{"id":43201,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/agreement-and-plan-of-reorganization-peregrine-systems-inc-and.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"agreement-and-plan-of-reorganization-peregrine-systems-inc-and","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/planning\/agreement-and-plan-of-reorganization-peregrine-systems-inc-and.html","title":{"rendered":"Agreement and Plan of Reorganization &#8211; Peregrine Systems Inc. and Innovative Tech Systems Inc."},"content":{"rendered":"<pre>\n                      AGREEMENT AND PLAN OF REORGANIZATION\n\n                                  BY AND AMONG\n\n                             PEREGRINE SYSTEMS, INC.\n\n                          HOMER ACQUISITION CORPORATION\n\n                                       AND\n\n                          INNOVATIVE TECH SYSTEMS, INC.\n\n\n\n                             Dated as of May 7, 1998\n\n  2\n                                TABLE OF CONTENTS\n\n                                                                                                                               PAGE\n                                                                                                                               \nARTICLE I  THE MERGER...........................................................................................................2\n\n           1.1       The Merger.................................................................................................2\n           1.2       Effective Time; Closing....................................................................................2\n           1.3       Effect of the Merger.......................................................................................2\n           1.4       Certificate of Incorporation; Bylaws.......................................................................2\n           1.5       Directors and Officers.....................................................................................3\n           1.6       Effect on Capital Stock....................................................................................3\n           1.7       Appraisal Rights...........................................................................................4\n           1.8       Surrender of Certificates..................................................................................5\n           1.9       No Further Ownership Rights in Company Common Stock........................................................6\n           1.10      Lost, Stolen, or Destroyed Certificates....................................................................6\n           1.11      Tax Consequences...........................................................................................7\n           1.12      Taking of Necessary Action; Further Action.................................................................7\n\nARTICLE II  REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................................................................7\n\n           2.1       Organization of the Company................................................................................7\n           2.2       Company Capital Structure..................................................................................8\n           2.3       Obligations With Respect to Capital Stock.................................................................10\n           2.4       Authority.................................................................................................11\n           2.5       SEC Filings; Company Financial Statements.................................................................12\n           2.6       Absence of Certain Changes or Events......................................................................13\n           2.7       Taxes.....................................................................................................15\n           2.8       Restrictions on Business Activities.......................................................................17\n           2.9       Title to Properties; Absence of Liens and Encumbrances....................................................18\n           2.10      Intellectual Property.....................................................................................18\n           2.11      Compliance; Permits; Restrictions.........................................................................22\n           2.12      Litigation................................................................................................23\n           2.13      Interested Party Transactions.............................................................................23\n           2.14      Brokers' and Finders' Fees................................................................................24\n           2.15      Employee Benefit Plans....................................................................................24\n           2.16      Environmental Matters.....................................................................................28\n           2.17      Agreements, Contracts, and Commitments....................................................................28\n           2.18      Change of Control Payments................................................................................29\n           2.19      Statements; Proxy Statement\/Prospectus....................................................................30\n           2.20      Board Approval............................................................................................30\n           2.21      Fairness Opinion..........................................................................................30\n\n\n\n           2.22      Section 11.75 of the Illinois General Corporation Law Not Applicable......................................30\n\nARTICLE III  REPRESENTATIONS AND WARRANTIES OF PARENT\n                     AND MERGER SUB............................................................................................31\n\n           3.1       Organization of Parent and Merger Sub.....................................................................31\n           3.2       Authority.................................................................................................31\n           3.3       Parent Common Stock.......................................................................................32\n           3.4       SEC Filings; Parent Financial Statements..................................................................32\n           3.5       No Material Adverse Change................................................................................32\n           3.6       Statements; Proxy Statement\/Prospectus....................................................................33\n\nARTICLE IV  CONDUCT PRIOR TO THE EFFECTIVE TIME................................................................................33\n\n           4.1       Conduct of Business by the Company........................................................................33\n           4.2       Termination of 401(k) Plans...............................................................................36\n\nARTICLE V  ADDITIONAL AGREEMENTS...............................................................................................36\n\n           5.1       Proxy Statement\/Prospectus; Registration Statement; Other Filings;\n                     Board Recommendations.....................................................................................36\n           