\n Exhibit A Form of Voting Agreements<\/p>\n Exhibit B Form of Noncompetition Agreements<\/p>\n
Exhibit C Articles of Merger<\/p>\n
Exhibit D Form of Registration Rights and Lock-Up Agreement<\/p>\n
Exhibit E Company Disclosure Schedules<\/p>\n
Exhibit F Form of Performance Option Agreement<\/p>\n
Exhibit G Form of Promissory Note<\/p>\n
Exhibit H Form of Security Agreement<\/p>\n
Exhibit I Form of License Agreement<\/p>\n
Exhibit J Form of Technology Escrow Agreement<\/p>\n
Exhibit K Form of Legal Opinion of Counsel to the Company<\/p>\n
Exhibit L Form of Indemnification and Escrow Agreement<\/p>\n
Exhibit M Certain Costs
\n<\/c><\/s><\/caption>\n<\/table>\n
AGREEMENT AND PLAN OF REORGANIZATION<\/p>\n
This AGREEMENT AND PLAN OF REORGANIZATION (the “AGREEMENT”) is made and
\nentered into as of June 9, 2000 among Intraware, Inc., a Delaware corporation
\n(“PARENT”), Steelers Acquisition Corp., a Pennsylvania corporation and a
\nwholly-owned subsidiary of Parent (“SUB”), Janus Technologies, Inc., a
\nPennsylvania corporation (the “COMPANY”), and Lawrence W. Shoup and Janice C.
\nPini (collectively, the “FOUNDERS”), and Edison Venture Fund IV, L.P. (“EDISON”)
\n(Edison and the Founders are referred to herein collectively the “PRINCIPAL
\nSHAREHOLDERS”).<\/p>\n
RECITALS<\/p>\n
A. The Boards of Directors of each of the Company, Parent and Sub
\nbelieve it is in the best interests of each company and their respective
\nshareholders that Parent acquire the Company through the statutory merger of Sub
\nwith and into the Company (the “MERGER”) and, in furtherance thereof, have
\napproved the Merger.<\/p>\n
B. Pursuant to the Merger, among other things, all of the issued
\nand outstanding securities of the Company shall be converted into the right to
\nreceive Parent Common Stock (as defined herein).<\/p>\n
C. The Company and the Principal Shareholders, on the one hand,
\nand Parent and Sub, on the other hand, desire to make certain representations,
\nwarranties, covenants and other agreements in connection with the Merger.<\/p>\n
D. The parties intend, by executing this Agreement, to adopt a
\nplan of reorganization within the meaning of Section 368 of the Internal Revenue
\nCode of 1986, as amended (the “CODE”).<\/p>\n
E. Concurrent with the execution of this Agreement, as a material
\ninducement to Parent and Sub to enter into this Agreement, the Principal
\nShareholders are entering into Voting Agreements in the form of EXHIBIT A hereto
\nwith Parent (collectively, the “VOTING AGREEMENTS”). Concurrent with the
\nexecution of this Agreement, the Key Employees (as defined in Section 6.24)
\nshall sign certain agreements not to compete with Parent or the Company in the
\nform of EXHIBIT B attached hereto (the “NONCOMPETITION AGREEMENTS”), which
\nNon-Competition Agreements will be effective at the Closing (as defined below).<\/p>\n
NOW, THEREFORE, in consideration of the covenants, promises and
\nrepresentations set forth herein, and for other good and valuable consideration,
\nand intending to be legally bound, the parties agree as follows:<\/p>\n
ARTICLE I<\/p>\n
THE MERGER<\/p>\n
1.1 THE MERGER. At the Effective Time (as defined in Section 1.2)
\nand subject to and upon the terms and conditions of this Agreement and the
\napplicable provisions of the Pennsylvania Business Corporation Law of 1988
\n(“PENNSYLVANIA LAW”), Sub shall be merged with and into the Company, the
\nseparate corporate existence of Sub shall cease and the Company shall continue
\nas the surviving corporation and as a wholly-owned subsidiary of Parent. The
\nsurviving corporation after the Merger is hereinafter sometimes referred to as
\nthe “SURVIVING CORPORATION.”<\/p>\n
1.2 EFFECTIVE TIME. Unless this Agreement is earlier terminated
\npursuant to Section 9.1, the closing of the Merger (the “CLOSING”) will take
\nplace as promptly as practicable, but no later than five (5) business days
\nfollowing satisfaction or waiver of the conditions set forth in Article VII, at
\nthe offices of Wilson Sonsini Goodrich & Rosati, Professional Corporation, 650
\nPage Mill Road, Palo Alto, California, unless another place or time is agreed to
\nin writing by Parent and the Company. The date upon which the Closing actually
\noccurs is herein referred to as the “CLOSING DATE.” On the Closing Date, the
\nparties hereto shall cause the Merger to be consummated by filing Articles of
\nMerger (or like<\/p>\n
instrument) in the form attached hereto as EXHIBIT C with the Secretary of State
\nof the Commonwealth of Pennsylvania (the “MERGER AGREEMENT”), in accordance with
\nthe applicable provisions of Pennsylvania Law (the time of acceptance by the
\nSecretary of State of the Commonwealth of Pennsylvania of such filing being
\nreferred to herein as the “EFFECTIVE TIME”).<\/p>\n
1.3 EFFECT OF THE MERGER. At the Effective Time, the effect of the
\nMerger shall be as provided in the applicable provisions of Pennsylvania Law.
\nWithout limiting the generality of the foregoing, and subject thereto, at the
\nEffective Time, all the property, rights, privileges, powers and franchises of
\nthe Company and Sub shall vest in the Surviving Corporation, and all debts,
\nliabilities and duties of the Company and Sub shall become the debts,
\nliabilities and duties of the Surviving Corporation.<\/p>\n
1.4 ARTICLES OF INCORPORATION; BYLAWS.<\/p>\n
(a) Unless otherwise determined by Parent prior to the
\nEffective Time, at the Effective Time, the Articles of Incorporation of Sub
\nshall be the Articles of Incorporation of the Surviving Corporation until
\nthereafter amended as provided by law and such Articles of Incorporation;
\nPROVIDED, HOWEVER, that Section I of the Articles of Incorporation of the
\nSurviving Corporation shall be amended to read as follows: “The name of the
\ncorporation is Swann, Inc.”<\/p>\n
(b) The Bylaws of Sub, as in effect immediately prior to
\nthe Effective Time, shall be the Bylaws of the Surviving Corporation until
\nthereafter amended.<\/p>\n
1.5 DIRECTORS AND OFFICERS. The directors of the Surviving
\nCorporation immediately after the Effective Time shall be the directors of Sub
\nimmediately prior to the Effective Time, each to hold the office of director of
\nthe Surviving Corporation in accordance with the provisions of Pennsylvania Law
\nand the Articles of Incorporation and Bylaws of the Surviving Corporation until
\ntheir successors are duly qualified and elected. The officers of the Surviving
\nCorporation immediately after the Effective Time shall be the officers of Sub
\nimmediately prior to the Effective Time, each to hold office in accordance with
\nthe provisions of the Bylaws of the Surviving Corporation.<\/p>\n
1.6 EFFECT OF MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
\nCORPORATIONS<\/p>\n
(a) CERTAIN DEFINITIONS. For all purposes of this
\nAgreement, the following terms shall have the following meanings:<\/p>\n
“COMPANY CAPITAL STOCK” shall mean shares of Company
\nCommon Stock and Company Preferred Stock.<\/p>\n
“COMPANY COMMON STOCK” shall mean shares of common
\nstock of the Company.<\/p>\n
“COMPANY SERIES A PREFERRED” shall mean shares of
\nSeries A Preferred Stock of the Company.<\/p>\n
“COMPANY PREFERRED STOCK” shall mean the Company
\nSeries A Preferred.<\/p>\n
“COMPANY’S KNOWLEDGE” shall mean what is known to the
\nactual knowledge of any officer or any director of the Company.<\/p>\n
“ESTIMATED BALANCE SHEET” shall mean the estimated
\nunaudited balance sheet of the Company immediately prior to the Effective Time
\nbut delivered to Parent not fewer than three (3) business days prior to the
\nClosing pursuant to Section 6.14, which shall be (i) prepared in accordance with
\nGAAP (except that such unaudited balance sheet does not contain the footnotes
\nrequired by GAAP and prepared in good faith and based on reasonable assumptions
\nand (ii) approved by Parent, which approval shall not be unreasonably withheld.<\/p>\n
-2-<\/p>\n
“ESTIMATED NET ASSETS” shall mean the amount by which
\ntotal current assets of the Company as determined in accordance with GAAP
\n(“TOTAL ASSETS”) exceeds total liabilities of the Company as determined in
\naccordance with GAAP (“TOTAL LIABILITIES”), each as reflected in the Estimated
\nBalance Sheet.<\/p>\n
“ESTIMATED THIRD PARTY EXPENSES” shall mean Third
\nParty Expenses (as defined in Section 6.4) of the Company on the Closing Date as
\nestimated by the Company in good faith and based on reasonable assumptions
\n(which shall include any accrued or paid Third Party Expenses) as set forth in a
\nletter delivered to Parent concurrently with the Estimated Balance Sheet (the
\n“ESTIMATED THIRD PARTY EXPENSES LETTER”).<\/p>\n
“EXCHANGE RATIO” shall mean a number equal to the
\nquotient obtained by dividing (i) the number of Merger Shares by (ii) the number
\nof Total Outstanding Shares.<\/p>\n
“GAAP” shall mean U.S. generally accepted accounting
\nprinciples consistent with the accounting policies and procedures applied to the
\nYear End Financials (as defined in Section 2.7) without any adjustments arising
\nas a result to the transactions contemplated hereby.<\/p>\n
“MERGER SHARES” shall mean that number of shares of
\nParent Common Stock equal to the quotient obtained by dividing the Value by the
\nTrading Price; PROVIDED, HOWEVER, that the number of shares shall neither be
\ngreater than 1,612,635 shares (the “CEILING”) nor less than 967,581 shares (the
\n“FLOOR”); PROVIDED FURTHER, HOWEVER, that the number of shares of Parent Common
\nStock shall be reduced by (i) such number of shares of Parent Common Stock
\nobtained by dividing (A) the dollar amount by which the Estimated Net Assets are
\nless than the Minimum Net Assets by (B) the Trading Price, and (ii) such number
\nof shares of Parent Common Stock obtained by dividing (A) the dollar amount by
\nwhich Estimated Third Party Expenses exceed $175,000 by (B) the Trading Price,
\n(iii) such number of shares of Parent Common Stock obtained by dividing (A) the
\namount of principal and interest owed by the Company to Parent immediately prior
\nto the Effective Time (regardless of when such debt matures) by (B) the Trading
\nPrice; and (iv) such number of shares of Parent Common Stock obtained by
\ndividing (A) fees and expenses paid or payable to the Company’s financial
\nadvisors in excess of $50,000 (the “ADVISOR FEES”) by (B) the Trading Price; and
\nPROVIDED, FURTHER, that the Floor and Ceiling shall be amended to reflect any
\nstock split, stock dividend or combination of outstanding Parent capital stock
\nbetween the date of this Agreement and prior to the Effective Time.<\/p>\n
“MINIMUM NET ASSETS” shall mean (i) ($1,672,000) if
\nthe Closing Date is June 30, 2000 or prior, or (ii) ($1,789,000) if the Closing
\nDate is after June 30, 2000 calculated in accordance with the spreadsheet
\nformula mutually agreed at signing.<\/p>\n
“NET ASSETS” shall mean the amount equal to Total
\nAssets of the Company minus Total Liabilities of the Company.<\/p>\n
“PARENT COMMON STOCK” shall mean shares of the common
\nstock, par value $.0001, of Parent.<\/p>\n
“RELATED AGREEMENTS” shall mean the Voting
\nAgreements, the Non-Competition Agreements, the Registration Rights and Lock-Up
\nAgreement, the Indemnification and Escrow Agreement and, each as defined in
\nSection 6.23, the Note, the Security Agreement, the License Agreement, and the
\nTechnology Escrow Agreement.<\/p>\n
“SHAREHOLDER” shall mean each holder of any Company
\nCapital Stock immediately prior to the Effective Time.<\/p>\n
“SIGNIFICANT SHAREHOLDER” shall mean the Principal
\nShareholders, Neal Pollon and Glen Chatfield and any Shareholder who owns five
\npercent (5%) or more of the Company Capital Stock on the date hereof or at the
\nEffective Time, if any.<\/p>\n
“TOTAL OUTSTANDING SHARES” shall mean the aggregate
\nnumber of shares of Company Common Stock outstanding immediately prior to the
\nEffective Time plus the aggregate number of shares of Company Common Stock
\nissuable, with or without the passage of time or satisfaction of other
\nconditions, upon exercise or conversion of all <\/p>\n
-3-<\/p>\n
options (whether or not vested), warrants (whether or not vested) and other
\nrights (whether or not vested) (including Company Preferred Stock) to acquire or
\nreceive shares of Company Capital Stock outstanding immediately prior to the
\nEffective Time.<\/p>\n
“TRADING PRICE” shall mean the average closing sales
\nprice of the Parent Common Stock as reported on the Nasdaq National Market for
\nthe ten (10) consecutive trading days ending three (3) trading days prior to the
\nClosing Date.<\/p>\n
“VALUE” shall mean an amount equal to $24.25 million.<\/p>\n
(b) EFFECT ON CAPITAL STOCK. At the Effective Time, by
\nvirtue of the Merger and without any action on the part of Sub, the Company or
\nthe holders of any shares of the Company Capital Stock, each share of Company
\nCommon Stock and Company Preferred Stock issued and outstanding immediately
\nprior to the Effective Time (other than any Dissenting Shares, as defined in
\nSection 1.7) will be converted automatically into, the right to receive upon
\nsurrender of the certificate representing such share of Company Common Stock and
\nCompany Preferred Stock, and upon the terms and subject to conditions set forth
\nbelow and throughout this Agreement, including, without limitation, the escrow
\nprovisions contemplated by this Agreement and the Indemnification and Escrow
\nAgreement, the number of shares of Parent Common Stock equal to the Exchange
\nRatio.<\/p>\n
(c) COMPANY STOCK OPTIONS TO PURCHASE COMPANY CAPITAL
\nSTOCK. At the Effective Time, each outstanding option to purchase shares of
\nCompany Common Stock issued pursuant to the Company’s stock option plans (each,
\na “STOCK OPTION PLAN”) (each a “COMPANY OPTION”), whether or not exercisable,
\nwill be assumed by Parent. Each Company Option so assumed by Parent under this
\nAgreement will continue to have, and be subject to, the same terms and
\nconditions governing such Company Option immediately prior to the Effective Time
\n(including, without limitation, any vesting schedule or repurchase rights),
\nexcept that (i) each Company Option will be exercisable (or will become
\nexercisable in accordance with its terms) for that number of whole shares of
\nParent Common Stock equal to the product of the number of shares of Company
\nCapital Stock that were issuable upon exercise of such Company Option
\nimmediately prior to the Effective Time multiplied by the Exchange Ratio,
\nrounded down to the nearest whole number of shares of Parent Capital Stock, and
\n(ii) the per share exercise price for the shares of Parent Capital Stock
\nissuable upon exercise of such assumed Company Option will be equal to the
\nquotient determined by dividing the exercise price per share of Company Capital
\nStock at which such Company Option was exercisable immediately prior to the
\nEffective Time by the Exchange Ratio, rounded up to the nearest whole cent.
\nAfter the Effective Time, Parent will issue to each holder of an outstanding
\nCompany Option a notice describing the foregoing assumption of such Company
\nOptions by Parent. All warrants to purchase Company Capital Stock shall have
\nbeen exercised prior to the Closing or shall terminate immediately prior to the
\nEffective Time.<\/p>\n
(d) CAPITAL STOCK OF SUB. Each share of common stock of
\nSub issued and outstanding immediately prior to the Effective Time shall be
\nconverted into and exchanged for one validly issued, fully paid and
\nnonassessable share of common stock of the Surviving Corporation. Each stock
\ncertificate of Sub evidencing ownership of any such shares shall continue to
\nevidence ownership of such shares of capital stock of the Surviving Corporation.<\/p>\n
(e) FRACTIONAL SHARES. No fraction of a share of Parent
\nCommon Stock will be issued, but in lieu thereof, each holder of shares of
\nCompany Capital Stock (including Company Capital Stock issuable upon exercise of
\noutstanding Company Options at the Effective Time) who would otherwise be
\nentitled to a fraction of a share of Parent Common Stock (after aggregating all
\nfractional shares of Parent Common Stock to be received by such holder) shall
\nreceive one whole share of Parent Common Stock.<\/p>\n
1.7 DISSENTING SHARES.<\/p>\n
(a) Notwithstanding any provision of this Agreement to
\nthe contrary, any shares of Company Capital Stock held by a holder who has
\nexercised and perfected appraisal rights for such shares in accordance with
\nPennsylvania Law and who, as of the Effective Time, has not effectively
\nwithdrawn or lost such appraisal rights (“DISSENTING SHARES”), shall not be
\nconverted into or represent a right to receive the consideration for Company
\nCapital <\/p>\n
-4-<\/p>\n
Stock pursuant to Section 1.6, but the holder thereof shall only be entitled to
\nsuch rights as are granted by Pennsylvania Law.<\/p>\n
(b) Notwithstanding the provisions of subsection (a), if
\nany holder of Dissenting Shares shall effectively withdraw or lose (through
\nfailure to perfect or otherwise) his or her appraisal rights, then, as of the
\nlater of the Effective Time and the occurrence of such event, such holder’s
\nshares shall automatically be converted into and represent only the right to
\nreceive the consideration for Company Capital Stock as provided in Section 1.6,
\nwithout interest thereon, upon surrender of the certificate representing such
\nshares.<\/p>\n
(c) The Company shall give Parent (i) prompt notice of
\nany written demand for appraisal received by the Company pursuant to the
\napplicable provisions of Pennsylvania Law and (ii) the opportunity to
\nparticipate in all negotiations and proceedings with respect to such demands.
\nThe Company shall not, except with the prior written consent of Parent,
\nvoluntarily make any payment with respect to any such demands or offer to settle
\nor settle any such demands. To the extent that Parent or the Company makes any
\npayment or payments in respect of any Dissenting Shares, Parent shall bear the
\ncost of the aggregate amount by which such payment or payments exceed the
\naggregate consideration that otherwise would have been payable in respect of
\nsuch shares (together with all costs associated with the dissenting shareholder
\nprocess).<\/p>\n
1.8 SURRENDER OF CERTIFICATES.<\/p>\n
(a) EXCHANGE AGENT. The Corporate Secretary of Parent or
\nan institution selected by Parent and reasonably satisfactory to the Company
\nshall serve as exchange agent (the “EXCHANGE AGENT”) in the Merger.<\/p>\n
(b) PARENT TO PROVIDE SHARES. Promptly after the
\nEffective Time (and, in no event, more than three (3) business days after the
\nEffective Time), Parent shall make available to the Exchange Agent for exchange
\nin accordance with this Article I, certificates representing the shares of
\nParent Common Stock and any dividends or distributions to which Shareholder may
\nbe entitled pursuant to Section 1.8(d) in exchange for all of the outstanding
\nshares of Company Capital Stock PROVIDED, HOWEVER, that on behalf of the
\nSignificant Shareholders, pursuant to Section 8.4 hereof, Parent shall deposit
\ninto an escrow account ten percent (10%) of the Merger Shares which would
\notherwise have been issued to the Significant Shareholders pursuant to Section
\n1.6(b) (the “ESCROW AMOUNT”). The portion of the Escrow Amount contributed on
\nbehalf of each Significant Shareholder shall be in proportion to the aggregate
\nnumber of Merger Shares which such Shareholder would otherwise be entitled to
\nreceive in the Merger by virtue of ownership of outstanding shares of Company
\nCapital Stock.<\/p>\n
(c) EXCHANGE PROCEDURES. Promptly after the Effective
\nTime, Parent shall cause the Exchange Agent to mail to each holder of record (as
\nof the Effective Time) of a certificate or certificates (the “COMPANY
\nCERTIFICATES”) which immediately prior to the Effective Time represented
\noutstanding shares of Company Capital Stock whose shares were converted into the
\nright to receive shares of Parent Common Stock pursuant to Section 1.6 and any
\ndividends or other distributions payable pursuant to Section 1.8(d), (i) a
\nletter of transmittal (which shall specify that delivery shall be effected, and
\nrisk of loss and title to the Company Certificates shall pass, only upon
\ndelivery of the Company Certificates to the Exchange Agent and shall be in such
\nform and have such other provisions as Parent may reasonably specify), and (ii)
\ninstructions for use in effecting the surrender of the Certificates in exchange
\nfor certificates representing shares of Parent Common Stock and any dividends or
\nother distributions payable pursuant to Section 1.8(d). Upon surrender of
\nCompany Certificates for cancellation to the Exchange Agent or to such other
\nagent or agents as may be appointed by Parent, together with item (i) above,
\nduly completed and validly executed in accordance with such transmittal letter,
\nthe holders of such Company Certificates shall be entitled to receive in
\nexchange therefor certificates representing the number of whole shares of Parent
\nCommon Stock and any dividends or distributions payable pursuant to Section
\n1.8(d), and the Company Certificates so surrendered shall forthwith be canceled.
