Company Stock, their addresses, and the number of such
\n shares owned of record and beneficially by each such holder. Schedule
\n 3.1(c) of the Company Disclosure Schedule sets forth a true and complete
\n list of the Company Options, outstanding as of the date hereof, including
\n the name and address of each holder thereof, the number of shares of
\n Company Common Stock subject to each such Company Option, the per share
\n exercise price for each such Company Option, whether such Company Option is
\n a Company incentive stock option or a Company non-qualified stock option,
\n the grant date of each such Company Option, the employee stock plan
\n pursuant to which such Company Option was granted, if any, and the vesting
\n schedule and vesting acceleration provisions, if any, applicable thereto.
\n All outstanding shares of Company Stock and all outstanding Company Options
\n were issued in compliance with applicable federal and state securities
\n laws. An updated Schedule 3.1(c) reflecting changes permitted by this
\n Agreement in the capitalization of Company between the date hereof and the
\n Effective Time shall be delivered by Company to Parent on the Closing Date.
\n The holders of the Company Stock and the Company Options have been or will
\n be properly given, or shall have properly waived, any required notice prior
\n to the Merger.<\/p>\n
(ii) Except as set forth in this Section 3.1(c), there are no equity
\n securities of any class or series of the Company, or any security
\n exchangeable into or exercisable for such equity securities, issued,
\n reserved for issuance or outstanding. Except as set forth in this Section
\n 3.1(c), there are no options, warrants, equity securities, calls, rights,
\n commitments, convertible debt instruments, transfer restrictions or
\n agreements, instruments or understandings (whether written or oral, formal
\n or informal) of any character to which the Company is a party or by which
\n it is bound obligating the Company to issue, deliver or sell, or cause to
\n be issued, delivered or sold, additional shares of capital stock of the
\n Company or obligating the Company to grant, extend, accelerate the vesting
\n of or enter into any such option, warrant, equity security, call, right,
\n commitment, instrument, restriction, understanding or agreement. Except as
\n provided in this Agreement or any transaction contemplated thereby, there
\n are no voting trusts, proxies or other agreements or understandings with
\n respect to the voting, transfer or disposition of the shares of capital
\n stock of the Company.<\/p>\n
(iii) The assumption by Parent of Company Options in accordance with
\n Section 2.3 hereunder will not constitute a breach of the Company plans or
\n any agreement entered into with respect to the granting of such options.<\/p>\n
9<\/p>\n
(d) AUTHORITY; NO CONSENTS. The execution, delivery and performance by
\n the Company of this Agreement and the Related Agreements to which it is a
\n party and the consummation of the transactions contemplated hereby and
\n thereby have been duly and validly authorized by all necessary corporate
\n action on the part of the Company; and this Agreement and the Related
\n Agreements to which it is a party have been duly and validly executed and
\n delivered by the Company, and this Agreement and the Related Agreements to
\n which it is a party, assuming the due authorization, execution and delivery
\n of this Agreement and the Related Agreements by the other parties thereto,
\n are the valid and binding obligations of the Company, enforceable against
\n the Company in accordance with their respective terms, except as such
\n enforceability may be limited by bankruptcy, reorganization, fraudulent
\n conveyance, insolvency, moratorium or similar laws affecting the rights and
\n remedies of creditors generally and by equitable principles of general
\n application (regardless of whether such enforceability is considered in a
\n proceeding at law or in equity). Neither the execution, delivery and
\n performance of this Agreement, the Related Agreements to which it is a
\n party nor the consummation by the Company of the transactions contemplated
\n hereby or thereby nor compliance by the Company with any provision hereof
\n or thereof will in any material respect (A) conflict with, (B) result in
\n any violations of, (C) cause a default under (with or without due notice,
\n lapse of time or both), (D) give rise to any right of termination,
\n amendment, cancellation or acceleration of any obligation contained in or
\n the loss of any material benefit under or (E) result in the creation of any
\n Encumbrance on or against any assets, rights or property of the Company
\n under any term, condition or provision of (x) any instrument or agreement
\n to which the Company is a party, or by which the Company or any of its
\n properties, assets or rights may be bound, (y) assuming the accuracy of the
\n representations and warranties of, and the performance of the covenants by
\n Parent and Acquisition Sub as set forth in this Agreement, any law,
\n statute, rule, regulation, order, writ, injunction, decree, permit,
\n concession, license or franchise of any Governmental Authority applicable
\n to the Company or any of its properties, assets or rights or (z) the
\n Company’s Charter or by-laws. Assuming the accuracy of the representations
\n and warranties of, and the performance of the covenants by Parent and
\n Acquisition Sub as set forth in this Agreement, no permit, authorization,
\n consent, (except the consent of any manufacturer) or approval of or by, or
\n any notification of or filing with, any Governmental Authority or other
\n person including the Federal Trade Commission or the Department of Justice
\n is required in connection with the execution, delivery and performance by
\n the Company of this Agreement or the Related Agreements or the consummation
\n by the Company of the transactions contemplated hereby or thereby, except
\n for (i) the distribution of the Stockholders’ Materials with respect to the
\n adoption by the stockholders of this Agreement, the Merger and the
\n transactions contemplated hereby, (ii) the filing of this Agreement or a
\n certificate or articles of merger with the Secretary of State of the State
\n of Delaware and the Pennsylvania Corporation Bureau and appropriate
\n documents with the relevant authorities of other states in which the
\n Company is qualified to do business and (iii) such other consents, waivers,
\n authorizations, filings, approvals and registrations which if not obtained
\n or made would not have a Company Material Adverse Effect or materially
\n impair the ability of the Company and the stockholders to consummate the
\n transactions contemplated by this Agreement, including, without limitation,
\n the Merger.<\/p>\n
(e) FINANCIAL INFORMATION. (i) The Company has previously delivered to
\n Parent the following financial statements (collectively, the “Company
\n Financial Statements”) (A) the audited financial statements of the Company
\n for the fiscal years ended 1997, 1998 and 1999 (the “Audited Financials”),
\n (B) the unaudited balance sheet, cash flow and income statements of the<\/p>\n
10<\/p>\n
Company as of March 31, June 30, July 31 and August 31, 2000 (the
\n “Unaudited Financials”) and (C) financial statements for the six-month
\n period ended June 30, 2000 as reviewed by PricewaterhouseCoopers LLP. The
\n Company Financial Statements (A) are in accordance with the books and
\n records of the Company, (B) fairly present, in all material respects, the
\n financial condition of the Company as at the respective dates indicated and
\n the results of operations of the Company for the respective periods
\n indicated and (C) have been prepared in accordance with generally accepted
\n accounting principles consistently applied (“GAAP”), except as indicated
\n therein.<\/p>\n
(f) ABSENCE OF UNDISCLOSED LIABILITIES. At August 31, 2000 (the
\n “Balance Sheet Date”), with respect to the Company Balance Sheet, the
\n Company had no liability or obligation of any nature (whether known or
\n unknown, matured or unmatured, fixed or contingent, secured or unsecured,
\n accrued, absolute or otherwise (a “Liability”)) required to be set forth on
\n the Company Financial Statements in order for the Company Balance Sheet to
\n fairly present the financial condition of the Company at the respective
\n dates thereof in accordance with GAAP, which was not provided for or
\n disclosed thereon, and all liability reserves established by the Company
\n and set forth thereon were adequate for all such Liabilities at the
\n respective dates thereof. There were no material loss contingencies (as
\n such term is used in Statement of Financial Accounting Standards No. 5
\n issued by the Financial Accounting Standards Board in March, 1975 (“FAS No.
\n 5”)) which were not adequately provided for on the Company Balance Sheet as
\n required by FAS No. 5.<\/p>\n
(g) ABSENCE OF CHANGES. Since the Balance Sheet Date, the Company has
\n been operated in the ordinary course, consistent with past practice, and
\n there has not been:<\/p>\n
(i) any Company Material Adverse Effect;<\/p>\n
(ii) any damage, destruction or loss, whether or not covered by
\n insurance, having or which could have a Company Material Adverse
\n Effect;<\/p>\n
(iii) other than in the ordinary course of business, any
\n Liability created, assumed, guaranteed or incurred, or any material
\n transaction, contract or commitment entered into, by the Company;<\/p>\n
(iv) Except for payment of legal fees and settlement costs in
\n connection with the MicroWarehouse Litigation, any payment, discharge
\n or satisfaction of any material Encumbrance or Liability by the Company
\n or any cancellation by the Company of any material debts or claims or
\n any amendment, termination or waiver of any rights of material value to
\n the Company;<\/p>\n
(v) any declaration, setting aside or payment of any dividend
\n or other distribution of any assets of any kind whatsoever with respect
\n to any shares of the capital stock of the Company, or any direct or
\n indirect redemption, purchase or other acquisition of any such shares
\n of the capital stock of the Company;<\/p>\n
(vi) any stock split, reverse stock split, combination,
\n reclassification or recapitalization of any Company Stock, or any
\n issuance of any other security in respect of or in exchange for, any
\n shares of Company Stock;<\/p>\n
11<\/p>\n
(vii) any issuance by the Company of any shares of its capital
\n stock or any debt security or securities, rights, options or warrants
\n convertible into or exercisable or exchangeable for any shares of its
\n capital stock or debt security (other than Company Options or shares of
\n Company Common Stock issued upon exercise of Company Options in
\n accordance with the present terms thereof);<\/p>\n
(viii) any license, sale, transfer, pledge, mortgage or other
\n disposition of any material tangible or intangible asset (including any
\n Intellectual Property Rights) of the Company, other than in the
\n ordinary course of business;<\/p>\n
(ix) any termination of, or written indication of an intention to
\n terminate or not renew, any material contract, license, commitment or
\n other agreement between the Company and any other person;<\/p>\n
(x) any material write-down or write-up of the value of any asset
\n of the Company, or any material write-off of any accounts receivable or
\n notes receivable of the Company or any portion thereof;<\/p>\n
(xi) any increase in or modification of compensation payable or
\n to become payable to (A) any director or officer of the Company or (B)
\n any employee of the Company other than in the ordinary course of
\n business, or the entering into of any employment contract with any
\n officer or employee;<\/p>\n
(xii) any adoption by the Company or any trade or business
\n (whether or not incorporated) which is a member of a controlled group
\n or which is under common control with the Company within the meaning of
\n Section 414 of the Code and the regulations promulgated thereunder or
\n an affiliated service group (as defined under Section 414(m) of the
\n Code or the regulations under Section 414(o) of the Code) (an “ERISA
\n Affiliate”) of any Employee Plans (as defined in Section 3.1(u)(ii)) or
\n any increase in or modification or acceleration, except for such
\n increases, modifications or accelerations that occur as a direct result
\n of the transactions contemplated by this Agreement, of any benefits
\n payable under any Employee Plans made to, for or with any director,
\n officer, employee, consultant or agent of the Company;<\/p>\n
(xiii) any change in the accounting methods or practices followed
\n by the Company or any change in depreciation or amortization policies
\n or rates theretofore adopted;<\/p>\n
(xiv) any change in the manner in which the Company extends
\n discounts or credit to customers or otherwise deals with customers;<\/p>\n
(xv) any termination of employment of any officer or Key Employee
\n of the Company or, to the Company’s knowledge, any expression of
\n intention by any officer or Key Employee of the Company to resign from
\n such office or employment with the Company;<\/p>\n
(xvi) any amendments or changes in the Company’s Charter or by-
\n laws;<\/p>\n
(xvii) any labor dispute or any union organizing campaign;<\/p>\n
12<\/p>\n
(xviii) the commencement of any litigation or other action by or
\n against the Company; or<\/p>\n
(xix) any agreement, understanding, authorization or proposal,
\n whether in writing or otherwise, for the Company to take any of the
\n actions specified in items (i) through (xix) above.<\/p>\n
(h) TAX MATTERS. The Company and each other corporation (if any) included
\nin any consolidated or combined tax return in which the Company has been
\nincluded (i) have filed and will file, in a timely and proper manner, consistent
\nwith applicable laws, all Federal, state and local Tax returns and Tax reports
\nrequired to be filed by them through the Closing Date (the “Company Returns”)
\nwith the appropriate governmental agencies in all jurisdictions in which Company
\nReturns are required to be filed and have timely paid or will timely pay all
\namounts shown thereon to be due; (ii) have paid and shall timely pay all Taxes
\nof the Company (or such other corporation) required to have been paid by the
\nCompany (or such other corporation) on or before the Closing Date; and (iii)
\ncurrently are not the beneficiary of an extension of time within which to file
\nany Tax return or Tax report. All such Company Returns were and will be correct
\nand complete in all material respects at the time of filing. All Taxes of the
\nCompany attributable to all taxable periods ending on or before the Closing
\nDate, to the extent not required to have been previously paid, have been
\nadequately provided for on the Company Financial Statements and the Company will
\nnot accrue a Tax Liability from the date of the Company Financial Statements up
\nto and including the Closing Date, other than a Tax Liability accrued in the
\nordinary course of business. The Company has not been notified by the Internal
\nRevenue Service or any state, local or foreign taxing authority that any issues
\nhave been raised (and are currently pending) in connection with any Company
\nReturn, and no waivers of statutes of limitations have been given with respect
\nto the Company that are still in effect. Except as contested in good faith, any
\ndeficiencies asserted or assessments (including interest and penalties) made as
\na result of any examination by the Internal Revenue Service or by any other
\ntaxing authorities of any Company Return have been fully paid or are adequately
\nprovided for on the Company Financial Statements (as appropriate) and the
\nCompany has received no notification that any proposed additional Taxes have
\nbeen asserted. The Company (i) has not made an election to be treated as a
\n“consenting corporation” under Section 341(f) of the Code and (ii) is not a
\n“personal holding company” within the meaning of Section 542 of the Code and
\n(iii) has not been a United States real property holding corporation within the
\nmeaning of Section 897(c) of the Code during the applicable period specified in
\nSection 897(c)(1)(A)(ii) of the Code. The Company has not agreed to, nor is it
\nrequired to, make any adjustment under Section 481(a) of the Code by reason of a
\nchange in accounting method or otherwise. The Company will not incur a Tax
\nLiability resulting from the Company ceasing to be a member of a consolidated or
\ncombined group that had previously filed consolidated, combined or unitary Tax
\nreturns. Each granted option that was designated as an “incentive stock option”
\non the applicable books and records of the Company qualified as an “incentive
\nstock option” within the meaning of the Section 422 of the Code on the date in
\nwhich such option was granted. To the knowledge of the Company, neither the
\nCompany nor any of its Affiliates has taken or agreed to take any action, failed
\nto take any action or is aware of any fact or circumstance that would prevent
\nthe Merger from constituting a reorganization within the meaning of Section
\n368(a) of the Code or that would prevent the Merger Shares from qualifying as
\nstock within the meaning of Section 354 of the Code rather than as “other
\nproperty” within the meaning of Section 356 of the Code.<\/p>\n
13<\/p>\n
As used in this Agreement, “Tax” means any of the Taxes and “Taxes” means,
\nwith respect to any entity, (A) all income taxes (including any tax on or based
\nupon net income, gross income, income as specially defined, earnings, profits or
\nselected items of income, earnings or profits) and all gross receipts, sales,
\nuse, ad valorem, transfer, franchise, license, withholding, payroll, employment,
\nexcise, severance, stamp, occupation, premium, property or windfall profits
\ntaxes, alternative or add-on minimum taxes, customs duties and other taxes,
\nfees, assessments or charges of any kind whatsoever, together with all interest
\nand penalties, additions to tax and other additional amounts imposed by any
\ntaxing authority (domestic or foreign) on such entity and (B) any liability for
\nthe payment of any amount of the type described in the immediately preceding
\nclause (A) as a result of being a “transferee” (within the meaning of Section
\n6901 of the Code or any other applicable law) of another entity or a member of
\nan affiliated or combined group.<\/p>\n
(i) TITLE TO ASSETS, PROPERTIES AND RIGHTS AND RELATED MATTERS. The Company
\nhas good and valid title to all assets, personal property and interests in
\npersonal property, reflected, respectively, on the Balance Sheet or acquired
\nafter the Balance Sheet Date (except accounts receivable and notes receivable
\npaid in full subsequent to the Balance Sheet Date, as the case may be), or not
\nso reflected therein but necessary for the conduct or operation of the Company’s
\nbusiness and owned by the Company, free and clear of all Encumbrances, of any
\nkind or character, except for (i) those Encumbrances set forth in Section 3.1(i)
\nof the Company Disclosure Schedule, (ii) liens for current taxes not yet due and
\npayable and (iii) statutory mechanics and materialmen’s liens. The assets,
\nproperties and interests in properties of the Company are in good operating
\ncondition and repair in all material respects (ordinary wear and tear excepted).