5.2       Meeting of Company Shareholders...........................................................................37\n           5.3       Confidentiality; Access to Information....................................................................39\n           5.4       No Solicitation...........................................................................................39\n           5.5       Public Disclosure.........................................................................................41\n           5.6       Reasonable Efforts; Notification..........................................................................41\n           5.7       Third Party Consents......................................................................................42\n           5.8       Stock Options and Employee Benefits.......................................................................42\n           5.9       Form S-8..................................................................................................43\n           5.10      Indemnification...........................................................................................43\n           5.11      Nasdaq Listing............................................................................................43\n           5.12      Company Affiliate Agreement...............................................................................43\n           5.13      Tax-Free Reorganization...................................................................................44\n           5.14      Comfort Letter............................................................................................44\n           5.15      Shareholder Rights Plan...................................................................................44\n           5.16      Amendment of Redeemable Warrants..........................................................................44\n           5.17      Warrant Assumption........................................................................................45\n\n\n\n                                      -ii-\n\n\nARTICLE VI  CONDITIONS TO THE MERGER...........................................................................................45\n\n           6.1       Conditions to Obligations of Each Party to Effect the Merger..............................................45\n           6.2       Additional Conditions to Obligations of the Company.......................................................46\n           6.3       Additional Conditions to the Obligations of Parent and Merger Sub.........................................46\n\nARTICLE VII  TERMINATION, AMENDMENT AND WAIVER.................................................................................48\n\n           7.1       Termination...............................................................................................48\n           7.2       Notice of Termination; Effect of Termination..............................................................49\n           7.3       Fees and Expenses.........................................................................................49\n           7.4       Amendment.................................................................................................51\n           7.5       Extension; Waiver.........................................................................................51\n\nARTICLE VIII  GENERAL PROVISIONS...............................................................................................52\n\n           8.1       Non-Survival of Representations and Warranties............................................................52\n           8.2       Notices...................................................................................................52\n           8.3       Interpretation............................................................................................53\n           8.4       Counterparts..............................................................................................54\n           8.5       Entire Agreement; Third Party Beneficiaries...............................................................54\n           8.6       Severability..............................................................................................54\n           8.7       Other Remedies; Specific Performance......................................................................54\n           8.8       Governing Law.............................................................................................54\n           8.9       Rules of Construction.....................................................................................55\n           8.10      Assignment................................................................................................55\n           8.11      Waiver of Jury Trial......................................................................................55\n\n\n\n                                     -iii-\n   5\n                      AGREEMENT AND PLAN OF REORGANIZATION\n\n\n         This AGREEMENT AND PLAN OF REORGANIZATION is made and entered into as\nof May 7, 1998, among Peregrine Systems, Inc., a Delaware corporation (the\n\"PARENT\"), Homer Acquisition Corporation, a Delaware corporation and\nwholly-owned subsidiary of Parent (the \"MERGER SUB\"), and Innovative Tech\nSystems, Inc., an Illinois corporation (the \"COMPANY\").\n\n                                    RECITALS\n\n         A.      Upon the terms and subject to the conditions of this Agreement\n(as defined in Section 1.2 below) and in accordance with the Delaware General\nCorporation Law (\"DELAWARE LAW\") and the Illinois Business Corporation Act\n(\"ILLINOIS LAW\"), Parent and the Company intend to enter into a business\ncombination transaction.\n\n         B.      The Board of Directors of the Company (i) has determined that\nthe Merger (as defined in Section 1.1) is consistent with and in furtherance of\nthe long-term business strategy of the Company and is fair to, and in the best\ninterests of, the Company and its shareholders, (ii) has unanimously approved\nthis Agreement, the Merger and the other transactions contemplated by this\nAgreement, and (iii) has determined to recommend that the shareholders of the\nCompany adopt and approve this Agreement and approve the Merger.\n\n         C.      Concurrently with the execution of this Agreement, and as a\ncondition and inducement to Parent's willingness to enter into this Agreement,\ncertain affiliates of the Company are entering into Voting Agreements in\nsubstantially the form attached hereto as Exhibit A.\n\n         D.      The parties intend, by executing this Agreement, to adopt a\nplan of reorganization within the meaning of Section 368 of the Internal\nRevenue Code of 1986, as amended (the \"CODE\").\n\n         E.      Concurrently with the execution of this Agreement, and as a\ncondition and inducement to Parent's willingness to enter into this Agreement,\ncertain officers of the Company are entering into Noncompetition Agreements in\nsubstantially the form attached hereto as Exhibit B in favor of the Company\nfollowing the Merger.\n\n         F.      Concurrently with the execution of this Agreement, Parent and\ncertain officers of the Company are entering into employment agreements,\neffective upon the Effective Time (as defined in Section 1.2), in substantially\nthe form attached hereto as Exhibit C.