\nUntil so surrendered, outstanding Company Certificates will be deemed from and
\nafter the Effective Time, for all corporate purposes, subject to Section 1.8(d)
\nas to the payment of dividends, to evidence the ownership of the number of full
\nshares of Parent Common Stock into which such shares of Company Capital Stock
\nshall have been so converted and any dividends or distributions payable pursuant
\nto Section 1.8(d). Parent shall enter into the Registration Rights and Lock-Up
\nagreement in the form of EXHIBIT D attached hereto with each Shareholder who
\nexecutes such agreement.<\/p>\n
-5-<\/p>\n
(d) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES.
\nSubject to applicable law, following surrender of any Company Certificates, the
\nExchange Agent shall deliver to the record holders thereof, without interest,
\ncertificates representing whole shares of Parent Common Stock issued in exchange
\ntherefor and the amount of any dividends or other distributions with a record
\ndate after the Effective Time payable with respect to such whole shares of
\nParent Common Stock.<\/p>\n
(e) TRANSFERS OF OWNERSHIP. If certificates for shares of
\nParent Common Stock are to be issued in a name other than that in which the
\nCompany Certificates surrendered in exchange therefor are registered, it will be
\na condition of the issuance thereof that the Company Certificates so surrendered
\nwill be properly endorsed and otherwise in proper form for transfer and that the
\npersons requesting such exchange will have paid to Parent or any agent
\ndesignated by it any transfer or other taxes required by reason of the issuance
\nof certificates for shares of Parent Common Stock in any name other than that of
\nthe registered holder of the Company Certificates surrendered, or established to
\nthe satisfaction of Parent or any agent designated by it that such tax has been
\npaid or is not payable.<\/p>\n
(f) NO LIABILITY. Notwithstanding anything to the
\ncontrary in this Section 1.8, none of the Exchange Agent, the Surviving
\nCorporation or any party hereto shall be liable to a holder of shares of Company
\nCapital Stock for any amount properly paid to a public official pursuant to any
\napplicable abandoned property, escheat or similar law.<\/p>\n
1.9 NO FURTHER OWNERSHIP RIGHTS IN COMPANY CAPITAL STOCK. All
\nconsideration paid in respect of the surrender for exchange of shares of Company
\nCapital Stock in accordance with the terms hereof, shall be deemed to be full
\nsatisfaction of all rights pertaining to such shares of Company Capital Stock,
\nand there shall be no further registration of transfers on the records of the
\nSurviving Corporation of shares of Company Capital Stock which were outstanding
\nimmediately prior to the Effective Time. If, after the Effective Time, Company
\nCertificates are presented to the Surviving Corporation for any reason, they
\nshall be canceled and exchanged as provided in this Article I.<\/p>\n
1.10 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
\nCompany Certificates evidencing shares of Company Capital Stock shall have been
\nlost, stolen or destroyed, the Exchange Agent shall issue in exchange for such
\nlost, stolen or destroyed certificates, upon the making of an affidavit of that
\nfact by the holder thereof, such shares of Parent Common Stock and other
\namounts, if any, as may be required pursuant to Section 1.8(d).<\/p>\n
1.11 TAKING OF NECESSARY ACTION; FURTHER ACTION. If, at any time
\nafter the Effective Time, any further action is necessary or desirable to carry
\nout the purposes of this Agreement and to vest the Surviving Corporation with
\nfull right, title and possession to all assets, property, rights, privileges,
\npowers and franchises of the Company, Parent and Sub, the officers and directors
\nof the Company, Parent and Sub are fully authorized in the name of their
\nrespective corporations or otherwise to take, and will take, all such lawful and
\nnecessary action.<\/p>\n
1.12 TAX AND ACCOUNTING CONSEQUENCES. It is intended by the parties
\nhereto that the Merger shall constitute a reorganization within the meaning of
\nSection 368 of the Code. It is intended by the parties hereto that the Merger be
\ntreated as a purchase transaction for financial accounting purposes.<\/p>\n
ARTICLE II<\/p>\n
REPRESENTATIONS AND WARRANTIES OF THE COMPANY<\/p>\n
The Company hereby represents and warrants to Parent and Sub, subject
\nto such exceptions as are specifically disclosed in the disclosure schedule
\n(referencing the appropriate Section and paragraph numbers) supplied by the
\nCompany and the Principal Shareholders to Parent and attached hereto as EXHIBIT
\nF (the “Disclosure Schedule”), that on the date hereof and as of the Effective
\nTime as though made at the Effective Time as follows:<\/p>\n
-6-<\/p>\n
2.1 Organization of the Company. The Company is a corporation duly
\norganized and presently subsisting under the laws of the Commonwealth of
\nPennsylvania. The Company has the corporate power to own its properties and to
\ncarry on its business as now being conducted. The Company is duly qualified to
\ndo business and in good standing as a foreign corporation in each jurisdiction
\nin which the failure to be so qualified would have a Company Material Adverse
\nEffect. For all purposes of this Agreement, the term “COMPANY MATERIAL ADVERSE
\nEFFECT” means any change, event or effect that is materially adverse to the
\nbusiness, assets (including intangible assets), condition (financial or
\notherwise) or results of operations of the Company. The Company has delivered a
\ntrue and correct copy of its Articles of Incorporation and Bylaws, each as
\namended to date, to Parent. Section 2.1 of the Disclosure Schedule identifies
\nthe directors and officers of the Company. The operations now being conducted by
\nthe Company have not been conducted under any other name.<\/p>\n
2.2 SUBSIDIARIES. The Company does not have, and has never had,
\nany subsidiaries or affiliated companies and does not otherwise own, and has not
\notherwise owned, any shares in the capital of or any interest in, or control,
\ndirectly or indirectly, any corporation, partnership, association, joint venture
\nor other business entity.<\/p>\n
2.3 COMPANY CAPITAL STRUCTURE.<\/p>\n
(a) The authorized Company Capital Stock consists of
\n7,000,000 shares of authorized Company Common Stock, $0.01 par value, of which
\n2,743,900 shares are issued and outstanding as of the date hereof, and 1,500,000
\nshares of Preferred Stock, $1.00 par value, all of which are designated Series A
\nPreferred Stock, of which 1,488,229 shares are issued and outstanding as of the
\ndate hereof. The Company Capital Stock is held by the persons, with the record
\naddresses and in the amounts set forth in Section 2.3(a) of the Disclosure
\nSchedule. All outstanding shares of Company Capital Stock are duly authorized,
\nvalidly issued, fully paid and non-assessable and, except as set forth in
\nSection 2.3(a) of the Disclosure Schedule, not subject to preemptive rights
\ncreated by statute, the Articles of Incorporation or Bylaws of the Company or
\nany agreement to which the Company is a party or by which it is bound and have
\nbeen issued in compliance with all federal and state securities laws. There are
\nno declared or accrued unpaid dividends with respect to any shares of the
\nCompany’s Capital Stock. Except for the Company Capital Stock, the Company has
\nno other capital stock authorized, issued or outstanding.<\/p>\n
(b) Except for the Stock Option Plans or as set forth in
\nSection 2.3(b) of the Disclosure Schedule, the Company has never adopted or
\nmaintained any stock option plan or other plan providing for equity compensation
\nof any person or granted any options or warrants outside of such plans. The
\nCompany has reserved 1,000,000 shares of Company Common Stock for issuance to
\nemployees and consultants pursuant to the Janus Technologies, Inc. 1997 Stock
\nOption Plan. Options outstanding under such plan are set forth on Schedule
\n2.3(b). Except as set forth on Section 2.3(b) of the Disclosure Schedule, there
\nis no outstanding Company Capital Stock which is subject to vesting. Section
\n2.3(b) of the Disclosure Schedule sets forth for each outstanding Company
\nOption, the name and the domicile address of the holder, the number of shares of
\nCompany Common Stock subject to such Company Option, the exercise price of such
\nCompany Option, the vesting schedule of such Company Option including the extent
\nto which such Company Option has vested to the date hereof and whether the
\nvesting of such Company Option will be accelerated by reason of the transactions
\ncontemplated by this Agreement, and whether such Company Option is intended to
\nqualify as an incentive stock option within the meaning of Section 422 of the
\nCode. Section 2.3(b) of the Disclosure Schedule also sets forth the name of the
\nholder of any Company Capital Stock subject to vesting, the number of shares of
\nCompany Capital Stock subject to vesting and the vesting schedule for such
\nCompany Capital Stock, including the extent vested to date. Except as set forth
\non Section 2.3(b) of the Disclosure Schedule, there are no options, warrants,
\ncalls, rights, commitments or agreements of any character, written or oral, to
\nwhich the Company is a party or by which it is bound obligating the Company to
\nissue, deliver, sell, repurchase or redeem, or cause to be issued, delivered,
\nsold, repurchased or redeemed, any shares of the capital stock of the Company or
\nobligating the Company to grant, extend, accelerate the vesting of, change the
\nprice of, otherwise amend or enter into any such option, warrant, call, right,
\ncommitment or agreement. There are no outstanding or authorized stock
\nappreciation, phantom stock, profit participation, or other similar rights with
\nrespect to the Company. There are no voting trusts, proxies, or other agreements
\nor understandings with respect to the voting stock of the Company in effect as
\nof the Effective Date.<\/p>\n
-7-<\/p>\n
2.4 AUTHORITY. The Company has all requisite power and authority
\nto enter into this Agreement and the Related Agreements to which it is a party
\nand to consummate the transactions contemplated hereby and thereby. The
\nexecution and delivery of this Agreement and any Related Agreements to which it
\nis a party and the consummation of the transactions contemplated hereby and
\nthereby has been duly authorized by all necessary corporate action, and no
\nfurther action is required on the part of the Company to authorize this
\nAgreement, the Related Agreements and the transactions contemplated hereby and
\nthereby, subject only to the approval of this Agreement by the Shareholders.
\nThis Agreement and the Merger have been approved by the Board of Directors of
\nthe Company. This Agreement and the Related Agreements have been duly executed
\nand delivered by the Company and, assuming the due authorization, execution and
\ndelivery by the other parties hereto and thereto, constitute the valid and
\nbinding obligations of the Company enforceable in accordance with their
\nrespective terms, subject to the laws of general application relating to
\nbankruptcy, insolvency and the relief of debtors and to rules governing specific
\nperformance, injunctive relief or other equitable remedies.<\/p>\n
2.5 NO CONFLICT. Except as set forth in Section 2.5 of the
\nDisclosure Schedule, the execution and delivery of this Agreement and any
\nRelated Agreements to which the Company is a party by the Company does not, and,
\nthe consummation of the transactions contemplated hereby and thereby will not,
\nconflict with, or result in any violation of, or default under (with or without
\nnotice or lapse of time, or both), or give rise to a right of termination,
\ncancellation, modification or acceleration of any obligation or loss of any
\nbenefit under (any such event, a “CONFLICT”) (i) any provision of the Articles
\nof Incorporation and Bylaws of the Company, (ii) any mortgage, indenture, lease,
\nmaterial contract or other agreement or instrument, permit, concession,
\nfranchise or license to which the Company or any of its properties or assets
\n(including intangible assets) are subject, or (iii) any judgment, order, decree,
\nstatute, law, ordinance, rule or regulation applicable to the Company or its
\nproperties or assets.<\/p>\n
2.6 CONSENTS. Except as set forth in Section 2.6 of the Disclosure
\nSchedule, no consent, waiver, approval, order or authorization of, or
\nregistration, declaration or filing with, any court, administrative agency or
\ncommission or other federal, state, county, local or foreign governmental
\nauthority, instrumentality, agency or commission (“GOVERNMENTAL ENTITY”) or any
\nthird party, including a party to any agreement with the Company (so as not to
\ntrigger any Conflict), is required by or with respect to the Company in
\nconnection with the execution and delivery of this Agreement and any Related
\nAgreements to which the Company is a party or the consummation of the
\ntransactions contemplated hereby and thereby, except for (i) such consents,
\nwaivers, approvals, orders, authorizations, registrations, declarations and
\nfilings as may be required under applicable securities laws and (ii) the filing
\nof the Merger Agreement and Articles of Merger with the Department of State of
\nthe Commonwealth of Pennsylvania. Schedule 2.6(a) sets forth all material
\nconsents (the “Material Consents”), and Schedule 2.6(b) sets forth all consents
\nwhich, the failure to obtain would not (i) cause the Company any liability or
\n(ii) cause the Company the loss of any right which is material to the business
\nof the Company (the “Immaterial Consents”). Notwithstanding the foregoing, the
\nVoting Agreements delivered by the Principal Shareholders represent the
\nsufficient vote required to effectuate the Merger under Pennsylvania Law and the
\nCompany’s Articles of Incorporation and Bylaws.<\/p>\n
2.7 COMPANY FINANCIAL STATEMENTS. The Company has delivered to
\nParent the Company’s audited balance sheet as of December 31, 1999 and the
\nrelated audited statements of income and cash flow for the twelve-month period
\nthen ended (the “YEAR-END FINANCIALS”) and the Company’s unaudited balance sheet
\nas of May 31, 2000, and the related unaudited statement of income and cash flow
\nfor the five (5) months then ended (the “INTERIM FINANCIALS”). The Year-End
\nFinancials and the Interim Financials are referred to herein, collectively, as
\nthe “COMPANY FINANCIALS.” The Company Financials are correct in all material
\nrespects and have been prepared in accordance with GAAP applied on a basis
\nconsistent throughout the periods indicated and consistent with each other
\nexcept, with respect to the Interim Financials, for the absence of footnotes
\nthereto. The Year-End Financials and Interim Financials present fairly the
\nfinancial condition and consolidated operating results of the Company as of the
\ndates and during the periods indicated therein, subject in the case of the
\nInterim Financials, to normal year-end adjustments. The Company’s unaudited
\nBalance Sheet as of May 31, 2000 (the “BALANCE SHEET DATE”) shall be hereinafter
\nreferred to as the “CURRENT BALANCE SHEET.”<\/p>\n
2.8 NO UNDISCLOSED LIABILITIES. Except as set forth on Schedule
\n2.8 of the Disclosure Schedule, the Company has no liability, indebtedness,
\nobligation, expense, claim, deficiency, guaranty or endorsement of any type,
\nwhether accrued, absolute, contingent, matured, unmatured or other (whether or
\nnot required to be reflected in financial <\/p>\n
-8-<\/p>\n
statements in accordance with GAAP), which individually or in the aggregate (i)
\nhas not been reflected in the Current Balance Sheet, or (ii) has not arisen in
\nthe ordinary course of business consistent with past practices since the Balance
\nSheet Date, none of which is material to the business, results of operations or
\ncondition (financial or otherwise) of the Company.<\/p>\n
2.9 NO CHANGES. Except as set forth in Section 2.9 of the
\nDisclosure Schedule, since the Balance Sheet Date there has not been, occurred
\nor arisen any:<\/p>\n
(a) amendments or changes to the Articles of
\nIncorporation or Bylaws of the Company;<\/p>\n
(b) capital expenditure or commitment by the Company,
\nexceeding $25,000 individually or $100,000 in the aggregate;<\/p>\n
(c) destruction of, damage to or loss of any material
\nassets, business or customer of the Company (whether or not covered by
\ninsurance);<\/p>\n
(d) labor trouble or claim of wrongful discharge or other
\nunlawful labor practice or action;<\/p>\n
(e) change in accounting methods or practices (including
\nany change in depreciation or amortization policies or rates) by the Company;<\/p>\n
(f) revaluation by the Company of any of its assets;<\/p>\n
(g) declaration, setting aside or payment of a dividend
\nor other distribution with respect to the capital stock of the Company or any
\ndirect or indirect redemption, purchase or other acquisition by the Company of
\nits capital stock;<\/p>\n
(h) increase in the salary or other compensation payable
\nor to become payable by the Company to any of its officers, directors, employees
\nor advisors, or the declaration, payment or commitment or obligation of any kind
\nfor the payment, by the Company of a bonus or other additional salary or
\ncompensation to any such person;<\/p>\n
(i) except in the ordinary course of business in
\naccordance with past custom and practice, entry by the Company into, or
\ntermination, extension, amendment or modification the terms of, any agreement,
\ncontract, covenant, instrument, lease, license or commitment to which the
\nCompany is a party or by which it or any of its assets are bound;<\/p>\n
(j) except in the ordinary course of business in
\naccordance with past custom and practice, any sale, lease, license or other
\ndisposition of any of the assets or properties of the Company;<\/p>\n
(k) any sale, lease, license, escrow deposit or other
\ndisposition of any of the material assets or properties of the Company or the
\ncreation of any security interest in such properties;<\/p>\n
(l) loan by the Company to any person or entity,
\nincurring by the Company of any indebtedness (other than indebtedness under
\nexisting revolving credit loan facilities), guaranteeing by the Company of any
\nadditional indebtedness, issuance or sale of any debt securities of the Company
\nor guaranteeing of any debt securities of others, except for advances to
\nemployees for travel and business expenses in the ordinary course of business,
\nconsistent with past practice;<\/p>\n
(m) except in the ordinary course of business in
\naccordance with past custom and practice, the waiver or release of any right or
\nclaim of the Company including any write-off or other compromise of any account
\nreceivable of the Company;<\/p>\n
-9-<\/p>\n
(n) the commencement or notice or threat or reasonable
\nbasis therefor of any lawsuit or, to the Company’s Knowledge, proceeding or
\ninvestigation against the Company or its affairs;<\/p>\n
(o) Knowledge by the Company of any claim or potential
\nclaim of ownership by any person other than the Company of the Company
\nIntellectual Property (as defined in Section 2.13) or of infringement by the
\nCompany of any other person’s Intellectual Property (as defined in Section
\n2.13);<\/p>\n
(p) issuance or sale, or contract to issue or sell, by
\nthe Company of any shares of its capital stock or securities exchangeable,
\nconvertible or exercisable therefor, or any securities, warrants, options or
\nrights to purchase any of the foregoing, except pursuant to the Company’s Stock
\nOption Plans;<\/p>\n
(q) except commercial licenses or other similar or
\nrelated agreements in the ordinary course of business in accordance with past
\ncustom and practice, (i) sale or license of any Company Intellectual Property or
\nentering into of any agreement with respect to the Company Intellectual Property
\nwith any person or entity or with respect to the Intellectual Property of any
\nperson or entity or (ii) purchase or license of any Intellectual Property or
\nentering into of any agreement with respect to the Intellectual Property of any
\nperson or entity or (iii) change in pricing or royalties set or charged by the
\nCompany to its customers or licensees or in pricing or royalties set or charged
\nby persons who have licensed Intellectual Property to the Company;<\/p>\n
(r) any event or condition of any character that has had
\na Company Material Adverse Effect; or<\/p>\n
(s) negotiation or agreement by the Company or any
\nofficer or employee thereof to do any of the things described in the preceding
\nclauses (a) through (r) (other than negotiations with Parent and its
\nrepresentatives regarding the transactions contemplated by this Agreement).<\/p>\n
2.10 TAX MATTERS.<\/p>\n
(a) Definition of Taxes. For the purposes of this
\nAgreement, “TAX” or, collectively, “TAXES”, means (i) any and all federal,
\nstate, local and foreign taxes, assessments and other governmental charges,
\nduties, impositions and liabilities, including taxes based upon or measured by
\ngross receipts, income, profits, sales, use and occupation, and value added, ad
\nvalorem, transfer, franchise, withholding, payroll, recapture, employment,
\nexcise and property taxes, together with all interest, penalties and additions
\nimposed with respect to such amounts; (ii) any liability for the payment of any
\namounts of the type described in clause (i) as a result of being a member of an
\naffiliated, consolidated, combined or unitary group for any period; and (iii)
\nany liability for the payment of any amounts of the type described in clause (i)
\nor (ii) as a result of any express or implied obligation to indemnify any other
\nperson or as a result of any obligations under any agreements or arrangements
\nwith any other person with respect to such amounts and including any liability
\nfor taxes of a predecessor entity.<\/p>\n
(b) TAX RETURNS AND AUDITS.<\/p>\n
(i) Except as set forth in Section 2.10(b) of
\nthe Disclosure Schedule, as of the Effective Time, the Company will have
\nprepared and timely filed, or timely obtained extensions to file, all required
\nmaterial federal, state, local and foreign returns, estimates, information
\nstatements and reports (“RETURNS”) relating to any and all material Taxes
\nconcerning or attributable to the Company or its operations and, to the
\nCompany’s Knowledge, such Returns are true and correct in all material respects.<\/p>\n
(ii) Except as set forth in Section 2.10(b) of
\nthe Disclosure Schedule and to the extent of any accruals therefor on the
\nCurrent Balance Sheet, as of the Effective Time, the Company (A) will have paid
\nall Taxes it is required to pay as of the Effective Time and will have withheld
\nwith respect to its employees all federal and state income taxes, FICA, FUTA and
\nother Taxes required to be withheld and have timely paid over to the proper
\ngovernmental authorities all amounts required to be withheld and paid over under
\nall applicable laws as of the Effective Time, and (B) will have accrued on the
\nCurrent Balance Sheet all Taxes attributable to the periods covered by the<\/p>\n
-10-<\/p>\n
Current Balance Sheet and will not have incurred any liability for Taxes for the
\nperiod prior to the Effective Time other than in the ordinary course of
\nbusiness.<\/p>\n
(iii) The Company has not been delinquent in the
\npayment of any Tax where such delinquency could have a Company Material Adverse
\nEffect, nor has the Company received notice of any Tax deficiency outstanding,
\nassessed or proposed against the Company nor has the Company executed any waiver
\nof any statute of limitations on or extending the period for the assessment or
\ncollection of any Tax where such waiver or extension could have a Company
\nMaterial Adverse Effect.<\/p>\n
(iv) To the Company’s Knowledge, no audit or
\nother examination of any Return of the Company is presently in progress, nor has
\nthe Company been notified of any request for such an audit or other examination.<\/p>\n
(v) Except to the extent of any accruals
\ntherefor on the Current Balance Sheet, the Company has no liabilities for unpaid
\nfederal, state, local and foreign Taxes which have not been accrued or reserved
\nagainst on the Current Balance Sheet, whether asserted or unasserted, contingent
\nor otherwise.<\/p>\n
(vi) There are (and immediately following the
\nEffective Time there will be) no liens, pledges, charges, claims, restrictions
\non transfer, mortgages, security interests or other encumbrances of any sort
\n(collectively, “LIENS”) on the assets of the Company relating to or attributable
\nto Taxes, other than Liens for Taxes not yet due and payable.<\/p>\n
(vii) The Company has no Knowledge of any basis
\nfor the assertion of any claim relating or attributable to Taxes which, if
\nadversely determined, would result in any material Lien on the assets of the
\nCompany.<\/p>\n
(viii) None of the Company’s assets are treated as
\n“tax-exempt use property”, within the meaning of Section 168(h) of the Code.<\/p>\n
(ix) Except as set forth in Section 2.10(b) of
\nthe Disclosure Schedule, as of the Effective Time, there will not be any
\ncontract, agreement, plan or arrangement, including but not limited to the
\nprovisions of this Agreement, covering any employee or former employee of the
\nCompany that, individually or collectively, could give rise to the payment of
\nany amount that would not be deductible as an expense under applicable law.<\/p>\n
(x) The Company has not filed any consent
\nagreement under Section 341(f) of the Code or agreed to have Section 341(f)(4)
\nof the Code apply to any disposition of a subsection (f) asset (as defined in
\nSection 341(f)(4) of the Code) owned by the Company.<\/p>\n
(xi) The Company (A) has never been a member of
\nan affiliated group filing a consolidated federal income Tax Return (other than
\na consolidated group the common parent of which is the Company), (B) has never
\nbeen a party to any Tax sharing or Tax allocation agreement, arrangement or
\nunderstanding and does not owe any amount under any such agreement, other than
\nthis Agreement, (C) is not liable for the Taxes of any other person under
\nTreasury Regulation Section 1.1502-6 (or any similar provision of state, local
\nor foreign law), as a transferee or successor, by contract or otherwise, and (D)
\nhas never been a party to any joint venture, partnership or other arrangement
\nthat could be treated as a partnership for income Tax purposes.<\/p>\n
(xii) The Company’s tax basis in its assets for