\nAs used herein, the term “Encumbrances” shall mean and include security
\ninterests, mortgages, liens, pledges, guarantees, charges, easements,
\nreservations, restrictions, equities, rights of way, options and rights of first
\nrefusal and all other encumbrances, whether or not relating to the extension of
\ncredit or the borrowing of money.<\/p>\n
(j) REAL PROPERTY-OWNED OR LEASED. The Company does not currently own, nor
\nhas it or any of its predecessors ever owned, any real property. Section 3.1(j)
\nof the Company Disclosure Schedule contains a list and brief description of all
\nreal property leased by the Company, together with all buildings and other
\nstructures and material improvements located on such real property (the “Leased
\nReal Property”), and with respect to each lease covering the Leased Real
\nProperty (collectively, the “Leases”), the name of the lessor. The Company is
\nthe owner and holder of all the leasehold estates purported to be granted by
\neach Lease, and all Leases are in full force and effect and, assuming the due
\nauthorization, execution and delivery of such Leases by the other parties
\nthereof, constitute valid and binding obligations of the Company. The Company
\nhas made available to Parent true and complete copies of all Leases. Except as
\nset forth in Section 3.1(j) of the Company Disclosure Schedule, all improvements
\nincluded in the Leased Real Property are in good operating condition and repair
\nin all material respects (ordinary wear and tear excepted) and, to the Company’s
\nknowledge, there does not exist any condition which interferes with the economic
\nvalue or use of such property and improvements.<\/p>\n
14<\/p>\n
(k) INTELLECTUAL PROPERTY.<\/p>\n
(i) The Company has good and valid title to, and owns free and clear
\n of all Encumbrances, has the exclusive right to use, sell, transfer,
\n license (or sublicense), transmit, broadcast, deliver (electronically or
\n otherwise) and dispose of, and has the right to bring actions for the
\n infringement of, all Intellectual Property Rights necessary or required for
\n the conduct of its business as currently conducted (collectively, the
\n “Company Rights”);<\/p>\n
(ii) The execution, delivery and performance of this Agreement and the
\n Related Agreements and the consummation of the Merger and the consummation
\n of the other transactions contemplated hereby, will not breach, violate or
\n conflict with any instrument or agreement governing any Company Rights,
\n will not cause the forfeiture or termination or give rise to a right of
\n forfeiture or termination of any Company Right or in any way impair the
\n right of the Company or the Surviving Corporation to use, sell, license (or
\n sublicense), transmit, broadcast, deliver (electronically or otherwise) or
\n dispose of, or to bring any action for the infringement of, any Company
\n Right or portion thereof;<\/p>\n
(iii) There are no royalties, honoraria, fees or other payments
\n payable by the Company to any person by reason of the ownership, use,
\n license (or sublicense), transmission, broadcast, delivery (electronically
\n or otherwise), sale, or disposition of the Company Rights, other than sales
\n commissions paid in the ordinary course of business;<\/p>\n
(iv) Neither the manufacture, marketing, license (or sublicense),
\n sale, transmission, delivery (electronically or otherwise), or use of any
\n product or service currently or proposed to be licensed, sold, marketed,
\n transmitted, broadcast, delivered (electronically or otherwise) or used by
\n the Company or currently under development by the Company, violates any
\n license (or sublicense) or agreement of the Company with any third party or
\n infringes any common law or statutory rights of any other party, including,
\n without limitation, rights relating to defamation, contractual rights,
\n Intellectual Property Rights (other than patent infringement which shall be
\n to the knowledge of the Company or the Stockholders) and rights of privacy
\n or publicity; nor, to the knowledge of the Company or the Stockholders, is
\n any third party materially infringing upon, or violating any license (or
\n sublicense), transmission, broadcast, delivery, (electronically or
\n otherwise) or agreement with the Company relating to, any Company Right;
\n and there is no pending or threatened claim or litigation contesting the
\n validity, ownership or right to use, manufacture, sell, license (or
\n sublicense), transmit, broadcast, deliver (electronically or otherwise) or
\n dispose of any Company Right, nor is there any basis for any such claim,
\n nor has the Company received any notice asserting that any Company Right or
\n the proposed use, manufacture, sale, license (or sublicense), transmission,
\n broadcast, delivery (electronically or otherwise) or disposition thereof
\n conflicts or will conflict with the rights of any other party nor is there
\n any basis for any such assertion;<\/p>\n
(v) All current and past officers, employees and consultants of or to
\n the Company have executed and delivered to and in favor of the Company an
\n agreement regarding the protection of confidential and proprietary
\n information and the assignment to the Company of all Intellectual Property
\n Rights arising from the services performed for<\/p>\n
15<\/p>\n
the Company by such persons (collectively, the “Confidentiality
\n Agreements”). The Company has taken and will continue through the Effective
\n Time to take all steps necessary, appropriate or desirable to safeguard and
\n maintain the secrecy and confidentiality of, and its proprietary rights in,
\n all Company Rights;<\/p>\n
(vi) All works that were created, prepared or delivered by
\n consultants, independent contractors or other third parties for or on
\n behalf of Company (including any materials and elements created, prepared
\n or delivered by such parties in connection therewith) (A) are and shall
\n constitute “works made for hire” specially ordered or commissioned by the
\n Company within the meaning of United States’ copyright law, or (B) all
\n right, title and interest therein (including any materials and elements
\n created, prepared or delivered by such parties in connection therewith)
\n have been assigned to the Company;<\/p>\n
(vii) No licenses or rights have been granted by the Company, or by
\n any employee, consultant, officer, director, agent or affiliate of the
\n Company or by anyone other than the foregoing, to distribute the source
\n code of, or to use source code to create Derivative Works, of, any product
\n currently marketed by, commercially available from or under development by
\n the Company for which the Company possesses the source code. As used
\n herein, “Derivative Work” shall mean a work that is based upon one or more
\n preexisting works, such as a revision, enhancement, modification,
\n abridgment, condensation, expansion or any other form in which such
\n preexisting works may be recast, transformed or adapted, and which, if
\n prepared without authorization of the owner of the copyright in such
\n preexisting work, would constitute a copyright infringement. For purposes
\n herein, a “Derivative Work” shall also include any compilation that
\n incorporates such a preexisting work as well as translations from one type
\n of code to another;<\/p>\n
(viii) No person has any marketing rights to any of the Intellectual
\n Property Rights of the Company (excluding Intellectual Property Rights
\n licensed to the Company by third parties);<\/p>\n
(ix) For the Intellectual Property Rights owned by the Company,
\n Section 3.1(k)(ix) of the Company Disclosure Schedule provides a complete
\n and accurate list of all United States and foreign (a) Patents, (b)
\n Trademarks (including Internet domain registrations and unregistered
\n Trademarks) and (c) Copyrights (including unregistered copyrights)
\n indicating for each, the applicable jurisdiction, registration number (or
\n application number) and date issued (or date filed);<\/p>\n
(x) The Company does not own and has not filed any application for
\n Patents. All registered Trademarks, and registered Copyrights are currently
\n in compliance with all legal requirements (including the timely post-
\n registration filing of affidavits of use and incontestability and renewal
\n applications with respect to registered Trademarks), are valid and
\n enforceable, and are not subject to any maintenance fees or actions falling
\n due within ninety (90) days after the Effective Time. No registered
\n Trademark has been or is now involved in any cancellation and no such
\n action is threatened with respect to any of the registered Trademarks. To
\n the knowledge of the Company, there are no potentially conflicting
\n Trademarks of any third party;<\/p>\n
16<\/p>\n
(xi) Section 3.1(k)(xi) of the Company Disclosure Schedule sets forth
\n a complete and accurate list of all license agreements granting any right
\n to use or practice any rights under any Intellectual Property Rights,
\n whether the Company is the licensee or licensor thereunder (except for shop
\n licenses identified in Section 3.1(l)(i) of the Company Disclosure
\n Schedule) and any assignments, consents, term, forbearances to sue,
\n judgments, Orders, settlements or similar obligations relating to any
\n Intellectual Property to which the Company is a party or otherwise bound
\n (collectively, the “License Agreements”), indicating for each the title,
\n the parties, date executed, whether or not it is exclusive and the
\n Intellectual Property covered thereby. The License Agreements are valid and
\n binding obligations of Company, enforceable in accordance with their terms,
\n and there exists no event or condition which will result in a violation or
\n breach of, or constitute (with or without due notice or lapse of time or
\n both) a default by the Company under any such License Agreement. The
\n Company has all necessary licenses and\/or right to use the information
\n relating to and\/or owned by Tech Data Corporation, Ingram Micro or any
\n other distributor displayed or linked on its website;<\/p>\n
(xii) All Trademarks of the Company have been in continuous use by the
\n Company. To the Knowledge of the Company, there has been no prior use of
\n such Trademarks by any third party which would confer upon said third party
\n superior rights in such Trademarks; the Company has adequately policed the
\n registered Trademarks against third party infringement; and the registered
\n Trademarks have been continuously used in the form appearing in, and in
\n connection with the goods and services listed in, their respective
\n registration certificates or identified in their respective pending
\n applications; and<\/p>\n
(xiii) As used herein, the term “Intellectual Property Rights” shall
\n mean all intellectual property rights worldwide, including, without
\n limitation, trademarks, service marks, trade names, service names, URLs and
\n Internet domain names and applications therefor (and all interest therein),
\n designs, slogans and general intangibles of like nature, together with all
\n goodwill related to the foregoing (including any registrations and
\n applications for any of the foregoing) (collectively, “Trademarks”);
\n patents (including any registrations, continuations, continuations in part,
\n renewals and applications for any of the foregoing) (collectively,
\n “Patents”); copyrights (including any registrations, applications and
\n renewals for any of the foregoing (collectively, “Copyrights”); computer
\n programs and other computer software (including, but not limited to the
\n Software); databases; technology, trade secrets and other confidential
\n information, know-how, proprietary technology, processes, formulae,
\n algorithms, models, user interfaces, customer lists, inventions, source
\n codes and object codes and methodologies, architecture, structure, display
\n screens, layouts, development tools, instructions, templates, marketing
\n materials, inventions, trade dress, logos and designs and all documentation
\n and media constituting, describing or relating to the foregoing
\n (collectively, “Trade Secrets”).<\/p>\n
(l) COMPANY SOFTWARE.<\/p>\n
(i) Section 3.1(1)(i) of the Company Disclosure Schedule sets forth a
\n true and complete list of all software programs, systems and applications
\n (A) designed or <\/p>\n
17<\/p>\n
developed or under development by employees of the Company or by
\n consultants on the Company’s behalf including all documentation therefor
\n (the “Owned Software”) or (B) licensed by the Company from any third party
\n or constituting “off-the-shelf” software (the “Licensed Software”), in each
\n case that is manufactured or used by the Company in the operation of its
\n business or marketed, licensed or sold by the Company to third parties
\n (collectively, the “Software”) and, in the case of Licensed Software,
\n Section 3.1(l)(i) of the Company Disclosure Schedule identifies each
\n license agreement with respect thereto;<\/p>\n
(ii) All of the Owned Software are original works of authorship and
\n are protected by the copyright laws of the United States. The Company owns
\n all right, title and interest in and to the Owned Software, and all
\n copyrights thereto, free and clear of any Encumbrance and has not sold,
\n assigned, licensed, distributed or in any other way disposed of or
\n subjected the Owned Software to any Encumbrance. None of the Owned Software
\n incorporates, is based on or is a derivative work of any third party code
\n that is subject to the terms of a public source license or otherwise
\n imposes conditions on the terms and conditions under which the Owned
\n Software may be used or distributed;<\/p>\n
(iii) The Licensed Software is validly held and used by the Company
\n and may be used by the Company pursuant to the applicable license agreement
\n with respect thereto without the consent of or notice to any third party
\n and is fully and freely utilizable by the Surviving Corporation or Parent
\n without the consent of or notice to any third party. All of the Company’s
\n computer hardware has validly licensed software installed therein and the
\n Company’s use thereof does not conflict with or violate any such license;<\/p>\n
(iv) To the knowledge of the Company, the Software is free from any
\n significant software defect, is free from any programming, documentation
\n error or virus (“Bugs”) not consistent with commercially reasonable
\n industry standards acceptable for such Bugs, operates and runs in a
\n reasonable and efficient business manner, conforms to the specifications
\n thereof, and, with respect to the Owned Software, the applications can be
\n compiled from their associated source code without undue burden;<\/p>\n
(v) The Company has not altered its data, or any Software or
\n supporting software that may in turn damage the integrity of the data,
\n whether stored in electronic, optical or magnetic or other form. The
\n Company has furnished Parent with all documentation relating to the use,
\n maintenance and operation of the Software, all of which is true and
\n accurate in all material respects; and<\/p>\n
(vi) The Company’s Owned Software and Licensed Software (including
\n existing products Owned Software and technology and Owned Software and
\n technology currently under development) used in the operation of the
\n business as presently conducted have been designed, written and tested to,
\n and will at all times (i) record, store, process, calculate, manage,
\n manipulate and present calendar dates falling before, on and after (and if
\n applicable, spans of time including) December 31, 1999, including, without
\n limitation, single-century formulas and multi-century formulas and (ii)
\n create, calculate, recognize, accept, display, store, retrieve, accent,
\n compare, sort, manipulate, or process any information dependent on or
\n relating to such dates or otherwise provide use of dates or date-dependent
\n or date-related data, including, but not limited to, century recognition,<\/p>\n
18<\/p>\n
day-of-the week recognition, leap years, date values and interfaces of date
\n functionalities, without loss of accuracy, functionality, data integrity
\n and performance and will provide that all date-related data and user
\n interface functionalities and data fields include the indication of century
\n (collectively, “Year 2000 Compliant”). Section 3.1(h)(vi) of the Company
\n Disclosure Schedule describes all software, hardware, databases or embedded
\n control systems not owned or developed by the Company that is or are
\n licensed for or otherwise used by the Company in the operation of its
\n business as presently conducted and as proposed to be conducted and the
\n nature and extent of the Company’s knowledge and inquiry regarding the
\n degree to which all such hardware, software, databases or embedded control
\n systems are Year 2000 Compliant.<\/p>\n
(m) AGREEMENTS, ETC. Section 3.1(m) of the Company Disclosure Schedule
\n sets forth a true and complete list of all written or oral contracts,
\n agreements and other instruments not made in the ordinary course of
\n business to which the Company is a party, or made in the ordinary course of
\n business and referred to in clauses (i) through (xviii) of this Section
\n 3.1(m). The Company is not a party to any agreement, arrangement or
\n understanding, whether written or oral, formal or informal, relating to:<\/p>\n
(i) agreements for the development, modification or enhancement
\n of computer software or multimedia products;<\/p>\n
(ii) any material distributorship, dealer, sales, advertising,
\n agency, manufacturer’s representative, franchise or similar contract
\n or relationship or any other contract relating to the payment of a
\n commission or other fee calculated as or by reference to a percentage
\n of the profits or revenues of the Company or of any business segment
\n of the Company;<\/p>\n
(iii) any joint venture, partnership or other agreement or
\n arrangement for the sharing of profits;<\/p>\n
(iv) any collective bargaining contract or other contract with or
\n commitment to any labor union;<\/p>\n
(v) the future purchase, sale or license of products, material,
\n supplies, equipment or services requiring payments to or from the
\n Company in an amount in excess of $25,000 per annum, which agreement,
\n arrangement or understanding is not terminable on 30 days’ notice
\n without cost or other liability at or at any time after the Effective
\n Time, or in which the Company has granted or received manufacturing
\n rights, most favored nations pricing provisions or exclusive marketing
\n or other rights relating to any product, group of products, services,
\n technology, assets or territory;<\/p>\n
(vi) any license (whether as licensor or licensee), or
\n sublicense, royalty, permit, or franchise agreement, including,
\n without limitation, any agreement pursuant to which the Company
\n licenses any Company Rights to any third party (other than ordinary
\n course licenses to end-users);<\/p>\n
(vii) the content or delivery of its computer software or
\n multimedia products and services (including the transmission or other
\n performance (electronically or otherwise));<\/p>\n
19<\/p>\n
(viii) the employment of any officer, employee, consultant or
\n agent or any other type of contract, commitment or understanding with
\n any officer, employee, consultant or agent which (except as otherwise
\n generally provided by applicable law) is not immediately terminable
\n without cost or other liability at or at any time after the Effective
\n Time;<\/p>\n
(ix) profit-sharing, bonus, stock option, stock appreciation
\n right, pension, retirement, disability, stock purchase,
\n hospitalization, insurance or similar plan or agreement, formal or
\n informal, providing benefits to any current or former director,
\n officer, employee, agent or consultant;<\/p>\n
(x) indenture, mortgage, promissory note, loan agreement,
\n guarantee or other agreement or commitment for the borrowing of money,
\n for a line of credit or for a leasing transaction of a type required
\n to be capitalized in accordance with Statement of Financial Accounting
\n Standards No. 13 of the Financial Accounting Standards Board;<\/p>\n
(xi) any agreement, instrument or other arrangement granting or
\n permitting any Encumbrance on any of the properties, assets or rights
\n of the Company;<\/p>\n
(xii) any lease for real property (whether as lessor or lessee)
\n or any lease or agreement under which the Company is lessee of or
\n holds or operates any items of tangible personal property owned by any
\n third party;<\/p>\n
(xiii) contract or commitment for charitable contributions;<\/p>\n
(xiv) contract or commitment for capital expenditures
\n individually or in the aggregate in excess of $10,000;<\/p>\n
(xv) any agreement or contract with a “disqualified individual”
\n (as defined in Section 280G(c) of the Code), which could result in an
\n “excess parachute payment” (as defined in Section 280G(b)(1) of the
\n Code) being made under Section 280G of the Code as a result of the
\n transactions contemplated hereby;<\/p>\n
(xvi) agreement or arrangement for the sale of any assets,
\n properties or rights having a value in excess of $25,000;<\/p>\n
(xvii) agreement which restricts the Company from engaging in any
\n aspect of its business or competing in any line of business in any
\n geographic area; or<\/p>\n
(xviii) any other agreement, contract or commitment which is
\n material to the Company.<\/p>\n
For purposes of this Section 3.1(m), the term “material” shall mean and
\nrefer to those agreements, contracts, instruments or arrangements (as
\napplicable) that involve payments or expenditures by or to the Company, or
\notherwise have an aggregate value, of at least $25,000. The Company has
\nfurnished to Parent true and complete copies of all such agreements listed in
\nSection 3.1(m) of the Company Disclosure Schedule and each such agreement (A) is
\nthe legal, valid and binding obligation of the Company and, to the knowledge of
\nthe Company, the legal, <\/p>\n
20<\/p>\n
valid and binding obligation of each other party thereto, in each case
\nenforceable in accordance with its terms, except as such enforceability may be
\nlimited by bankruptcy, reorganization, fraudulent conveyance, insolvency,
\nmoratorium or similar laws affecting the rights and remedies of creditors
\ngenerally and by equitable principles of general application (regardless of
\nwhether such enforceability is considered in a proceeding at law or in equity),
\n(B) is in full force and effect and (C) to the knowledge of the Company, the
\nother party or parties thereto is or are not in material default thereunder.<\/p>\n
(n) NO DEFAULTS. The Company has in all material respects performed all
\nthe obligations required to be performed by it to date and is not in default or
\nalleged to be in default under (i) its Charter or by-laws or (ii) any material
\nagreement, lease, license, contract, commitment, instrument or obligation to
\nwhich the Company is a party or by which any of its properties, assets or rights
\nare or may be bound or affected, and to the Company’s knowledge, except for the
\nexecution of this Agreement and the consummation of the transactions
\ncontemplated herein, there exists no event, condition or occurrence which, with
\nor without due notice or lapse of time, or both, would constitute such a default
\nor alleged default by it of any of the foregoing.<\/p>\n
(o) LITIGATION, ETC. Except for settlement discussions with MicroWarehouse
\nregarding the Note and Security Agreement pursuant to the Settlement Agreement
\n(as defined in Section 8.2(b) below), there are no (i) actions, suits, claims,
\ninvestigations or legal or administrative or arbitration proceedings
\n(collectively, “Actions”) pending, or threatened against the Company nor is
\nthere any basis therefor, whether at law or in equity, or before or by any
\nFederal, state, municipal, foreign or other governmental court, department,
\ncommission, board, bureau, agency or instrumentality (“Governmental Authority”),
\n(ii) judgments, decrees, injunctions or orders of any Governmental Authority or
\narbitrator against the Company or (iii) disputes with customers or vendors,
\nother than such disputes which typically occur in the ordinary course of
\nbusiness and which are not likely to have a Company Material Adverse Effect,
\neither individually or in the aggregate. There are no Actions pending or, to the
\nCompany’s knowledge, threatened, nor is there any basis therefor, with respect
\nto (A) the current employment by, or association with, the Company, or future
\nemployment by, or association with, Parent or the Surviving Corporation, of any
\nof the present officers or employees of or consultants to the Company
\n(collectively, the “Designated Persons”) or (B) the use, in connection with any
\nbusiness presently conducted or proposed to be conducted by the Company or the
\nSurviving Corporation, of any information, techniques or processes presently
\nutilized or proposed to be utilized by the Company, Parent, the Surviving
\nCorporation or any of the Designated Persons, that the Company, Parent, the
\nSurviving Corporation or any of the Designated Persons are or would be
\nprohibited from using as the result of a violation or breach of, or conflict
\nwith any agreements or arrangements between any Designated Person and any other
\nperson, or any legal considerations applicable to unfair competition, trade
\nsecrets or confidential or proprietary information. The Company has delivered to
\nParent all material documents and correspondence relating to such matters
\nreferred to in Section 3.1(o) of the Company Disclosure Schedule (including, in
\nthe case of clause (iii) of the first sentence of this Section 3.1(o), any
\ncorrespondence evidencing material customer dissatisfaction with the Company or
\nits products or services).<\/p>\n
(p) ACCOUNTS AND NOTES RECEIVABLE. All the accounts receivable (net of
\nreserves) and notes receivable owing to the Company as of the date hereof
\nconstitute, and as of the Effective Time will constitute, valid and enforceable
\nclaims arising from bona fide transactions in the<\/p>\n
21<\/p>\n
ordinary course of business. Section 3.1(p) of the Company Disclosure Schedule
\nprovides a schedule of accounts receivable including an aging of such accounts.