\n\n         NOW, THEREFORE, in consideration of the covenants, promises and\nrepresentations set forth herein, and for other good and valuable\nconsideration, the receipt and sufficiency of which are hereby acknowledged,\nthe parties agree as follows:\n   6\n                                    ARTICLE I\n\n                                   THE MERGER\n\n         I.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 Delaware Law and Illinois Law, Merger Sub shall be\nmerged with and into the Company (the \"MERGER\"), the separate corporate\nexistence of Merger Sub shall cease, and the Company shall continue as the\nsurviving corporation and as a wholly-owned subsidiary of Parent.  The Company\nas the surviving corporation after the Merger is hereinafter sometimes referred\nto as the \"SURVIVING CORPORATION.\"\n\n         I.2     Effective Time; Closing.  Subject to the provisions of this\nAgreement, the parties hereto shall cause the Merger to be consummated by\nfiling concurrently (i) a Certificate of Merger with the Secretary of State of\nthe State of Delaware in accordance with the relevant provisions of Delaware\nLaw (the \"CERTIFICATE OF MERGER\") (the time of such filing (or such later time\nas may be agreed in writing by the Company and Parent and specified in the\nCertificate of Merger) being the \"EFFECTIVE TIME\") as soon as practicable on or\nafter the Closing Date (as herein defined) and (ii) Articles of Merger with the\nSecretary of State of the State of Illinois in accordance with the relevant\nprovisions of Illinois Law (the \"ARTICLES OF MERGER\").  The Certificate of\nMerger and the Articles of Merger are referred to collectively herein as the\n\"MERGER FILINGS.\"  Unless the context otherwise requires, the term \"AGREEMENT\"\nas used herein refers collectively to this Agreement and Plan of Reorganization\nand the Merger Filings.  The closing of the Merger (the \"CLOSING\") shall take\nplace at the offices of Wilson Sonsini Goodrich &amp; Rosati, Professional\nCorporation, 650 Page Mill Road, Palo Alto, California 94304-1050, at a time\nand date to be specified by the parties, which shall be no later than the\nsecond business day after the satisfaction or waiver of the conditions set\nforth in Article VI, or at such other time, date and location as the parties\nhereto agree in writing (the \"CLOSING DATE\").\n\n         I.3     Effect of the Merger.  At the Effective Time, the effect of\nthe Merger shall be as provided in this Agreement and the applicable provisions\nof Delaware Law and Illinois Law.  Without limiting the generality of the\nforegoing, and subject thereto, at the Effective Time, all the property,\nrights, privileges, powers and franchises of the Company and Merger Sub shall\nvest in the Surviving Corporation, and all debts, liabilities and duties of the\nCompany and Merger Sub shall become the debts, liabilities and\nduties of the Surviving Corporation.\n\n         I.4     Certificate of Incorporation; Bylaws.\n\n                 (a)      At the Effective Time, the Certificate of\nIncorporation of Merger Sub, as in effect immediately prior to the Effective\nTime, shall be the Certificate of Incorporation of the Surviving Corporation\nuntil thereafter amended as provided by law and such Certificate of\nIncorporation; provided, however, that Article I of the Certificate of\nIncorporation of the Surviving Corporation shall be amended to read as follows:\n\"The name of the corporation is Peregrine Systems Facilities Management, Inc.\"\n\n\n                                      -2-\n   7\n                 (b)      The Bylaws of Merger Sub, as in effect immediately\nprior to the Effective Time, shall be the Bylaws of the Surviving Corporation\nuntil thereafter amended.\n\n         I.5     Directors and Officers.  The director(s) of Merger Sub\nimmediately prior to the Effective Time shall be the initial director(s) of the\nSurviving Corporation, each to hold office in accordance with the Certificate\nof Incorporation and Bylaws of the Surviving Corporation, until their\nrespective successors are duly elected or appointed and qualified.  The\nofficers of Merger Sub immediately prior to the Effective Time shall be the\ninitial officers of the Surviving Corporation, each to hold office in\naccordance with the Bylaws of the Surviving Corporation until their respective\nsuccessors are duly appointed.\n\n         I.6     Effect on Capital Stock.  Subject to the terms and conditions\nof this Agreement, at the Effective Time, by virtue of the Merger and without\nany action on the part of Merger Sub, the Company or the holders of any shares\nof the Company's capital stock, the following shall occur:\n\n                 (a)      Conversion of Company Common Stock.  Each share of\nCommon Stock, $0.0185 par value per share, of the Company (the \"COMPANY COMMON\nSTOCK\") issued and outstanding immediately prior to the Effective Time, other\nthan any shares of Company Common Stock to be cancelled pursuant to Section\n1.6(b) and any Dissenting Shares (as defined and to the extent provided in\nSection 1.7(a)), will be cancelled and extinguished and automatically converted\ninto the right to receive .2341 shares of the Common Stock of Parent (the\n\"PARENT COMMON STOCK\") (such ratio, as adjusted pursuant to Section 1.6(f)\nbelow, being defined herein as the \"EXCHANGE RATIO\") upon surrender of the\ncertificate representing such share of Company Common Stock in the manner\nprovided in Section 1.8 (or in the case of a lost, stolen or destroyed\ncertificate, upon delivery of an affidavit (and bond, if required) in the\nmanner provided in Section 1.10).\n\n                 (b)      Cancellation of Parent-Owned and Company-Owned Stock.\nEach share of Company Common Stock held by the Company or owned by Merger Sub,\nParent or any direct or indirect wholly-owned subsidiary of the Company or\nParent immediately prior to the Effective Time shall be canceled and\nextinguished without any conversion thereof.\n\n                 (c)      Stock Options.  At the Effective Time, all options to\npurchase Company Common Stock then outstanding under the Company's 1994 Stock\nOption Plan (the \"1994 OPTION PLAN\") shall be assumed by Parent in accordance\nwith Section 5.8 hereof  (each a \"COMPANY OPTION\" and, collectively, the\n\"COMPANY OPTIONS\").\n\n                 (d)      Warrants.  Subject to Section 5.17 of this Agreement,\nall outstanding Redeemable Warrants (as defined in Section 2.2(b)) below, shall\nhave been amended and exercised in accordance with Section 5.16 of this\nAgreement, and the Goldmen Warrants (as defined in Section 2.2(b) below) shall\nhave been either redeemed or exercised not later than the Effective Time, or\namended to require their exchange for Parent Common Stock at the Effective\nTime, as contemplated by Section 2.2(d) below.\n\n\n                                       -3-\n   8\n                 (e)      Capital Stock of Merger Sub.  Each share of Common\nStock, $0.001 par value per share, of Merger Sub (the \"MERGER SUB COMMON\nSTOCK\") issued and outstanding immediately prior to the Effective Time, shall\nbe converted into one validly issued, fully paid and nonassessable share of\nCommon Stock, $0.001 par value per share, of the Surviving Corporation.  Each\ncertificate evidencing ownership of shares of Merger Sub Common Stock shall\ncontinue to evidence ownership of such shares of capital stock of the Surviving\nCorporation.\n\n                 (f)      Adjustments to Exchange Ratio.  