\npurposes of determining its future amortization, depreciation and other federal
\nincome tax deductions is accurately reflected on the Company’s tax books and
\nrecords.<\/p>\n
(xiii) The Company is not and has not been at any
\ntime, a “United States Real Property Holding Corporation” within the meaning of
\nSection 897(c)(2) of the Code.<\/p>\n
-11-<\/p>\n
(xiv) Except to the extent accrued for in the
\nCompany Financials, no material adjustment relating to any Return filed by the
\nCompany and no claim by a tax authority in a jurisdiction in which the Company
\ndoes not file returns that the Company may be subject to taxation by such
\njurisdiction has been proposed formally or, to the Knowledge of the Company,
\ninformally by any tax authority to the Company or any representative thereof.<\/p>\n
(xv) The Company has never constituted either a
\n“distributing corporation” or a “controlled corporation” in a distribution of
\nstock qualifying for tax-free treatment under Section 355 of the Code (A) in the
\ntwo years prior to the date of this Agreement or (B) in a distribution which
\ncould otherwise constitute part of a “plan” or “series of related transactions”
\n(within the meaning of Section 355(e) of the Code) in conjunction with the
\nMerger.<\/p>\n
(c) EXECUTIVE COMPENSATION TAX. Except as set forth in
\nSection 2.10(c) of the Disclosure Schedule, there is no contract, agreement,
\nplan or arrangement to which the Company is a party as of the date of this
\nAgreement, including but not limited to the provisions of this Agreement,
\ncovering any employee or former employee of Company, individually or
\ncollectively, that could give rise to the payment of any amount that would not
\nbe deductible pursuant to Sections 280G, 404 or 162(m) of the Code.<\/p>\n
2.11 RESTRICTIONS ON BUSINESS ACTIVITIES. Except as set forth in
\nSection 2.11 of the Disclosure Schedule, there is no agreement (noncompete or
\notherwise), commitment, judgment, injunction, order or decree to which the
\nCompany is a party or otherwise binding upon the Company which has or may have
\nthe effect of prohibiting or impairing any material business practice of the
\nCompany, any acquisition of property (tangible or intangible) by the Company or
\nthe conduct of business by the Company. Without limiting the foregoing, except
\nas set forth in Section 2.11 of the Disclosure Schedule, the Company has not
\nentered into any agreement under which it is restricted from selling, licensing
\nor otherwise distributing any of its technology or products to or providing
\nservices to, customers or potential customers or any class of customers, in any
\ngeographic area, during any period of time or in any segment of the market.<\/p>\n
2.12 TITLE OF PROPERTIES; ABSENCE OF LIENS AND ENCUMBRANCES;
\nCONDITION OF EQUIPMENT.<\/p>\n
(a) The Company does not own any real property and has
\nnever owned any real property. Section 2.12(a) of the Disclosure Schedule sets
\nforth a list of all real property currently leased by the Company. All such
\ncurrent leases are in full force and effect, are valid and effective in
\naccordance with their respective terms, and, there is not, under any of such
\nleases, any existing default or event of default (or event which with notice or
\nlapse of time, or both, would constitute a default).<\/p>\n
(b) The Company has good and valid title to, or, in the
\ncase of leased properties and assets, valid leasehold interests in, all of its
\ntangible properties and assets, real, personal and mixed, used or held for use
\nin its business, free and clear of any Liens, except as reflected in the Current
\nBalance Sheet or set forth in Section 2.12(b) of the Disclosure Schedule, and
\nexcept for Liens for Taxes not yet due and payable and such imperfections of
\ntitle and encumbrances, if any, which are not material in character, amount or
\nextent, and which do not materially detract from the value, or interfere with
\nthe present use, of the property subject thereto or affected thereby.<\/p>\n
(c) Section 2.12(c) of the Disclosure Schedule lists all
\nmaterial items of equipment (the “EQUIPMENT”) owned or leased by the Company and
\nsuch Equipment is, (i) adequate for the conduct of the business of the Company
\nas currently conducted and, (ii) in good operating condition, regularly and
\nproperly maintained, subject to normal wear and tear.<\/p>\n
(d) Except as set forth Section 2.13(f) of Disclosure
\nSchedule, the Company has sole and exclusive ownership, free and clear of any
\nLiens, of all customer files and other customer information relating to
\ncustomers of the Company’s current and former customers (the “CUSTOMER
\nINFORMATION”). No person other than the Company possesses any claims or rights
\nwith respect to use of the Customer Information.<\/p>\n
2.13 INTELLECTUAL PROPERTY.<\/p>\n
-12-<\/p>\n
(a) DEFINITIONS. For all purposes of this Agreement, the
\nfollowing terms shall have the following respective meanings:<\/p>\n
(i) “TECHNOLOGY” shall mean any or all of the
\nfollowing: (i) works of authorship including, without limitation, computer
\nprograms, source code and executable code, whether embodied in software,
\nfirmware or otherwise, documentation, designs, files, net lists, records, data
\nand mask works; (ii) inventions (whether or not patentable), improvements and
\ntechnology; (iii) proprietary and confidential information, including technical
\ndata and customer and supplier lists, trade secrets and know how; (iv)
\ndatabases, data compilations and collections and technical data; (v) logos,
\ntrade names, trade dress, trademarks and service marks; (vi) World Wide Web
\naddresses, domain names and sites; (vii) tools, methods and processes; and
\n(viii) all manifestations of the foregoing in any form and embodied in any
\nmedia.<\/p>\n
(ii) “INTELLECTUAL PROPERTY RIGHTS” shall mean
\nany or all of the following and all rights in, arising out of, or associated
\ntherewith: (i) all United States and foreign patents and utility models and
\napplications therefor and all reissues, divisions, re-examinations, renewals,
\nextensions, provisionals, continuations and continuations-in-part thereof, and
\nequivalent or similar rights anywhere in the world in inventions and discoveries
\nincluding without limitation invention disclosures (“PATENTS”); (ii) all trade
\nsecrets and other rights in know-how and confidential or proprietary
\ninformation; (iii) all copyrights, copyrights registrations and applications
\ntherefor and all other rights corresponding thereto throughout the world
\n(“COPYRIGHTS”); (iv) all mask works, mask work registrations and applications
\ntherefor, and any equivalent or similar rights in semiconductor masks, layouts,
\narchitectures or topology (“MASKWORKS”); (v) all industrial designs and any
\nregistrations and applications therefor throughout the world; (vi) all rights in
\nWorld Wide Web addresses and domain names and applications and registrations
\ntherefor; (vii) all trade names, logos, common law trademarks and service marks,
\ntrademark and service mark registrations and applications therefor and all
\ngoodwill associated therewith throughout the world (“Trademarks”); and (viii)
\nany similar, corresponding or equivalent rights to any of the foregoing anywhere
\nin the world.<\/p>\n
(iii) “COMPANY INTELLECTUAL PROPERTY” shall mean
\nany Technology and Intellectual Property Rights including the Company Registered
\nIntellectual Property Rights (as defined in Section 2.13(b) below) that are
\nowned (in whole or in part) by or exclusively licensed to the Company.<\/p>\n
(iv) “REGISTERED INTELLECTUAL PROPERTY RIGHTS”
\nshall mean all United States, international and foreign: (i) Patents, including
\napplications therefor; (ii) registered Trademarks, applications to register
\nTrademarks, including intent-to-use applications or other registrations or
\napplications related to Trademarks; (iii) Copyrights registrations and
\napplications to register Copyrights; (iv) Mask Work registrations and
\napplications to register Mask Works; and (v) any other Technology that is the
\nsubject of an application, certificate, filing, registration or other document
\nissued by, filed with, or recorded by, any state, government or other public or
\nprivate legal authority at any time.<\/p>\n
(b) Section 2.13(b) of the Disclosure Schedule lists all
\nRegistered Intellectual Property Rights owned by, filed in the name of, or
\napplied for, by the Company (the “COMPANY REGISTERED INTELLECTUAL PROPERTY
\nRIGHTS”) and lists any proceedings or actions before any court, tribunal
\n(including the United States Patent and Trademark Office (the “PTO”) or
\nequivalent authority anywhere in the world) related to any of the Company
\nRegistered Intellectual Property Rights.<\/p>\n
(c) Each item of Company Registered Intellectual Property
\nRights is valid and subsisting, and all necessary registration, maintenance and
\nrenewal fees in connection with such Company Registered Intellectual Property
\nRights that are due by the Effective Date have been or will be timely paid and
\nall necessary documents and certificates in connection with such Company
\nRegistered Intellectual Property Rights that are due by the Effective Date have
\nbeen or will be timely filed with the relevant patent, copyright, trademark or
\nother authorities in the United States or foreign jurisdictions, as the case may
\nbe, for the purposes of maintaining such Company Registered Intellectual
\nProperty Rights. Except for the completion of the registration process for any
\nitems of Company Intellectual Property for which registration is in process as
\nof the Effective Date, there are no actions that must be taken by the Company
\nwithin one hundred twenty (120) days of the Closing Date, including the payment
\nof any registration, maintenance or renewal fees <\/p>\n
-13-<\/p>\n
or the filing of any responses to PTO office actions, documents, applications or
\ncertificates for the purposes of obtaining, maintaining, perfecting or
\npreserving or renewing any Company Registered Intellectual Property Rights. To
\nthe maximum extent provided for by, and in accordance with, applicable laws and
\nregulations, the Company has recorded each such assignment of a Registered
\nIntellectual Property Right assigned to the Company with the relevant
\nGovernmental Entity, including the PTO, the U.S. Copyright Office or their
\nrespective equivalents in any relevant foreign jurisdiction, as the case may be.
\nExcept as set forth on Section 2.13(c) of the Disclosure Schedule, the Company
\nhas not claimed a particular status, including “Small Business Status,” in the
\napplication for any Company Registered Intellectual Property Rights, which claim
\nof status was not at the time made, or which has since become, inaccurate or
\nfalse or that will no longer be true and accurate as a result of the Closing.<\/p>\n
(d) There are no facts or circumstances that would render
\nany Company Intellectual Property invalid or unenforceable. Without limiting the
\nforegoing, there are no materials, facts, or circumstances, including any
\ninformation or fact that would constitute prior art, that would render any of
\nthe Company Registered Intellectual Property Rights invalid or unenforceable, or
\nwould adversely effect any pending application for any Company Registered
\nIntellectual Property Right and the Company has not misrepresented, or failed to
\ndisclose, and there is no misrepresentation or failure to disclose, any fact or
\ncircumstances in any application for any Company Registered Intellectual
\nProperty Right that would constitute fraud or a misrepresentation with respect
\nto such application or that would otherwise affect the validity or
\nenforceability of any Company Registered Intellectual Property Right.<\/p>\n
(e) Section 2.13(e) of the disclosure schedule briefly
\ndescribes each item of material Company Intellectual Property, and in the case
\nof software, its functionality.<\/p>\n
(f) Except as set forth in Section 2.13(f) of the
\nDisclosure Schedule, each item of Company Intellectual Property is free and
\nclear of any Liens except for non-exclusive licenses granted to end-user
\ncustomers in the ordinary course of business and, except as set forth in Section
\n2.13(f) of the Disclosure Schedule, the Company is the exclusive owner or
\nexclusive licensee of all Company Intellectual Property. Without limiting the
\nforegoing, except as set forth in Section 2.13(f) of the Disclosure Schedule,
\nthe Company is the exclusive owner of all Trademarks, Copyrights and Patents
\nwhich it purports to own.<\/p>\n
(g) Except as set forth in Section 2.13(g) of the
\nDisclosure Schedule, all Company Intellectual Property will be fully
\ntransferable, alienable or licensable by Surviving Corporation and\/or Parent
\nwithout restriction and without payment of any kind to any third party and the
\ntransactions contemplated hereby will not release from escrow any Company
\nIntellectual Property.<\/p>\n
(h) To the extent that any Company Technology has been
\ndeveloped or created by a third party for the Company, the Company has a written
\nagreement with such third party with respect thereto and the Company thereby has
\nobtained ownership of, and is the exclusive owner of all such third party’s
\nIntellectual Property Rights in such Technology by operation of law or by valid
\nassignment, to the fullest extent it is legally possible to do so.<\/p>\n
(i) Except as otherwise disclosed in the Disclosure
\nSchedule and with exception of “shrink-wrap” or similar widely-available
\ncommercial end-user licenses, all Technology used in or necessary to the conduct
\nof Company’s business as presently conducted by the Company was written and
\ncreated solely by either (i) employees of the Company acting within the scope of
\ntheir employment or (ii) by third parties who have validly and irrevocably
\nassigned all of their rights, including Intellectual Property Rights therein, to
\nthe Company, and no third party owns or has any rights to any of the Company
\nIntellectual Property.<\/p>\n
(j) Except as set forth on Section 2.13(j) of the
\nDisclosure Schedule and except for “shrink-wrap” licenses used by the Company in
\nthe ordinary course of business, no person who has licensed Technology or
\nIntellectual Property Rights to the Company has ownership rights or license
\nrights to improvements made by the Company in such Technology or Intellectual
\nProperty Rights.<\/p>\n
(k) Except as set forth on Schedule 2.13(k) of the
\nDisclosure Schedule, the Company has not transferred ownership of, or granted
\nany exclusive license of or right to use, or authorized the retention of any
\nexclusive <\/p>\n
-14-<\/p>\n
rights to use or joint ownership of, any Technology or Intellectual Property
\nRight that is or was Company Intellectual Property, to any other person.<\/p>\n
(l) Except as set forth in Section 2.13(l) of the
\nDisclosure Schedule and to the extent of any reserves therefor in the Company
\nFinancials, there are no contracts, licenses or agreements between the Company
\nand any other person with respect to Company Intellectual Property under which
\nthere is any dispute regarding the scope of such agreement, or performance under
\nsuch agreement, including with respect to any payments to be made or received by
\nthe Company thereunder.<\/p>\n
(m) The operation of the business of the Company as it
\ncurrently is conducted, including but not limited to the design, development,
\nuse, import, branding, advertising, promotion, marketing, manufacture and sale
\nof Company Products, does not infringe or misappropriate any Intellectual
\nProperty Right of any person, violate any right of any person (including any
\nright to privacy or publicity) or constitute unfair competition or trade
\npractices under the laws of any jurisdiction, and the Company has not received
\nnotice from any person claiming that such operation or any act of the Company
\ninfringes or misappropriates any Intellectual Property Right of any person or
\nconstitutes unfair competition or trade practices under the laws of any
\njurisdiction (nor does the Company have Knowledge of any basis therefor).<\/p>\n
(n) No Company Intellectual Property or Company Products
\nis subject to any proceeding or outstanding decree, order, judgment or
\nsettlement agreement or stipulation that restricts in any manner the use,
\ntransfer or licensing thereof by the Company or may affect the validity, use or
\nenforceability of such Company Intellectual Property or Company Products.<\/p>\n
(o) Except as set forth on Section 2.13(o) of the
\nDisclosure Schedule, neither this Agreement nor the transactions contemplated by
\nthis Agreement, including the assignment to Parent or Surviving Corporation, by
\noperation of law or otherwise, of any contracts or agreements to which the
\nCompany is a party, will result in (i) either Parent’s or the Surviving
\nCorporation’s granting to any third party any right to or with respect to any
\nTechnology or Intellectual Property Right owned by, or licensed to, either of
\nthem, (ii) either the Parent’s or the Surviving Corporation’s being bound by, or
\nsubject to, any non-compete or other restriction on the operation or scope of
\ntheir respective businesses, or (iii) either the Parent’s or the Surviving
\nCorporation’s being obligated to pay any royalties or other amounts to any third
\nparty in excess of those payable by Parent or Surviving Corporation,
\nrespectively, prior to the Closing.<\/p>\n
(p) All Company Technology: record, store, process,
\ncalculate and present calendar dates falling on and after (and if applicable,
\nspans of time including) January 1, 2000, and calculate any information
\ndependent on or relating to such dates in the same manner, and with the same
\nfunctionality, data integrity and performance, as the products record, store,
\nprocess, calculate and present calendar dates on or before December 31, 1999, or
\ncalculate any information dependent on or relating to such dates, provided that
\nall other non-Company Products used in combination with Company Products
\nproperly exchange data with Company Products.<\/p>\n
(q) All employees of the Company have entered into a
\nvalid and binding written agreement with the Company sufficient to vest title in
\nthe Company of all Technology, including all accompanying Intellectual Property
\nRights, created by such employee in the scope of his or her employment with the
\nCompany.<\/p>\n
(r) The Company has taken all reasonable steps to protect
\nthe Company’s rights in confidential information and trade secrets of the
\nCompany or provided by any other person to the Company. Without limiting the
\nforegoing, the Company has, and enforces, a policy requiring each employee,
\nconsultant and contractor to execute a proprietary information, confidentiality
\nand assignment agreement, substantially in the form attached hereto as Section
\n2.13(r) of the Company Disclosure Schedule, and all current and former
\nemployees, consultants and contractors of the Company have executed such an
\nagreement.<\/p>\n
(s) Other than inbound “shrink-wrap” and similar publicly
\navailable commercial binary code end-user licenses and outbound “form” licenses
\nin the form set forth on Section 2.13(s) of the Company Disclosure Schedule, <\/p>\n
-15-<\/p>\n
the contracts, licenses and agreements listed in Section 2.13(s) of the Company
\nDisclosure Schedule lists all contracts, licenses and agreements to which the
\nCompany is a party with respect to any Technology or Intellectual Property
\nRights. Section 2.14(b) of the Company Disclosure Schedule lists all material
\ncontracts, licenses and agreements between the Company and any other person
\nwherein or whereby the Company has agreed to, or assumed, any obligation or duty
\nto warrant, indemnify, reimburse, hold harmless, guaranty or otherwise assume or
\nincur any obligation or liability or provide a right of rescission with respect
\nto the infringement or misappropriation by the Company or such other person of
\nthe Intellectual Property Rights of any person other than the Company. The
\nCompany is not in breach of nor has the Company failed to perform under, any of
\nthe foregoing contracts, licenses or agreements and, to the Company’s knowledge,
\nno other party to any such contract, license or agreement is in breach thereof
\nor has failed to perform thereunder.<\/p>\n
(t) To the Company’s Knowledge, no person is infringing
\nor misappropriating any Company Intellectual Property Right.<\/p>\n
(u) No (i) product, technology, service or publication of
\nthe Company, (ii) material published or distributed by the Company, or (iii)
\nconduct or statement of the Company constitutes obscene material, a defamatory
\nstatement or material, false advertising or otherwise violates in any material
\nrespect any law or regulation.<\/p>\n
(v) Except as set forth on Section 2.13(v) of the
\nDisclosure Schedule, the Company Intellectual Property constitutes all the
\nTechnology and Intellectual Property Rights used in and\/or necessary to the
\nconduct of the business of the Company as it currently is conducted.<\/p>\n
2.14 AGREEMENTS, CONTRACTS AND COMMITMENTS.<\/p>\n
(a) Section 2.14(a) of the Disclosure Schedule lists:<\/p>\n
(i) any employment or consulting agreement,
\ncontract or commitment with an employee, consultant, or sales person,<\/p>\n
(ii) any agreement or plan, including, without
\nlimitation, any stock option plan, stock appreciation rights plan or stock
\npurchase plan, any of the benefits of which will be increased, or the vesting of
\nbenefits of which will be accelerated, by the occurrence of any of the
\ntransactions contemplated by this Agreement or the value of any of the benefits
\nof which will be calculated on the basis of any of the transactions contemplated
\nby this Agreement,<\/p>\n
(iii) any fidelity or surety bond or completion
\nbond,<\/p>\n
(iv) any lease of personal property having a
\nvalue individually in excess of $25,000 or $100,000 in the aggregate,<\/p>\n
(v) any agreement, contract or commitment
\ncontaining any covenant restricting the Company from engaging in any line of
\nbusiness or competing with any person,<\/p>\n
(vi) any agreement, contract or commitment
\nrelating to capital expenditures and involving future payments in excess of
\n$25,000 individually or $100,000 in the aggregate,<\/p>\n
(vii) any agreement, contract or commitment
\nrelating to the disposition or acquisition of assets or any interest in any
\nbusiness enterprise outside the ordinary course of the Company’s business,<\/p>\n
(viii) any mortgages, indentures, loans or credit
\nagreements, security agreements or other agreements or instruments relating to
\nthe borrowing of money or extension of credit,<\/p>\n
-16-<\/p>\n
(ix) any purchase order or contract for the
\npurchase of materials involving in excess of $25,000 individually or $100,000 in
\nthe aggregate,<\/p>\n
(x) any dealer, distribution, joint marketing or
\ndevelopment agreement, entered into by the Company;<\/p>\n
(xi) any sales representative, original equipment
\nmanufacturer, value added, remarketer, reseller or independent software vendor
\nor other agreement for use or distribution of the Company’s products, technology
\nor services entered into by the Company other than pursuant to the form
\nagreement attached to Schedule 2.14(a)(xi), or<\/p>\n
(xii) any other agreement, contract or commitment
\nthat involves $25,000 individually or $100,000 in the aggregate or more or is
\nnot cancelable without penalty within thirty (30) days.<\/p>\n
(b) Except as set forth in Schedule 2.14(b) of the
\nDisclosure Schedule, the Company is in substantial compliance with and has not
\nmaterially breached, violated or defaulted under, or received notice that it has
\nbreached, violated or defaulted under, any of the terms or conditions of any
\nagreement, contract, covenant, instrument, lease, license or commitment to which
\nit is not a party or by which it is bound (collectively a “CONTRACT”), nor does
\nthe Company have Knowledge of any event that would constitute such a breach,
\nviolation or default with the lapse of time, giving of notice or both. Each
\nContract is in full force and effect and, to the Company’s Knowledge, is not
\nsubject to any default thereunder by any party obligated to the Company pursuant
\nthereto. Following the Effective Time and the waiver of any Conflicts and the
\nwaiver or consent to any of the required consents to this transaction set forth
\nin Section 2.6 of the Disclosure Schedule, the Company will be permitted to
\nexercise all of its rights under the Contracts without the payment of any
\nadditional amounts or consideration other than ongoing fees, royalties or
\npayments which the Company would otherwise be required to pay had the
\ntransactions contemplated by this Agreement not occurred.<\/p>\n
2.15 INTERESTED PARTY TRANSACTIONS. Except as set forth in Section
\n2.15 of the Disclosure Schedule, no officer, director or shareholder (nor any
\nancestor, sibling, descendant or spouse of any of such persons, or any trust,
\npartnership or corporation in which any of such persons has or has had an
\ninterest), has or has had, directly or indirectly, (i) an interest in any entity
\nwhich furnished or sold, or furnishes or sells, services, products or technology
\nthat the Company furnishes or sells, or proposes to furnish or sell, or (ii) any
\ninterest in any entity that purchases from or sells or furnishes to the Company
\nany goods or services or (iii) a beneficial interest in any Contract; PROVIDED,
\nthat ownership of no more than five percent (5%) of the outstanding voting stock
\nof a publicly traded corporation shall not be deemed an “interest in any entity”
\nfor purposes of this Section 2.15.<\/p>\n
2.16 GOVERNMENTAL AUTHORIZATION. Except with respect to
\nqualification to do business and sales or use tax authorizations, no consent,
\nlicense, permit, grant or other authorization is required to be issued to the
\nCompany by a Governmental Entity in order for the Company to operate its
\nbusiness.<\/p>\n
2.17 LITIGATION. Except as set forth in Section 2.17 of the
\nDisclosure Schedule, there is no action, suit, claim or proceeding of any nature
\npending, or, to the Company’s Knowledge threatened, against the Company, or its
\nproperties (tangible or intangible) or any of its officers or directors as it
\nrelates to the Company. There is no investigation pending or, to the Company’s
\nKnowledge threatened, against the Company, its properties or any of its officers
\nor directors as it relates to the Company by or before any Governmental Entity.