\nThere is, to the knowledge of the Company, no account debtor or note debtor that
\nis insolvent or bankrupt and no account receivable or note receivable which is
\npledged to any third party by the Company. Provided that Parent has performed
\nits obligations under Section 7.5 of this Agreement, ninety percent (90%) of the
\naccount receivables (net of reserves) of the Company existing on the Closing
\nDate shall have been paid in full by not later than six (6) months after the
\nClosing Date and all of the notes receivable shall be paid in accordance with
\nthe terms thereof; provided, however, that if the Stockholders of the Company
\nshall indemnify Parent for breach of the percentage requirement of this Section
\n3.1(p), the Company shall remit any amounts subsequently collected on any such
\naccounts receivable to the Stockholders of the Company for their benefit.<\/p>\n
(q) ACCOUNTS AND NOTES PAYABLE. All accounts payable and notes payable by
\nthe Company to third parties as of the date hereof arose, and as of the Closing
\nwill have arisen, in the ordinary course of business. Section 3.1(q) of the
\nCompany Disclosure Schedule provides a schedule of accounts payable including an
\naging of such accounts.<\/p>\n
(r) COMPLIANCE; GOVERNMENTAL AUTHORIZATIONS AND CONSENTS. The Company has
\ncomplied and is presently in compliance in all material respects with all
\nFederal, state, local or foreign laws, ordinances, regulations and orders
\napplicable to it or its business (including, without limitation, laws,
\nordinances, regulations and orders applicable to labor, employment and
\nemployment practices, terms and conditions of employment and wages and hours).
\nThe Company has all Federal, state, local and foreign governmental licenses,
\nconsents, approvals, authorizations, permits, orders, decrees and other
\ncompliance agreements necessary in the conduct of its business as presently
\nconducted except where the failure to have any one of the foregoing would not
\nhave a Company Material Adverse Effect, such licenses, consents, approvals,
\nauthorizations, permits, orders, decrees and other compliance agreements are in
\nfull force and effect, no violations are or have been recorded in respect of any
\nthereof except where such violations would not have a Company Material Adverse
\nEffect and no proceeding is pending or, to the knowledge of the Company,
\nthreatened to revoke or limit any thereof. Section 3.1(r) of the Company
\nDisclosure Schedule contains a true and complete list of all such governmental
\nlicenses, authorizations, consents, approvals, permits, orders, decrees and
\nother compliance agreements under which the Company is operating or bound, the
\nCompany is not in default or alleged to be in default under any thereof and the
\nCompany has furnished to Parent true and complete copies thereof. None of such
\nlicenses, consents, approvals, authorizations, permits, orders, decrees and
\nother compliance agreements shall be affected in any material respect by the
\nMerger or the transactions contemplated hereby.<\/p>\n
(s) ENVIRONMENTAL MATTERS. The Company currently is and at all times has
\nbeen in material compliance with all Federal, state and local laws, ordinances,
\nregulations and orders relating to the protection of the environment applicable
\nto its properties, facilities or operations.<\/p>\n
22<\/p>\n
(t) LABOR RELATIONS; EMPLOYEES.<\/p>\n
(i) The Company employs a total of 108 employees. Section 3.1(t) of
\n the Company Disclosure Schedule identifies all employees (full-time and
\n part-time) and consultants employed or engaged by the Company and sets
\n forth each such individual’s payment arrangements or annual compensation,
\n job title and date of hire. There are no employment, consulting, severance
\n pay, continuation pay, termination or indemnification agreements or other
\n similar agreements of any nature (whether in writing or not) between the
\n Company and any current or former shareholder, officer, director, employee
\n consultant or volunteer. No such employment agreement disclosed on Section
\n 3.1(t) of the Company Disclosure Schedule will, as a direct or indirect
\n result of the transaction contemplated herein, either require any payment
\n by the Company or any consent or waiver from any shareholder, officer,
\n director, employee or consultant; or result in any change in the nature of
\n any rights of any shareholder, officer, director, employee or consultant,
\n including, but not limited to, any accelerated payments, deemed
\n satisfaction of goals or conditions, new or increased benefits or
\n additional or accelerated vesting. The Company is not delinquent in
\n payments to any of its employees for any wages, salaries, commissions,
\n bonuses or other direct compensation for any services performed by them to
\n date or amounts required to be reimbursed to such employees; upon
\n termination of the employment of any such employees, neither the Company,
\n Parent, Acquisition Sub nor the Surviving Corporation will by reason of
\n anything done prior to the Closing be liable to any of such employees for
\n so-called “severance pay” or any other payments; there is no unfair labor
\n practice complaint against the Company pending before the National Labor
\n Relations Board or any comparable Governmental Authority, and none of the
\n Company’s employment policies or practices is currently being audited or
\n investigated by any federal, state or local government agency; there is no
\n labor strike, dispute, claim, charge, lawsuit, proceeding, labor slowdown
\n or stoppage pending or, to the knowledge of the Company, threatened against
\n or involving the Company; no labor union has taken any action with respect
\n to organizing the employees of the Company; neither any grievance nor any
\n arbitration proceeding arising out of or under collective bargaining
\n agreements is pending and no claim therefor has been asserted against the
\n Company; and no employee has informed any officer of the Company that such
\n employee will terminate his or her employment or engagement with the
\n Company, or the Surviving Corporation and the Company has no reason to
\n believe that the Key Employees that accept employment with the Surviving
\n Corporation will not remain employees of the Surviving Corporation for at
\n least 180 days after the Closing. Neither the Company nor any employee of
\n the Company is to the Company’s knowledge in violation of any term of any
\n employment contract, patent disclosure agreement or any other contract or
\n agreement relating to the relationship of such employee with the Company or
\n any other party because of the nature of the business conducted by the
\n Company or the execution and delivery of the Confidentiality Agreement by
\n such employee.<\/p>\n
(ii) Section 3.1(t) of the Company Disclosure Schedule lists all
\n current and former officers, employees and consultants of the Company with
\n which the Company has entered into Confidentiality Agreements in the forms
\n attached to Section 3.1(t) of the Company Disclosure Schedule.<\/p>\n
23<\/p>\n
(u) EMPLOYEE BENEFIT PLANS AND CONTRACTS.<\/p>\n
(i) At no time has the Company or any ERISA Affiliate (A) sponsored,
\n maintained, contributed to or been required to contribute to any plan
\n subject to Title IV of the Employee Retirement Income Security Act of 1974,
\n as amended (“ERISA”) or the minimum funding requirements of Section 412 of
\n the Code or Section 302 of ERISA; (B) contributed to or been required to
\n contribute to any multiemployer plan as defined in Section 3(37) of ERISA;
\n or (C) incurred any withdrawal liability to any multiemployer plan. The
\n Company has not incurred and could not reasonably be expected to incur any
\n material liability under Title IV of ERISA or the minimum funding
\n requirements of Section 412 of the Code or Section 302 of ERISA.<\/p>\n
(ii) Section 3.1(u) of the Company Disclosure Schedule lists all
\n “employee benefit plans” as defined in Section 3(3) of ERISA, and any
\n bonus, phantom stock, stock appreciation rights, stock option or other
\n stock related rights, incentive, deferred compensation, retirement or
\n supplemental retirement, severance, golden parachute, vacation, cafeteria,
\n dependent care, health or medical care, employee assistance program,
\n disability, education or tuition assistance programs, insurance and other
\n similar compensation, fringe or employee benefit plans, programs or
\n arrangements, and any current or former employment or executive
\n compensation or severance agreements, written or otherwise, for the benefit
\n of, or relating to, any present or former Employee of the Company, any
\n subsidiary of the Company, or any ERISA Affiliate or any other written or
\n formal plans or agreements involving direct or indirect compensation
\n (including any employment agreements entered into between the Company and
\n any Employee, but excluding workers’ compensation, unemployment
\n compensation, other government-mandated programs and the Company’s salary
\n and wage arrangements) currently or previously maintained, contributed to
\n or entered into by the Company, any subsidiary of the Company or any ERISA
\n Affiliate thereof for the benefit of any Employee or former Employee under
\n which the Company, any subsidiary of the Company or any ERISA Affiliate
\n thereof has any present or future obligation or liability (the “Employee
\n Plans”), whether or not such plan or arrangement has been terminated. The
\n Company has furnished to Parent copies or descriptions of each Employee
\n Plan (and, if applicable, related trust agreements) and all amendments
\n thereto and written interpretations thereof.<\/p>\n
(iii) Except as set forth on Section 3.1(u) of the Company Disclosure
\n Schedule, each Employee Plan has been maintained and operated in
\n substantial compliance with its terms and with the requirements prescribed
\n by any and all applicable statutes, orders, rules and regulations
\n including, but not limited to, the Code and ERISA and has been maintained
\n in good standing with all applicable regulatory authorities including, but
\n not limited to the Internal Revenue Service and the Department of Labor, so
\n as not to result in any liability in excess of $5,000 for the Company or
\n the Acquisition Sub for a failure to so comply or the Parent or the
\n Surviving Corporation after the Closing Date.<\/p>\n
(iv) Except as set forth in Section 3.1(u) of the Company Disclosure
\n Schedule, the Company has no material current or projected liability in
\n respect of post-employment<\/p>\n
24<\/p>\n
or post-retirement health or medical or life insurance benefits for
\n retired, former or current employees of the Company, except those required
\n by Section 4980B of the Code.<\/p>\n
(v) Except as set forth in Section 3.1(u) of the Company Disclosure
\n Schedule, (A) all benefit obligations under each Employee Plan accrued
\n prior to the Closing Date, determined in accordance with prior practices,
\n have been paid, adequately reserved or reflected in the Company’s financial
\n statements as of the Balance Sheet Date in accordance with GAAP, (B) all
\n monies withheld from the paychecks of Company employees pursuant to
\n Employee Plans have been transferred to the applicable Employee Plans in a
\n timely manner in accordance with the Code, ERISA and GAAP, and (C) the
\n Company has paid all matching contributions under the CMP, Inc. 401(k)
\n Savings Plan (“401(k) Plan”) for all 401(k) Plan years commencing prior to
\n January 1, 2000. Except as set forth in Section 3.1(u) of the Company
\n Disclosure Schedule, there has been no amendment to, written interpretation
\n of or announcement (whether or not written) by the Company of, or change in
\n employee participation or coverage under, any Employee Plan that would
\n increase materially the expense to the Company or the Acquisition Sub or
\n the Parent or the Surviving Corporation or any of the Parent’s or the
\n Surviving Corporation’s affiliates of maintaining such Employee Plan above
\n the level of the expense incurred in respect thereof for the most recent
\n fiscal year ended prior to the date hereof.<\/p>\n
(vi) There has been no failure of any Employee Plan which is a group
\n health plan (as defined in Section 5000(b)(1) of the Code) maintained by
\n the Company to meet the requirements of Code Section 4980B(f) with respect
\n to a qualified beneficiary (as defined in Section 4980B(g)).<\/p>\n
(vii) Except as disclosed in Section 3.1(u) of the Company Disclosure
\n Schedule, no employee of the Company will become entitled to any bonus,
\n retirement, severance, job security or similar benefit or enhanced such
\n benefit (including acceleration of vesting or exercise of an incentive
\n award) as the direct and sole result of the transactions contemplated
\n hereby and no employee of the company will become entitled to any enhanced
\n severance protections or benefits as a result of the transactions
\n contemplated hereby.<\/p>\n
(viii) To the extent applicable, the Company has complied with all
\n requirements under the Workers Adjustment and Retraining Notification Act
\n of 1988, as amended, and any similar state or local law, rule or
\n regulation.<\/p>\n
(v) INSURANCE. Section 3.1(v) of the Company Disclosure Schedule contains a
\nlist of all policies of liability, theft, fidelity, fire, product liability,
\nerrors and omissions, workmen’s compensation, indemnification of directors and
\nofficers and other similar forms of insurance held by the Company (specifying
\nthe insurer, the amount of coverage, the type of insurance, the policy number
\nand any pending claims thereunder) and a history of all claims over $5,000 made
\nby the Company thereunder and the status thereof. All such policies of insurance
\nare in full force and effect and all premiums with respect thereto are currently
\npaid and, to the Company’s knowledge, no basis exists for termination of any
\nthereof on the part of the insurer. The Company has not, since its inception,
\nbeen denied or had revoked or rescinded any policy of insurance.<\/p>\n
25<\/p>\n
(w) BANK ACCOUNTS; POWERS OF ATTORNEY. Section 3.1(w) of the Company
\nDisclosure Schedule sets forth a true and complete list of (i) all bank accounts
\nand safe deposit boxes of the Company and all persons who are signatories
\nthereunder or who have access thereto and (ii) the names of all persons, firms,
\nassociations, corporations or business organizations holding general or special
\npowers of attorney from the Company and a summary of the terms thereof.<\/p>\n
(x) BROKERS. Except for the fee equal to one and one half percent (1.5%) of
\nthe transaction value due to Janney Montgomery Scott LLC pursuant to a letter
\nagreement dated April 28, 1999 and as listed on Section 3.1(x) of the Company
\nDisclosure Schedule, the Company has not, nor have any of its officers,
\ndirectors, securityholders or employees, employed any broker or finder or
\nincurred any liability for any brokerage fees, commissions or finders’ fees in
\nconnection with the transactions contemplated hereby.<\/p>\n
(y) RELATED TRANSACTIONS. No current or former director, officer or
\nsecurityholder of the Company that is an affiliate of the Company or any
\nassociate (as defined in the rules promulgated under the Exchange Act (as
\ndefined below)) thereof, is now, or has been since the inception of the Company,
\na party to any transaction with the Company (including, but not limited to, any
\ncontract, agreement or other arrangement providing for the furnishing of
\nservices by, or rental of real or personal property from, or borrowing money
\nfrom, or otherwise requiring payments to, any such director, officer or
\naffiliated stockholder of the Company or associate thereof), or the direct or
\nindirect owner of an interest in any corporation, firm, association or business
\norganization which is a present or potential competitor, supplier or customer of
\nthe Company (other than non-affiliated holdings in publicly-held companies), nor
\ndoes any such person receive income from any source other than the Company which
\nrelates to the business of, or should properly accrue to, the Company.<\/p>\n
(z) CUSTOMERS. Section 3.1(z) of the Company Disclosure Schedule sets forth
\na true and complete list of the Company’s top 100 customers, which customers in
\nthe aggregate accounted for in excess of forty percent (40%) of the Company’s
\nrevenues during such period, and which such list includes (i) related dollar
\namount sales figure for each such customer and (ii) a description of the items
\nsold. Nothing has come to the attention of the Company that would cause it to
\nbelieve that any of the top ten largest customers has materially reduced or has
\nthe intention of reducing, the dollar amount of its business with the Company or
\nhas terminated, or expressed to the Company any intention of terminating, its
\nbusiness relationship with the Company.<\/p>\n
(aa) EXTENSION OF CREDIT FACILITY; CONSENT OF BANK. The Company has secured
\nits credit facility with its primary lender for the ninety (90) day period
\nfollowing the Closing Date. The Company has secured any consent required from
\nsuch lender to consummate the Merger.<\/p>\n
(bb) MINUTE BOOKS. The minute books of the Company provided to Parent for
\nreview are the Company’s true and correct minutes. All Company actions that
\nrequired Board action have been duly authorized or ratified.<\/p>\n
(cc) BOARD APPROVAL. The Board of Directors of the Company has unanimously
\n(i) approved this Agreement, the Merger and each of the Related Agreements to
\nwhich the Company is a party and the transactions contemplated hereby and
\nthereby, (ii) determined <\/p>\n
26<\/p>\n
that the Merger is in the best interests of the stockholders of the Company and
\nis on terms that are fair to such stockholders of the Company and (iii)
\nrecommended that the stockholders of the Company approve the Merger in
\naccordance with the Pennsylvania Statute.<\/p>\n
(dd) VOTE REQUIRED. The affirmative vote of at least (i) a majority of the
\noutstanding shares of Common Stock and a majority of the outstanding shares of
\nSeries A Stock, voting together as a single class and (ii) a majority of the
\noutstanding shares of Series A Stock, voting as a separate class, approving this
\nAgreement and Merger is the only vote of the holders of any class or series of
\nthe Company’s capital stock necessary to approve this Agreement, the Merger and
\nthe transactions contemplated hereby and thereby.<\/p>\n
(ee) INFORMATION SUPPLIED. None of the information supplied, or to be
\nsupplied, by the Company or any Stockholder for inclusion or incorporation by
\nreference in the Stockholders’ Materials will, at the dates mailed to the
\nStockholders and at the effective date of the Stockholder Action, contain any
\nuntrue statement of a material fact or omit to state any material fact required
\nto be stated therein or necessary to make the statements therein, in light of
\nthe circumstances under which they are made, not misleading. The Stockholders’
\nMaterials will comply as to form in all material respects with the provisions of
\nall applicable laws, rules and regulations of all Governmental Authorities.<\/p>\n
(ff) DISCLOSURE. Neither Section 3.1 of this Agreement (including the
\nCompany Disclosure Schedule) nor any document, written information, statement,
\nfinancial statement, certificate or exhibit furnished or to be furnished to
\nParent or Acquisition Sub by or on behalf of the Company or any securityholder
\npursuant hereto or in connection with the transactions contemplated hereby,
\ncontains or will contain any untrue statement of a material fact or omits or
\nwill omit to state a material fact necessary in order to make the statements or
\nfacts contained herein and therein not misleading in light of the circumstances
\nunder which they were made.<\/p>\n
(gg) KNOWLEDGE DEFINITION. As used in this Article III, the term