The Exchange Ratio\nshall be adjusted to reflect appropriately the effect of any stock split,\nreverse stock split, stock dividend (including any dividend or distribution of\nsecurities convertible into Parent Common Stock or Company Common Stock),\nreorganization, recapitalization, reclassification or other like change with\nrespect to Parent Common Stock or Company Common Stock occurring on or after\nthe date hereof and prior to the Effective Time.\n\n                 (g)      Fractional Shares.  No fraction of a share of Parent\nCommon Stock will be issued by virtue of the Merger, but in lieu thereof, each\nholder of shares of Company Common Stock who would otherwise be entitled to a\nfraction of a share of Parent Common Stock (after aggregating all fractional\nshares of Parent Common Stock that otherwise would be received by such holder)\nshall be entitled to receive from Parent an amount of cash (rounded to the\nnearest whole cent) equal to the product of (i) such fraction and (ii) the\naverage of the last reported sale prices of Parent Common Stock for the five\n(5) most recent days that Parent Common Stock has traded ending on the trading\nday immediately prior to the Effective Time, as reported on the Nasdaq National\nMarket (\"NASDAQ\").\n\n         I.7     Appraisal Rights.\n\n                 (a)      Notwithstanding any provision of this Agreement to\nthe contrary, any shares of Company Common Stock held by a holder who has\ndemanded and perfected appraisal rights for such shares in accordance with\nIllinois Law and who, as of the Effective Time, has not effectively withdrawn\nor lost such appraisal rights (\"DISSENTING SHARES\"), shall not be converted\ninto or represent a right to receive Parent Common Stock pursuant to Section\n1.6, but the holder thereof shall only be entitled to such rights as are\ngranted by Illinois Law.\n\n                 (b)      Notwithstanding the provisions of subsection (a), if\nany holder of shares of Company Common Stock who demands appraisal of such\nshares under Illinois Law shall effectively withdraw or lose (through failure\nto perfect or otherwise) the right to appraisal, then, as of the later of the\nEffective Time or the occurrence of such event, such holder's shares of Company\nCommon Stock shall automatically be converted into and represent only the right\nto receive, upon surrender of the certificate representing such shares of\nCompany Common Stock, shares of Parent Common Stock issuable pursuant to\nSection 1.6 in exchange for outstanding shares of Company Common Stock, cash in\nan amount sufficient for payment in lieu of fractional shares pursuant to\nSection 1.6(g), and any dividends or other distributions pursuant to Section\n1.8(d).\n\n\n                                       -4-\n   9\n                 (c)      The Company shall give Parent (i) prompt notice of\nany written demands for appraisal of any shares of Company Common Stock,\nwithdrawals of such demands, and any other instruments served pursuant to\nIllinois Law and received by the Company and (ii) the opportunity to\nparticipate in all negotiations and proceedings with respect to demands for\nappraisal under Illinois Law.  The Company shall not, except with the prior\nwritten consent of Parent, voluntarily make any payment with respect to any\ndemands for appraisal of Company Common Stock or offer to settle or settle any\nsuch demands.\n\n         I.8     Surrender of Certificates.\n\n                 (a)      Exchange Agent.  Prior to the Effective Time, Parent\nshall select a bank or trust company to act as the exchange agent in the Merger\n(the \"EXCHANGE AGENT\").\n\n                 (b)      Parent to Provide Common Stock.  Promptly after the\nEffective Time, Parent shall make available to the Exchange Agent, for exchange\nin accordance with this Article I, (i) the shares of Parent Common Stock\nissuable pursuant to Section 1.6 in exchange for outstanding shares of Company\nCommon Stock and (ii) cash in an amount sufficient for payment in lieu of\nfractional shares pursuant to Section 1.6(g) and any dividends or distributions\nto which holders of shares of Company Common Stock may be entitled pursuant to\nSection 1.8(d).\n\n                 (c)      Exchange Procedures.  Promptly after the Effective\nTime, Parent shall cause the Exchange Agent to mail to each holder of record\n(as of the Effective Time) of a certificate or certificates (the\n\"CERTIFICATES\"), which immediately prior to the Effective Time represented\noutstanding shares of Company Common Stock whose shares were converted into the\nright to receive shares of Parent Common Stock pursuant to Section 1.6, cash in\nlieu of any fractional shares pursuant to Section 1.6(g), and any dividends or\nother distributions pursuant to Section 1.8(d),(i) a letter of transmittal\n(which shall specify that delivery shall be effected, and risk of loss and title\nto the Certificates shall pass, only upon delivery of the Certificates to the\nExchange Agent and shall contain such other provisions as Parent may reasonably\nspecify) and (ii) instructions for use in effecting the surrender of the\nCertificates in exchange for certificates representing shares of Parent Common\nStock, cash in lieu of any fractional shares pursuant to Section 1.6(g), and any\ndividends or other distributions pursuant to Section 1.8(d). Upon surrender of a\nCertificate for cancellation to the Exchange Agent or to such other agent or\nagents as may be appointed by Parent, together with such letter of transmittal,\nduly completed and validly executed in accordance with the instructions thereto,\nthe holder of such Certificate shall be entitled to receive in exchange therefor\na certificate representing the number of whole shares of Parent Common Stock\ninto which their shares of Company Common Stock were converted at the Effective\nTime, payment in lieu of fractional shares which such holder has the right to\nreceive pursuant to Section 1.6(g) and any dividends or distributions payable\npursuant to Section 1.8(d), and the Certificate so surrendered shall forthwith\nbe cancelled. Until so surrendered, each outstanding Certificate that, prior to\nthe Effective Time, represented shares of Company Common Stock will be deemed,\nfrom and after the Effective Time, for all corporate purposes, subject to\nSection 1.8(d) as to the payment of dividends, to evidence only the ownership of\nthe number of full shares of Parent Common Stock into which such shares of\nCompany\n\n\n                                       -5-\n   10\nCommon Stock shall have been so converted and the right to receive an amount in\ncash in lieu of the issuance of any fractional shares in accordance with\nSection 1.6(g), and any dividends or distributions payable pursuant to Section\n1.8(d).\n\n                 (d)      Distributions With Respect to Unexchanged Shares.  No\ndividends or other distributions declared or made after the date of this\nAgreement with respect to Parent Common Stock with a record date after the\nEffective Time will be paid to the holders of any unsurrendered Certificate\nwith respect to the shares of Parent Common Stock represented thereby until the\nholders of record of such Certificate shall surrender such Certificate.\nSubject to applicable law, following surrender of any such Certificate, the\nExchange Agent shall deliver to the record holder thereof, without interest, a\ncertificate representing whole shares of Parent Common Stock issued in exchange\ntherefor along with payment in lieu of fractional shares pursuant to Section\n1.6(g) hereof and the amount of any such dividends or other distributions with\na record date after the Effective Time payable with respect to such whole\nshares of Parent Common Stock.\n\n                 (e)      Transfers of Ownership.  