\nNo Governmental Entity has at any time challenged or questioned the legal right
\nof the Company to conduct its operations as presently or previously conducted.<\/p>\n
2.18 ACCOUNTS RECEIVABLE.<\/p>\n
(a) Schedule 2.18 sets forth (a) a list of all accounts
\nreceivable of the Company as of May 31, 2000 along with a range of days elapsed
\nsince invoice.<\/p>\n
-17-<\/p>\n
(b) All such accounts receivable arose in the ordinary
\ncourse of business, are carried at values determined in accordance with GAAP
\nconsistently applied and are collectible except to the extent of reserves
\ntherefor set forth in the Current Balance Sheet. Except for Liens granted by the
\nCompany to the Company’s existing senior secured lender, no person has any Lien
\non any of such accounts receivable and there has been no request or agreement
\nfor a deduction or discount with respect to any of such Accounts Receivable.<\/p>\n
2.19 MINUTE BOOKS. Except as disclosed on Section 2.19 of the
\nDisclosure Schedule, the minutes of the Company made available to counsel for
\nParent are the only minutes of the Company since January 1, 1997 and contain a
\nreasonably accurate summary of all meetings of the Board of Directors of the
\nCompany, or committees thereof, and its respective shareholders or actions by
\nwritten consent since January 1, 1997.<\/p>\n
2.20 ENVIRONMENTAL MATTERS.<\/p>\n
(a) Hazardous Material. The Company has not: (i) operated
\nany underground storage tanks at any property that the Company has at any time
\nowned, operated, occupied or leased; or (ii) illegally released any material
\namount of any substance that has been designated by any Governmental Entity or
\nby applicable federal, state or local law to be radioactive, toxic, hazardous or
\notherwise a danger to health or the environment, including, without limitation,
\nPCBs, asbestos, petroleum, and urea-formaldehyde and all substances listed as
\nhazardous substances pursuant to the Comprehensive Environmental Response,
\nCompensation, and Liability Act of 1980, as amended, or defined as a hazardous
\nwaste pursuant to the United States Resource Conservation and Recovery Act of
\n1976, as amended, and the regulations promulgated pursuant to said laws (a
\n“HAZARDOUS MATERIAL”), but excluding office and janitorial supplies properly and
\nsafely maintained. No Hazardous Materials are present as a result of the
\ndeliberate actions of the Company or, to the Company’s Knowledge, as a result of
\nany actions of any other person or otherwise, in, on or under any property,
\nincluding the land and the improvements, ground water and surface water thereof,
\nthat the Company has at any time owned, operated, occupied or leased. To the
\nCompany’s Knowledge, there is no fact or circumstance which could involve the
\nCompany in any environmental litigation or impose upon the Company any
\nenvironmental liability.<\/p>\n
(b) HAZARDOUS MATERIALS ACTIVITIES. The Company has not
\ntransported, stored, used, manufactured, disposed of, released or exposed its
\nemployees or others to Hazardous Materials in violation of any law in effect on
\nor before the Effective Time, nor has it disposed of, transported, sold, or
\nmanufactured any product containing a Hazardous Material (any or all of the
\nforegoing being collectively referred to as “HAZARDOUS MATERIALS ACTIVITIES”) in
\nviolation of any rule, regulation, treaty or statute promulgated by any
\nGovernmental Entity in effect prior to or as of the date hereof to prohibit,
\nregulate or control Hazardous Materials or any Hazardous Material Activity.<\/p>\n
(c) PERMITS. The Company currently holds all
\nenvironmental approvals, permits, licenses, clearances and consents (the
\n“Environmental Permits”) necessary for the conduct of the Company’s Hazardous
\nMaterial Activities and other businesses of the Company as such activities and
\nbusinesses are currently being conducted.<\/p>\n
(d) ENVIRONMENTAL LIABILITIES. No action, proceeding,
\nrevocation proceeding, amendment procedure, writ, injunction or claim is
\npending, or to the Company’s Knowledge, threatened concerning any Environmental
\nPermit, Hazardous Material or any Hazardous Materials Activity of the Company.<\/p>\n
2.21 BROKERS’ AND FINDERS’ FEES. Except as set forth on Section
\n2.21 of the Disclosure Schedule, the Company has not incurred, nor will it
\nincur, directly or indirectly, any liability for brokerage or finders’ fees or
\nagents’ commissions or any similar charges in connection with the Agreement or
\nany transaction contemplated hereby. Section 2.21 of the Disclosure Schedules
\nsets forth the Company’s current good faith estimate of all Third Party
\nExpenses.<\/p>\n
2.22 EMPLOYEE BENEFIT PLANS AND COMPENSATION.<\/p>\n
(a) DEFINITIONS. For all purposes of this Agreement, the
\nfollowing terms shall have the following respective meanings:<\/p>\n
-18-<\/p>\n
“AFFILIATE” shall mean any other person or entity
\nrequired to be aggregated with the Company under Section 414(b), (c), (m) or (o)
\nof the Code, and the regulations issued thereunder.<\/p>\n
“COMPANY EMPLOYEE PLAN” shall mean any plan, program,
\npolicy, practice, contract, agreement or other arrangement providing for
\ncompensation, severance, termination pay, deferred compensation, performance
\nawards, stock or stock-related awards, fringe benefits or other employee
\nbenefits or remuneration of any kind, whether written, unwritten or otherwise,
\nfunded or unfunded, including without limitation, each “employee benefit plan,”
\nwithin the meaning of Section 3(3) of ERISA which is maintained, contributed to,
\nor required to be contributed to, by the Company or any Affiliate for the
\nbenefit of any Employee, or with respect to which the Company or any Affiliate
\nhas or may have any liability or obligation.<\/p>\n
“COBRA” shall mean the Consolidated Omnibus Budget
\nReconciliation Act of 1985, as amended.<\/p>\n
“DOL” shall mean the United States Department of
\nLabor.<\/p>\n
“EMPLOYEE” shall mean any current or former or
\nretired employee, contract worker, consultant or director of the Company or any
\nAffiliate.<\/p>\n
“EMPLOYMENT AGREEMENT” shall mean each management,
\nemployment, severance, consulting, relocation, repatriation, expatriation,
\nvisas, work permit or other agreement, or contract between the Company or any
\nAffiliate and any Employee other than a Company Employee Plan.<\/p>\n
“ERISA” shall mean the Employee Retirement Income
\nSecurity Act of 1974, as amended.<\/p>\n
“FMLA” shall mean the Family Medical Leave Act of
\n1993, as amended.<\/p>\n
“IRS” shall mean the United States Internal Revenue
\nService.<\/p>\n
“MULTIEMPLOYER PLAN” shall mean any “Pension Plan”
\n(as defined below) which is a “multiemployer plan,” as defined in Section 3(37)
\nof ERISA.<\/p>\n
“PENSION PLAN” shall mean each Company Employee Plan
\nwhich is an “employee pension benefit plan,” within the meaning of Section 3(2)
\nof ERISA.<\/p>\n
(b) Schedule. Section 2.22(b) of the Disclosure Schedule
\ncontains an accurate and complete list of each Company Employee Plan and each
\nEmployment Agreement. The Company has no commitment to establish any new Company
\nEmployee Plan or Employment Agreement, to modify any Company Employee Plan or
\nEmployment Agreement (except to the extent required by law or to conform any
\nsuch Company Employee Plan or Employment Agreement to the requirements of any
\napplicable law, or to adopt or enter into any Company Employee Plan or
\nEmployment Agreement.<\/p>\n
(c) DOCUMENTS. The Company has made available to Parent
\n(to the extent requested by Parent or its legal counsel) correct and complete
\ncopies of: (i) all documents embodying each Company Employee Plan and each
\nEmployment Agreement including, without limitation, all amendments thereto and,
\nto the extent applicable, all related trust documents, (ii) the two (2) most
\nrecent annual reports (Form Series 5500 and all schedules and financial
\nstatements attached thereto), if any, required under ERISA or the Code in
\nconnection with each Company Employee Plan, (iii) if the Company Employee Plan
\nis funded, the most recent annual and periodic accounting of Company Employee
\nPlan assets, (iv) the most recent summary plan description together with the
\nsummary(ies) of material modifications thereto, if any, required under ERISA
\nwith respect to each Company Employee Plan, (v) all material written agreements
\nand contracts relating to each Company Employee Plan, including, without
\nlimitation, administrative service agreements and group insurance contracts,
\n(vi) all material communications relating to any Company Employee Plan and any
\nproposed <\/p>\n
-19-<\/p>\n
Company Employee Plan, in each case, relating to any amendments, terminations,
\nestablishments, increases or decreases in benefits, acceleration of payments or
\nvesting schedules or other events which would result in any liability to the
\nCompany, (vii) all material correspondence to or from any governmental agency
\nrelating to any Company Employee Plan, except that with respect to IRS
\ndetermination, opinion, notification and advisory letters, only the most recent
\nsuch letter has been made available, (viii) samples of all COBRA forms and
\nrelated notices (or such forms and notices as required under comparable law),
\n(ix) all policies pertaining to fiduciary liability insurance covering the
\nfiduciaries for each Company Employee Plan, (x) the two (2) most recent plan
\nyears discrimination tests for each Company Employee Plan, to the extent
\napplicable and to the extent not shown on any Form 5500 provided to Parent, and
\n(xi) the most recent annual actuarial valuations, if any, prepared for each
\nCompany Employee Plan.<\/p>\n
(d) EMPLOYEE PLAN COMPLIANCE. The Company has performed
\nin all material respects all obligations required to be performed by it under,
\nis not in material default or violation of, and has no Knowledge of any material
\ndefault or violation by any other party to each Company Employee Plan, and each
\nCompany Employee Plan has been established and maintained in all material
\nrespects in accordance with its terms and in compliance with all applicable
\nlaws, statutes, orders, rules and regulations, including but not limited to
\nERISA or the Code. Each Company Employee Plan intended to qualify under Section
\n401(a) of the Code and each trust intended to qualify under Section 501(a) of
\nthe Code has either received a favorable determination, opinion, notification or
\nadvisory letter from the IRS with respect to each such Company Employee Plan as
\nto its qualified status under the Code, including all amendments to the Code
\neffected by the Tax Reform Act of 1986 and subsequent legislation, or has
\nremaining a period of time under applicable Treasury regulations or IRS
\npronouncements in which to apply for such a letter and make any amendments
\nnecessary to obtain a favorable determination as to the qualified status of each
\nsuch Company Employee Plan. To the Company’s Knowledge, no “prohibited
\ntransaction,” within the meaning of Section 4975 of the Code or Sections 406 and
\n407 of ERISA, and not otherwise exempt under Section 4975 of the Code or Section
\n408 of ERISA (or any administrative class exemption issued thereunder), has
\noccurred with respect to any Company Employee Plan. There are no actions, suits
\nor claims pending, or to the Knowledge of the Company threatened or reasonably
\nanticipated (other than routine claims for benefits) against any Company
\nEmployee Plan or against the assets of any Company Employee Plan. Each Company
\nEmployee Plan (other than any stock option plan) can be amended, terminated or
\notherwise discontinued after the Effective Time in accordance with its terms,
\nwithout liability to Parent, the Company or any Affiliate (other than ordinary
\nadministration expenses). To the Company’s Knowledge, there are no audits,
\ninquiries or proceedings pending or threatened by the IRS or DOL with respect to
\nany Company Employee Plan. Neither the Company nor any Affiliate has been
\nassessed any penalty or tax with respect to any Company Employee Plan under
\nSection 502(i) of ERISA or Sections 4975 through 4980 of the Code.<\/p>\n
(e) NO PENSION PLAN. Neither the Company nor any other
\nAffiliate has ever maintained, established, sponsored, participated in, or
\ncontributed to, any Pension Plan subject to Title IV of ERISA or Section 412 of
\nthe Code<\/p>\n
(f) COLLECTIVELY BARGAINED, MULTIEMPLOYER AND MULTIPLE
\nEMPLOYER PLANS. Except as set forth in Section 2.22(f) of the Disclosure
\nSchedule, at no time has the Company or any Affiliate contributed to or been
\nobligated to contribute to any Multiemployer Plan. Neither the Company, nor any
\nAffiliate has at any time ever maintained, established, sponsored, participated
\nin, or been obligated to contribute to any multiple employer plan, or to any
\nplan described in Section 413 of the Code.<\/p>\n
(g) NO POST-EMPLOYMENT OBLIGATIONS. No Company Employee
\nPlan provides, or reflects or represents any liability to provide, retiree
\nhealth to any person for any reason, except as may be required by COBRA or other
\napplicable statute, and the Company has never represented, promised or
\ncontracted (whether in oral or written form) to any Employee (either
\nindividually or to Employees as a group) or any other person that such
\nEmployee(s) or other person would be provided with retiree health coverage,
\nexcept to the extent required by statute.<\/p>\n
(h) HEALTH CARE COMPLIANCE. Neither the Company nor any
\nAffiliate has, prior to the Effective Time and in any material respect, violated
\nany of the health care continuation requirements of COBRA, the requirements of
\nFMLA, the requirements of the Health Insurance Portability and Accountability
\nAct of 1996, the requirements of the <\/p>\n
-20-<\/p>\n
Women’s Health and Cancer Rights Act of 1998, the requirements of the Newborns’
\nand Mothers’ Health Protection Act of 1996, or any amendment to each such act,
\nor any similar provisions of state law applicable to its Employees.<\/p>\n
(i) EFFECT OF TRANSACTION. Except as set forth in Section
\n2.22(i) of the Disclosure Schedule, the execution of this Agreement and the
\nconsummation of the transactions contemplated herein will not (either alone or
\nupon the occurrence of any additional or subsequent events) constitute an event
\nunder any Company Employee Plan, Employment Agreement, trust or loan that will
\nor may result in any payment (whether of severance pay or otherwise),
\nacceleration, forgiveness of indebtedness, vesting, distribution, increase in
\nbenefits or obligation to fund benefits with respect to any Employee, except as
\nexpressly required by this Agreement.<\/p>\n
(j) EMPLOYMENT MATTERS. Except as set forth in Section
\n2.22(j) of the Disclosure Schedule, the Company: (i) is in compliance in all
\nmaterial respects with all applicable foreign, federal, state and local laws,
\nrules and regulations respecting employment, employment practices, terms and
\nconditions of employment and wages and hours, in each case, with respect to
\nEmployees, including all applicable laws of foreign jurisdictions where the
\nCompany has Employees; (ii) has withheld and reported all material amounts
\nrequired by law or by agreement to be withheld and reported with respect to
\nwages, salaries and other payments to Employees, (iii) is not liable for any
\narrears of wages or any taxes or any penalty for failure to comply with any of
\nthe foregoing, and (iv) is not liable for any payment to any trust or other fund
\ngoverned by or maintained by or on behalf of any governmental authority, with
\nrespect to unemployment compensation benefits, social security or other benefits
\nor obligations for Employees (other than routine payments to be made in the
\nnormal course of business and consistent with past practice). There are no
\npending, or to the Knowledge of the Company threatened, claims or actions
\nagainst the Company under any worker’s compensation policy or long-term
\ndisability policy.<\/p>\n
(k) NO INTERFERENCE OR CONFLICT. To the Knowledge of the
\nCompany, no officer or employee of the Company is obligated under any contract
\nor agreement subject to any judgment, decree or order of any court or
\nadministrative agency that would interfere with such person’s efforts to promote
\nthe interests of the Company or that would interfere with the Company’s
\nbusiness. Neither the execution nor delivery of this Agreement, nor the carrying
\non of the Company’s business as presently conducted or presently proposed to be
\nconducted nor any activity of such officers, directors, employees or consultants
\nin connection with the carrying on of the Company’s business as presently
\nconducted or currently proposed to be conducted, will, to the Company’s
\nKnowledge, conflict with or result in a breach of the terms, conditions or
\nprovisions of, or constitute a default under, any contract or agreement under
\nwhich any of such officers, directors, employees or consultants is now bound.<\/p>\n
2.23 INSURANCE. Section 2.23 of the Disclosure Schedule lists all
\ninsurance policies and fidelity bonds covering the assets, business, equipment,
\nproperties, operations, employees, officers and directors of the Company. There
\nis no claim by the Company pending under any of such policies or bonds as to
\nwhich coverage has been questioned, denied or disputed by the underwriters of
\nsuch policies or bonds. All premiums due and payable under all such policies and
\nbonds have been paid, and, to the Company’s Knowledge, the Company is otherwise
\nin compliance with the terms of such policies and bonds (or other policies and
\nbonds providing substantially similar insurance coverage). The Company has no
\nKnowledge of any material threatened termination of, or material premium
\nincrease with respect to, any of such policies.<\/p>\n
2.24 COMPLIANCE WITH LAWS. To the Company’s Knowledge, the Company
\nhas complied with, is not in violation of, and has not received any notices of
\nviolation with respect to, any material foreign, federal, state or local
\nstatute, law or regulation.<\/p>\n
2.25 WARRANTIES; INDEMNITIES. Except for the warranties and
\nindemnities contained in the Company’s form license and preferred service
\nprovider agreements, the Company has not given any warranties or indemnities
\nrelating to products or technology sold or licensed or services rendered by the
\nCompany.<\/p>\n
2.26 COMPLETE COPIES OF CONTRACTS. The Company has provided or made
\navailable to Parent complete copies of all contracts of the Company set forth on
\nSection 2.14(a) of the Disclosure Schedule.<\/p>\n
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2.27 INFORMATION DISCLOSED IN CONNECTION WITH MERGER ABSENT OF
\nMATERIAL MISSTATEMENTS OR OMISSIONS. None of the representations or warranties
\nmade by the Company (as modified by the Disclosure Schedule), nor any statement
\nmade in any Schedule or certificate furnished by the Company pursuant to this
\nAgreement or furnished by the Company in or in connection with documents mailed
\nor delivered to the Shareholders for use in soliciting their consent to this
\nAgreement and the Merger contains or will contain at the Effective Time, any
\nuntrue statement of a material fact, or omits or will omit at the Effective Time
\nto state any material fact necessary in order to make the statements contained
\nherein or therein, in the light of the circumstances under which made, not
\nmisleading.<\/p>\n
ARTICLE III<\/p>\n
REPRESENTATIONS AND WARRANTIES OF PRINCIPAL SHAREHOLDERS<\/p>\n
Each of the Principal Shareholders, with respect to himself or herself,
\nhereby severally represents and warrants to Parent and Sub, subject to such
\nexceptions as are specifically disclosed in the Disclosure Schedule that on the
\ndate hereof and as of the Effective Time as though made at the Effective Time as
\nfollows:<\/p>\n
3.1 AUTHORITY. Each of the Principal Shareholders has all
\nrequisite power and authority to enter into this Agreement and the Related
\nAgreements to which they are a party and to consummate the transactions
\ncontemplated hereby and thereby. The execution and delivery of this Agreement
\nand any Related Agreements to which they are a party and the consummation of the
\ntransactions contemplated hereby and thereby has been duly authorized by all
\nnecessary action, and no further action is required on the part of the Principal
\nShareholders to authorize this Agreement, the Related Agreements and the
\ntransactions contemplated hereby and thereby. This Agreement and the Related
\nAgreements have been duly executed and delivered by each such Principal
\nShareholder and, assuming the due authorization, execution and delivery by the
\nother parties hereto and thereto, constitute the valid and binding obligations
\nof each such Principal Shareholder enforceable in accordance with their
\nrespective terms, subject to the laws of general application relating to
\nbankruptcy, insolvency and the relief of debtors and to rules governing specific
\nperformance, injunctive relief or other equitable remedies.<\/p>\n
3.2 NO CONFLICT. The execution and delivery of this Agreement and
\nany Related Agreements to which the Principal Shareholders are a party by the
\nCompany does not, and, the consummation of the transactions contemplated hereby
\nand thereby will not, conflict with, or result in any violation of, or default