\n“knowledge” and like phrases shall mean and include (i) actual knowledge and
\n(ii) that knowledge which a prudent business person (including the officers,
\ndirectors, and Key Employee) could have obtained in the management of his or her
\nbusiness affairs after making due inquiry and exercising due diligence with
\nrespect thereto. In connection therewith, the knowledge (both actual and
\nconstructive) of any officer, director, or Key Employee of the Company shall be
\nimputed to be the knowledge of the Company.<\/p>\n
3.2 SEVERAL REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS. Each of the
\nStockholders, severally (and not jointly) represents and warrants to Parent,
\nAcquisition Sub and the Company with respect to himself or itself as follows:<\/p>\n
(a) TITLE; ABSENCE OF CERTAIN AGREEMENTS. Such Stockholder is the lawful
\nand record and beneficial owner of, and has good and marketable title to the
\nshares of Company Stock set forth opposite the name of such Stockholder in
\nSection 3.2(a) of the Company Disclosure Schedule, with the full power and
\nauthority to vote such Company Stock and transfer and otherwise dispose of such
\nCompany Stock, and any and all rights and benefits incident to the ownership
\nthereof free and clear of all Encumbrances, and there are no agreements or
\nunderstandings between such Stockholder and the Company and\/or any other
\nStockholder or any<\/p>\n
27<\/p>\n
other person with respect to the voting, sale or other disposition of Company
\nStock or any other matter relating to Company Stock, except for the Stockholder
\nAgreements.<\/p>\n
(b) ORGANIZATION, GOOD STANDING AND POWER. In the case of any Stockholder
\nthat is not a natural person, such Stockholder is duly organized or formed and
\nvalidly existing under the laws of the jurisdiction of its incorporation or
\nformation and has the corporate or other organizational power and authority
\nunder such laws to enter into this Agreement, to perform its obligations
\nhereunder and to consummate the transactions contemplated hereby.<\/p>\n
(c) AUTHORITY – GENERAL. Such Stockholder has full and absolute power and
\nauthority to enter into this Agreement and, if applicable, each Related
\nAgreement being executed and delivered by such Stockholder simultaneously
\nherewith and this Agreement and each Related Agreement to which such Stockholder
\nis a party, and has, in the case of a Stockholder that is not a natural person,
\nbeen duly authorized by all requisite action on the part of such Stockholder;
\nand this Agreement and each Related Agreement to which such Stockholder is a
\nparty has been duly executed and delivered by such Stockholder, and is the valid
\nand binding obligation of such Stockholder, enforceable against such Stockholder
\nin accordance with its terms. Neither the execution, delivery and performance of
\nthis Agreement and each Related Agreement to which such Stockholder is a party,
\nnor the consummation of the transactions contemplated hereby or thereby nor
\ncompliance by such Stockholder with any of the provisions hereof or thereof will
\n(i) (A) conflict with, (B) result in any violations of, (C) cause a default
\nunder (with or without due notice, lapse of time or both), (D) give rise to any
\nright of termination, amendment, cancellation or acceleration of any obligation
\ncontained in or the loss of any material benefit under or (E) result in the
\ncreation of any Encumbrance upon or against any assets, rights or property of
\nthe Company (or against any Company Stock, Parent capital stock or common stock
\nof the Surviving Corporation), under any term, condition or provision of (x) any
\nagreement or instrument to which such Stockholder is a party, or by which such
\nStockholder or any of his or its properties, assets or rights may be bound, (y)
\nany law, statute, rule, regulation, order, writ, injunction, decree, permit,
\nconcession, license or franchise of any Governmental Authority applicable to
\nsuch Stockholder or any of his or its properties, assets or rights or (z) in the
\ncase of any Stockholder that is not a natural person, such Stockholder’s Charter
\nor by-laws, as amended through the date hereof, which conflict, breach, default
\nor violation or other event would prevent the consummation of the transactions
\ncontemplated by this Agreement or any Related Agreement to which such
\nStockholder is a party. No permit, authorization, consent or approval of or by,
\nor any notification of or filing with, any Governmental Authority or other
\nperson is required in connection with the execution, delivery and performance by
\nsuch Stockholder of this Agreement, each Related Agreement to which such
\nStockholder is a party or the consummation by such Stockholder of the
\ntransactions contemplated hereby or thereby.<\/p>\n
(d) INVESTMENT REPRESENTATIONS.<\/p>\n
(i) Such Stockholder:<\/p>\n
(A) is acquiring the Merger Shares being issued to such
\n Stockholder for such Stockholder’s own account and, except as listed
\n on Section 3.2(d) of the Company Disclosure Schedule, not as a nominee
\n or agent for any other person and with no present intention of
\n distributing or reselling such shares or any part <\/p>\n
28<\/p>\n
thereof in any transactions that would be in violation of the
\n Securities Act or any state securities or “blue-sky” laws;<\/p>\n
(B) understands (1) that the Merger Shares to be issued to him or
\n it have not been registered for sale under the Securities Act or any
\n state securities or “blue-sky” laws in reliance upon exemptions
\n therefrom, (2) that such Merger Shares must be held indefinitely and
\n not sold until such shares are registered under the Securities Act and
\n any applicable state securities or “blue-sky” laws, unless an
\n exemption from such registration is available, (3) that, except as
\n provided in the Registration Rights Agreement, Parent is under no
\n obligation to so register such Merger Shares and (4) that the
\n certificates evidencing such Merger Shares will be imprinted with a
\n legend in the form set forth in Section 7.2(b) that prohibits the
\n transfer of such shares, except as provided in Section 7.2;<\/p>\n
(C) has been furnished with, and has read and reviewed, the
\n Parent SEC Documents;<\/p>\n
(D) has had an opportunity to ask questions of and has received
\n satisfactory answers from the officers of Parent or persons acting on
\n Parent’s behalf concerning Parent and the terms and conditions of an
\n investment in Parent Common Stock;<\/p>\n
(E) is aware of Parent’s business affairs and financial condition
\n and has acquired sufficient information about Parent to reach an
\n informed and knowledgeable decision to acquire the Merger Shares to be
\n issued to him or it;<\/p>\n
(F) can afford to suffer a complete loss of his or its investment
\n in such Merger Shares;<\/p>\n
(G) is familiar with the provisions of Rule 144 promulgated under
\n the Securities Act which, in substance, permits limited public resale
\n of “restricted securities” acquired, directly or indirectly, from the
\n issuer thereof, in a non-public offering subject to the satisfaction
\n of certain circumstances which require among other things: (1) the
\n availability of certain public information about the issuer, (2) the
\n resale occurring not less than one year after the party has purchased,
\n and made full payment for, within the meaning of Rule 144, the
\n securities to be sold; and, in the case of an affiliate, or of a non-
\n affiliate who has held the securities less than two years, the amount
\n of securities being sold during any three month period not exceeding
\n the specified limitations stated therein, if applicable and (3) the
\n sale being made through a broker in an unsolicited “broker’s
\n transaction” or in transactions directly with a market maker (as said
\n term is defined under the Exchange Act);<\/p>\n
(H) understands that in the event all of the applicable
\n requirements of Rule 144 are not satisfied, registration under the
\n Securities Act, compliance with Regulation A, or some other
\n registration exemption will be required; and that, notwithstanding the
\n fact that Rule 144 is not exclusive, the staff of the SEC has<\/p>\n
29<\/p>\n
expressed its opinion that persons proposing to sell private placement
\n securities other than in a registered offering and otherwise than
\n pursuant to Rule 144 will have a substantial burden of proof in
\n establishing that an exemption from registration is available for such
\n offers or sales, and that such persons and their respective brokers
\n who participate in such transactions do so at their own risk;<\/p>\n
(I) has either alone or, in the case of those Stockholders
\n identified in Section 3.2 (d) of the Company Disclosure Schedule,
\n together with such Stockholder’s “Purchaser Representative” (as such
\n term is defined in Rule 501(h), as promulgated under the Securities
\n Act, as to each such Purchaser, a “Purchaser Representative”), such
\n knowledge and experience in financial and business matters that he or
\n it is capable of evaluating the merits and risks of acquiring and
\n holding shares of Parent Common Stock; and<\/p>\n
(ii) Such Stockholder is an “accredited investor” within the meaning
\n of Rule 501(a) under the Securities Act. If such Stockholder is identified
\n in Section 3.2 (d) of the Company Disclosure Schedule, such Stockholder is
\n being advised by a Purchaser Representative in connection with the
\n transactions contemplated hereby.<\/p>\n
(e) BROKERS. Except as set forth in Section 3.2(e) of the Stockholders’
\nDisclosure Schedule, no Stockholder has, nor have any of their officers,
\ndirectors, securityholders or employees (if any) employed any broker or finder
\nor incurred any liability for any brokerage fees, commissions or finders’ fees
\nin connection with the transactions contemplated hereby.<\/p>\n
3.3 REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION SUB. Parent
\nand Acquisition Sub represent and warrant to the Company as follows:<\/p>\n
(a) ORGANIZATION; GOOD STANDING; QUALIFICATION AND POWER. Each of Parent
\nand Acquisition Sub (i) is a corporation duly organized, validly existing and in
\ngood standing under the laws of the State of Delaware and (ii) has all requisite
\ncorporate power and authority to own, lease and operate its properties and
\nassets and to carry on its business as now being conducted, to enter into this
\nAgreement and each of the Related Agreements to which it is a party, to perform
\nits obligations hereunder and thereunder and to consummate the transactions
\ncontemplated hereby and thereby. Parent has delivered to the Company true and
\ncomplete copies of the Charter and by-laws of each of Parent and Acquisition
\nSub.<\/p>\n
(b) CAPITAL STOCK. Parent’s Annual Report on Form 10-K filed with the SEC
\nwith respect to the fiscal year ended February 29, 2000 (the “Form 10-K”), sets
\nforth a true and complete description of the authorized and outstanding shares
\nof capital stock of Parent as of such date. Parent has duly authorized and
\nreserved for issuance the Merger Shares, and, when issued in accordance with the
\nterms of Article II, the Merger Shares will be validly issued, fully paid and
\nnonassessable and free of preemptive rights. There exist a sufficient number of
\nauthorized but unissued shares of Parent Common Stock to allow for the exercise
\nin full of the Assumed Options. Parent owns all the outstanding shares of
\ncapital stock of Acquisition Sub, and all of such shares are validly issued,
\nfully paid and nonassessable and not subject to preemptive rights.<\/p>\n
30<\/p>\n
(c) AUTHORITY. The execution, delivery and performance by Parent of this
\nAgreement and each of the Related Agreements to which it is a party and the
\nexecution, delivery and performance of this Agreement by Acquisition Sub and the
\nconsummation of the transactions contemplated hereby and thereby have been duly
\nauthorized by all necessary corporate action on the part of Parent and
\nAcquisition Sub, respectively. This Agreement and each of the Related Agreements
\nto which Parent is a party are valid and binding obligations of Parent,
\nenforceable against Parent in accordance with their respective terms; and this
\nAgreement is the valid and binding obligations of Acquisition Sub, enforceable
\nagainst Acquisition Sub in accordance with its respective terms. Neither the
\nexecution, delivery and performance by Parent of this Agreement and the Related
\nAgreements to which Parent is a party, the execution, delivery and performance
\nof this Agreement by Acquisition Sub, nor the consummation of the transactions
\ncontemplated hereby or thereby, will in any material respect (A) conflict with,
\n(B) result in any material violations of, (C) cause a material default under
\n(with or without due notice, lapse of time or both), (D) give rise to any
\nmaterial right of termination, amendment, cancellation or acceleration of any
\nobligation contained in or the loss of any material benefit under, (E) result in
\nthe creation of any material Encumbrance on or against any assets, rights or
\nproperty of Parent or Acquisition Sub, as the case may be, under any term,
\ncondition or provision of (x) any material instrument or agreement to which
\nParent or Acquisition Sub is a party, or by which Parent or Acquisition Sub or
\nany of their respective properties, assets or rights may be bound, (y) any
\nmaterial law, statute, rule, regulation, order, writ, injunction, decree,
\npermit, concession, license or franchise of any Governmental Authority
\napplicable to Parent or Acquisition Sub or any of their respective properties,
\nassets or rights or (z) Parent’s or Acquisition Sub’s Charter or by-laws, as
\namended through the date hereof, respectively, in each case, which conflict,
\nbreach, default or violation or other event would prevent the consummation of
\nthe transactions contemplated by this Agreement or any Related Agreement to
\nwhich Parent or Acquisition Sub is a party. Except as contemplated by this
\nAgreement, no permit, authorization, consent or approval of or by, or any
\nnotification of or filing with, any Governmental Authority or other person is
\nrequired in connection with the execution, delivery and performance by Parent or
\nAcquisition Sub of this Agreement or the Related Agreements to which they are a
\nparty or the consummation of the transactions contemplated hereby or thereby,
\nother than (i) the filing with the SEC of such reports and information under the
\nSecurities and Exchange Act of 1934, as amended (the “Exchange Act”), and the
\nrules and regulations promulgated by the SEC thereunder, as may be required in
\nconnection with this Agreement and the transactions contemplated hereby, (ii)
\nthe filing of such documents with, and the obtaining of such orders from,
\nvarious state securities and blue-sky authorities as are required in connection
\nwith the transactions contemplated hereby, (iii) the filing of the this
\nAgreement or a certificate or articles of merger with the Secretary of State of
\nthe State of Delaware and the Pennsylvania Corporation Commission and (iv) such
\nother consents, waivers, authorizations, filings, approvals and registrations
\nwhich if not obtained or made would materially impair the ability of Parent or
\nAcquisition Sub to consummate the transactions contemplated by this Agreement,
\nincluding, without limitation, the Merger (each of the actions reflected in
\nclauses (i), (ii) and (iii) to be taken by Parent).<\/p>\n
31<\/p>\n
(d) SEC DOCUMENTS.<\/p>\n
(i) As of their respective filing dates, or in the case of
\n registration statements, their respective effective dates, none of the
\n documents or reports filed by Parent with the SEC (“Parent SEC Documents”)
\n (including all exhibits and schedules thereto and documents incorporated by
\n reference therein) contained any untrue statement of a material fact or
\n omitted to state a material fact required to be stated therein or necessary
\n in order to make the statements therein, in light of the circumstances
\n under which they were made, not misleading, and the Parent SEC Documents
\n complied when filed, or in the case of registration statements, as of their
\n respective effective dates, in all material respects with the then
\n applicable requirements of the Securities Act or the Exchange Act, as the
\n case may be, and the rules and regulations promulgated by the SEC
\n thereunder.<\/p>\n
(ii) All financial statements (including the notes thereto) of Parent
\n included in Parent SEC Documents complied as to form in all material
\n respects with the then applicable accounting requirements and the published
\n rules and regulations of the SEC with respect thereto, were prepared in
\n accordance with GAAP during the periods involved and fairly present the
\n financial position of Parent as at the dates thereof and the results of
\n their operations, stockholders’ equity and cash flows for the period then
\n ended.<\/p>\n
(e) TAX MATTERS. To the Knowledge of the Parent, neither the Parent nor
\nany of its Affiliates has taken or agreed to take any action, failed to take any
\naction or is aware of any fact or circumstance that would prevent the Merger
\nfrom constituting a reorganization within the meaning of Section 368(a) of the
\nCode or that would prevent the Merger Shares from qualifying as stock within the
\nmeaning of Section 354 of the Code rather than as “other property” within the
\nmeaning of Section 356 of the Code.<\/p>\n
ARTICLE IV<\/p>\n
RELATED AGREEMENTS<\/p>\n
4.1 RELATED AGREEMENTS. In connection with the execution and delivery of
\nthis Agreement, the following agreements (such agreements, together with the
\nGeneral Indemnity Escrow Agreement and the Specific Indemnity Escrow Agreement
\nbeing herein collectively referred to as the “Related Agreements”) are being
\nexecuted and delivered by the respective parties thereto:<\/p>\n
(a) EMPLOYEES. At Closing, each (i) equityholder of the Company who is
\n expected to be an employee of Parent or the Surviving Corporation upon the
\n Closing and (ii) employee of the Company who is expected to accept employment
\n with Parent or the Surviving Corporation subsequent to the Closing, will enter
\n into an Employee Confidentiality and Inventions Agreement, effective as of the
\n Effective Time, in the form of EXHIBIT C-1 attached hereto (the “Employee
\n Confidentiality Agreement”), providing for, among other things, non-disclosure
\n of confidential information and ownership of proprietary information and
\n rights. Bryn Kaufman, Sean McGilloway and Eric Lorenzoni will, as of the
\n Effective Time, enter into employment agreements, in the forms of EXHIBIT C-2,
\n C-4 AND C-5, respectively (“Employment Agreements”). Jeffrey Harrow will, as of
\n the Effective Time, enter into a non-competition and non-solicitation
\n agreement, in the form of EXHIBIT C-6 (the “Non-Compete Agreement”). The
\n salespersons listed on Schedule 4.1(a) hereto who are expected to be employees
\n of Parent or the Surviving Corporation upon the Closing will enter into an
\n Employee Confidentiality, Inventions and Non-Competition Agreement in the form
\n of EXHIBIT C-7.<\/p>\n
32<\/p>\n
(b) INDEMNITY ESCROW AGREEMENTS. At Closing, each of Parent, the
\nStockholders’ Committee and the Indemnity Escrow Agent will enter into the
\nGeneral Indemnity Escrow Agreement in the form of EXHIBIT B-1 and the Specific
\nIndemnity Escrow Agreement in the form of EXHIBIT B-2.<\/p>\n
(c) LOCK UP AGREEMENTS. At Closing, Bryn Kaufman is entering into a lock
\nup agreement, effective as of the Effective Time, in the form of EXHIBIT D-1,
\nwhereby twenty (20%) of the Merger Shares he will receive at the Closing
\n(exclusive of the 10% held pursuant to the General Indemnity Escrow Agreement
\nand 5% held pursuant to the Specific Indemnity Escrow Agreement) will be
\nreleased from restrictions on transfer every three (3) months beginning on the
\nfourth (4th) month anniversary of the Closing Date. At Closing, Jeffrey K.