If any certificate\nrepresenting shares of Parent Common Stock is to be issued in a name other than\nthat in which the Certificate surrendered in exchange therefor is registered,\nit will be a condition of the issuance thereof that the Certificate so\nsurrendered will be properly endorsed and otherwise in proper form for transfer\nand that the persons requesting such exchange will have paid to Parent or any\nagent designated by it any transfer or other taxes required by reason of the\nissuance of certificates representing shares of Parent Common Stock in any name\nother than that of the registered holder of the Certificate surrendered, or\nestablished to the satisfaction of Parent or any agent designated by it that\nsuch tax has been paid or is not payable.\n\n                 (f)      No Liability.  Notwithstanding anything to the\ncontrary in this Section 1.8, none of the Exchange Agent, Parent, the Surviving\nCorporation, or any party hereto shall be liable to a holder of shares of\nParent Common Stock or Company Common Stock for any amount properly paid to a\npublic official pursuant to any applicable abandoned property, escheat, or\nsimilar law.\n\n         I.9     No Further Ownership Rights in Company Common Stock.  All\nshares of Parent Common Stock issued upon the surrender for exchange of shares\nof Company Common Stock in accordance with the terms hereof (including any cash\npaid in respect thereof pursuant to Section 1.6(g) and 1.8(d)) shall be deemed\nto have been issued in full satisfaction of all rights pertaining to such shares\nof Company Common Stock, and there shall be no further registration of transfers\non the records of the Surviving Corporation of shares of Company Common Stock\nwhich were outstanding immediately prior to the Effective Time. If, after the\nEffective Time, Certificates are presented to the Surviving Corporation for any\nreason, they shall be cancelled and exchanged as provided in this Article I.\n\n         I.10    Lost, Stolen, or Destroyed Certificates.  In the event that\nany Certificate shall have been lost, stolen, or destroyed, the Exchange Agent\nshall issue in exchange for such lost, stolen, or destroyed Certificate, upon\nthe making of an affidavit of that fact by the holder thereof, certificates\nrepresenting the shares of Parent Common Stock into which the shares of Company\nCommon Stock represented by such\n\n\n                                       -6-\n   11\nCertificates were converted pursuant to Section 1.6, cash for fractional\nshares, if any, as may be required pursuant to Section 1.6(g), and any\ndividends or distributions payable pursuant to Section 1.8(d); provided,\nhowever, that Parent may, in its discretion and as a condition precedent to the\nissuance of such certificates representing shares of Parent Common Stock, cash,\nand other distributions, require the owner of such lost, stolen, or destroyed\nCertificate to deliver a bond in such sum as it may reasonably direct as\nindemnity against any claim that may be made against Parent, the Surviving\nCorporation, or the Exchange Agent with respect to the Certificates alleged to\nhave been lost, stolen, or destroyed.\n\n         I.11    Tax Consequences.  It is intended by the parties hereto that\nthe Merger shall (i) constitute a reorganization within the meaning of Section\n368 of the Code and (ii) qualify for accounting treatment as a purchase.  The\nparties hereto adopt this Agreement as a \"plan of reorganization\" within the\nmeaning of Sections 1.368-2(g) and 1.368-3(a) of the United States Income Tax\nRegulations.\n\n         I.12    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 and Merger Sub, the officers and directors\nof the Company and Merger Sub, are fully authorized in the names of their\nrespective corporations or otherwise to take, and will take, all such lawful\nand necessary action.\n\n\n                                   ARTICLE II\n\n                 REPRESENTATIONS AND WARRANTIES OF THE COMPANY\n\n         The Company hereby represents and warrants to Parent and Merger Sub,\nsubject to the specific exceptions specifically disclosed in writing in the\ndisclosure letter and schedules thereto (each referencing the appropriate\nsection numbers of this Article II for which an exception exists), dated as of\nthe date hereof, certified by a duly authorized officer of the Company, and\ndelivered by the Company to Parent (the \"COMPANY SCHEDULES\"), as follows:\n\n         II.1    Organization of the Company.\n\n                 (a)      The Company is a corporation duly organized, validly\nexisting, and in good standing under the laws of the State of Illinois, and\neach Subsidiary (as defined herein) is a corporation duly organized, validly\nexisting, and in good standing under the laws of its respective jurisdiction of\nincorporation.  The Company and each Subsidiary has the corporate power and\nauthority to own, lease, and operate its assets and property and to carry on\nits business as now being conducted and as proposed to be conducted and is duly\nqualified or licensed to do business and is in good standing in each\njurisdiction where the character of the properties owned, leased, or operated\nby it or the nature of its activities makes such qualification or licensing\nnecessary, except where the failure to be so qualified would not have a\nMaterial Adverse Effect (as defined in Section 8.3(c) below) on the Company.\n\n\n                                      -7-\n   12\n                 (b)      Schedule 2.1(b) sets forth a complete list of each\ncorporation, partnership, limited liability company, joint venture, business\ntrust or association, or other entity in which the Company, directly or\nindirectly, holds an equity, partnership, or other ownership interest (each, a\n\"SUBSIDIARY\" and collectively, the \"SUBSIDIARIES\").  Schedule 2.1(b)\nidentifies, for each Subsidiary, the issued and outstanding capital stock (or\npartnership or other ownership interests), the identity and address of each\nholder of the issued and outstanding capital stock of such Subsidiary (or\npartnership or other ownership interests), and the number of shares of capital\nstock (or similar partnership or ownership interests) of such Subsidiary held\nby such holder. All of the outstanding shares of the capital stock of each\nSubsidiary have been duly authorized and validly issued, are fully paid and\nnonassessable, and all such shares (or partnership or other ownership interests)\nare wholly owned by the Company, directly or indirectly through a Subsidiary,\nfree and clear of any lien, adverse claim, security interest, equity or other\nencumbrance. There are no options, warrants, calls, rights, commitments or\nagreements of any character, written or oral, to which any Subsidiary is a party\nor by which any Subsidiary is bound, obligating such Subsidiary to issue,\ndeliver, sell, repurchase or redeem, or cause to be issued, delivered, sold,\nrepurchased or redeemed, any shares of such Subsidiary's capital stock or any\npartnership or other ownership interest in such Subsidiary.\n\n                 (c)      The Company has made available to Parent a true and\ncorrect copy of its Articles of Incorporation and Bylaws and the similar\nconstituent documents of each Subsidiary, each as amended to date, and each\nsuch instrument is in full force and effect.  Neither the Company nor any\nSubsidiary is in violation of any of the provisions of its Articles of\nIncorporation or Bylaws or equivalent governing instruments.\n\n         II.2    Company Capital Structure.