\nunder (with or without notice or lapse of time, or both), or give rise to a
\nright of termination, cancellation, modification or acceleration of any
\nobligation or loss of any benefit under (i) any provision of the Articles of
\nIncorporation and Bylaws of such Principal Shareholder, (ii) any mortgage,
\nindenture, lease, contract or other agreement or instrument, permit, concession,
\nfranchise or license to which such Principal Shareholder or of any such
\nPrincipal Shareholder’s properties or assets (including intangible assets) are
\nsubject, or (iii) any judgment, order, decree, statute, law, ordinance, rule or
\nregulation applicable to the such Principal Shareholder or the Company’s such
\nPrincipal Shareholder’s properties or assets.<\/p>\n
3.3 OWNERSHIP, ETC. Such Principal Shareholder is the holder and
\nbeneficial owner of the Shares and has good and valid title to the shares set
\nforth on Schedule 3.3(a) (the “Shares”), free and clear of any liens, pledges,
\nsecurity interests, adverse claims, equities, options, proxies, charges,
\nencumbrances or restrictions of any nature. Such Principal Shareholder does not
\nown, either beneficially or of record, any shares of capital stock of the
\nCompany, or rights to acquire any shares of capital stock of the Company, other
\nthan such shares. As of the date of this Agreement and at any meeting of the
\nshareholders of the Company held during the term of this Agreement, Shareholder
\nhas and shall have the ability to vote all the shares in accordance with such
\nPrincipal Shareholder’s Voting Agreement. Except as provided in this Agreement,
\nShareholder has not appointed or granted any proxy or entered into a voting
\nagreement, which appointment agreement or grant is still effective, with respect
\nto any of the Shares.<\/p>\n
3.4 HART SCOTT RODINO. Such Principal Shareholder does not have
\ntotal assets or annual net sales of ten million dollars or more, or otherwise
\nhas attributes that cause the Company, Parent or any other person to be
\nstatutorily <\/p>\n
-22-<\/p>\n
required to file a premerger report or take any other actions pursuant to the
\nHart Scott Rodino Antitrust Improvements Act in connection with this Agreement,
\nthe Related Agreements or the transactions contemplated therein.<\/p>\n
ARTICLE IV<\/p>\n
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB<\/p>\n
Parent and Merger Sub (collectively, the “BUYERS”) represent and
\nwarrant to the Company that on the date hereof, and as of the Effective Time as
\nthough made on the date hereof as follows:<\/p>\n
4.1 ORGANIZATION, STANDING AND POWER. Parent is a corporation duly
\norganized, validly existing and in good standing under the laws of the State of
\nDelaware. Sub is a corporation duly organized, validly existing and in good
\nstanding under the laws of the Commonwealth of Pennsylvania. Each of Parent and
\nSub has the corporate power to own its properties and to carry on its business
\nas now being conducted and is duly qualified to do business and is in good
\nstanding in each jurisdiction in which the failure to be so qualified would have
\na material adverse effect on the ability of Parent and Sub to consummate the
\ntransactions contemplated hereby. Parent has made available a true and correct
\ncopy of the Certificate of Incorporation and Bylaws of Parent and the Articles
\nof Incorporation and Bylaws of Sub, as amended to date, to counsel for the
\nCompany. For all purposes of this Agreement, the term “PARENT MATERIAL ADVERSE
\nEFFECT” means any change, event or effect that is materially adverse to the
\nbusiness, assets (including intangible assets), financial condition, or results
\nof operations of Parent and its subsidiaries, taken as a whole; PROVIDED,
\nHOWEVER, that a decline in the price of Parent’s Common Stock shall be
\ndisregarded for the purposes of determining whether there is a Parent Material
\nAdverse Effect.<\/p>\n
4.2 AUTHORITY. Each of Parent and Sub has all requisite corporate
\npower and authority to enter into this Agreement and any Related Agreements to
\nwhich it is a party and to consummate the transactions contemplated hereby and
\nthereby. The execution and delivery of this Agreement and any Related Agreements
\nto which it is a party and the consummation of the transactions contemplated
\nhereby and thereby have been duly authorized by all necessary corporate action
\non the part of Parent and Sub. This Agreement and any Related Agreements to
\nwhich Parent and Sub are parties have been duly executed and delivered by Parent
\nand Sub and constitutes the valid and binding obligations of Parent and Sub,
\nenforceable in accordance with their terms, except as such enforceability may be
\nlimited by principles of public policy and subject to the laws of general
\napplication relating to bankruptcy, insolvency and the relief of debtors and
\nrules of law governing specific performance, injunctive relief or other
\nequitable remedies.<\/p>\n
4.3 NO CONFLICT. The execution and delivery of this Agreement and
\nany Related Agreements to which it is a party do not, and, the consummation of
\nthe transactions contemplated hereby will not, and the consummation of the
\ntransactions contemplated hereby and thereby will not, conflict with, or result
\nin any violation of, or default under (with or without notice or lapse of time,
\nor both), or give rise to a Conflict under (i) any provision of the Certificate
\nof Incorporation, as amended, and Bylaws of Parent or Sub, (ii) any mortgage,
\nindenture, lease, contract or other agreement or instrument, permit, concession,
\nfranchise or license to which Parent or any of its respective properties or
\nassets are subject and which has been filed as an exhibit to Parent’s filings
\nunder the Securities Act or the Exchange Act or (iii) any judgment, order,
\ndecree, statute, law, ordinance, rule or regulation applicable to Parent or Sub
\nor its properties or assets, except where such Conflict will not have a Parent
\nMaterial Adverse Effect.<\/p>\n
4.4 CONSENTS. No consent, waiver, approval, order or authorization
\nof, or registration, declaration or filing with, any Governmental Entity, or any
\nthird party is required by or with respect to Parent or Sub in connection with
\nthe execution and delivery of this Agreement and any Related Agreements to which
\nit is a party or the consummation of the transactions contemplated hereby and
\nthereby, except for such consents, waivers, approvals, orders, authorizations,
\nregistrations, declarations and filings as may be required under applicable
\nsecurities laws and such consents, waivers, approvals, orders, authorizations,
\nregistrations, declarations and filings which, if not obtained or made, would
\nnot have a Parent Material Adverse Effect.<\/p>\n
4.5 AUTHORIZATION OF MERGER SHARES. The shares of Parent Common
\nStock to be issued pursuant to the Merger will be duly authorized, validly
\nissued, fully paid, non-assessable, free of any liens or encumbrances and not<\/p>\n
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subject to any preemptive rights or rights of first refusal created by statute
\nor the Certificate of Incorporation or Bylaws of Parent or Sub or any agreement
\nto which Parent or Sub is a party or is bound.<\/p>\n
4.6 BROKERS’ AND FINDERS’ FEES. The Parent has not incurred, nor
\nwill it incur, directly or indirectly, any liability for brokerage or finders’
\nfees or agents’ commissions or any similar charges in connection with this
\nAgreement or any transaction contemplated hereby.<\/p>\n
4.7 SEC FILINGS; FINANCIAL STATEMENTS. Parent has filed all forms,
\nreports and documents required to be filed by Parent with the SEC (collectively,
\ntogether with any forms, reports and documents filed by Parent with the SEC
\nafter the date hereof until the Closing, the “PARENT SEC REPORTS”). Each such
\nreport, when filed, complied in all material respects as to form with the
\nrequirements of the Exchange Act and, as of their respective dates, none of such
\nreports contained any untrue statement of a material fact or omitted to state a
\nmaterial fact required to be stated therein or necessary to make the statements
\ntherein, in light of the circumstances under which they were made, not
\nmisleading. Each of the consolidated financial statements (including, in each
\ncase, any related notes) contained in the Parent SEC Reports complied in all
\nmaterial respects with the applicable rules and regulations of the SEC with
\nrespect thereto, was prepared in accordance with generally accepted accounting
\nprinciples applied on a consistent basis throughout the periods involved (except
\nas may be indicated in the notes to such financial statements) and fairly
\npresented the consolidated financial position of Parent as at the respective
\ndates and the consolidated results of operations and cash flows for the periods
\nindicated, except that unaudited interim financial statements contained in any
\nquarterly report on Form 10-Q (i) were or are subject to normal year-end
\nadjustments which were not or are not expected to be material in amount, and
\n(ii) do not contain complete footnote disclosure.<\/p>\n
ARTICLE V<\/p>\n
CONDUCT PRIOR TO THE EFFECTIVE TIME<\/p>\n
5.1 CONDUCT OF BUSINESS OF THE COMPANY. During the period from the
\ndate of this Agreement and continuing until the earlier of the termination of
\nthis Agreement or the Effective Time, the Company agrees (except to the extent
\nthat Parent shall otherwise consent in writing (which consent shall not be
\nunreasonably withheld, conditioned or delayed)), to use reasonable efforts to
\ncarry on the Company’s business in the usual, regular and ordinary course in
\nsubstantially the same manner as heretofore conducted, to use reasonable efforts
\nto pay the debts and Taxes of the Company when due and to pay or perform other
\nobligations when due and, to the extent consistent with such business, use their
\nreasonable best efforts consistent with past practice and policies to preserve
\nintact the Company’s present business organizations, keep available the services
\nof the Company’s present officers and key employees and preserve the Company’s
\nrelationships with customers, suppliers, distributors, licensors, licensees, and
\nothers having business dealings with it, all with the goal of preserving
\nunimpaired the Company’s goodwill and ongoing businesses at the Effective Time.
\nThe Company shall promptly notify Parent of any material event or occurrence or
\nemergency not in the ordinary course of business of the Company of which the
\nCompany has Knowledge. Except as expressly contemplated by this Agreement or as
\nset forth in Section 5.1 of the Disclosure Schedule, the Company shall not,
\nwithout the prior written consent of Parent (which consent shall not be
\nunreasonably withheld, conditioned or delayed):<\/p>\n
(a) Make any expenditures or enter into any commitment or
\ntransaction exceeding $25,000 individually or $100,000 in the aggregate or any
\ncommitment or transaction of the type described in Section 2.9 hereof;<\/p>\n
(b) Except in the ordinary course of business of the
\nCompany in accordance with past custom and practice, (i) sell any Company
\nIntellectual Property or enter into any agreement with respect to the Company
\nIntellectual Property with any person or entity or with respect to the
\nIntellectual Property of any person or entity, (ii) buy any Intellectual
\nProperty or enter into any agreement with respect to the Intellectual Property
\nof any person or entity, (iii) enter into any agreement with respect to the
\ndevelopment of any Intellectual Property with a third party;<\/p>\n
(c) Except in the ordinary course of business of the
\nCompany in accordance with past custom and practice, sell or enter into any
\nlicense agreement with respect to the Company Intellectual Property with any
\nperson or entity or buy or enter into any license agreement with respect to the
\nIntellectual Property of any person or entity;<\/p>\n
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(d) Except in the ordinary course of business of the
\nCompany in accordance with past custom and practice, transfer to any person or
\nentity any rights to the Company Intellectual Property;<\/p>\n
(e) Except in the ordinary course of business of the
\nCompany in accordance with past custom and practice, enter into or amend any
\nContract pursuant to which any other party is granted marketing, distribution,
\ndevelopment or similar rights of any type or scope with respect to any products
\nor technology of the Company;<\/p>\n
(f) Amend or otherwise modify (or agree to do so) any of
\nthe Contracts set forth or described in the Disclosure Schedule;<\/p>\n
(g) Commence or settle any litigation;<\/p>\n
(h) Declare, set aside or pay any dividends on or make
\nany other distributions (whether in cash, stock or property) in respect of any
\nof its capital stock, or split, combine or reclassify any of its capital stock
\nor issue or authorize the issuance of any other securities in respect of, in
\nlieu of or in substitution for shares of capital stock of the Company, or
\nrepurchase, redeem or otherwise acquire, directly or indirectly, any shares of
\nthe capital stock of the Company (or options, warrants or other rights
\nexercisable therefor);<\/p>\n
(i) Issue, grant, deliver or sell or authorize or propose
\nthe issuance, grant, delivery or sale of, or purchase or propose the purchase
\nof, any shares of its capital stock or securities convertible into, or
\nsubscriptions, rights, warrants or options to acquire, or other agreements or
\ncommitments of any character obligating it to issue or purchase any such shares
\nor other convertible securities.<\/p>\n
(j) Cause or permit any amendments to its Articles of
\nIncorporation or Bylaws;<\/p>\n
(k) Acquire or agree to acquire by merging or
\nconsolidating with, or by purchasing any assets or equity securities of, or by
\nany other manner, any business or any corporation, partnership, association or
\nother business organization or division thereof, or otherwise acquire or agree
\nto acquire any assets which are material, individually or in the aggregate, to
\nthe Company’s business;<\/p>\n
(l) Sell, lease, license or otherwise dispose of any of
\nits properties or assets, except properties or assets which are not Intellectual
\nProperty in the ordinary course of business and consistent with past practices;<\/p>\n
(m) Except as otherwise contemplated by the Note (as
\ndefined in Section 6.24) incur any indebtedness for borrowed money or guarantee
\nany such indebtedness or issue or sell any debt securities or guarantee any debt
\nsecurities of others;<\/p>\n
(n) Grant any loans to others or purchase debt securities
\nof others or amend the terms of any outstanding loan agreement;<\/p>\n
(o) Grant any severance or termination pay (i) to any
\ndirector or officer or (ii) to any other employee except payments made pursuant
\nto standard written agreements outstanding on the date hereof and disclosed in
\nthe Disclosure Schedule;<\/p>\n
(p) Adopt any employee benefit plan, or enter into any
\nemployment contract, pay or agree to pay any special bonus or special
\nremuneration to any director or employee, or increase the salaries or wage rates
\nof its employees;<\/p>\n
(q) Revalue any of its assets, including without
\nlimitation writing down the value of inventory or writing off notes or accounts
\nreceivable other than in the ordinary course of business;<\/p>\n
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(r) Pay, discharge or satisfy, in an amount in excess of
\n$25,000 in any one case or $100,000 in the aggregate, any claim, liability or
\nobligation (absolute, accrued, asserted or unasserted, contingent or otherwise),
\nother than the payment, discharge or satisfaction of liabilities reflected or
\nreserved against in the Current Balance Sheet;<\/p>\n
(s) Make or change any material election in respect of
\nTaxes, adopt or change any accounting method in respect of Taxes, enter into any
\nclosing agreement, settle any claim or assessment in respect of Taxes, or
\nconsent to any extension or waiver of the limitation period applicable to any
\nclaim or assessment in respect of Taxes;<\/p>\n
(t) Enter into any strategic alliance or joint marketing
\narrangement or agreement;<\/p>\n
(u) Other than as specifically requested in writing by
\nParent, accelerate the vesting schedule of any of the outstanding Company
\nOptions or Company Capital Stock;<\/p>\n
(v) Hire or terminate employees or encourage employees to
\nresign; or<\/p>\n
(w) Take, or agree in writing or otherwise to take, any
\nof the actions described in Sections 5.1(a) through (v) above, or any other
\naction that would prevent the Company from performing or cause the Company not
\nto perform its covenants hereunder.<\/p>\n
5.2 NO SOLICITATION.<\/p>\n
(a) Until the earlier of the Effective Time or the date
\nof termination of this Agreement pursuant to the provisions of Section 9.1
\nhereof, neither the Company nor any of the Principal Shareholders (nor will the
\nCompany nor any of the Principal Shareholders permit any of their respective
\nofficers, directors, agents, representatives or affiliates, as applicable, to)
\ndirectly or indirectly, take any of the following actions with any party other
\nthan Parent and its designees: (a) solicit, encourage, initiate or participate
\nin any negotiations or discussions with respect to, any offer or proposal to
\nacquire all, substantially all or a significant portion of the Company’s
\nbusiness, properties or technologies or any portion of the Company’s capital
\nstock (whether or not outstanding) whether by merger, purchase of assets, tender
\noffer or otherwise, or effect any such transaction, (b) disclose any information
\nnot customarily disclosed to any person concerning the Company’s business,
\ntechnologies or properties or afford to any person or entity access to its
\nproperties, technologies, books or records, (c) assist or cooperate with any
\nperson to make any proposal to purchase all or any material part of the
\nCompany’s capital stock or assets, or (d) enter into any agreement with any
\nperson providing for the acquisition of all or any significant portion of the
\nCompany (whether by way of merger, purchase of assets, tender offer or
\notherwise). In addition to the foregoing, if the Company or any of the Principal
\nShareholders receives, prior to the Effective Time or the termination of this
\nAgreement, any offer, proposal, or request relating to any of the above, the
\nCompany or the Principal Shareholders, as applicable, shall immediately notify
\nParent thereof, including information as to the identity of the offer or the
\nparty making any such offer or proposal and the specific terms of such offer or
\nproposal, as the case may be, and such other information related thereto as
\nParent may reasonably request.<\/p>\n
(b) The parties hereto agree that, in addition to any
\nother remedy to which Parent may be entitled at law or in equity, irreparable
\ndamage would occur in the event that the provisions of this Section 5.2 were not
\nperformed in accordance with their specific terms or were otherwise breached. It
\nis accordingly agreed by the parties that Parent shall be entitled to seek an
\ninjunction or injunctions to prevent breaches of the provisions of this Section
\n5.2 and to enforce specifically the terms and provisions hereof in any court of
\nthe United States or any state having jurisdiction.<\/p>\n
ARTICLE VI<\/p>\n
ADDITIONAL AGREEMENTS<\/p>\n
6.1 SHAREHOLDER APPROVAL. Promptly upon completion of the Private
\nPlacement Statement in accordance with Section 6.22, the Company shall submit
\nthis Agreement and the transactions contemplated hereby to the <\/p>\n
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Shareholders for approval and adoption as provided by Pennsylvania Law, its
\nArticles of Incorporation and Bylaws. The Company shall use its reasonable
\nefforts to obtain the consent or vote of its Shareholders sufficient to approve
\nthe Merger and this Agreement and to enable the Closing to occur as soon as
\npossible. The materials submitted to the Company’s Shareholders shall have been
\nsubject to review and approval by Parent and include information regarding the
\nCompany, the terms of the Merger and this Agreement and the unanimous
\nrecommendation of the Board of Directors of the Company in favor of the Merger
\nand this Agreement and the Board of Directors will not change such
\nrecommendation.<\/p>\n
6.2 ACCESS TO INFORMATION. The Company shall afford Parent and its
\naccountants, counsel and other representatives, reasonable access during normal
\nbusiness hours upon reasonable advance notice during the period prior to the
\nEffective Time to (a) all of the Company’s properties, books, contracts, and
\nrecords and (b) all other information concerning the business, properties and
\npersonnel (subject to restrictions imposed by applicable law) of the Company as
\nParent may reasonably request, including all key employees of the Company;
\nPROVIDED that the Company shall have the right to participate in any contact
\nwith such person. The Company agrees to provide to Parent and its accountants,
\ncounsel and other representatives copies of internal financial statements
\n(including tax returns and supporting documentation) promptly upon request.