\nHarrow, Liberty Ventures I, L.P. and Janney Montgomery Scott LLC, as nominee,
\nare entering into individual lock up agreements, effective as of the Effective
\nTime, in the form of EXHIBIT D-2 attached hereto (together with Bryn Kaufman’s
\nagreement, the “Lock Up Agreements”), whereby twenty-five (25%) of the Merger
\nShares each will receive at the Closing (exclusive of the 10% held pursuant to
\nthe General Indemnity Escrow Agreement and 5% held pursuant to the Specific
\nIndemnity Escrow Agreement) will be released from restrictions on transfer every
\nthree (3) months beginning on the fourth (4th) month anniversary the Closing
\nDate.<\/p>\n
(d) REGISTRATION RIGHTS AGREEMENTS. At Closing, each of the stockholders
\nof the Company and the Parent are entering into a Registration Rights Agreement
\neffective as of the Effective Time, in the form of EXHIBIT E attached hereto
\n(collectively, the “Registration Rights Agreements”), providing for registration
\nrights with respect to the Merger Shares.<\/p>\n
(e) RELEASE AGREEMENTS. At Closing, each Stockholder, option holder,
\nwarrant holder, and employee of the Company is entering into a Release
\nAgreement, effective as of the Effective Time, in the form of EXHIBIT F attached
\nhereto (the “Release Agreements”), providing for, among other things, release of
\nthe Company, Parent and Parent’s affiliates from any and all claims, known and
\nunknown, that such Stockholder may have against the Company through the
\nEffective Time.<\/p>\n
(f) STOCKHOLDER AGREEMENT. Simultaneous with the execution and delivery
\nof this Agreement, each of the Stockholders of the Company identified on
\nSchedule I hereto is entering into a Stockholder Agreement with Parent,
\neffective as of the date hereof, in the form of EXHIBIT G attached hereto
\n(collectively, the “Stockholder Agreements”), pursuant to which, among other
\nthings, such Stockholder shall agree to vote in favor of or consent in writing
\nto the Merger and shall not transfer their shares of Company Common Stock except
\nin accordance with the Stockholder Agreement.<\/p>\n
(g) TERMINATION AGREEMENT. At Closing, each of the Stockholders of the
\nCompany identified on Schedule 4.1(g) attached hereto is entering into a
\nTermination Agreement, effective as of the Effective Time, with respect to the
\nagreement(s) to which such Stockholders and the Company are a party, each in the
\nForm of EXHIBIT H attached hereto (the “Termination Agreement”).<\/p>\n
33<\/p>\n
ARTICLE V<\/p>\n
CONDUCT AND TRANSACTIONS PRIOR TO EFFECTIVE TIME;
\n ADDITIONAL AGREEMENTS<\/p>\n
5.1 ACCESS TO RECORDS AND PROPERTIES OF EACH PARTY; CONFIDENTIALITY. From
\nand after the date hereof until the Effective Time or the earlier termination of
\nthis Agreement pursuant to Section 9.1 hereof (the “Executory Period”), the
\nCompany and the Stockholders shall permit Parent and its consultants and
\nprofessional advisors to conduct, and assist Parent and its consultants and
\nprofessional advisors in the conduct of, a full and complete investigation of
\nthe Company’s business and technology including, without limitation, a market
\nand competitive products and technology analysis and a review of the Company’s
\nbooks and records, contracts, technology, intellectual property, inventory,
\nequipment, technical materials, customer records and other assets, reasonable,
\nnon-disruptive access to, and communications with current and former employees
\nof the Company (the “Investigation”). The Investigation shall be conducted
\nduring normal business hours. Under no circumstances shall any information
\ndisclosed by the Stockholders or the Company to Parent, or otherwise in Parent’s
\npossession, on or before the Effective Time, limit or restrict in any manner any
\nright of Parent to terminate this Agreement upon the terms and conditions
\nherein. All such information shall be subject to the confidentiality agreements
\ncurrently existing between the parties; the Investigation shall not give Parent
\nthe right to use any disclosed or discovered information beyond the scope of
\nthese provisions or agreements or any applicable license agreement.<\/p>\n
5.2 OPERATION OF BUSINESS OF THE COMPANY. During the Executory Period,
\nthe Company shall operate its business as now operated and only in the normal
\nand ordinary course and, consistent with such operation, will use its best
\nefforts to preserve intact its business and assets, to keep available the
\nservices of its officers and employees and to maintain satisfactory
\nrelationships with persons having business dealings with it. Without limiting
\nthe generality of the foregoing, during the Executory Period, the Company shall
\nnot, without the prior written consent of Parent, (a) take any action that would
\nresult in any of the representations and warranties of the Company herein
\nbecoming untrue in all material respects (except for any representation or
\nwarranty that by its terms is qualified by materiality, in which case it shall
\nbe true and correct in all respects) or in any of the conditions to the Merger
\nnot being satisfied, or (b) take or cause to occur any of the actions or
\ntransactions described in Section 3.1(g)(iii) through (xix), except as disclosed
\nin Section 3.1(g) of the Company Disclosure Schedule.<\/p>\n
5.3 NEGOTIATION WITH OTHERS. During the Executory Period, the Company
\nshall not (and the Company shall not permit the Company’s employees, directors,
\nofficers, advisors, consultants or agents to), and each of the Stockholders
\nshall not, directly or indirectly: (i) solicit, initiate or engage in any
\ndiscussions or negotiations with, whether or not initiated by the Company or any
\nsuch Stockholder, or provide any information to, or take any other action with
\nthe intent to facilitate the efforts of, any third party relating to any
\npossible agreement (whether binding or in principle) or other arrangement
\ninvolving (1) the acquisition of the Company (whether by way of merger, purchase
\nof capital stock, purchase of assets or otherwise); (2) any financing of, or
\ninvestment in, including the purchase of any capital stock in, the Company; (3)
\nthe sale, license, disposition or encumbrance of any Intellectual Property of
\nthe Company; or (4) any action or agreement that would otherwise be inconsistent
\nwith the terms of this Agreement, or the Related <\/p>\n
34<\/p>\n
Agreements or that would prohibit the performance of the Company’s or the
\nStockholders’ obligations under this Agreement or the Related Agreements or that
\ncould reasonably be expected to materially diminish the likelihood of or render
\nimpracticable or undesirable the consummation of the Merger (each, a “Prohibited
\nTransaction”); or (ii) authorize or consummate a Prohibited Transaction. In
\naddition, upon execution and delivery of this Agreement, the Company and each
\nStockholder shall: (i) terminate any and all discussions, if any, it or he may
\nbe having regarding a Prohibited Transaction; and (ii) promptly notify Parent in
\nwriting if it or he thereafter receives any inquiries or offers from any person
\nor entity regarding a Prohibited Transaction, which notice shall contain the
\nidentity of such person or entity, the nature of the Prohibited Transaction
\nproposed and the material terms of the proposal, and the Company and each
\nStockholder shall refuse to discuss, and promptly reject such inquiry or offer.<\/p>\n
5.4 DISSENTING STOCKHOLDERS. Prior to the Closing, the Company shall give
\nParent (a) prompt notice of any demand by stockholders (the “Dissenting
\nStockholders”) for appraisal of their shares of Company Stock in accordance with
\nthe Pennsylvania Statute and (b) the opportunity to direct all negotiations and
\nproceedings with respect to any such demands. Prior to the Closing, the Company
\nshall not, except with the prior written consent of Parent, voluntarily make any
\npayment with respect to, or settle or offer to settle, any such demands for
\npayment.<\/p>\n
5.5 PREPARATION OF FILINGS. As promptly as practicable after the date of
\nthis Agreement, Parent and the Company shall properly prepare and file any
\nfilings required under the Exchange Act, the Securities Act or any other Federal
\nor state laws and Parent shall properly prepare and file any filings required
\nunder state securities or “blue sky” laws, in each case relating to the Merger
\nand the transactions contemplated by this Agreement (collectively, the
\n“Filings”). The Company shall promptly furnish Parent with all information
\nconcerning the Company and the stockholders of the Company as may be reasonably
\nrequested by Parent in connection with any action contemplated by this Section
\n5.5. The Parent and the Company will notify the other promptly of the receipt of
\nany comments from any government officials for amendments or supplements to any
\nFiling or for additional information and will supply the other with copies of
\nall correspondence between such party or any of its representatives, on the one
\nhand, and any government officials, on the other hand, with respect to the
\nMerger or any Filing. The Parent and the Company shall promptly provide the
\nother (or its counsel) with copies of all filings made by such party with any
\nGovernmental Authority in connection with this Agreement and the transactions
\ncontemplated hereby and thereby. The Filings shall comply in all material
\nrespects with all applicable requirements of law. Whenever any event occurs
\nwhich should be set forth in an amendment or supplement to any Filing, Parent or
\nthe Company, as the case may be, shall promptly inform the other party of such
\noccurrence and cooperate in filing with any government officials, and\/or mailing
\nto the Stockholders, such amendment or supplement.<\/p>\n
5.6 ADVICE OF CHANGES. During the Executory Period, the Company shall
\nconfer with Parent on a regular and frequent basis, report on operational
\nmatters and promptly advise Parent of any change, event or circumstance having,
\nor which, insofar as can reasonably foreseen, could have a Company Material
\nAdverse Effect or which could impair (negatively or positively) its financial
\nprojections or forecasts.<\/p>\n
35<\/p>\n
5.7 STOCKHOLDER APPROVAL. The Company shall (a) obtain in compliance with
\napplicable law and the Company’s Charter and By-laws the requisite approval of
\nthe stockholders of the Company after the mailing of the Stockholders’ Materials
\nor by written consent for the purpose of obtaining the approval of the Merger,
\nthis Agreement and the transactions contemplated hereby (in either case, the
\n“Stockholder Action”), (b) take or cause to be taken all such other action as
\nmay be required by the Pennsylvania Statute and any other applicable law in
\nconnection with the Merger and this Agreement, in each case as promptly as
\npossible and (c) reasonably cooperate with and assist Parent and its
\nrepresentatives in taking any such actions as may reasonably be required to
\nconsummate the Merger, including obtaining the consent and approval of any third
\nparties or governmental agencies. In connection with the Stockholder Action, the
\nCompany’s Board of Directors shall unanimously recommend that the Stockholders
\nof the Company consent in writing to the Merger and the approval and adoption of
\nthis Agreement and shall take all reasonable actions necessary to solicit such
\napproval. The Company shall prepare and distribute any written notice and other
\nmaterials relating to the Stockholders’ Action, in accordance with the Charter
\nand by-laws of the Company, the Pennsylvania Statute and any other Federal and
\nstate laws relating to the Merger or any other transaction relating to or
\ncontemplated by this Agreement (collectively, the “Stockholders’ Materials”);
\nprovided, however, that all Stockholders’ Materials shall be in form and
\nsubstance reasonably satisfactory to Parent and its counsel; and provided
\nfurther, that if any event occurs that should be set forth in an amendment or
\nsupplement to any Stockholders’ Materials, the Company shall promptly inform
\nParent thereof (or, if such event relates solely to Parent, Parent shall
\npromptly inform the Company thereof), and the Company shall promptly prepare an
\namendment or supplement in form and substance satisfactory to Parent in
\naccordance with the Charter and by-laws of the Company, the Pennsylvania Statute
\nand any other Federal or state laws.<\/p>\n
5.8 LEGAL CONDITIONS TO MERGER. Each party hereto shall take all
\nreasonable actions necessary to comply promptly with all legal requirements that
\nmay be imposed on such party with respect to the Merger and will take all
\nreasonable actions necessary to cooperate with and furnish information to the
\nother party or parties, as the case may be, in connection with any such
\nrequirements imposed upon such other party or parties in connection with the
\nMerger. Each party hereto shall take all reasonable actions necessary (a) to
\nobtain (and will take all reasonable actions necessary to promptly cooperate
\nwith the other party or parties in obtaining) any consent, authorization, order
\nor approval of, or any exemption by, any Governmental Authority, or other third
\nparty, required to be obtained or made by such party (or by the other party or
\nparties) in connection with the Merger or the taking of any action contemplated
\nby this Agreement, (b) to defend, lift, rescind or mitigate the effect of any
\nlawsuit, order, injunction or other action adversely affecting the ability of
\nsuch party to consummate the transactions contemplated hereby and (c) to fulfill
\nall conditions precedent applicable to such party pursuant to this Agreement.<\/p>\n
5.9 EFFORTS TO CONSUMMATE. Subject to the terms and conditions herein
\nprovided, the parties hereto shall use their respective best efforts to do or
\ncause to be done all such acts and things as may be necessary, proper or
\nadvisable, consistent with all applicable laws and regulations, to consummate
\nand make effective the transactions contemplated hereby and to satisfy or cause
\nto be satisfied all conditions precedent that are set forth in Article VI as
\nsoon as reasonably practicable, provided, however, that neither Parent nor any
\nof its affiliates shall be under any obligation to (x) make proposals, execute
\nor carry out agreements or submit to orders providing for the sale or other
\ndisposition or holding separate (through the establishment of a trust or
\notherwise) of any assets or categories of assets of Parent, any of its
\naffiliates, the Company or the holding separate of the Company Stock or imposing
\nor seeking to impose any limitation on the ability of Parent or any of its
\nsubsidiaries or affiliates to conduct their business or own such assets or to
\nacquire, hold or exercise full rights of ownership of the shares Company Stock.<\/p>\n
36<\/p>\n
5.10 NOTICE OF PROSPECTIVE BREACH. Each party hereto shall immediately
\nnotify the other parties in writing upon the occurrence of any act, event,
\ncircumstance or thing that is reasonably likely to cause or result in a
\nrepresentation or warranty hereunder to be untrue at the Closing, the failure of
\na closing condition to be achieved at the Closing, or any other breach or
\nviolation hereof or default hereunder.<\/p>\n
5.11 PUBLIC ANNOUNCEMENTS. The parties hereto agree that, to the maximum
\nextent feasible, but subject to the public disclosure and other legal
\nobligations of Parent and regulatory obligations to which each may be subject,
\nthey shall advise and confer prior to the issuance (and provide copies to the
\nother party prior to issuance) of any public announcement or reports or
\nstatements with respect to the Merger; provided, however, that neither the
\nCompany nor Parent or Acquisition Sub will issue any report, statement or
\nrelease pertaining to this Agreement or any transaction contemplated hereby,
\nwithout the prior written consent of the other parties.<\/p>\n
5.12 SUPPORT OF MERGER BY OFFICERS AND DIRECTORS. The Company shall use
\nits best efforts to cause all of its officers and directors to support the
\nMerger and to take all actions and execute all documents reasonably requested by
\nthe other parties hereto to carry out the intent of the parties with respect to
\nthe transactions contemplated hereby.<\/p>\n
5.13 MANAGEMENT AND EMPLOYEES. Parent shall have the right to discuss and
\nsecure satisfactory assurances from management and certain other existing key
\nemployees of the Company that they will continue to be employed by the Surviving
\nCorporation following the consummation of the Merger.<\/p>\n
5.14 FINANCIAL STATEMENTS. The Company will provide Parent at or prior to
\nthe Effective Time with an unaudited balance sheet of the Company as of August
\n31, 2000.<\/p>\n
5.15 GUARANTEES. The Company, Parent and Bryn Kaufman will use all
\nreasonable efforts to obtain promptly the release of the guarantee obligations
\nof Bryn Kaufman, or Mr. Kaufman’s substitution for such guarantor, with respect
\nto all guaranty, surety and other similar obligations relating to the
\nobligations of the Company or its business. Parent agrees to indemnify, defend
\nand hold harmless Bryn Kaufman from and against any and all losses, costs,
\ndamages, obligations, claims, liabilities, expenses (including reasonable
\nattorneys’ fees and expenses) and causes of action relating to, resulting from,
\nor arising out of, any such guarantee, surety and other similar obligation.<\/p>\n
37<\/p>\n
ARTICLE VI<\/p>\n
CONDITIONS PRECEDENT<\/p>\n
6.1 CONDITIONS TO EACH PARTY’S OBLIGATIONS. The obligations of each party
\nto perform this Agreement and to effect the Merger are subject to the
\nsatisfaction of the following conditions unless waived (to the extent such
\nconditions can be waived) by all parties hereto:<\/p>\n
(a) STOCKHOLDER APPROVAL. This Agreement and the Merger shall have been
\nduly and validly approved and adopted by the directors and stockholders of the
\nCompany in accordance with the Delaware Statute and the Pennsylvania Statute and
\nthe Company’s Charter and By-laws, and this Agreement or a certificate\/articles
\nof merger shall have been executed and delivered by Acquisition Sub and the
\nCompany and filed with and accepted by the Secretary of State of the State of
\nDelaware and the Pennsylvania Corporation Bureau.<\/p>\n
(b) APPROVALS. All authorizations, consents, orders or approvals of,
\ndeclarations, registrations or filings with or expiration of waiting periods
\nimposed by any Governmental Authority necessary for the consummation of the
\ntransactions contemplated hereby shall have been obtained or made or shall have
\noccurred.<\/p>\n
(c) LEGAL ACTION. No temporary restraining order, preliminary injunction
\nor permanent injunction or other order preventing the consummation of the Merger
\nshall have been issued by any Federal or state court or other Governmental
\nAuthority and remain in effect.<\/p>\n
(d) LEGISLATION. No Federal, state, local or foreign statute, rule or
\nregulation shall have been enacted which prohibits, restricts or delays the
\nconsummation of the transactions contemplated by this Agreement or any of the
\nconditions to the consummation of such transactions.<\/p>\n
(e) TAX OPINIONS. Parent and the Company shall have received written
\nopinions of Parent’s legal counsel and the Company’s legal counsel,
\nrespectively, to the effect that the Merger will constitute a reorganization
\nwithin the meaning of Section 368(a) of the Code, and such opinions shall not
\nhave been withdrawn. In rendering such opinions, counsel shall be entitled to
\nrely upon, among other things, reasonable assumptions as well as representations
\nof Parent, Acquisition Sub and the Company, and Parent Acquisition Sub and the
\nCompany agree to provide reasonable and customary representations in connection
\nwith the issuance of such opinions.<\/p>\n
6.2 CONDITIONS TO OBLIGATIONS OF PARENT AND ACQUISITION SUB. The
\nobligations of Parent to perform this Agreement and of Acquisition Sub to
\nperform this Agreement are subject to the satisfaction of the following
\nconditions unless waived (to the extent such conditions can be waived) by Parent
\nand Acquisition Sub:<\/p>\n
(a) REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE STOCKHOLDERS.