\n\n                 (a)      The authorized capital stock of the Company consists\nof 100,000,000 shares of Common Stock, $0.0185 par value per share, of which\nthere were 11,344,845 shares issued and outstanding as of May 7, 1998\n(excluding shares held in treasury of which there were none), and 200,000,000\nshares of Senior Preferred Stock, $0.001 par value per share, of which no\nshares were issued or outstanding as of May 7, 1998.  All outstanding shares of\nCompany Common Stock are duly authorized, validly issued, fully paid and\nnonassessable and are not subject to preemptive rights created by statute, the\nArticles of Incorporation or Bylaws of the Company, or any agreement or\ndocument to which the Company is a party or by which it is bound.  As of May 7,\n1998, the Company had reserved an aggregate of 2,089,334 shares of Company\nCommon Stock, net of exercises, for issuance pursuant to the 1994 Option Plan.\nIn addition, there was an option outstanding outside the 1994 Option Plan to\nacquire 100,000 shares of Company Common Stock held by a consultant to the\nCompany.  As of May 7, 1998, there were options outstanding to purchase an\naggregate of 2,089,334 shares of Company Common Stock pursuant to the 1994\nOption Plan, of which options to purchase 1,160,145 shares were fully vested\nand exercisable as of May 7, 1998.  As of May 7, 1998, there were outstanding\nwarrants to purchase an aggregate of 1,336,937 shares of Company Common Stock\n(including warrants issuable upon exercise of outstanding warrants).\n\n\n                                       -8-\n   13\n                 (b)      The Warrant Agreement (the \"WARRANT AGREEMENT\")\ndated as of July 26, 1994 between the Company and Continental Stock Transfer &amp; Trust Company (the \"WARRANT AGENT\") governs outstanding warrants for the\npurchase of a total of 940,187 shares of Company Common Stock as of the date of\nthis Agreement (the \"REDEEMABLE WARRANTS\"); provided, however, that warrants\n(the \"GOLDMEN WARRANTS\") for the purchase of (x) a total of 390,000 shares of\nCompany Common Stock and (y) additional warrants for the purchase of 6,750\nshares of Company Common Stock, all of which are held by transferees of A.S.\nGoldmen &amp; Co., Inc. (\"GOLDMEN\"), are subject to the provisions of the\nUnderwriter's Warrant Agreement dated as of July 26, 1994 between the Company\nand Goldmen.  The Redeemable Warrants and the Goldmen Warrants (including the\nwarrants issuable upon exercise of the Goldmen Warrants) are referred to\ncollectively herein as the \"WARRANTS.\"  The Warrant Agreement, together with\nthe certificates for the Redeemable Warrants, constitutes the entire agreement\namong the Company, the Warrant Agent and the holders of the Redeemable Warrants\nwith respect to the Redeemable Warrants, and except as the terms of the\nRedeemable Warrants have been amended in connection with the solicitation of\nthe holders of the Redeemable Warrants effected September 30, 1997, there has\nbeen no change in or modification or alteration of such terms, nor has there\nbeen any amendment or modification of the Warrant Agreement or any other\nagreement which would affect the terms of the Redeemable Warrants or the\nrelated rights and obligations of the holders of the Redeemable Warrants or the\nparties to the Warrant Agreement.  Among other terms, the Redeemable Warrants\n(i) are currently exercisable at a price of $0.08 per share of Company Common\nStock, (ii) expire July 25, 1999 (subject to adjustment in accordance with the\nWarrant Agreement), and (iii) are currently redeemable at a redemption price of\n$0.67 per share, subject to the requirements set forth in Section 9 of the\nWarrant Agreement, which condition the redemption of the Redeemable Warrants\nbased on an average closing sale price of the Company Common Stock (as required\nin such Section 9) of $2.33 per share, after adjustment for the three-for-one\nforward split of the Company Common Stock effected on September 18, 1995.  The\namendment to the Redeemable Warrants made in connection with the solicitation\nof the holders of the Redeemable Warrants in September 1997 was in compliance\nwith applicable federal and state securities laws.  The Company has complied\nand continues to comply with the terms of the Redeemable Warrants and the\nWarrant Agreement; has not issued or agreed to issue at any time any\nsecurities, including any options, warrants or similar rights for the purchase\nof securities of the Company, which would result in any adjustment to the\nnumber of shares underlying the Redeemable Warrants or the exercise price\nthereof; and has maintained the currency of the registration statement\npermitting the exercise of the Redeemable Warrants in accordance with Section\n5(b) of the Warrant Agreement. Warrants for the purchase of 940,187 shares are\nlisted for trading on the Nasdaq SmallCap Market, and the grant of Redeemable\nWarrants and\/or the issue and sale of shares of Company Common Stock upon\nexercise thereof comply or will comply with applicable federal and state\nsecurities laws.\n\n                 (c)      All shares of Company Common Stock subject to\nissuance upon exercise of outstanding options or warrants, upon issuance on the\nterms and conditions specified in the instruments pursuant to which they are\nissuable, would be duly authorized, validly issued, fully paid and\nnonassessable.  All outstanding shares of Company Common Stock, all outstanding\nsecurities exchangeable or convertible into or exercisable for Company Common\nStock, and any other outstanding securities of the Company were issued in\ncompliance with applicable federal and state securities laws.\n\n                                       -9-\n   14\nSchedule 2.2 lists for each person who held options to acquire shares of Company\nCommon Stock as of May 7, 1998, the name of the holder of such option, the\nexercise price of such option, the number of shares as to which such option had\nvested at such date, the vesting schedule for such option, and the extent to\nwhich such option will be accelerated in any way by the transactions\ncontemplated by this Agreement. Schedule 2.2 also lists all outstanding Warrants\nand other securities exercisable for or convertible into shares of Company\nCommon Stock, the record holder thereof, the applicable exercise or conversion\nprice therefor, and the expiration or termination date thereof. All Company\nOptions have been granted under and in accordance with the requirements of the\n1994 Option Plan, have been properly authorized by appropriate action of the\nCompany's Board of Directors, have been granted with an exercise price of not\nless than fair market value as of the date of grant, and, except with respect to\nthe grant of Company Options to consultants or directors of the Company, have\nnot required or resulted in compensation charges under generally accepted\naccounting principles.\n\n                 (d)      Prior to the execution of this Agreement, the Company\nhas obtained in writing from Goldmen and each of the holders of the Goldmen\nWarrants such waivers and consents, in a form satisfactory to Parent and signed\ncopies of which have been attached to the Company Schedules, to ensure that (i)\nthe Goldmen Warrants will be either redeemed or exercised not later than the\nEffective Time, or amended prior to the execution of this Agreement to provide\nthat the Goldmen Warrants shall be exchanged for Parent Common Stock at the\nEffective Time, with appropriate adjustments based on the Exchange Ratio, and\n(ii) neither Goldmen nor any holder of the Goldmen Warrants has (or at the\nEffective Time will have) any contractual rights or claims against the Company\nor Parent of any nature (including but not limited to Board representation\nrights, registration rights, rights to payment of commissions or fees, or\ninformation rights).