\nParent shall promptly provide the Company with copies of such publicly available
\ninformation about Parent as the Company may request. No information or knowledge
\nobtained in any investigation pursuant to this Section 6.2 shall affect or be
\ndeemed to modify any representation or warranty contained herein or the
\nconditions to the obligations of the parties to consummate the Merger.<\/p>\n
6.3 CONFIDENTIALITY. Each of the parties hereto hereby agrees that
\nthe information obtained in any investigation pursuant to Section 6.2, or
\npursuant to the negotiation and execution of this Agreement or the effectuation
\nof the transaction contemplated hereby shall be governed by the terms of the
\nConfidential Disclosure Agreement dated March 6, 2000, between the Company and
\nParent (the “CONFIDENTIAL DISCLOSURE AGREEMENT”).<\/p>\n
6.4 EXPENSES.<\/p>\n
(a) Except as set forth in Section 6.4(b) or as otherwise
\nprovided in the Transaction Documents, whether or not the Merger is consummated,
\nall fees and expenses incurred in connection with the Merger including, without
\nlimitation, all legal, accounting, consulting and all other fees and expenses of
\nthird parties (collectively, “THIRD PARTY EXPENSES”) incurred by a party in
\nconnection with the negotiation and effectuation of the terms and conditions of
\nthis Agreement and the transactions contemplated hereby, shall be the obligation
\nof the respective party incurring such fees and expenses.<\/p>\n
(b) In the event that the Merger is consummated, Parent
\nagrees to bear $175,000 of those Third Party Expenses incurred by the Company
\nand up to $50,000 in financial advisory fees (which $175,000 and $50,000
\nlimitations shall include any Third Party Expenses paid or incurred by the
\nCompany prior to the Effective Time). The Company and the Principal Shareholders
\nagree that Parent shall have full recourse to the Escrow Fund (as defined
\nherein) for all Third Party Expenses of the Company that exceed the greater of
\nEstimated Third Party Expenses or $175,000.<\/p>\n
(c) The Company shall deliver the Estimated Third Party
\nExpenses Letter to Parent concurrently with the Estimated Closing Balance Sheet.<\/p>\n
6.5 PUBLIC DISCLOSURE. Unless otherwise required by law, prior to
\nthe Effective Time, no disclosure (whether or not in response to an inquiry) of
\nthe subject matter of this Agreement shall be made by any party hereto unless
\napproved by Parent and the Company regarding the subject matter of this
\nAgreement prior to release, which approval shall not be unreasonably withheld;
\nPROVIDED HOWEVER, that a party may, without the prior consent of the other
\nparty, issue such press release or make such public statements as may upon the
\nadvice of counsel be required by law or the Nasdaq National Market if it has
\nused reasonable efforts to consult with the other party. Any public announcement
\nby Parent regarding the subject matter of this Agreement shall be delivered to
\nthe Company prior to release and the Company shall have been given a reasonable
\nopportunity to comment thereon.<\/p>\n
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6.6 CONSENTS. The Company shall use commercially reasonable
\nefforts to obtain the consents, waivers, assignments and approvals of all
\nMaterial Consents and Immaterial Consents as may be required in connection with
\nthe Merger so as to preserve all rights of, and benefits to, the Company
\nthereunder.<\/p>\n
6.7 FIRPTA COMPLIANCE. On the Closing Date, the Company shall
\ndeliver to Parent a properly executed statement in a form reasonably acceptable
\nto Parent for purposes of satisfying Parent’s obligations under Treasury
\nRegulation Section 1.1445-2(c)(3).<\/p>\n
6.8 REASONABLE EFFORTS. Subject to the terms and conditions
\nprovided in this Agreement, each of the parties hereto shall use commercially
\nreasonable efforts to take promptly, or cause to be taken, all actions, and to
\ndo promptly, or cause to be done, all things necessary, proper or advisable
\nunder applicable laws and regulations to consummate and make effective the
\ntransactions contemplated hereby, to obtain all necessary waivers, consents and
\napprovals and to effect all necessary registrations and filings and to remove
\nany injunctions or other impediments or delays, legal or otherwise, in order to
\nconsummate and make effective the transactions contemplated by this Agreement
\nfor the purpose of securing to the parties hereto the benefits contemplated by
\nthis Agreement; provided that Parent shall not be required to agree to any
\ndivestiture by Parent or the Company or any of Parent’s subsidiaries or
\naffiliates of shares of capital stock or of any business, assets or property of
\nParent or its subsidiaries or affiliates or of the Company, its affiliates, or
\nthe imposition of any material limitation on the ability of any of them to
\nconduct their businesses or to own or exercise control of such assets,
\nproperties and stock.<\/p>\n
6.9 NOTIFICATION OF CERTAIN MATTERS. Each party hereto shall use
\ncommercially reasonable efforts to give prompt notice to the other party of (a)
\nthe occurrence or non-occurrence of any event, the occurrence or non-occurrence
\nof which is likely to cause any representation or warranty of such party to be
\nmaterially untrue or inaccurate at or prior to the Effective Time and (b) any
\nfailure of such party to comply with or satisfy any covenant, condition or
\nagreement to be complied with or satisfied by it hereunder; PROVIDED, HOWEVER,
\nthat the delivery of any notice pursuant to this Section 6.9 shall not limit or
\notherwise affect any remedies available to the party receiving such notice. No
\ndisclosure pursuant to this Section 6.9, however, shall be deemed to amend or
\nsupplement the Disclosure Schedule or prevent or cure any misrepresentations,
\nbreach of warranty or breach of covenant.<\/p>\n
6.10 ADDITIONAL DOCUMENTS AND FURTHER ASSURANCES. Each party
\nhereto, at the request of another party hereto, shall execute and deliver such
\nother instruments and do and perform such other acts and things as may be
\nreasonably necessary or desirable for effecting completely the consummation of
\nthis Agreement and the transactions contemplated hereby.<\/p>\n
6.11 NO ACTIONS INCONSISTENT WITH TAX-FREE REORGANIZATION. The
\nCompany, Parent and Merger Sub shall (and, following the Effective Time, Parent
\nshall cause the Company to) take no action with respect to the Capital Stock,
\nassets or liabilities of the Company that would cause the Merger to fail to
\nqualify as a “reorganization” within the meaning of Section 368(a) of the Code.<\/p>\n
6.12 NASDAQ LISTING. Parent agrees to authorize for listing on the
\nNasdaq National Market the shares of Parent Common Stock issuable, and those
\nrequired to be reserved for issuance, in connection with the Merger, upon
\nofficial notice of issuance.<\/p>\n
6.13 FORM S-8. Parent shall file a registration statement on Form
\nS-8 to register shares of Parent Common Stock issuable upon exercise of assumed
\nCompany Options (other than Company Options in the form of warrants or other
\ninvestments issued pursuant to arrangements that are not eligible for
\nregistration on Form S-8) within 180 days after the Closing Date.<\/p>\n
6.14 ESTIMATED BALANCE SHEET AND CLOSING BALANCE SHEET. Not fewer
\nthan three business days prior to the Closing, the Company shall deliver to
\nParent the Estimated Balance Sheet. Not more than 10 business days after the
\nEffective Time, Parent shall prepare, in good faith, a balance sheet of the
\nCompany dated as of the Closing (the “CLOSING BALANCE SHEET”) and shall deliver
\nthe same to the Shareholder’s Agent (as defined in the Indemnification and
\nEscrow <\/p>\n
-28-<\/p>\n
Agreement). The Shareholders may dispute the Closing Balance Sheet in accordance
\nwith the Indemnification and Escrow Agreement. The Closing Balance Sheet shall
\nbe prepared in accordance with GAAP.<\/p>\n
6.15 ISSUANCE OF OPTIONS.<\/p>\n
(a) At or promptly after the Closing, but in no event
\nmore than 30 days after the Closing, Parent agrees that it shall issue options
\nto purchase an aggregate of not fewer than 250,000 shares of Parent Common
\nStock, pursuant to option agreements in the Parent’s standard form (the
\n“Options”) to certain Company employees who commence employment with Parent on
\nthe Effective Date, the identity of such employees to be agreed upon prior to
\nthe Closing. The Options shall have an exercise price equal to the fair market
\nvalue of the date of grant, and be subject to Parent’s customary vesting
\nschedule with a vesting commencement date not later than the Effective Date.<\/p>\n
(b) At or promptly after the Closing, but in no event
\nmore than 30 days after the Closing, Parent agrees that it shall issue options
\nto purchase up to 50,000 shares of Parent Common Stock, pursuant to an option
\nagreement substantially in the form attached hereto as EXHIBIT F (the
\n“Performance Options”) after the Effective Date to certain Company employees who
\ncommence employment with Parent on the Effective Date (the identity of such
\nemployees to be agreed upon prior to the Closing). The Performance Options shall
\nhave an exercise price equal to the fair market value on the Closing Date and
\nshall vest upon the earlier of (i) the five year anniversary of the Closing
\nDate, or (ii) the completion of certain milestones, described in the Performance
\nOptions.<\/p>\n
6.16 TERMINATION, WAIVER AND RELEASE OF EMPLOYMENT AGREEMENTS. The
\nCompany shall use commercially reasonable efforts to provide that its employees
\nlisted on Schedule 6.16 enter into Parent offer letter agreements as provided by
\nParent to the Company (the “Parent Offer Letter Agreements”).<\/p>\n
6.17 TERMINATION OF 401(k) PLAN. The parties will use good faith
\nefforts to cooperate to determine whether to terminate the Company’s 401(k)
\nplan(s) prior to Closing. After such efforts, to the extent Parent reasonably
\ndetermines that the 401(k) plan should be terminated, the Company shall
\nterminate such plan prior to Closing.<\/p>\n
6.18 TERMINATION OF SEVERANCE PLANS. The Company agrees to
\nterminate any and all group severance, separation or salary continuation plans,
\nprograms or arrangements immediately prior to Closing. The Parent shall receive
\nfrom the Company evidence that the Company’s plan(s) has been terminated
\npursuant to the Company’s Board of Directors (the form and substance of which
\nresolutions shall be subject to review and approval of the Parent), effective as
\nof the day immediately preceding the Effective Time.<\/p>\n
6.19 EMPLOYEE PLANS. The Company and Parent shall use good faith
\nefforts to determine which Employee Plans of Company shall be terminated prior
\nto Closing Date.<\/p>\n
6.20 EMPLOYEE BENEFITS. All Company eligible employees shall
\ncontinue on their existing benefit plans until such time as, in Parent’s sole
\ndiscretion, a transaction can be accomplished to adopt employee benefit plans
\nand programs maintained by Parent. Parent shall provide the Company’s employees
\nwith health, welfare and other employee benefits that in the aggregate are
\nsubstantially similar to those provided to Parent’s employees in similar
\nfunctions and positions. Parent covenants and agrees that to the extent
\npermitted by applicable law and to the extent the existing benefit plans and
\narrangements provided by Company to its employees are terminated on or after the
\nEffective Time, such employees shall be eligible for benefits which are
\navailable or subsequently become available to Parent’s employees, and on a basis
\nwhich is on parity with Parent’s employees. For purposes of satisfying the terms
\nand conditions of such plans, Parent shall give full credit for eligibility,
\nvesting or benefit accrual to the extent commercially and legally possible for
\neach participant’s period of service at the Company, as reflected in the
\nCompany’s records, prior to the Effective Time; PROVIDED, HOWEVER, the Company,
\nprior to the Closing, delivers to Parent sufficient information to grant such
\nservice credit. In addition, to the extent Parent elects to terminate Company’s
\nemployee benefit plans, Parent shall make commercially reasonable efforts to
\nwaive limitations on benefits relating to any pre-existing conditions and
\nrecognize, for purposes of annual deductible and out-of-pocket limits under its
\nmedical and dental plans, deductible and out-of-pocket expenses paid by the
\nCompany’s employees in the calendar year in which the Effective Time occurs.<\/p>\n
-29-<\/p>\n
6.21 BLUE SKY LAWS. Parent shall take such steps as may be
\nnecessary to comply with the securities and Blue Sky laws of all jurisdictions
\nwhich are applicable in connection with the Merger; PROVIDED, HOWEVER, that
\nParent shall not be required to qualify to do business or execute a general
\nconsent to service of process in any jurisdiction.<\/p>\n
6.22 PRIVATE PLACEMENT STATEMENT. As promptly as practicable after
\nthe execution of this Agreement, the Parent shall prepare, with the cooperation
\nof the Company, an informational private placement statement as Parent
\nreasonably determines is required to provide that the Parent Common Stock issued
\npursuant to this Agreement will be exempt from registration under the Securities
\nAct of 1933, as amended pursuant to Rule 506 promulgated by the Securities and
\nExchange Commission (the “PRIVATE PLACEMENT STATEMENT”). Each of Parent and the
\nCompany shall provide promptly to the other such information concerning its
\nbusiness and financial statements and affairs as, in the reasonable judgment of
\nthe providing party or its counsel, may be required or appropriate for inclusion
\nin the Private Placement Statement, or in any amendments or supplements thereto,
\nand to cause its counsel and auditors to cooperate with the other’s counsel and
\nauditors in the preparation of the Private Placement Statement. The Company will
\ncause the Private Placement Statement to be mailed to the Shareholders, at the
\nearliest practicable time after its preparation by Parent and delivery to the
\nCompany. As promptly as practicable after the date of this Agreement, the Parent
\nwill prepare and file any other filings required under any Federal, foreign or
\nBlue Sky laws relating to the Merger and the transactions contemplated by this
\nAgreement (the “OTHER FILINGS”). The Private Placement Statement and the Other
\nFilings will comply in all material respects with all applicable requirements of
\nlaw and the rules and regulations promulgated thereunder. Whenever any event
\noccurs which is required to be set forth in an amendment or supplement to the
\nPrivate Placement Statement or any Other Filing, the Company or Parent, as the
\ncase may be, will promptly inform the other of such occurrence and cooperate in
\nfiling with any other government officials, and\/or mailing to the stockholders,
\nsuch supplement.<\/p>\n
6.23 OTHER AGREEMENTS. Upon execution of this Agreement, the
\nCompany and Parent shall enter into (i) a Promissory Note in the form attached
\nhereto as EXHIBIT G (the “Note”), (ii) a Security Agreement in the form attached
\nhereto as EXHIBIT H (the “Security Agreement”), (iii) a License Agreement in the
\nform attached hereto as EXHIBIT I (the “License Agreement”), and (iv) a
\ntechnology Escrow Agreement in the form attached hereto as EXHIBIT J (the
\n“Technology Escrow Agreement”) which may be executed by the escrow agent
\nsubsequent to the date hereof.<\/p>\n
6.24 EMPLOYMENT AGREEMENTS. At the Closing, each Founder and
\nNicholas Manolis (collectively, the “KEY EMPLOYEES”) and the Parent shall enter
\ninto Employment Agreements in the forms agreed upon, respectively with such
\npersons (collectively, the “EMPLOYMENT AGREEMENTS”) and each of the Key
\nEmployees shall enter into the Non-Competition Agreements.<\/p>\n
6.25 POST CLOSING INSURANCE. For a period of at least two (2) years
\nafter the Closing, Parent shall cause to be maintained the director and officer
\ninsurance policies identified in Section 2.23 of the Disclosure Schedule
\nrelating to the period prior to the Closing.<\/p>\n
6.26 GUARANTEES. Parent shall use its best efforts to refinance all
\nobligations of the Company for which one or more Shareholders are or may be
\nliable (collectively, “GUARANTEED OBLIGATIONS”), which are disclosed in Section
\n2.15 of the Disclosure Schedule, promptly after the Closing. After the Closing,
\nParent shall indemnify such individuals for any liability which such persons
\nincur as a result of such guarantees as a result of matters occurring after the
\nClosing.<\/p>\n
6.27 ADVISOR’S FEES. At the Effective Time, Parent shall pay the
\nAdvisor’s Fees in shares of its Common Stock (which fees shall be deducted from
\nthe Merger Shares, and contemplated by such definition).<\/p>\n
ARTICLE VII<\/p>\n
CONDITIONS TO THE MERGER<\/p>\n
7.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER.
\nThe respective obligations of the Company and Parent to effect the Merger shall
\nbe subject to the satisfaction at or prior to the Effective Time of the
\nfollowing conditions:<\/p>\n
-30-<\/p>\n
(a) COMPANY SHAREHOLDER APPROVAL. This Agreement shall
\nhave been approved and adopted, and the Merger shall have been duly approved, by
\nthe requisite vote under applicable law, by the Shareholders of Company.<\/p>\n
(b) NO ORDER. No Governmental Entity shall have enacted,
\nissued, promulgated, enforced or entered any statute, rule, regulation,
\nexecutive order, decree, injunction or other order (whether temporary,
\npreliminary or permanent) which is in effect and which has the effect of making
\nthe Merger illegal or otherwise prohibiting consummation of the Merger.<\/p>\n
(c) NASDAQ LISTING. The shares of Parent Common Stock
\nissuable to the Shareholders of Company pursuant to this Agreement and such
\nother shares required to be reserved for issuance in connection with the Merger
\nshall have been authorized for listing on Nasdaq upon official notice of
\nissuance.<\/p>\n
(d) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No
\ntemporary restraining order, preliminary or permanent injunction or other order
\nissued by any court of competent jurisdiction or other legal restraint or
\nprohibition preventing the consummation of the Merger shall be in effect, nor
\nshall any proceeding brought by an administrative agency or commission or other
\ngovernmental authority or instrumentality, domestic or foreign, seeking any of
\nthe foregoing be pending; nor shall there be any action taken, or any statute,
\nrule, regulation or order enacted, entered, enforced or deemed applicable to the
\nMerger, which makes the consummation of the Merger illegal.<\/p>\n
7.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY AND THE PRINCIPAL
\nSHAREHOLDERS. The obligations of the Company and the Principal Shareholders to
\nconsummate and effect this Agreement and the transactions contemplated hereby
\nshall be subject to the satisfaction at or prior to the Effective Time of each
\nof the following conditions, any of which may be waived, in writing, exclusively
\nby the Company:<\/p>\n
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. Each of
\nthe representations and warranties of Parent and Sub shall be true and correct
\nin all material respects on and as of the Closing Date as though such
\nrepresentations and warranties were made on and as of the Closing Date (except
\nfor representations and warranties made specifically with reference to a
\nparticular date, which shall have been true as of such date). The Parent and Sub
\nshall have performed and complied in all material respects with all covenants to
\nbe performed by them through the Closing Date.<\/p>\n
(b) OTHER AGREEMENTS. The Parent shall have executed (i)
\nthe Registration Rights and Lock-Up Agreement and (ii) the Employment
\nAgreements.<\/p>\n
(c) NO MATERIAL ADVERSE CHANGE. There shall not have
\noccurred any Parent Material Adverse Effect since the date of this Agreement.<\/p>\n
(d) CERTIFICATE OF THE PARENT. Company shall have been
\nprovided with a certificate executed on behalf of Parent by an Executive Vice
\nPresident to the effect that, as of the Effective Time the conditions set forth
\nin Section 7.2(a) are true and have been satisfied.<\/p>\n
7.3 CONDITIONS TO THE OBLIGATIONS OF PARENT AND SUB. The
\nobligations of Parent and Sub to consummate and effect this Agreement and the
\ntransactions contemplated hereby shall be subject to the satisfaction at or
\nprior to the Effective Time of each of the following conditions, any of which
\nmay be waived, in writing, exclusively by Parent:<\/p>\n
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. Each of
\nthe representations and warranties of the Company and the Principal Shareholders
\nin this Agreement shall be true and correct in all material respects on and as
\nof the Closing Date as though such representations and warranties were made on
\nand as of the Closing Date (except for representations and warranties made
\nspecifically with reference to a particular date, which shall have been true as
\nof such date); PROVIDED HOWEVER that any failure of Section 2.13 (Intellectual
\nProperty) to be true and correct shall automatically be deemed to be material
\nfor purposes of this Section 7.3(a), and the Company and the Principal
\nShareholders shall have performed and complied in all material respects with all
\ncovenants and obligations of this Agreement required to be performed and
\ncomplied with by them through the Closing Date.<\/p>\n
-31-<\/p>\n
(b) CLAIMS. There shall not have occurred any claims
\n(whether or not asserted in litigation) which may materially and adversely
\naffect the consummation of the transactions contemplated hereby or are likely to
\nhave a Company Material Adverse Effect. There shall be no BONA FIDE action,
\nsuit, claim or proceeding of any nature pending, or overtly threatened, against
\nthe Parent, Sub or the Company, their respective properties or any of their
\nofficers or directors, arising out of, or in any way connected with, the Merger
\nor the other transactions contemplated by the terms of this Agreement.<\/p>\n
(c) SHAREHOLDER APPROVAL; DISSENTERS. Shareholders
\nholding at least ninety-five percent (95%) of the Company’s Capital Stock shall
\nhave approved this Agreement, the Merger and the transactions contemplated
\nhereby and thereby (i.e., no fewer than five percent (5%) of the Shareholders
\nshall have the opportunity to exercise appraisal rights under Pennsylvania Law).