\nThe representations and warranties of the Company and the Stockholders set forth
\nin Sections 3.1 and 3.2 hereof, respectively, shall be true and correct in all
\nmaterial respects (except for any representation or warranty that by its terms
\nis qualified by materiality, in which case it shall be true and correct in all
\nrespects) as of the date of this Agreement, and as of the Closing Date as though
\nmade at and as of such dates, respectively, and Parent and Acquisition Sub shall
\nhave received a certificate signed by the Chief Executive Officer or the Chief
\nFinancial Officer and each Stockholder, respectively, to that effect.<\/p>\n
38<\/p>\n
(b) SECRETARY’S CERTIFICATE. Parent and Acquisition Sub shall have
\nreceived a Certificate for the Secretary of the Company certifying the board of
\ndirector resolutions and the vote of the stockholders approving the Merger, the
\nArticles of Incorporation of the Company and the By-laws of the Company.<\/p>\n
(c) PERFORMANCE OF OBLIGATIONS OF THE COMPANY AND THE STOCKHOLDERS. The
\nCompany and the Stockholders shall have performed in all material respects the
\nobligations required to be performed by it and them, respectively, under this
\nAgreement prior to or as of the Closing Date, and Parent and Acquisition Sub
\nshall have received a certificate signed by the Chief Executive Officer or the
\nChief Financial Officer on behalf of the Company and each Stockholder,
\nrespectively, to that effect.<\/p>\n
(d) AUTHORIZATION OF MERGER. All actions necessary to authorize the
\nexecution, delivery and performance of this Agreement and the Related Agreements
\nby the Company and the consummation of the Merger and the other transactions
\ncontemplated hereby and thereby shall have been duly and validly taken by the
\nBoard of Directors of the Company, and the Company and the Stockholders shall
\nhave full power and right to effect the Merger on the terms provided herein.<\/p>\n
(e) OPINION OF THE COMPANY’S COUNSEL. Parent and Acquisition Sub shall
\nhave received an opinion dated the Closing Date of Morgan, Lewis & Bockius,
\ncounsel to the Company in form and substance reasonably satisfactory to Parent
\nand Acquisition Sub.<\/p>\n
(f) CONSENTS AND APPROVALS. Parent and Acquisition Sub shall have
\nreceived duly executed copies of all consents, (except the consent of any
\nmanufacturer) and approvals contemplated by this Agreement or the Company
\nDisclosure Schedule, in form and substance satisfactory to Parent and
\nAcquisition Sub.<\/p>\n
(g) RELATED AGREEMENTS. Each of the Related Agreements shall be in full
\nforce and effect as of the Effective Time and become effective in accordance
\nwith the respective terms thereof and the actions required to be taken
\nthereunder by the parties thereto immediately prior to the Effective Time shall
\nhave been taken, and each person or entity who or which is required or
\ncontemplated by the parties hereto to be a party to any Related Agreement who or
\nwhich did not theretofore enter into such Related Agreement shall execute and
\ndeliver such Related Agreement.<\/p>\n
(h) ABSENCE OF MATERIAL ADVERSE CHANGE. There shall have been no Company
\nMaterial Adverse Change prior to the Closing.<\/p>\n
(i) RESIGNATION OF DIRECTORS. The directors of the Company immediately
\nprior to the Effective Time shall have resigned as directors of the Surviving
\nCorporation effective as of the Effective Time.<\/p>\n
39<\/p>\n
(j) DISSENTERS. All of the stockholders of the Company shall have
\nconsented to the Merger and delivered all of their capital stock to the Parent
\nin accordance with the terms hereof, and none of the holders of the issued and
\noutstanding shares of Company Stock shall have exercised, or shall have any
\ncontinued right to exercise, appraisal, dissenter’s or similar rights of
\nappraisal under the Pennsylvania Statute.<\/p>\n
(k) EMPLOYMENT AGREEMENTS. Each person identified on SCHEDULE 6.2(k)
\nattached hereto (each a “Key Employee”) shall have accepted an offer of
\nemployment with Parent or the Surviving Corporation on terms reasonably
\nsatisfactory to Parent and each such person and executed the applicable form of
\nEmployment Agreement set out in Section 4.1(a).<\/p>\n
(l) DEFAULT UNDER AGREEMENTS. The consummation of the transactions
\ncontemplated hereby shall not cause the Company to be in default under any
\nmaterial agreement or instrument to which it is a party or by which it or any of
\nits properties are bound, the result of which could have a Company Material
\nAdverse Effect.<\/p>\n
(m) COMPANY EXPENSES. A true, correct and complete schedule (the
\n“Schedule of Expenses”) of all Company Expenses paid or incurred by or on behalf
\nof the Company through the Closing Date, accompanied by a certificate signed by
\nthe Chief Executive Officer or Chief Financial Officer of the Company certifying
\nthe accuracy and completeness thereof, shall have been delivered by the Company;
\nand the Company shall have furnished evidence reasonably satisfactory to Parent
\nthat the stockholders of the Company have either paid directly or contributed to
\nthe Company in cash an amount equal, in the aggregate, to the amount of Company
\nExpenses, subject to the second proviso set forth in Section 10.1 hereof.<\/p>\n
(n) SEPTEMBER 30, 2000. The Closing Date shall occur on or before
\nSeptember 30, 2000.<\/p>\n
(o) RELEASE OF NOTEHOLDERS. The Company shall have obtained a signed
\nrelease from each of the Noteholders agreeing to forego warrants for Series A
\nStock to have been issued in connection with the Bridge Notes.<\/p>\n
(p) LICENSE FEES. The Company shall have paid all amounts due under any
\nlicense agreement through the Closing Date.<\/p>\n
6.3 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligations of the
\nCompany to perform this Agreement are subject to the satisfaction of the
\nfollowing conditions unless waived (to the extent such conditions can be waived)
\nby the Company:<\/p>\n
(a) REPRESENTATIONS AND WARRANTIES OF PARENT. The representations and
\nwarranties of Parent and Acquisition Sub set forth in Section 3.3 hereof shall
\nbe true and correct in all material respects (except for any representation or
\nwarranty that by its terms is qualified by materiality, in which case it shall
\nbe true and correct in all respects) as of the date of this Agreement, and as of
\nthe effective date of the Stockholder Action and as of the Closing Date as
\nthough made at and as of such dates, respectively, and the Company shall have
\nreceived a certificate signed by Chief Executive Officer or Chief Financial
\nOfficer of Parent and the Chief Executive Officer or Chief Financial Officer of
\nAcquisition Sub to that effect.<\/p>\n
40<\/p>\n
(b) PERFORMANCE OF OBLIGATIONS OF PARENT AND ACQUISITION SUB. Parent and
\nAcquisition Sub shall have performed in all material respects their respective
\nobligations required to be performed by them under this Agreement prior to or as
\nof the Closing Date and the Company shall have received a certificate signed by
\nthe Chief Executive Officer or Chief Financial Officer of Parent and the Chief
\nExecutive Officer or Chief Financial Officer of Acquisition Sub to that effect.<\/p>\n
(c) RELATED AGREEMENTS. Parent shall have executed and delivered the
\nRelated Agreements to which it is a party and all other agreements to which
\nParent is to be party pursuant to the terms of Section 4.1.<\/p>\n
(d) STOCK CERTIFICATES. Parent shall have delivered a letter to its
\ntransfer agent directing the transfer agent to deliver the Merger Shares.<\/p>\n
(e) SECRETARY’S CERTIFICATE. The Company shall have received a
\nCertificate from the Secretary of Parent and Acquisition Sub certifying the
\nboard of director’s resolutions approving the Merger, the stockholder vote on
\nthe Merger, as applicable, the Charters of Parent and Acquisition Sub, and the
\nBy-laws of Parent and Acquisition Sub.<\/p>\n
(f) OPINION OF PARENT AND ACQUISITION SUB’S COUNSEL. The Company shall
\nhave received an opinion dated the Closing Date of Mintz, Levin, Cohn, Ferris,
\nGlovsky and Popeo, P.C., counsel to Parent and Acquisition Sub, in form and
\nsubstance reasonably satisfactory to the Company.<\/p>\n
ARTICLE VII<\/p>\n
ADDITIONAL AGREEMENTS<\/p>\n
7.1 CERTAIN INFORMATION REQUIRED BY THE CODE. Each holder of Company
\nStock or Company Options who holds ten percent (10%) or more (by value) of the
\ninterests in the Company immediately prior to the Merger, within the meaning of
\nSection 1060(e) of the Code, and who, in connection with the Merger, enters into
\na Non-Competition Agreement or other agreement with the Company or the Surviving
\nCorporation (or is related to any person who enters into any such contract or
\nagreement, within the meaning of Section 267(b) or Section 707(b)(1) of the
\nCode) shall furnish Parent with any information required pursuant to Section
\n1060(e) of the Code at such time and in such manner as Parent may request to the
\nextent necessary to comply with regulations promulgated under Section 1060(e) if
\nany.<\/p>\n
7.2 RESTRICTION ON TRANSFER. <\/p>\n
(a) The shares of Parent Common Stock to be issued to each Stockholder of
\nthe Company pursuant to the Merger and any shares of capital stock or other
\nsecurities received with respect thereto (collectively, the “Restricted
\nSecurities”) shall not be sold, transferred, assigned, pledged, encumbered or
\notherwise disposed of (each, a “Transfer”) in compliance with the provisions of
\nthe Securities Act. Each Stockholder of the Company shall observe and comply
\nwith the Securities Act and the rules and regulations promulgated by the SEC
\nthereunder as now in effect or hereafter enacted or promulgated, and as from
\ntime to time amended, in connection with any Transfer of Restricted Securities
\nbeneficially owned by the stockholder.<\/p>\n
41<\/p>\n
(b) Each certificate representing Restricted Securities issued to a
\nStockholder of the Company and each certificate for such securities issued to
\nsubsequent transferees of any such certificate shall (unless otherwise permitted
\nby the provisions of Sections 7.2(c) and 7.2(d) hereof) be stamped or otherwise
\nimprinted with a legend in substantially the following form:<\/p>\n
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
\n INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
\n AS AMENDED, OR ANY APPLICABLE STATE SECURITIES OR “BLUE-SKY” LAWS. THESE
\n SECURITIES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, ENCUMBERED OR
\n OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
\n THEREFROM.”<\/p>\n
(c) Notwithstanding the foregoing provisions of this Section 7.2, the
\nrestrictions imposed by this Section 7.2 upon the transferability of Restricted
\nSecurities shall cease and terminate when (i) any such shares are sold or
\notherwise disposed of pursuant to an effective registration statement under the
\nSecurities Act or pursuant to an exemption therefrom, the securities so
\ntransferred are not required to bear the legend set forth in Section 7.2(b) or
\n(ii) the holder of such Restricted Securities has met the requirements for
\nTransfer of such Restricted Securities pursuant to subparagraph (k) of Rule 144.