\n\n         II.3    Obligations With Respect to Capital Stock.  Except as set\nforth in Section 2.2, there are no equity securities, partnership interests or\nsimilar ownership interests of any class of equity securities of the Company,\nor any securities exchangeable or convertible into or exercisable for such\nequity securities, partnership interests or similar ownership interests,\nissued, reserved for issuance or outstanding.  Except as set forth in Section\n2.2, there are no subscriptions, options, warrants, equity securities,\npartnership interests or similar ownership interests, calls, rights (including\npreemptive rights), commitments or agreements of any character to which the\nCompany or any Subsidiary is a party or by which it is bound obligating the\nCompany or any Subsidiary to issue, deliver or sell, or cause to be issued,\ndelivered or sold, or repurchase, redeem or otherwise acquire, or cause the\nrepurchase, redemption or acquisition of, any shares of capital stock,\npartnership interests or similar ownership interests of the Company or any\nSubsidiary or obligating the Company or any Subsidiary to grant, extend,\naccelerate the vesting of or enter into any such subscription, option, warrant,\nequity security, call, right, commitment or agreement.  As of the date of this\nAgreement, and except as set forth on Schedule 2.3 and as contemplated by this\nAgreement, no person or entity holds the right to require the registration or\nqualification under applicable securities laws of any securities of the Company\nor any Subsidiary, and there is no voting trust, proxy, rights plan,\nantitakeover plan or other agreement or understanding to which the Company is a\nparty or by which it is bound with respect to any class of equity security of\nthe\n\n\n                                      -10-\n   15\nCompany or with respect to any equity security, partnership interest or\nsimilar ownership interest of any class of equity security of any Subsidiary.\n\n         II.4    Authority.\n\n                 (a)      The Company has all requisite corporate power and\nauthority to enter into this Agreement and to consummate the transactions\ncontemplated hereby and thereby.  The execution and delivery of this Agreement\nand the consummation of the transactions contemplated hereby have been duly\nauthorized by all necessary corporate action on the part of the Company,\nsubject only to the approval and adoption of this Agreement and the approval of\nthe Merger by the Company's shareholders in accordance with Illinois Law and the\nfiling of the Merger Filings pursuant to Delaware Law and Illinois Law. The vote\nrequired of the Company's shareholders to approve and adopt this Agreement and\napprove the Merger is a majority of the outstanding shares of Company Common\nStock. The Company's Board of Directors has unanimously approved the Merger and\nthis Agreement. This Agreement has been duly executed and delivered by the\nCompany and constitutes a valid and binding obligation of the Company,\nenforceable against the Company in accordance with its terms. The execution and\ndelivery of this Agreement by the Company does not, and the performance of this\nAgreement by the Company will not, and as of the Effective Time, the\nconsummation of the transactions contemplated hereby will not, (i) conflict with\nor violate the Articles of Incorporation or Bylaws of the Company or the\nconstituent documents of any Subsidiary; (ii) subject to obtaining the approval\nand adoption of this Agreement and the approval of the Merger by the Company's\nshareholders as contemplated in Section 5.2 and compliance with the requirements\nset forth in Section 2.4(b) below, conflict with, or result in any violation of,\nlaw, rule, regulation, order, judgment or decree applicable to the Company or\nany Subsidiary or by which the Company or any Subsidiary or any of their\nrespective properties is bound or affected; or (iii) except for the consents,\nwaivers, and approvals described in Schedule 2.4(a), result in any breach of or\nconstitute a default (or an event that with notice or lapse of time or both\nwould become a default) under, or impair the Company's rights or alter the\nrights or obligations of any third party under, or give to others any rights of\ntermination, amendment, acceleration or cancellation of, or result in the\ncreation of a lien or encumbrance on any of the properties or assets of the\nCompany or any Subsidiary pursuant to, any note, bond, mortgage, indenture,\ncontract, agreement, lease, license, permit, franchise, concession, or other\ninstrument or obligation to which the Company or any Subsidiary is a party or by\nwhich the Company or any Subsidiary or its or any of their respective assets are\nbound or affected. Schedule 2.4(a) lists all consents, waivers and approvals\nunder any agreements, contracts, licenses or leases of the Company or any\nSubsidiary required to be obtained in connection with the Merger and the\nconsummation of the transactions contemplated hereby, which, if individually or\nin the aggregate not obtained, would result in a material loss of benefits to\nthe Company, Parent, or the Surviving Corporation.\n\n                 (b)      No consent, waiver, approval, order or authorization\nof, or registration, declaration or filing with any court, administrative\nagency or commission or other federal, state, county, local, or foreign\ngovernmental authority or instrumentality (\"GOVERNMENTAL ENTITY\") or any third\nparty, is required to be obtained or made by the Company or any Subsidiary in\nconnection with the execution and delivery of this Agreement or the\nconsummation of the Merger, except for (i) the Merger Filings with\n\n\n                                      -11-\n   16\nthe Secretaries of State of the States of Delaware and Illinois; (ii) the filing\nof the Proxy Statement\/Prospectus (as defined in Section 2.19) with the\nSecurities and Exchange Commission (the \"SEC\") in accordance with the Securities\nExchange Act of 1934, as amended (the \"EXCHANGE ACT\"); (iii) such consents,\napprovals, orders, authorizations, registrations, declarations, and filings as\nmay be required under applicable federal, foreign, and state securities (or\nrelated) laws, and the securities or antitrust laws of any foreign country; and\n(iv) such other consents, authorizations, filings, approvals, and registrations\nwhich if not obtained or made would not be material to the Company or Parent or\nadversely effect the ability of the parties hereto to consummate the Merger.\n\n         II.5    SEC Filings; Company Financial Statements.\n\n                 (a)      Except as set forth on Schedule 2.5, the Company has\nfiled all forms, reports, and documents required to be filed by the Company\nwith the SEC since July 26, 1994.  All such required forms, reports and\ndocuments (including those that the Company may file subsequent to the date\nhereof, are referred to herein as the \"COMPANY SEC REPORTS.\"  As of their\nrespective filing dates:  the Company SEC Reports (i) complied in all material\nrespects with the requirements of the Securities Act of 1933, as amended (the\n\"SECURITIES ACT\"), or the Exchange Act, as the case may be, and the rules and\nregulations of the SEC thereunder applicable to such Company SEC Reports and\n(ii) did not at the time they were filed (or if amended or superseded by a\nfiling prior to the date of this Agreement, then on the date of such filing)\ncontain any untrue statement of a material fact or omit to state a material\nfact required to be stated therein or necessary in order to make the statements\ntherein, in the light of the circumstances under which they were made, not\nmisleading.  