\nShareholders shall have approved by the requisite vote any amounts of the Value
\nreceived or to be received in exchange for Company Capital Stock that may be
\ndeemed to constitute “parachute payments” pursuant to Section 280G of the Code,
\nsuch that all such payments, sales and purchases resulting from the transactions
\ncontemplated hereby shall not be deemed to be “parachute payments” pursuant to
\nSection 280G of the Code or shall be exempt from such treatment under such
\nSection of the Code.<\/p>\n
(d) THIRD PARTY CONSENTS. Any and all consents, waivers,
\nassignments and approvals listed in Section 2.6(a) of the Disclosure Schedule
\nshall have been obtained.<\/p>\n
(e) LEGAL OPINION. Parent shall have received a legal
\nopinion from Kirkpatrick & Lockhart LLP, legal counsel to the Company,
\nsubstantially in the form of EXHIBIT K hereto.<\/p>\n
(f) OTHER AGREEMENTS. Each Key Employee shall execute and
\ndeliver to Parent a Noncompetition Agreement concurrently with the Closing. The
\nSignificant Shareholders shall have executed and delivered to Parent each of (i)
\nthe Registration Rights and Lock-Up Agreement and (ii) the Indemnification and
\nEscrow Agreement in the form of EXHIBIT L attached hereto.<\/p>\n
(g) NO MATERIAL ADVERSE CHANGES. There shall not have
\noccurred any Company Material Adverse Effect since the date of this Agreement.<\/p>\n
(h) ESTIMATED BALANCE SHEET. Parent shall have received
\nfrom the Company at least three business days prior to the Closing Date each of
\n(i) the Estimated Balance Sheet and (ii) the Estimated Third Party Expenses
\nLetter.<\/p>\n
(i) WARRANTS AND CONVERTIBLE DEBT. Any and all warrants
\nand convertible debt of the Company shall have been converted into Company
\nCapital Stock.<\/p>\n
(j) NO VARIABLE OPTIONS. The Company shall have no
\nvariable options outstanding.<\/p>\n
(k) NO RELEASE OF TECHNOLOGY. The Company shall have
\nobtained written confirmation from the Bank of Montreal that the Merger will not
\ncause the release of Company Intellectual Property.<\/p>\n
(l) PRE-EMPTIVE RIGHTS. All agreements with any third
\nparty which provide for pre-emptive rights on Company Capital Stock shall have
\nbeen terminated.<\/p>\n
(m) CERTIFICATE OF THE COMPANY. Parent shall have been
\nprovided with a certificate executed on behalf of the Company by its President
\nto the effect that, as of the Effective Time the conditions set forth in Section
\n7.3 (a) have been satisfied.<\/p>\n
ARTICLE VIII<\/p>\n
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION<\/p>\n
-32-<\/p>\n
8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The Buyers’,
\nCompany’s and Principal Shareholders’ representations and warranties in this
\nAgreement shall terminate on the second anniversary of the Closing Date (and no
\nclaim may be made based thereon after such date); provided, however, that (a)
\nthe representations and warranties set forth in Section 2.3 shall survive the
\nClosing and continue in perpetuity, (b) the representations and warranties
\nrelating or pertaining to any Federal Tax or Returns related to such Tax set
\nforth in Section 2.10 hereof shall survive until the expiration of all
\napplicable statutes of limitations, or current extensions thereof, governing
\neach Tax or Returns related to such Tax, and (c) the representations and
\nwarranties relating or pertaining to environmental matters set forth in Section
\n2.20 hereof shall survive until the expiration of all applicable statutes of
\nlimitations or current extensions thereof. All of Parent’s and Sub’s
\nrepresentations and warranties contained herein or in any instrument delivered
\npursuant to this Agreement shall terminate at the Effective Time; provided
\nhowever, that this provision shall not be construed to abrogate rights of
\nShareholders under federal and state securities laws.<\/p>\n
8.2 INDEMNIFICATION.<\/p>\n
(a) INDEMNIFICATION OBLIGATIONS. The Significant
\nShareholders agree severally, and not jointly, in pro rata proportion relative
\nto the aggregate consideration received by such Shareholders, to indemnify and
\nhold Parent and its officers, directors and affiliates harmless against all
\nclaims, losses, liabilities, damages, deficiencies, costs and expenses,
\nincluding reasonable attorneys’ fees and expenses of investigation and defense
\n(hereinafter individually a “LOSS” and collectively “LOSSES”) incurred by
\nParent, its officers, directors, or affiliates (including the Surviving
\nCorporation) (collectively, “PARENT INDEMNITEES”) directly or indirectly as a
\nresult of (i) any inaccuracy or breach of a representation or warranty of the
\nCompany contained in this Agreement or (ii) any failure by the Company to
\nperform or comply with any covenant contained in this Agreement; and each
\nPrincipal Shareholder agrees to indemnify and hold Parent and its officers,
\ndirectors and affiliates harmless against all Losses incurred by a Parent
\nIndemnitee as a result of an inaccuracy or breach of a representation by such
\nPrincipal Shareholder in Article III hereof (amounts to be indemnified pursuant
\nto this Subsection (a) are referred to herein collectively as “SHAREHOLDER
\nINDEMNIFICATION SUMS”). The Significant Shareholders shall not have any right of
\ncontribution or indemnification from the Company with respect to any Loss
\nclaimed by an indemnified party after the Effective Time. The Loss with respect
\nto any claim shall be reduced by the amount of insurance recoveries received by
\nthe Parent Indemnitees under insurance policies of the Company in effect at or
\nprior to the Effective Time.<\/p>\n
(b) SEVERAL OBLIGATIONS. The obligations of the
\nSignificant Shareholders under Subsection (a) for each claim shall be several
\n(and not joint). Each Significant Shareholder’s liability for the Losses arising
\nout of a single claim (as defined in Section 8.8) shall not exceed the amount of
\nsuch Losses multiplied by a fraction, the numerator of which is the number of
\nMerger Shares received by such Significant Shareholder and the denominator of
\nwhich is the total number of Merger Shares.<\/p>\n
(c) BASKET. The Significant Shareholders shall have no
\nobligation to pay any Shareholders Indemnification Sums unless and until the
\naggregate Losses exceed $150,000 (the “BASKET AMOUNT”), but thereafter the
\nShareholder Indemnification Sum shall include the Basket Amount; PROVIDED,
\nHOWEVER, that, notwithstanding anything else in this Agreement or the Company
\nDisclosure Schedules which may be construed to the contrary, the items set forth
\non EXHIBIT M (“Certain Costs”) shall be deductible by Parent from the Escrow
\nwithout regard to the Basket.<\/p>\n
(d) MAXIMUM LIABILITY AFTER CLOSING. Certain terms not
\notherwise defined herein have the meanings ascribed to them in the
\nIndemnification and Escrow Agreement.<\/p>\n
(i) After the Closing, in no event shall any
\nShareholder’s (other than the Founders (the “NON-FOUNDING SHAREHOLDERS”))
\nliability with respect to any Loss exceed fifty percent (50%) of the Merger
\nShares held by such Shareholder on the date of the Notice with respect to such
\nLoss is received plus fifty percent (50%) of the Sales Proceeds (as hereafter
\ndefined) (less any Merger Shares or Sales Proceeds allocated for previously
\nindemnified Losses). The “SALES PROCEEDS” shall equal the proceeds net of
\ncommissions received by such Shareholder for sales of Merger Shares before the
\ndate of the applicable Notice.<\/p>\n
-33-<\/p>\n
(ii) After the Closing, in no event shall any
\nFounder’s liability with respect to any Loss exceed (y) one hundred percent
\n(100%) of the Merger Shares held by such Shareholder on the date the Notice with
\nrespect to such Loss is received plus one hundred percent (100%) of the Sales
\nProceeds (less any Merger Shares or Sales Proceeds allocated for previously
\nindemnified Losses), all with respect to Claims made during the first year after
\nthe Closing and (z) fifty percent (50%) of the Merger Shares held by such
\nShareholder on the date the Notice with respect to such Loss is received plus
\n50% of the Sales Proceeds (less any Merger Shares or Sales Proceeds allocated
\nfor previously indemnified Losses), with respect to Claims made after the first
\nyear after the Closing (either (i) or this section (ii), the “MAXIMUM
\nLIABILITY”, as applicable).<\/p>\n
(iii) Each Shareholder may pay any Claim in either
\nMerger Shares or cash, at such Shareholder’s option. If a Shareholder pays in
\nMerger Shares, the Merger Shares will be valued at the closing price of Parent’s
\nCommon Stock, for purposes of satisfying Losses and determining the Maximum
\nLiability, on the date the Notice is received by the Shareholder’s Agent (or the
\ntrading day immediately thereafter, if such day is not a trading day).<\/p>\n
8.3 ESCROW ARRANGEMENTS.<\/p>\n
(a) ESCROW FUND. As security for the indemnity provided
\nfor in Section 8.2 hereof and by virtue of this Agreement and the Merger
\nAgreement, the Company and the Significant Shareholders will be deemed to have
\nreceived and deposited with the Escrow Agent (as defined below) the Escrow
\nAmount (plus any additional shares as may be issued upon any stock split, stock
\ndividend or recapitalization effected by Parent after the Effective Time with
\nrespect to the Escrow Amount) without any act of the Company or any
\nShareholders. As soon as practicable after the Effective Time, the Escrow
\nAmount, without any act of any Shareholders, will be deposited with U.S. Bank
\nTrust, N.A. (or other institution acceptable to Parent and the Securityholder
\nAgent (as defined in Section 8.4(g) below)) as Escrow Agent (the “ESCROW
\nAGENT”), such deposit to constitute an escrow fund (the “ESCROW FUND”) to be
\ngoverned by the terms set forth herein and in the Escrow and Indemnity
\nAgreement. The Escrow Agent may execute the Escrow and Indemnity Agreement
\nfollowing the date hereof and prior to the Effective Time, and such latter
\nexecution shall not affect the binding nature of this Agreement as of the date
\nhereof among the signatories hereto. Nothing herein shall limit the liability of
\nthe Company for any breach of any representation, warranty, or covenant
\ncontained in this Agreement if the Merger does not close. Parent may not receive
\nany shares from the Escrow Fund unless and until Officer’s Certificates (as
\ndefined in the Escrow and Indemnity Agreement) identifying Losses, for which
\nParent is entitled in accordance with Section 8.2 above.<\/p>\n
(b) ESCROW PERIOD; DISTRIBUTION UPON TERMINATION OF
\nESCROW PERIODS. Subject to the following requirements, the Escrow Fund shall be
\nin existence immediately following the Effective Time and shall terminate at
\n5:00 p.m., P.S.T., on the date twelve months after the Effective Time (the
\n“ESCROW PERIOD”); PROVIDED that the Escrow Period shall not terminate with
\nrespect to such remaining portion of the Escrow Fund (or some portion thereof)
\nthat in the reasonable judgement of Parent, subject to the objection of the
\nShareholders Agent (as defined in the Escrow and Indemnity Agreement) and the
\nsubsequent arbitration of the matter in the manner provided in the Escrow and
\nIndemnity Agreement, is necessary to satisfy any unsatisfied Claims specified in
\nany Officer’s Certificate delivered to the Escrow Agent prior to termination of
\nthe Escrow Period with respect to facts and circumstances existing prior to the
\ntermination of such Escrow Period. As soon as all such Claims have been
\nresolved, the Escrow Agent shall deliver to the Shareholders the remaining
\nportion of the Escrow Fund not required to satisfy such Claims. Deliveries of
\nEscrow Amounts to the Shareholders shall be made in proportion to Shareholders’
\noriginal contributions to the Escrow Fund.<\/p>\n
8.4 NOTICE OF CLAIMS. If any Parent Indemnitee believes that it
\nhas suffered or incurred or will suffer or incur any Losses for which it is
\nentitled to indemnification under this Article VIII, or if any legal,
\ngovernmental or administrative proceeding which may result in such damages is
\nthreatened or asserted, such Parent Indemnitee shall so notify the Shareholder’s
\nAgent with reasonable promptness and reasonable particularity in light of the
\ncircumstances then existing (collectively, “CLAIMS”). If any action at law or
\nsuit in equity is instituted by or against a third party with respect to which
\nany Parent Indemnitee intends to claim any damages, such Parent Indemnitee shall
\npromptly notify the Indemnifying Party of such action or suit. The failure of a
\nParent Indemnitee to give any notice required by this Section 8.5 shall not
\naffect any Parent Indemnitee’s rights under this Article.<\/p>\n
-34-<\/p>\n
8.5 DEFENSE OF THIRD PARTY CLAIMS. In the event of the assertion
\nor commencement by any Person of any claim or other proceeding with respect to
\nwhich any of the Shareholders may become obligated to indemnify any Parent
\nIndemnitee, Parent shall proceed with the defense of such claim on its own
\n(including in conjunction with the Surviving Corporation). If Parent so proceeds
\nwith the defense of any such claim:<\/p>\n
(a) if reasonably requested by Parent, each Significant
\nShareholder shall make available to Parent any documents and materials in his or
\nits possession or control that may be necessary to the defense of such claim or
\nproceeding;<\/p>\n
(b) Parent shall have the right to settle, adjust or
\ncompromise such claim or Proceeding without the consent of the Shareholders’
\nAgent; PROVIDED, HOWEVER, that any settlement without the written approval of
\nthe Shareholder’s Agent shall not be construed prejudicially against the
\nShareholders in determining the amount of any Loss.<\/p>\n
8.6 EXCLUSIVITY AS TO REPRESENTATIONS AND WARRANTIES.<\/p>\n
(a) The representations and warranties (and the related
\nSchedules thereto) set forth herein and in the closing certificates referenced
\nin Sections 7.2(c) and 7.3(h) (collectively, the “CLOSING CERTIFICATES”) are the
\nsole and exclusive representations and warranties made by the Buyers and Sellers
\nin connection with the transactions contemplated by this Agreement. Neither
\nBuyers nor Sellers shall be deemed to have made any representation or warranty
\nother than as expressly made herein or in the Closing Certificates, as
\napplicable. Without limiting the foregoing, and notwithstanding any otherwise
\nexpress representations and warranties made herein or in the Closing
\nCertificates, as applicable, neither Buyers nor Sellers make any representation
\nor warranty with respect to any other information or documents (financial or
\notherwise) made available to the other party or its counsel, accountants,
\nadvisors, or representatives.<\/p>\n
(b) Except as otherwise provided by applicable law, the
\nrights under this Article 8 are the sole and exclusive remedies of the parties
\nunder this Agreement after the Closing for any breach of any representation or
\nwarranty under this Agreement.<\/p>\n
ARTICLE IX<\/p>\n
TERMINATION, AMENDMENT AND WAIVER<\/p>\n
9.1 TERMINATION. Except as provided in Section 9.2, this Agreement
\nmay be terminated and the Merger abandoned at any time prior to the Effective
\nTime:<\/p>\n
(a) by mutual consent of the Company and Parent;<\/p>\n
(b) by Parent or the Company if: (i) the Effective Time
\nhas not occurred by August 31, 2000, PROVIDED, HOWEVER, that the right to
\nterminate this Agreement under this Section 9.1(b)(i) shall not be available to
\nany party whose action or failure to act has been a principal cause of or
\nresulted in the failure of the Merger to occur on or before such date and such
\naction or failure to act constitutes a breach of this Agreement; (ii) there
\nshall be a final nonappealable order of a federal or state court in effect
\npreventing consummation of the Merger; or (iii) there shall be any statute,
\nrule, regulation or order enacted, promulgated or issued or deemed applicable to
\nthe Merger by any Governmental Entity that would make consummation of the Merger
\nillegal;<\/p>\n
(c) by Parent if there shall be any action taken, or any
\nstatute, rule, regulation or order enacted, promulgated or issued or deemed
\napplicable to the Merger by any Governmental Entity, which would: (i) prohibit
\nParent’s or Sub’s ownership or operation of any portion of the business of the
\nCompany or (ii) compel Parent or the Company to dispose of or hold separate all
\nor a portion of the business or assets of the Company or Parent as a result of
\nthe Merger;<\/p>\n
-35-<\/p>\n
(d) by Parent if it is not in material breach of its
\nobligations under this Agreement and there has been a material breach of any
\nrepresentation, warranty, covenant or agreement contained in this Agreement on
\nthe part of the Company or the Principal Shareholders and such breach has not
\nbeen cured within ten (10) calendar days after written notice to the Company;
\nPROVIDED, HOWEVER, that, no cure period shall be required for a breach which by
\nits nature cannot be cured; PROVIDED FURTHER, HOWEVER, that a breach or breaches
\nof representations or warranties must constitute a Company Material Adverse
\nEffect for this termination right to arise;<\/p>\n
(e) by the Company if neither it nor any Principal
\nShareholder nor any Key Employee is in material breach of their respective
\nobligations under this Agreement and there has been a material breach of any
\nrepresentation, warranty, covenant or agreement contained in this Agreement on
\nthe part of Parent or Sub and such breach has not been cured within ten (10)
\ncalendar days after written notice to Parent; PROVIDED, HOWEVER, that no cure
\nperiod shall be required for a breach which by its nature cannot be cured;
\nPROVIDED FURTHER, HOWEVER, that a breach or breaches of representations and
\nwarranties must constitute a Parent Material Adverse Effect for this termination
\nright to arise;<\/p>\n
(f) by Parent or Sub if an event having a Company
\nMaterial Adverse Effect shall have occurred after the date of this Agreement;<\/p>\n
(g) by Company if an event having a Parent Material
\nAdverse Effect shall have occurred after the date of this Agreement; or<\/p>\n
9.2 EFFECT OF TERMINATION. In the event of termination of this
\nAgreement as provided in Section 9.1, this Agreement shall forthwith become void
\nand there shall be no liability or obligation on the part of Parent, Sub or the
\nCompany, or their respective officers, directors or Shareholders, PROVIDED that
\neach party shall remain liable for any breaches of this Agreement prior to its
\ntermination; PROVIDED FURTHER that, the provisions of Sections 6.3, 6.4(a) and
\n6.5, Article X and this Section 9.2 shall remain in full force and effect and
\nsurvive any termination of this Agreement.<\/p>\n
9.3 AMENDMENT. This Agreement may be amended by the parties hereto
\nat any time by execution of an instrument in writing signed on behalf of Parent,
\nSub, the Company and the Principal Shareholders.<\/p>\n
9.4 EXTENSION; WAIVER. At any time prior to the Effective Time,
\nParent and Sub, on the one hand, and the Company and the Principal Shareholders,
\non the other hand, may, to the extent legally allowed, (i) extend the time for
\nthe performance of any of the obligations of the other party hereto, (ii) waive
\nany inaccuracies in the representations and warranties made to such party
\ncontained herein or in any document delivered pursuant hereto, and (iii) waive
\ncompliance with any of the agreements or conditions for the benefit of such
\nparty contained herein. Any agreement on the part of a party hereto to any such
\nextension or waiver shall be valid only if set forth in an instrument in writing
\nsigned on behalf of such party.<\/p>\n
ARTICLE X<\/p>\n
GENERAL PROVISIONS<\/p>\n
10.1 NOTICES. All notices and other communications hereunder shall
\nbe in writing and shall be deemed given if delivered personally or by commercial
\nmessenger or courier service, or mailed by registered or certified mail (return
\nreceipt requested) or sent via facsimile (with acknowledgment of complete
\ntransmission) to the parties at the following addresses (or at such other
\naddress for a party as shall be specified by like notice), PROVIDED, HOWEVER,
\nthat notices sent by mail will not be deemed given until received:<\/p>\n
(a) if to Parent or Sub, to:<\/p>\n
-36-<\/p>\n
Intraware, Inc.
\n 2000 Powell Street
\n Suite 140
\n Emeryville, CA 94608
\n Attn: General Counsel<\/p>\n
Telephone No.: 510-597-4933
\n Facsimile No.: 510-597-4890<\/p>\n
with a copy to:<\/p>\n
Wilson Sonsini Goodrich & Rosati
\n Professional Corporation
\n 650 Page Mill Road
\n Palo Alto, California 94304
\n Attention: John Donahue, Esq.
\n Adam R. Dolinko, Esq.
\n Telephone No.: (650) 493-9300
\n Facsimile No.: (650) 493-6811<\/p>\n
(b) if to the Company, to<\/p>\n
1000 Cliff Mine Road
\n Suite 400
\n Pittsburgh, PA 15275-1001
\n Attn: Mr. Lawrence W. Shoup
\n Telephone No.: (412) 787-3030
\n Facsimile No.: (412) 494-2830<\/p>\n
with a copy to:<\/p>\n
Kirkpatrick & Lockhart LLP
\n 535 Smithfield Street
\n Pittsburgh, PA 15222
\n Attn: David J. Lehman, Esq.