\nWhenever the restrictions imposed by this Section 7.2 shall terminate, as herein
\nprovided, the holder of Restricted Securities as to which such restrictions have
\nterminated shall be entitled to receive from Parent, without expense, a new
\ncertificate not bearing the restrictive legend set forth in Section 7.2(b) and
\nnot containing any other reference to the restrictions imposed by this Section
\n7.2.<\/p>\n
(d) Each Stockholder of the Company understands and agrees that Parent, at
\nits discretion, may cause stop transfer orders to be placed with its transfer
\nagent with respect to certificates for Restricted Securities owned by such
\nStockholder but not as to certificates for such shares of Parent Common Stock as
\nto which the legend set forth in paragraph (b) of this Section 7.2 is no longer
\nrequired because one or more of the conditions set forth in Section 7.2(c) shall
\nhave been satisfied, in the event of a proposed transfer in violation or breach
\nof this Section 7.2 or that is or may otherwise be unlawful.<\/p>\n
7.3 CONFIDENTIALITY. The Company, and the Stockholders, acknowledge and
\nrecognize that the Subject Business has been conducted or is currently planned
\nto be conducted by the Company throughout the world, and further acknowledge and
\nrecognize the highly competitive nature of the industry in which the Subject
\nBusiness is involved and that, accordingly, in consideration of the premises
\ncontained herein, the consideration to be received hereunder and the direct and
\nindirect benefits to the Company and the Stockholders of the transactions
\ncontemplated hereby, and in consideration of and as an inducement to Parent and
\nAcquisition Sub to enter into to this Agreement and to consummate the
\ntransactions contemplated hereby, from and after the Effective Time, the Company
\nand the Stockholders shall not use or disclose to any Person, any Confidential
\nInformation or the terms and conditions of this Agreement, for any reason or
\npurpose whatsoever, nor shall it or they make use of any of the Confidential
\nInformation for its own purposes or for the benefit of any Person except (i) in
\norder to facilitate the fulfillment of such party’s obligations hereunder, (ii)
\nto Parent and the Surviving Corporation, (iii) as required by law or judicial
\nprocess, (iv) as required to fulfill legal and regulatory <\/p>\n
42<\/p>\n
obligations, if any or (v) to such party’s attorneys, accountants, other
\nadvisors, officers, employees, directors and equityholders, as applicable,
\nprovided that such third party agrees to be bound by the confidentiality
\nprovisions hereof. For purposes of this Agreement, “Confidential Information”
\nshall mean Intellectual Property Rights of the Company, the Surviving
\nCorporation or Parent or its affiliates and all information of a proprietary
\nnature relating to the Company, the Surviving Corporation or Parent or its
\naffiliates or the Subject Business (other than information that is in the public
\ndomain at the time of receipt thereof by the Company or the Stockholders or
\notherwise becomes public other than as a result of the breach by the Company or
\nthe Stockholders of its agreement hereunder or is rightfully received from a
\nthird party without any obligation of confidentiality to Parent or the Company
\nor is independently developed by the Company or the Shareholders) and the terms
\nand conditions of this Agreement. As used herein, the term “Subject Business”
\nshall mean (iv) the business of the Company or such business as is reasonably
\nrelated to the business of the Company or is reasonably based on its technology
\nand (v) the business of Parent or any of its affiliates.<\/p>\n
7.4 REGISTRATION RIGHTS. Parent shall use its commercially reasonable
\nefforts to file, within sixty (60) days following the Closing Date, a
\nregistration statement on Form S-3, as provided in the Registration Rights
\nAgreement substantially in the form set forth as Exhibit E hereto, with the SEC
\ncovering the resale of the shares of Parent Common Stock issued to holders of
\nCompany Stock pursuant to the Merger. Any such registration shall be subject to
\nthe terms and conditions set forth in the Registration Rights Agreement. Parent
\ncovenants that with respect to information contained in the registration
\nstatement and supplied by Parent in connection therewith, such information will
\nnot contain any untrue statement of a material fact or omit to state any
\nmaterial fact required to be stated therein or necessary in order to make the
\nstatements therein not misleading, or omit to state a material fact necessary to
\nmake the statements therein, in light of the circumstances under which they were
\nmade, not misleading; provided, however, that the foregoing covenant of Parent
\nshall not apply with respect to information contained in the registration
\nstatement and supplied in writing for inclusion in the registration statement by
\npersons or entities who were Stockholders of the Company immediately prior to
\nthe Effective Time.<\/p>\n
7.5 COLLECTION BY PARENT. Parent shall use its commercially reasonable
\nefforts to collect all of the accounts receivable of the Company existing on the
\nClosing Date within six (6) months following the Closing Date. In the event
\nParent is indemnified by the Stockholders for any accounts receivable (net of
\nreserves) not collected within such time period, Parent shall continue to use
\ncommercially reasonable efforts to collect such amounts still outstanding for
\nthe benefit of the Stockholders.<\/p>\n
7.6 DIRECTORS AND OFFICERS INSURANCE. Parent shall use its commercially
\nreasonable efforts to obtain directors and officers insurance for the outgoing
\ndirectors and officers of the Company for the six-year period after the Closing
\nDate, provided that the premium paid by Parent for such insurance shall not
\nexceed $25,000.<\/p>\n
43<\/p>\n
7.7 FEE TO JANNEY MONTOGOMERY SCOTT LLC. Parent shall pay to Janney
\nMontgomery Scott LLC the amount of Parent Stock equal to $180,000 on the Closing
\nDate in satisfaction of the Company’s obligations to Janney Montgomery pursuant
\nto a letter agreement dated April 28, 1999.<\/p>\n
7.8 MANUFACTURER CONSENTS. The Company shall use its best efforts to
\nobtain the Microsoft Certified Solution Provider Authorization and Cisco
\nSystems, Inc authorization, to the extent there is an agreement between the
\nCompany and such party pursuant to which such authorization may be obtained.<\/p>\n
ARTICLE VIII<\/p>\n
INDEMNIFICATION<\/p>\n
8.1 DEFINITIONS. As used in this Agreement, the following terms shall
\nhave the following meanings:<\/p>\n
(a) “AFFILIATE” as to any person means any entity, directly or indirectly,
\nthrough one or more intermediaries, controlling, controlled by or under common
\ncontrol with such person.<\/p>\n
(b) “GENERAL EVENT OF INDEMNIFICATION” shall mean the following:<\/p>\n
(i) the untruth, inaccuracy or breach of any representation or
\n warranty contained in Section 3.1, 3.2 or 3.3 of this Agreement, or in the
\n Company Disclosure Schedule, any Exhibit or Schedule hereto or any document
\n delivered in connection herewith; or<\/p>\n
(ii) the breach of any agreement or covenant of the Company, or the
\n Stockholders contained in this Agreement or in the Company Disclosure
\n Schedule, any Exhibit hereto or any document delivered in connection
\n herewith.<\/p>\n
(iii) Notwithstanding the foregoing, any Losses in connection with
\n the MicroWarehouse Litigation shall not be considered a General Event of
\n Indemnification.<\/p>\n
(c) “INDEMNIFIED PERSONS” shall mean and include Parent, Acquisition Sub
\nand the Surviving Corporation and their respective Affiliates, successors and
\nassigns, and the respective officers and directors of each of the foregoing.<\/p>\n
(d) “INDEMNIFYING PERSONS” shall mean and include each of the Stockholders
\nand its or his respective successors, assigns, heirs and legal representatives
\nand estate.<\/p>\n
(e) “LOSSES” shall mean any and all losses, claims, shortages, damages,
\nliabilities, expenses (including reasonable attorneys’ and accountants’ fees),
\nassessments, Taxes (including interest or penalties thereon) sustained, suffered
\nor incurred by any Indemnified Person arising from or in connection with any
\nsuch matter that is the subject of indemnification under Section 8.2 hereof.<\/p>\n
(f) “MICROWAREHOUSE LITIGATION” shall have the meaning ascribed to such
\nterm in Section 2.2(a) of this Agreement.<\/p>\n
44<\/p>\n
8.2 INDEMNIFICATION GENERALLY.<\/p>\n
(a) The Indemnifying Persons shall indemnify the Indemnified Persons from
\nand against any and all Losses arising from or in connection with any General
\nEvent of Indemnification, which shall first be paid from the General Indemnity
\nEscrow Fund (as provided for and defined in the General Indemnity Escrow
\nAgreement) and then by each Indemnifying Person from amounts not contained in
\nthe General Indemnity Escrow Fund; provided that: (i) the indemnification
\nobligations of the Stockholders beyond amounts deposited in the Escrow Fund
\nshall be limited to their pro-rata portion of the Aggregate Consideration; (ii)
\nthe Stockholders shall have no indemnification obligations for Losses resulting
\nfrom breaches by other Stockholders of Sections 3.2(a)-(e), except to the extent
\nof amounts deposited in the Escrow Fund; and (iii) the total amount of Losses
\nfor which the Indemnifying Persons shall indemnify the Indemnified Persons in
\nconnection with any General Event of Indemnification (exclusive of any amount
\nrecovered from the General Indemnity Escrow Fund and exclusive of any amount
\nrecovered pursuant to Section 8.2(b) of this Section) shall be limited to thirty
\npercent (30%) of the Aggregate Consideration and reasonable attorneys’ fees.<\/p>\n
(b) The Indemnifying Persons shall indemnify the Indemnified Persons from
\nand against any and all Losses arising from or in connection with the
\nMicroWarehouse Litigation, which shall first be paid from the Specific Indemnity
\nEscrow Fund (as provided for and defined in the Specific Indemnity Escrow
\nAgreement) and then by each Indemnifying Person from amounts not contained in
\nthe Specific Indemnity Escrow Fund; provided that: (i) the indemnification
\nobligations of Stockholders beyond amounts deposited in the Escrow Fund shall be
\nlimited to their pro-rata portion of the Aggregate Consideration, (ii) the total
\namount of Losses for which the Indemnifying Persons shall indemnify the
\nIndemnified Persons in connection with the MicroWarehouse Litigation (exclusive
\nof any amount recovered from the Specific Indemnity Escrow Fund and exclusive of
\nany amount recovered pursuant to Section 8.1(a) of this Section) shall be
\nlimited to thirty percent (30%) of the Aggregate Consideration and reasonable
\nattorneys’ fees and (iii) if, subsequent to the Effective Time, Parent
\nintentionally fails to honor, or intentionally causes CMP to fail to honor, the
\nletter agreement between the Company and MicroWarehouse dated July 7, 1999 (the
\n“Settlement Agreement”), as such Settlement Agreement now exists, the provisions
\nof this Section 8.2(b) shall no longer apply and Parent shall instruct the
\nIndemnity Escrow Agent to release the Specific Indemnity Escrow Fund to the
\nStockholders within five (5) business days of such failure and shall indemnify
\nthe parties to the Settlement Agreement for actual losses incurred which are
\ndirectly related to Parent’s failure to honor such Settlement Agreement.<\/p>\n
(c) Notwithstanding the foregoing, the Indemnified Persons shall not be
\nentitled to indemnification pursuant to this Article VIII with respect to any
\nLosses until the aggregate amount of such losses under subsections (a) and (b)
\nexceeds $150,000 (the “Threshold Amount”), whereupon the Indemnified Persons
\nshall be entitled to indemnification for all Losses, including the Threshold
\nAmount.<\/p>\n
45<\/p>\n
(d) Notwithstanding any of the foregoing, nothing contained in this
\nSection 8.2 shall in any way limit, impair, modify or otherwise affect the
\nrights of the Indemnified Persons (including rights available under the
\nSecurities Act or the Exchange Act) nor shall there be any limitation of
\nliability of Indemnifying Persons in connection with any of such rights of the
\nIndemnified Persons (A) to bring any claim, demand, suit or cause of action
\notherwise available to the Indemnified Persons based upon an allegation or
\nallegations that the Company and\/or the Indemnifying Persons, or any of them,
\nhad an intent to defraud or made a willful, intentional or reckless
\nmisrepresentation or willful omission of a material fact in connection with this
\nAgreement or the Related Agreements and the transactions contemplated hereby or
\nthereby or (B) to enforce any judgment of a court of competent jurisdiction
\nwhich finds or determines that the Company and\/or the Indemnifying Persons, or
\nany of them, had an intent to defraud or made a willful misrepresentation or
\nomission of a material fact in connection with this Agreement and the
\ntransactions contemplated hereby.<\/p>\n
8.3 ASSERTION OF CLAIMS. No claim shall be brought under Section 8.2
\nhereof unless the Indemnified Persons, or any of them, at any time prior to the
\napplicable Survival Date with respect to a claim under Section 8.2(a), give the
\nStockholders’ Committee (a) written notice of the existence of any such claim,
\nspecifying the nature and basis of such claim and the amount thereof, to the
\nextent known or (b) written notice pursuant to Section 8.4 of any third party
\nclaim, the existence of which might give rise to such a claim but the failure so
\nto provide such notice to the Stockholders’ Committee will not relieve the
\nIndemnifying Persons from any liability which they may have to the Indemnified
\nPersons under this Agreement or otherwise (unless and only to the extent that
\nsuch failure results in the loss or compromise of any rights or defenses of the
\nIndemnifying Persons and they were not otherwise aware of such action or claim).
\nUpon the giving of such written notice as aforesaid, the Indemnified Persons, or
\nany of them, shall have the right to commence legal proceedings prior or
\nsubsequent to the Survival Date for the enforcement of their rights under
\nSection 8.2 hereof.<\/p>\n
8.4 NOTICE AND DEFENSE OF THIRD PARTY CLAIMS. Losses resulting from the
\nassertion of liability by third parties (each, a “Third Party Claim”) shall be
\nsubject to the following terms and conditions:<\/p>\n
(a) The Indemnified Persons shall promptly give written notice to the
\nStockholders’ Committee of any Third Party Claim that might give rise to any
\nLoss by the Indemnified Persons, stating the nature and basis of such Third
\nParty Claim, and the amount thereof to the extent known. Such notice shall be
\naccompanied by copies of all relevant documentation with respect to such Third
\nParty Claim, including, without limitation, any summons, complaint or other
\npleading that may have been served, any written demand or any other document or
\ninstrument. Notwithstanding the foregoing, the failure to provide notice as
\naforesaid to the Stockholders’ Committee will not relieve the Indemnifying
\nPersons from any liability which they may have to the Indemnified Persons under
\nthis Agreement or otherwise (unless and only to the extent that such failure
\ndirectly results in the loss or compromise of any rights or defenses of the
\nIndemnifying Person and they were not otherwise aware of such action or claim).<\/p>\n
(b) The Indemnified Persons shall defend any Third Party Claims with
\ncounsel of their own choosing, and shall act reasonably and in accordance with
\ntheir good faith business judgment in handling such Third Party Claims. The
\nStockholders’ Committee and the Indemnifying Persons, on the one hand, and the
\nIndemnified Persons, on the other hand, shall make available to each other and
\ntheir counsel and accountants all books and records and information relating to
\nany Third Party Claims, keep each other fully apprised as to the details and
\nprogress of all proceedings relating thereto and render to each other such
\nassistance as may be reasonably required to ensure the proper and adequate
\ndefense of any and all Third Party Claims.<\/p>\n
46<\/p>\n
8.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Subject to the further
\nprovisions of this Section 8.5, the representations and warranties of the Parent
\nand Acquisition Sub shall be deemed to be a condition to the Merger and shall
\nnot survive beyond the Effective Time. The representations and warranties made
\nby the Company in Section 3.1 and the Stockholders in Sections 3.2,
\nrespectively, shall survive the Effective Time until the first anniversary of
\nthe Closing Date; provided, however, that Fraud Claims shall survive in
\naccordance with the applicable statute of limitations related to such
\nrepresentations and warranties or such Fraud Claims. For convenience of
\nreference, the date upon which any representation and warranty contained herein
\nshall terminate is referred to herein as the “Survival Date.” Anything contained
\nherein to the contrary notwithstanding, the representations and warranties of
\nthe Company contained in this Agreement (including, without limitation, the
\nCompany Disclosure Schedule) (i) are being given by the Company on behalf of the
\nStockholders and for the purpose of binding the Stockholders to the terms and
\nprovisions of this Article VIII and the Escrow Agreement, and as an inducement
\nto Parent and Acquisition Sub to enter into this Agreement and to approve the
\nMerger (and the Company acknowledges that Parent and Acquisition Sub have
\nexpressly relied thereon) and (ii) are solely for the benefit of the Indemnified
\nPersons and each of them. Accordingly, no third party (including, without
\nlimitation, the Stockholders or anyone acting on behalf of any thereof) other
\nthan the Indemnified Persons, and each of them, shall be a third party or other
\nbeneficiary of such representations and warranties and no such third party shall
\nhave any rights of contribution against the Company or the Surviving Corporation
\nwith respect to such representations or warranties or any matter subject to or
\nresulting in indemnification under this Article VIII or otherwise.<\/p>\n
8.6 STOCKHOLDERS’ COMMITTEE.<\/p>\n
(a) Upon approval of the Merger and\/or upon execution of this Agreement,
\nthe Stockholders shall be deemed, for themselves and their personal
\nrepresentatives and other successors, to have constituted and appointed,
\neffective from and after the Effective Time, a committee of three (3) persons
\ninitially to consist of Jeffrey Harrow, Michael Mufson, and David Robkin, as
\ntheir agents and attorneys-in-fact (the “Stockholders’ Committee”) to take all
\naction required or permitted under this Agreement, the Indemnity Escrow
\nAgreement and the Registration Rights Agreement (including, without limitation,
\nthe execution and delivery of the General Indemnity Escrow Agreement and the
\nSpecific Indemnity Escrow Agreement on behalf of the Stockholders of the
\nCompany, the giving and receiving of all notices and consents and the execution
\nand delivery of all documents, including any amendments of any non-material term
\nor provision hereof or of the General Indemnity Escrow Agreement, the Specific
\nIndemnity Escrow Agreement or Registration Rights Agreement, and the execution
\nand delivery of any agreements and releases in connection with the settlement of
\nany dispute or claim under Article VIII hereof or the Indemnity Escrow Agreement
\nor Registration Rights Agreement). The vote of a majority of the Stockholders’
\nCommittee shall be required to take any action on behalf of the Stockholders
\npursuant to the authority granted to them under this Section 8.7.<\/p>\n
47<\/p>\n
(b) In the event of the death, physical or mental incapacity or
\nresignation of any of the members of any of the Stockholders’ Committee or a
\nvacancy thereon for any other reason, the remaining members of the Stockholders’
\nCommittee shall promptly appoint a further substitute or substitutes and shall
\nadvise Parent thereof. As between the Stockholders’ Committee and the
\nStockholders of the Company, the members of the Stockholders’ Committee shall
\nnot be liable for, and shall be indemnified by the Stockholders or provided with
\ninsurance against, any good faith error of judgment on their part or any other
\nact done or omitted by them in good faith in connection with their duties as
\nmembers of such Committee, except for gross negligence or willful misconduct.
\nThe Stockholders’ Committee may consult with professional advisors of its
\nchoice. The Stockholders’ Committee shall not be responsible for the genuineness
\nor validity of any document and shall have no liability for acting in accordance
\nwith any written instructions given to them and believed by them to be signed by
\nthe proper parties. All expenses incurred by the members of the Stockholders’
\nCommittee in performing their duties (including fees and expenses of
\nprofessional advisors) and any indemnification to be provided to the
\nStockholders’ Committee shall be jointly and severally borne by the
\nStockholders.<\/p>\n
ARTICLE IX<\/p>\n
TERMINATION; AMENDMENT, MODIFICATION AND WAIVER<\/p>\n
9.1 TERMINATION. This Agreement may be terminated, and the Merger
\nabandoned, notwithstanding the approval by Parent, Acquisition Sub and the
\nCompany of this Agreement, at any time prior to the Effective Time, by:<\/p>\n
(a) the mutual consent of Parent, Acquisition Sub and the Company; or<\/p>\n
(b) either Parent or Company, if the conditions set forth in Section 6.1
\nhereof shall not have been met by September 30, 2000, except if such conditions
\nhave not been met solely as a result of the action or inaction of the party
\nseeking to terminate; or<\/p>\n
(c) Parent and Acquisition Sub, if the conditions set forth in Section 6.2
\nhereof shall not have been met, and the Company if the conditions set forth in
\nSection 6.3 hereof shall not have been met, in either case by September 30,
\n2000, except if such conditions have not been met solely as a result of the
\naction or inaction of the party seeking to terminate; or<\/p>\n
(d) either Parent or Company, if such party shall have determined in its
\nsole discretion, exercised in good faith, that the Merger contemplated by this
\nAgreement has become impracticable by reason of the institution of any
\nlitigation, proceeding or investigation to restrain or prohibit the consummation
\nof the Merger, or which questions the validity or legality of the transactions
\ncontemplated by this Agreement.<\/p>\n
Any termination pursuant to this Section 9.1 (other than a termination
\npursuant to Section 9.1(a) hereof) shall be effected by written notice from the
\nparty or parties so terminating to the other parties hereto.<\/p>\n
9.2 EFFECT OF TERMINATION. In the event of the termination of this
\nAgreement as provided in Section 9.1, this Agreement shall be of no further
\nforce or effect, except for Section 5.1, this Section 9.2, and Article X, each
\nof which shall survive the termination of this Agreement; provided, however,
\nthat the liability of any party for any breach by such party of the
\nrepresentations, warranties, covenants or agreements of such party set forth in
\nthis Agreement occurring prior to the termination of this Agreement shall
\nsurvive the termination of this Agreement.<\/p>\n
48<\/p>\n
9.3 SPECIFIC PERFORMANCE. The transactions contemplated by this
\nAgreement, including the Merger, are unique transactions and any failure on the
\npart of the Company and the Stockholders to complete the transactions
\ncontemplated by this Agreement, including the Merger, on the terms of this
\nAgreement will not be fully compensable in damages and the breach or threatened
\nbreach of the provisions of this Agreement would cause Parent irreparable harm.
\nAccordingly, in addition to and not in limitation of any other remedies
\navailable to Parent for a breach or threatened breach of this Agreement, Parent
\nwill be entitled to specific performance of this Agreement upon any breach by
\nthe Company or the Stockholders, and to an injunction restraining any such party
\nfrom such breach or threatened breach.<\/p>\n
ARTICLE X<\/p>\n
MISCELLANEOUS<\/p>\n
10.1 EXPENSES. As used in this Agreement, “Transaction Costs” shall mean,
\nwith respect to any party, all actual, out-of-pocket expenses incurred by such
\nparty to third parties, in connection with this Agreement, the Merger and all
\nother transactions provided for herein and therein; but shall not in any event
\ninclude general overhead; the time spent by employees of such party internally;
\npostage, telephone, telecopy, photocopy and delivery expenses; permit and filing
\nfees; and other non-material expenses that are incidental to the ordinary course
\nof business. Each party hereto shall bear its own fees and expenses in
\nconnection with the transactions contemplated hereby; provided, however, that in
\nthe event the Merger shall be consummated, (a) Parent and Acquisition Sub shall
\nbear all Transaction Costs of Parent and Acquisition Sub and (b) the
\nStockholders of the Company shall bear all Transaction Costs of the Company pro
\nrata among such Stockholders of the Company based on their former relative
\nownership of Company Stock, whether or not such fees and expenses have been paid
\nby the Company or the Stockholders of the Company on or before the Closing Date
\nand whether or not such fees and expenses are reflected in the Company
\nDisclosure Schedule or the Schedule of Expenses (such Transaction Costs of the
\nCompany being herein collectively referred to as the “Company Expenses”),
\nprovided further however, that the first $150,000 of Company Expenses set forth
\non the Schedule of Expenses shall be paid by the Parent and such amount to
\nconstitute the only Transaction Costs to be paid in cash, the remainder of any
\nTransaction Costs to be paid in Merger Shares from the Total Parent Share
\nAmount.<\/p>\n
10.2 ENTIRE AGREEMENT. This Agreement (including the Company Disclosure
\nSchedule and the Exhibits attached hereto) and the other writings referred to
\nherein contain the entire agreement among the parties hereto with respect to the
\ntransactions contemplated hereby and supersede all prior agreements or
\nunderstandings, written or oral, among the parties with respect thereto.<\/p>\n
10.3 DESCRIPTIVE HEADINGS. Descriptive headings are for convenience only
\nand shall not control or affect the meaning or construction of any provision of
\nthis Agreement.<\/p>\n
49<\/p>\n
10.4 NOTICES. All notices or other communications which are required or
\npermitted hereunder shall be in writing and sufficient if delivered personally
\nor sent by nationally-recognized overnight courier or by registered or certified
\nmail, postage prepaid, return receipt requested[, or by electronic mail with a
\ncopy thereof to be delivered by mail (as aforesaid) within 24 hours of such
\nelectronic mail,] or by telecopier, with confirmation as provided above
\naddressed as follows:<\/p>\n
(i) if to Parent or Acquisition Sub, to:<\/p>\n
CYBERIAN OUTPOST, INC.
\n 23 North Main Street, PO Box 636
\n Kent, Connecticut 06757
\n Telecopier: (860) 927-8229
\n E-mail: kate@outpost.com
\n Attention: Katherine N. Vick
\n Executive Vice President<\/p>\n
with a copy to:<\/p>\n
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
\n One Financial Center
\n Boston, MA 02111
\n Telecopier: (617) 542-2241
\n E-mail: mlfantozzi@mintz.com
\n Attention: Michael L. Fantozzi, Esq.<\/p>\n
(ii) if to the Company, to:<\/p>\n
CMPExpress.com, Inc.
\n 5000 Hilltop Drive
\n Brookhaven, PA 19015
\n Telecopier: (610) 499-5000
\n E-mail: tkaminer@cmpexpress.com
\n Attention: Ted I. Kaminer
\n Chief Financial Officer<\/p>\n
with a copy to:
\n Morgan Lewis & Bockius
\n 1701 Market Street
\n Philadelphia, PA 19013-2921
\n Telecopier: (215) 963-5299
\n E-Mail: rsilfen@morganlewis.com
\n Attention: Richard A. Silfen, Esquire<\/p>\n
(iii) if to the Stockholders, at their respective addresses set forth on
\nSCHEDULE I attached hereto;<\/p>\n
50<\/p>\n
or to such other address as the party to whom notice is to be given may
\nhave furnished to the other party in writing in accordance herewith. All such
\nnotices or communications shall be deemed to be received (a) in the case of
\npersonal delivery, on the date of such delivery, (b) in the case of nationally-
\nrecognized overnight courier, on the next business day after the date when sent,
\n(c) in the case of facsimile transmission or telecopier or electronic mail, upon
\nconfirmed receipt, and (d) in the case of mailing, on the third business day
\nfollowing the date on which the piece of mail containing such communication was
\nposted.<\/p>\n
10.5 COUNTERPARTS. This Agreement may be executed in any number of
\ncounterparts by original or facsimile signature, each such counterpart shall be
\nan original instrument, and all such counterparts together shall constitute one
\nand the same agreement.<\/p>\n
10.6 GOVERNING LAW. This Agreement shall be governed by and construed in
\naccordance with the laws of the State of Delaware applicable to contracts made
\nand to be performed wholly therein.<\/p>\n
10.7 BENEFITS OF AGREEMENT. All the terms and provisions of this Agreement
\nshall be binding upon and inure to the benefit of the parties hereto and their
\nrespective successors and permitted assigns. This Agreement shall not be
\nassignable by any party hereto without the consent of the other parties hereto;
\nprovided, however, that anything contained herein to the contrary
\nnotwithstanding, Acquisition Sub may assign and delegate any or all of its
\nrights and obligations hereunder to any other direct or indirect wholly-owned
\nsubsidiary of Parent; provided further, however, that any of the rights granted
\nto and obligations of Parent under this Agreement (other than the payment of the
\nAggregate Consideration) may also be exercised or performed by any entity
\ncontrolled by or under common control with Parent (each, a “Parent Affiliate”);
\nprovided that such Parent Affiliate agrees to be bound by all of the applicable
\nprovisions hereof governing such exercise or performance and that the Company
\nand Stockholders promptly receive written notice of any such exercise or
\nperformance.<\/p>\n
10.8 PRONOUNS. As used herein, all pronouns shall include the masculine,
\nfeminine, neuter, singular and plural thereof whenever the context and facts
\nrequire such construction.<\/p>\n
10.9 AMENDMENT, MODIFICATION AND WAIVER. This Agreement shall not be
\naltered or otherwise amended except pursuant to (a) an instrument in writing
\nsigned by Parent and the Company, if Article VIII is not affected by such
\nalteration or amendment and (b) an instrument in writing signed by (i) Parent,
\n(ii) the Company and (iii) stockholders of the Company owning a majority (by
\nvoting power) of the outstanding shares of Company Stock held by all
\nstockholders of the Company, if Article VIII is affected thereby; provided,
\nhowever, that after the approval and adoption of this Agreement and the Merger
\nby the stockholders of the Company, no amendment of this Agreement shall be made
\nwhich pursuant to the Pennsylvania Statute or other law requires the further
\napproval of the stockholders of the Company; provided further, however, that any
\nparty to this Agreement may waive in writing any obligation owed to it by any
\nother party under this Agreement. The waiver by any party hereto of a breach of
\nany provision of this Agreement shall not operate or be construed as a waiver of
\nany subsequent breach.<\/p>\n
10.10 NO THIRD PARTY BENEFICIARIES. Nothing express or implied in this
\nAgreement is intended to confer, nor shall anything herein confer, upon any
\nperson other than the parties and<\/p>\n
51<\/p>\n
the respective successors or assigns of the parties, any rights, remedies,
\nobligations or liabilities whatsoever.<\/p>\n
10.11 CONSENTS. Except as otherwise expressly provided in this Agreement,
\nany consent or approval of Parent requested or permitted hereunder may be given
\nor withheld in Parent’s sole discretion.<\/p>\n
10.12 INTERPRETATION. This Agreement has been negotiated between the
\nparties and will not be deemed to be drafted by, or the product of, any party.
\nAs such, this Agreement will not be interpreted in favor of, or against, any
\nparty.<\/p>\n
10.13 NO JOINT VENTURE. No party hereto shall make any warranties or
\nrepresentations, or assume or create any obligations, on the other party’s
\nbehalf except as may be expressly permitted hereunder or in writing by such
\nother party. Each party hereto shall be solely responsible for the actions of
\nall its respective employees, agents and representatives.<\/p>\n
[Remainder of this page intentionally left blank]<\/p>\n
52<\/p>\n
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
\nand Plan of Reorganization to be executed on its behalf as of the day and year
\nfirst above written.<\/p>\n
CYBERIAN OUTPOST, INC.<\/p>\n
By: \/s\/ Robert A. Bowman
\n ——————–
\n Name: Robert A. Bowman
\n Title: President and Chief Executive Officer<\/p>\n
SYDNEY ACQUISITION SUB, INC.<\/p>\n
By: \/s\/ Robert A. Bowman
\n ——————–
\n Name: Robert A. Bowman
\n Title: President<\/p>\n
CMPEXPRESS.COM, INC.<\/p>\n
By: \/s\/ Jeffrey K. Harrow
\n ———————
\n Name: Jeffrey K. Harrow
\n Title: Chief Executive Officer<\/p>\n
[COUNTERPART SIGNATURE PAGES OF STOCKHOLDERS
\n ATTACHED HERETO]<\/p>\n
SIGNATURE PAGE TO AGREEMENT AND PLAN OF REORGANIZATION DATED AS OF SEPTEMBER 6,
\n1999 (THE “AGREEMENT”), AMONG CYBERIAN OUTPOST, INC., SYDNEY ACQUISITION SUB,
\nINC., CMPEXPRESS.COM, INC. AND THE OTHER PARTIES TO THE AGREEMENT<\/p>\n
The undersigned hereby executes and delivers the Agreement, authorizes this
\nsignature page to be attached to a counterpart of the Agreement, and agrees to
\nbe bound by the Agreement; and this Signature Page together with the Signature
\nPages of Cyberian Outpost, Inc., Sydney Acquisition Sub, Inc., CMPExpress.com,
\nInc. and the other parties to the Agreement shall constitute counterpart copies
\nof the Agreement in accordance with the terms of the Agreement.<\/p>\n
NAME OF SIGNATORY:<\/p>\n
\/s\/ Dianne Chewning JANNEY MONTGOMERY SCOTT LLC
\n————————— as nominee <\/p>\n
\/s\/ Dennis Flanagan By: \/s\/ Michael Mufson
\n————————— ————————
\n Michael Mufson
\n\/s\/ Jeffrey Harrow
\n————————— \/s\/ Thomas Morse
\n —————————-
\n\/s\/ Ted Kaminer
\n————————— <\/p>\n
\/s\/ Bryn Kaufman
\n—————————<\/p>\n
\/s\/ Bryn Kaufman (as attorney in fact) \/s\/ Michael Mufson
\n————————————– —————————-
\n Walter Kaufman <\/p>\n
LIBERTY VENTURES I, L.P. \/s\/ Brad Oberwager
\n —————————-<\/p>\n
By: \/s\/ David Robkin \/s\/ Bryn Kaufman (as attorney in fact)
\n ———————– ————————————
\n David Robkin Nancy Patterson <\/p>\n
\/s\/ Eric Lorenzoni
\n————————— <\/p>\n
\/s\/ Sean McGilloway \/s\/ David Robkin
\n————————— ————————— <\/p>\n
JANNEY MONTGOMERY SCOTT LLC \/s\/ Richard Vague
\n —————————-
\nBy: \/s\/ Michael Mufson
\n—————————
\n Michael Mufson<\/p>\n
INDEX OF DEFINED TERMS<\/p>\n
Acquisition Sub ………………………………….. Preamble
\nActions …………………………………………. 3.1(o)
\nAffiliate ……………………………………….. 8.1(a)
\nAggregate Consideration …………………………… 2.1
\nAgreement ……………………………………….. Preamble
\nAssumed Option …………………………………… 2.3
\nAudited Financials ……………………………….. 3.1(e)
\nBalance Sheet Date ……………………………….. 3.1(f)
\nBugs ……………………………………………. 3.1(l)(iv)
\nBusiness Day …………………………………….. 1.7
\nCharter …………………………………………. 3.1(a)
\nClosing Date …………………………………….. 1.7
\nClosing …………………………………………. 1.7
\nCode ……………………………………………. Preamble
\nCommon Exchange Ratio …………………………….. 2.1(c)(i)
\nCommon Stock …………………………………….. Preamble
\nCompany …………………………………………. Preamble
\nCompany Common Stock ……………………………… 2.1
\nCompany Disclosure Schedule ……………………….. 3.1
\nCompany Expenses …………………………………. 6.2(m)
\nCompany Financial Statements ………………………. 3.1(e)
\nCompany Material Adverse Effect ……………………. 3.1(a)
\nCompany Options ………………………………….. 2.1
\nCompany Returns ………………………………….. 3.1(h)
\nCompany Rights …………………………………… 3.1(k)(i)
\nConfidential Information ………………………….. 7.3
\nConfidentiality Agreements ………………………… 3.1(k)(v)
\nConstituent Corporations ………………………….. 1.1
\nConvertible Securities ……………………………. 2.1
\nCopyrights ………………………………………. 3.1(k)(ix)
\nCure Date ……………………………………….. 8.2(b)
\nDelaware Statute …………………………………. Preamble
\nDerivative Work ………………………………….. 3.1(k)(vii)
\nDesignated Persons ……………………………….. 3.1(o)
\nDissenting Shares ………………………………… 2.1(d)(i)
\nDissenting Stockholder ……………………………. 2.1(d)(i)
\nDissenting Stockholders …………………………… 5.4
\nEffective Time …………………………………… 1.2
\nEmployee Confidentiality Agreement …………………. 4.1(a)
\nEmployee Plans …………………………………… 3.1(u)(ii)
\nEmployment Agreements …………………………….. 4.1(a)
\nEncumbrances …………………………………….. 3.1(i)
\nERISA …………………………………………… 3.1(u)(i)
\nERISA Affiliate ………………………………….. 3.1(u)(xii)
\nExchange Act …………………………………….. 3.1(y)
\nExecutory Period …………………………………. 5.1
\nFAS No. 5 ……………………………………….. 3.1(f)
\nFilings …………………………………………. 5.5
\nFully Diluted Company Share Amount …………………. 2.1
\nFully Diluted Company Shares ………………………. 2.1
\nGAAP ……………………………………………. 3.1(e)(i)
\nGeneral Event of Indemnification …………………… 8.1(b)
\nGeneral Indemnity Escrow Agreement …………………. 2.2(a)<\/p>\n
i<\/p>\n
General Indemnity Escrow Shares ……………………. 2.2(b)
\nGovernmental Authority ……………………………. 3.1(o)
\nIndemnified Persons ………………………………. 8.1(c)
\nIndemnifying Persons ……………………………… 8.1(d)
\nIndemnity Escrow Agent ……………………………. 2.2(a)
\nIndemnity Escrow Agreement ………………………… 2.2(a)
\nIndemnity Escrow Shares …………………………… 2.2(b)
\nIntellectual Property Rights ………………………. 3.1(k)(xiii)
\nInvestigation ……………………………………. 5.1
\nKey Employee …………………………………….. 6.2(k)
\nKnowledge ……………………………………….. 3.1(ff)
\nLeased Real Property ……………………………… 3.1(j)
\nLeases ………………………………………….. 3.1(j)
\nLiability ……………………………………….. 3.1(f)
\nLicense Agreements ……………………………….. 3.1(k)(xi)
\nLicensed Software ………………………………… 3.1(l)(i)
\nLiquidation Preference Amount ……………………… 2.1(c)(ii)
\nLiquidation Preference Shares ……………………… 2.1(c)(iii)
\nLock Up Agreements ……………………………….. 4.1(c)
\nLosses ………………………………………….. 8.1(e)
\nMerger ………………………………………….. 1.1
\nMerger Shares ……………………………………. 2.1(c)
\nMicroWarehouse Litigation …………………………. 2.2(a)
\nNon-Competition Agreement …………………………. 4.1(a)
\nOutstanding Shares ……………………………….. 2.1
\nOwned Software …………………………………… 3.1(l)(i)
\nParent ………………………………………….. Preamble
\nParent Affiliate …………………………………. 10.7
\nParent Common Stock ………………………………. Preamble
\nParent SEC Documents ……………………………… 3.3(d)(i)(C)
\nPatents …………………………………………. 3.1(k)(xiii)
\nPennsylvania Statute ……………………………… Preamble
\nPreferred Stock ………………………………….. Preamble
\nProhibited Transaction ……………………………. 5.3
\nPurchaser Representative ………………………….. 3.2(d)(i)(I)
\nRegistration Rights Agreement ……………………… 4.1(d)
\nRelated Agreements ……………………………….. 4.1
\nRelease Agreements ……………………………….. 4.1(e)
\nRestricted Securities …………………………….. 7.2(a)
\nSeries A Exchange Ratio …………………………… 2.1(c)
\nSeries A Stock …………………………………… Preamble
\nSoftware ………………………………………… 3.1(l)(i)
\nSpecific Indemnity Escrow Agreement ………………… 2.2(a)
\nSpecific Indemnity Escrow Shares …………………… 2.2(b)
\nStipulated Price …………………………………. 2.1
\nStockholder Action ……………………………….. 5.7
\nStockholder Agreements ……………………………. 4.1(f)
\nStockholders …………………………………….. Preamble
\nStockholders’ Committee …………………………… 8.6(a)
\nStockholders’ Materials …………………………… 5.7
\nSubject Business …………………………………. 7.3
\nSurvival Date ……………………………………. 8.5
\nSurviving Corporation …………………………….. 1.1
\nTax …………………………………………….. 3.1(h)
\nTaxes …………………………………………… 3.1(h)
\nThird Party Claim ………………………………… 8.4<\/p>\n
ii<\/p>\n
Threshold Amount …………………………………. 8.2(a)
\nTotal Parent Share Amount …………………………. 2.1
\nTrade Secrets ……………………………………. 3.1(k)(xiii)
\nTrademarks ………………………………………. 3.1(k)(xiii)
\nTransaction Costs ………………………………… 10.1
\nTransfer ………………………………………… 7.2(a)
\nTransferee ………………………………………. 3.1(h)
\nYear 2000 Compliant ………………………………. 3.1(l)(vi)<\/p>\n
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