\n Telephone No.: (412) 355-6738
\n Facsimile No.: (412) 355-6501<\/p>\n
(c) if to the Principal Shareholders, to the address set
\nforth on the signature page hereto:<\/p>\n
10.2 INTERPRETATION. The words “include,” “includes” and
\n“including” when used herein shall be deemed in each case to be followed by the
\nwords “without limitation.” The table of contents and headings contained in this
\nAgreement are for reference purposes only and shall not affect in any way the
\nmeaning or interpretation of this Agreement.<\/p>\n
10.3 COUNTERPARTS. This Agreement may be executed in one or more
\ncounterparts, all of which shall be considered one and the same agreement and
\nshall become effective when one or more counterparts have been signed by each of
\nthe parties and delivered to the other party, it being understood that all
\nparties need not sign the same counterpart.<\/p>\n
10.4 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement, the Exhibits
\nhereto, the Confidential Disclosure Agreement and the documents and instruments
\nand other agreements among the parties hereto referenced herein: (a) <\/p>\n
-37-<\/p>\n
constitute the entire agreement among the parties with respect to the subject
\nmatter hereof and supersede all prior agreements and understandings both written
\nand oral, among the parties with respect to the subject matter hereof; (b) are
\nnot intended to confer upon any other person any rights or remedies hereunder;
\nand (c) shall not be assigned (other than by operation of law).<\/p>\n
10.5 SEVERABILITY. In the event that any provision of this
\nAgreement or the application thereof, becomes or is declared by a court of
\ncompetent jurisdiction to be illegal, void or unenforceable, the remainder of
\nthis Agreement will continue in full force and effect and the application of
\nsuch provision to other persons or circumstances will be interpreted so as
\nreasonably to effect the intent of the parties hereto. The parties further agree
\nto replace such void or unenforceable provision of this Agreement with a valid
\nand enforceable provision that will achieve, to the extent possible, the
\neconomic, business and other purposes of such void or unenforceable provision.<\/p>\n
10.6 OTHER REMEDIES; SPECIFIC PERFORMANCE. Except as otherwise
\nprovided herein, any and all remedies herein expressly conferred upon a party
\nwill be deemed cumulative with and not exclusive of any other remedy conferred
\nhereby, or by law or equity upon such party, and the exercise by a party of any
\none remedy will not preclude the exercise of any other remedy. The parties
\nhereto agree that irreparable damage would occur in the event that any of the
\nprovisions of this Agreement were not performed in accordance with their
\nspecific terms or were otherwise breached. It is accordingly agreed that the
\nparties shall be entitled to seek an injunction or injunctions to prevent
\nbreaches of this Agreement and to enforce specifically the terms and provisions
\nhereof in any court of the United States or any state having jurisdiction, this
\nbeing in addition to any other remedy to which they are entitled at law or in
\nequity.<\/p>\n
10.7 GOVERNING LAW. This Agreement shall be governed by and
\nconstrued in accordance with the laws of the State of California, regardless of
\nthe laws that might otherwise govern under applicable principles of conflicts of
\nlaws thereof. Each of the parties hereto irrevocably consents to the exclusive
\njurisdiction and venue of any court within Santa Clara County, State of
\nCalifornia, in connection with any matter based upon or arising out of this
\nAgreement or the matters contemplated herein, agrees that process may be served
\nupon them in any manner authorized by the laws of the State of California for
\nsuch persons and waives and covenants not to assert or plead any objection which
\nthey might otherwise have to such jurisdiction, venue and such process. Each of
\nparent, company and merger sub hereby irrevocably waives all right to trial by
\njury in any action, proceeding or counterclaim (whether based on contract, tort
\nor otherwise) arising out of or relating to this agreement or the actions of
\nparent, company or merger sub in the negotiation, administration, performance
\nand enforcement hereof.<\/p>\n
10.8 RULES OF CONSTRUCTION. The parties hereto agree that they have
\nbeen represented by counsel during the negotiation and execution of this
\nAgreement and, therefor, waive the application of any law, regulation, holding
\nor rule of construction providing that ambiguities in an agreement or other
\ndocument will be construed against the party drafting such agreement or
\ndocument.<\/p>\n
-38-<\/p>\n
IN WITNESS WHEREOF, Parent, Sub, the Company and the Principal
\nShareholders have caused this Agreement to be signed, all as of the date first
\nwritten above.<\/p>\n
PARENT COMPANY<\/p>\n
By: \/s\/ Mark P. Long By: \/s\/ Lawrence W. Shoup
\n —————————- ————————————–
\n Name: Mark P. Long Name: Lawrence W. Shoup
\n ————————– ————————————
\n Title: Executive Vice-President Title: President
\n ————————- ———————————–<\/p>\n
SUB PRINCIPAL SHAREHOLDER<\/p>\n
By: \/s\/ Mark P. Long By: \/s\/ Lawrence W. Shoup
\n —————————- ————————————–
\n Name: Mark P. Long Print Name: Lawrence W. Shoup
\n ————————– ——————————
\n Title: Chief Executive Officer Address: 380 Kramer Road
\n ————————- ———————————
\n Burgettstown, PA 15021
\n —————————————–<\/p>\n
—————————————–<\/p>\n
PRINCIPAL SHAREHOLDER<\/p>\n
By: \/s\/ Janice C. Pini
\n ————————————–
\n Print Name: Janice C. Pini
\n ——————————
\n Address: 103 Crabtree Court
\n ———————————
\n Venetia, PA 15367
\n —————————————–<\/p>\n
—————————————–<\/p>\n
PRINCIPAL SHAREHOLDER<\/p>\n
Entity Name: Edison Venture Fund IV, L.P.
\n —————————–
\n By: \/s\/ Bruce H. Luehrs
\n ————————————–
\n Bruce H. Luehrs
\n —————————————–
\n Print Name of Authorized Signatory<\/p>\n
Title:
\n ———————————–
\n Address:
\n ———————————<\/p>\n
—————————————–<\/p>\n
—————————————–<\/p>\n
-2-<\/p>\n
AMENDMENT TO AGREEMENT AND PLAN OF REOGRANIZATION<\/p>\n
THIS AMENDMENT TO AGREEMENT AND PLAN OF REORGANIZATION (“AMENDMENT”) is
\nmade and entered into as of the 12TH day of July, 2000 by and among INTRAWARE,
\nINC., a Delaware corporation (“PARENT”), STEELERS ACQUISITION CORP., a
\nPennsylvania corporation and a wholly-owned subsidiary of Parent (“SUB”), JANUS
\nTECHNOLOGIES, INC., a Pennsylvania corporation (the “COMPANY”) and LAWRENCE W.
\nSHOUP, JANICE C. PINI and EDISON VENTURE FUND IV, L.P. (collectively, the
\n“PRINCIPAL SHAREHOLDERS”).<\/p>\n
WITNESSETH:<\/p>\n
WHEREAS, Parent, Sub, the Company and the Principal Shareholders
\nentered into that certain Agreement and Plan of Merger, dated as of June 9, 2000
\n(“MERGER AGREEMENT”), pursuant to which, at the Effective Time, Sub would be
\nmerged with and into the Company and the Shareholders of the Company would
\nreceive shares of Intraware Common Stock, as further described in the Merger
\nAgreement and subject to the terms and conditions set forth therein; and<\/p>\n
WHEREAS, the parties wish to amend the Merger Agreement and the
\nDisclosure Schedules thereto to, among other things, make the certain
\nrepresentations and warranties under the Merger Agreement true and correct as of
\nthe Closing Date and waive certain obligations of the parties under the Merger
\nAgreement, as permitted pursuant to Section 9.4 of the Merger Agreement, all
\nunder the terms and conditions set forth herein.<\/p>\n
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency
\nof which are hereby acknowledged, and intending to be legally bound, the parties
\nagree as follows:<\/p>\n
1. RECITALS\/DEFINITIONS. The recitals set forth above are hereby
\nincorporated into and made a part of this Amendment. Unless otherwise defined
\nherein, capitalized terms used in this Amendment shall have the definitions
\nascribed to them in the Merger Agreement.<\/p>\n
2. THE MERGER. The parties hereby agree that, for purposes the
\ncalculation of the Merger Shares pursuant to Section 1.6 of the Merger
\nAgreement, there shall be no deduction of the Merger Shares by the principal and
\ninterest owned by the Company to Parent immediately prior to the Effective Date,
\nand subsection (iii) under the definition of “Merger Shares” in Section 1.6 of
\nthe Merger Agreement is hereby deleted in its entirety.<\/p>\n
3. REPRESENTATIONS AND WARRANTIES. The representations and
\nwarranties of the Company set forth in Article II to the Merger Agreement are
\nhereby amended as follows:<\/p>\n
1<\/p>\n
(a) Section 2.8 of the Merger Agreement is hereby amended
\nby adding, immediately following the words “Current Balance Sheet,” the words
\n“or Estimated Balance Sheet.”<\/p>\n
4. DISCLOSURE SCHEDULES. EXHIBIT E to the Merger Agreement is
\nhereby amended as follows:<\/p>\n
(a) Section 2.3(a) of the Disclosure Schedule is hereby
\namended by adding the list of Shareholders of the Company as of the Closing Date
\nattached hereto as ANNEX 1. All agreements listed under the heading “Preemptive
\nRights” in Section 2.3(a) of the Disclosure Schedule have been terminated as of
\nthe Closing Date by agreement of the parties thereto.<\/p>\n
(b) The information set forth with respect to options to
\npurchase Company Capital Stock under the Company’s 1997 Stock Option Plan set
\nforth in Section 2.3(b) of the Disclosure Schedule is hereby amended and
\nsuperceded in its entirety by the stock option schedule and footnotes page
\nattached hereto as ANNEX 2 . The information set forth with respect to warrants
\nto purchase Company Capital Stock set forth in Section 2.3(b) is hereby amended
\nby (i) replacing the number “21,643” set forth in items 2 and 3 with the number
\n“4,329,” (ii) replacing the number “66,115” set forth in item 4 with the number
\n“66,101” and (iii) replacing the number “4,007” set forth in items 5 and 6 with
\nthe number “4,006.”<\/p>\n
(c) Section 2.5 of the Disclosure Schedule is hereby
\namended as follows: (i) under the agreement described in item 2 of the
\nDisclosure Schedule, Case has provided its waiver and consent to the Merger,
\n(ii) under the agreement described in item 5 of the Disclosure Schedule, Vision
\nFinancial Group, Inc. has refused to provide its waiver or consent to the
\nMerger, (iii) the agreements described in items 7-9 of the Disclosure Schedule
\nhave been terminated as of the Closing Date by agreement of the parties thereto
\nand (iv) the warrants described in items 10-12 of the Disclosure Schedule have
\nbeen exercised by the holders thereof immediately prior to the Closing Date.<\/p>\n
(d) Section 2.6 of the Disclosure Schedule is hereby
\namended to provide that consent to the Merger has been obtained by the Company
\non or prior to the Closing Date under the agreements described in items 2, 6, 7,
\n10 and 11 of such Disclosure Schedule.<\/p>\n
(e) Section 2.9 of the Disclosure Schedule is hereby
\namended as follows:<\/p>\n
(i) Vision Financial Group, Inc. (“Vision”) has
\nrefused to give its consent and waiver to the Merger, and has notified the
\nCompany that the Company is in default under the Master Lease Agreement dated
\nMay 30, 2000, and that the Company will owe approximately $140,000 to purchase
\nthe equipment leased from Vision under the Master Lease Agreement to cure the
\ndefault thereunder.<\/p>\n
2<\/p>\n
(ii) The Company has been informed that Inacom
\nCorporation, which is a party to several agreements with the Company as set
\nforth in item 93 to Section 2.13(s) of the Disclosure Schedule, has filed for
\nfederal bankruptcy protection on or about June 15, 2000. Inacom currently owes
\nthe Company approximately $11,300 for products sold and services performed by
\nthe Company.<\/p>\n
(iii) On June 22, 2000, the Company and Ralph
\nMassaro agreed to cancel 17,385 options to purchase Company Common Stock, which
\nwere subject to performance-based vesting, held by Mr. Massaro and to reissue
\n8,693 options to purchase Company Common Stock, subject to time-based vesting as
\nset forth in more detail on the stock option schedule attached hereto as ANNEX
\n2.<\/p>\n
(iv) The Company agreed to amend the Stock Option
\nAgreements with James F. Petersen to provide for, INTER ALIA, vesting of shares
\nupon a change-in-control, effective as of the date of the original grant.<\/p>\n
(f) Section 2.12(b) of the Disclosure Schedule is hereby
\namended to (i) delete item 8 therefrom in its entirety, (ii) add thereto UCC
\nFinancing Statements filed on June 16, 2000 by Intraware, Inc., as secured
\nparty, with the Pennsylvania Department of State and the Prothonotary of
\nAllegheny County, Pennsylvania, listing the Company as debtor thereunder.<\/p>\n
(g) Section 2.13(f) of the Disclosure Schedule is hereby
\namended to add the following: “Pursuant to Security Agreement and License
\nAgreement, each dated June 9, 2000 between Janus Technologies, Inc. and
\nIntraware, Inc., all general intangibles, copyrights, patents, trademarks, trade
\nsecrets and infringements claims are considered collateral under the Commitment
\nAgreement and Subordinated Secured Promissory dated as of June 9, 2000 in favor
\nof Intraware, and the Company has granted a lien and subordinated security
\ninterest in such collateral to Intraware.”<\/p>\n
(h) Section 2.13(s) of the Disclosure Schedule is hereby
\namended to add the following agreements for McLeodUSA Purchasing, L.L.P. –
\n“Software License Agreement; Escrow Agreement.”<\/p>\n
(i) Section 2.14(a) of the Disclosure Schedule is hereby
\namended as follows:<\/p>\n
(i) The list of Employee Agreements attached to
\nSection 2.14(a) of the Disclosure Schedule is amended and superseded in its
\nentirety by the list of Employee Agreements attached hereto as ANNEX 3.<\/p>\n
3<\/p>\n
(ii) The agreements described in items 1, 2, 3,
\n4, 5 and 7 under the heading “Corporate Agreements” in Section 2.14(a) of the
\nDisclosure Schedule have been terminated by agreement of the parties thereto.<\/p>\n
(j) Section 2.14(b) of the Disclosure Schedule is hereby
\namended by (i) incorporating by reference therein the information set forth in
\nSection 4(e)(i) and (ii) of this Amendment relating to Section 2.9 of the
\nDisclosure Schedule and (ii) adding FAA Lockheed and Delexe to the customers of
\nthe Company listed in item 6 thereof.<\/p>\n
(k) Section 2.17 of the Disclosure Schedule is hereby
\namended by incorporating by reference therein the information set forth in
\nSection 4(e)(i) of this Amendment relating to Section 2.9 of the Disclosure
\nSchedule.<\/p>\n
(l) Section 2.21 of the Disclosure Schedule is hereby
\namended by substituting the amounts set forth in the Third Party Expenses Letter
\nfor the amounts set forth in Section 2.21 as the Company’s Good Faith Estimate
\nof Third Party Expenses.<\/p>\n
(m) Section 2.22(b) of the Disclosure Schedule is hereby
\namended by adding the following item: “Pursuant to a letter agreement dated
\nFebruary 4, 1999, the Company agrees to pay Diane Conaway, Senior Asset
\nManagement Consultant, incentive compensation based on her billable consulting
\nhours in the amount of 12.3% on the first $150,000 and 20.3% on $150,001 and
\nabove, without a cap.”<\/p>\n
(n) Section 2.23 of the Disclosure Schedules is hereby
\namended by deleting items 1 and 2 therefrom and substituting the following
\nitems:<\/p>\n
(i) Certificate of Liability Insurance, Policy
\nNo. Binder 06073-00, issued June 28, 2000, effective as of June 15, 2000, from
\nNational Grange Insurance Company.<\/p>\n
(ii) Certificate of Worker’s Compensation and
\nEmployers’ Liability Insurance, Policy No. Binder 06073-00, issued June 28,
\n2000, effective as of June 15, 2000, from National Grange Insurance Company.<\/p>\n
5. ADDITIONAL AGREEMENTS. Article VI to the Merger Agreement is
\nhereby amended as follows:<\/p>\n
(a) Section 6.6 of the Merger Agreement is hereby amended
\nby adding the following provision: “The parties acknowledge that the Company has
\nused commercially reasonable efforts to obtain the Material Consent of Vision
\nFinancial Services, Inc. to the Merger prior to Closing, and that,
\nnotwithstanding anything to the contrary set forth herein, any liability <\/p>\n
4<\/p>\n
arising out of the failure to obtain such Material Consent prior to Closing
\nshall not be deemed to require indemnification by the Significant Shareholders
\npursuant to Article VIII hereof, and any such amounts shall be borne by the
\nSurviving Corporation after the Closing.”<\/p>\n
(b) Section 6.12 of the Merger Agreement is hereby
\namended by deleting therefrom the words “upon official notice of issuance.”<\/p>\n
(c) Parent and Sub hereby acknowledge that,
\nnotwithstanding the provision of Sections 1.6 and 6.14 of the Merger Agreement,
\nthe Estimated Balance Sheet and the Estimated Third Party Expenses Letter have
\nbeen delivered to Parent in a timely manner prior to Closing and Parent and Sub
\nhereby waive any required time for the receipt thereof set forth in the Merger
\nAgreement.<\/p>\n
(d) Section 6.14 of the Merger Agreement is hereby
\namended by adding the words “except as agreed upon by the parties in preparing
\nthe Closing Balance Sheet.”<\/p>\n
(e) Section 6.16 of the Merger Agreement is hereby
\namended to delete the words “employees listed on Schedule 6.16” and to replace
\nit with the words “employees as of the date hereof.”<\/p>\n
(f) Section 6.17 of the Merger Agreement is hereby
\namended by adding the following provision: “The parties have mutually agreed to
\nterminate, and the Company has terminated, the Company’s 401(k) plan on the date
\nimmediately prior to the Closing Date. Parent and the Surviving Corporation
\nshall take all commercially reasonable actions necessary to distribute the
\nassets of the Company’s terminated 401(k) plan in accordance with the Code and
\nother applicable law in a commercially reasonable manner as soon as possible
\nafter the Closing.<\/p>\n
6. CONDITIONS TO THE MERGER. Article VII to the Merger Agreement
\nis hereby amended as follows:<\/p>\n
(a) Section 7.1(c) is hereby amended by deleting
\ntherefrom the words “upon official notice of issuance.”<\/p>\n
(b) Section 7.3(d) is hereby amended by adding the
\nfollowing provision: “except for the waiver and consent of Vision Financial
\nGroup, Inc. to the Merger, failure to obtain such waiver and consent prior to
\nthe Closing Date being hereby waived by Parent and Sub.”<\/p>\n
(c) Section 7.3(h) is hereby amended by deleting
\ntherefrom the words “at least three business days.”<\/p>\n
5<\/p>\n
(d) Section 7.3(k) is hereby amended by deleting
\ntherefrom the words “written.”<\/p>\n
7. EXHIBITS. EXHIBIT M to the Merger Agreement is hereby amended
\nby modifying the following:<\/p>\n
(a) The fourth paragraph of EXHIBIT M is hereby
\nsuperseded in its entirety by the following: “Any portion of the $250,000 annual
\nminimum commitment payable by the Company to Best Software, Inc. (or the Sage
\nGroup plc which is acquiring Best) less royalty payment amounts paid or to be
\npaid in connection with sales or accrued as indicated on the Closing Balance
\nSheet under the Software Distribution and Private Labeling Agreement between the
\nCompany and Best Software, Inc. dated December 1, 1999, for the calendar year
\n2000 (provided, that Parent shall have used Parent’s best efforts to satisfy the
\nminimum annual commitments).”<\/p>\n
(b) The sixth paragraph of EXHIBIT M is hereby amended by
\nadding, immediately following the words “Nicholas Manolis,” the words “or James
\nPetersen.”<\/p>\n
8. EFFECT OF AMENDMENT. As expressly modified hereunder, the
\nMerger Agreement shall remain in full force.<\/p>\n
9. COUNTERPARTS. This Amendment may be executed in two or more
\ncounterparts, each of which, when executed and delivered, shall have the force
\nand effect of law, and all of which together shall constitute one and the same
\ninstrument.<\/p>\n
6<\/p>\n
IN WITNESS WHEREOF, the parties hereto have duly executed this
\nAmendment as of the day and year first above written.<\/p>\n
PARENT:<\/p>\n
INTRAWARE, INC.,<\/p>\n
a Delaware corporation<\/p>\n
By: \/s\/ Mark P. Long
\n ———————————-
\n Title: Executive Vice-President
\n ———————————-<\/p>\n
SUB:<\/p>\n
STEELERS ACQUISITION CORP.,<\/p>\n
a Pennsylvania corporation<\/p>\n
By: \/s\/ Mark P. Long
\n ———————————-
\n Title: Chief Executive Officer
\n ———————————-<\/p>\n
COMPANY:<\/p>\n
JANUS TECHNOLOGIES, INC.,<\/p>\n
a Pennsylvania corporation<\/p>\n
By: \/s\/ Lawrence W. Shoup
\n ———————————-<\/p>\n
Title: President
\n ———————————-<\/p>\n
PRINCIPAL SHAREHOLDERS:<\/p>\n
\/s\/ Lawrence W. Shoup
\n ———————————-
\n Lawrence W. Shoup<\/p>\n
\/s\/ Janice C. Pini
\n ———————————-
\n Janice C. Pini<\/p>\n
Edison Venture Fund IV, L.P.,<\/p>\n
By: Edison Partners IV, L.P., its general partner<\/p>\n
By: \/s\/ Bruce H. Luehrs
\n ———————————-
\n Title: General Partner
\n ———————————-<\/p>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[7907],"corporate_contracts_industries":[],"corporate_contracts_types":[9622,9626],"class_list":["post-43190","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-intraware-inc","corporate_contracts_types-planning","corporate_contracts_types-planning__merger"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/43190","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=43190"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=43190"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=43190"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=43190"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}