No Subsidiary is required to file any forms, reports, or other\ndocuments with the SEC.\n\n                 (b)      Each of the consolidated financial statements\n(including, in each case, any related notes thereto) contained in the Company\nSEC Reports (the \"COMPANY FINANCIAL STATEMENTS\"), including each Company SEC\nReport filed after the date hereof until the Closing (i) complied as to form in\nall material respects with the published rules and regulations of the SEC with\nrespect thereto; (ii) was prepared in accordance with United States generally\naccepted accounting principles (\"GAAP\") applied on a consistent basis\nthroughout the periods indicated (except as may be indicated in the notes\nthereto or, in the case of unaudited statements, as may be permitted by the SEC\non Form 10-Q under the Exchange Act); and (iii) fairly presented the\nconsolidated financial position of the Company and the Subsidiaries as at the\nrespective dates thereof and the consolidated results of the Company's\noperations and cash flows for the periods indicated (subject, in the case of\nunaudited financial statements, to normal audit adjustments).  The balance\nsheet of the Company contained in the Company's Annual Report on Form 10-K for\nthe year ended January 31, 1998 (as filed with the SEC on May 1, 1998) is\nhereinafter referred to as the \"COMPANY BALANCE SHEET.\"  Except as disclosed in\nthe Company Financial Statements, since the date of the Company Balance Sheet,\nneither the Company nor any Subsidiary has incurred any liability required\nunder GAAP to be set forth on a balance sheet (absolute, accrued, contingent or\notherwise) which is, individually or in the aggregate, material to the\nbusiness, results of operations or financial condition of the Company and the\nSubsidiaries, taken as a whole, except for liabilities incurred\n\n\n                                      -12-\n   17\nsince the date of the Company Balance Sheet in the ordinary and usual course of\nbusiness consistent with past practices.\n\n                 (c)      The Company has heretofore furnished to Parent a\ncomplete and correct copy of any amendments or modifications, which have not\nyet been filed with the SEC but which are required to be filed, to agreements,\ndocuments, or other instruments which previously had been filed by the Company\nwith the SEC pursuant to the Securities Act or the Exchange Act.\n\n         II.6    Absence of Certain Changes or Events.  Since the date of the\nCompany Balance Sheet (or such other date specifically set forth herein),\nexcept as otherwise contemplated by this Agreement, disclosed in the Company\nSEC Reports, or described in Schedule 2.6, the Company and each Subsidiary have\nconducted their businesses only in the ordinary and usual course and, without\nlimiting the generality of the foregoing:\n\n                 (a)      Neither the Company nor any Subsidiary has sustained\nany damage, destruction, or loss by reason of fire, explosion, earthquake,\ncasualty, labor trouble (including but not limited to any claim of wrongful\ndischarge or other unlawful labor practice), requisition or taking of property\nby any government or agent thereof, windstorm, embargo, riot, act of God or\npublic enemy, flood, accident, revocation of license or right to do business,\ntotal or partial termination, suspension, default or modification of contracts,\ngovernmental restriction or regulation, other calamity, or other similar or\ndissimilar event (whether or not covered by insurance) that has resulted or\nwould result in a Material Adverse Effect on the Company.\n\n                 (b)      There have been no changes in the condition\n(financial or otherwise), business, net worth, assets, properties, operations,\nobligations, liabilities (fixed or contingent), or prospects of the Company\nwhich, individually or in the aggregate, have resulted or will result (whether\nbefore or after the Effective Time) in a Material Adverse Effect on the\nCompany.\n\n                 (c)      Neither the Company nor any Subsidiary has issued, or\nauthorized for issuance, any equity security, bond, note, or other security,\nexcept for shares of Company Common Stock issued upon exercise of outstanding\nCompany Options and the Warrants, except for shares of Company Common Stock and\noptions to acquire Company Common Stock granted under the 1994 Option Plan,\nwhich options are listed in Schedule 2.2, or accelerated the vesting of any\nemployee stock benefits (including vesting under stock purchase agreements or\nthe exercisability of Company Options).  Neither the Company nor any Subsidiary\nhas granted or entered into any commitment or obligation to issue or sell any\nsuch equity security, bond, note or other security of the Company or such\nSubsidiary, whether pursuant to offers, stock option agreements, stock bonus\nagreements, stock purchase plans, incentive compensation plans, warrants,\ncalls, conversion rights or otherwise, except for shares of Company Common\nStock issued upon the exercise of the Company Options and the Warrants.\n\n\n                                      -13-\n   18\n                 (d)      Neither the Company nor any Subsidiary has incurred\nany additional debt for borrowed money, nor incurred any obligation or\nliability (fixed, contingent, or otherwise) except in the ordinary and usual\ncourse of business.\n\n                 (e)      Neither the Company nor any Subsidiary has paid any\nobligation or liability (fixed, contingent, or otherwise), or discharged or\nsatisfied any lien or encumbrance, or settled any liability, claim, dispute,\nproceeding, suit, or appeal, pending or threatened against it or any of its\nassets or properties, except for current liabilities included in the Company\nBalance Sheet and current liabilities incurred since the date of the Company\nBalance Sheet in the ordinary and usual course of business.\n\n                 (f)      Neither the Company nor any Subsidiary has declared,\nset aside for payment, or paid any dividend, payment, or other distribution on\nor with respect to any share of its capital stock.\n\n                 (g)      Neither the Company nor any Subsidiary has purchased,\nredeemed, or otherwise acquired or committed itself to acquire, directly or\nindirectly, any shares of its capital stock.\n\n                 (h)      Neither the Company nor any Subsidiary has mortgaged,\npledged, otherwise encumbered, or subjected to lien any of its material assets\nor properties, tangible or intangible, nor has it committed itself to do any of\nthe foregoing, except for liens for current Taxes (as defined in Section 2.7)\nwhich are not yet due and payable and purchase money liens arising out of the\npurchase and sale of products or services made in the ordinary and usual course\nof business.\n\n                 (i)      Neither the Company nor any Subsidiary has disposed\nof, or agreed to dispose of, any material asset or property, tangible or\nintangible, except in the ordinary and usual course of business, nor has the\nCompany or any Subsidiary leased or licensed to others (including officers and\ndirectors of the Company), or agreed so to lease or license, any asset or\nproperty, except for the licensing of the Company's software to customers,\ndistributors, and resellers in the ordinary and usual course of business.\n\n                 (j)      Neither the Company nor any Subsidiary has purchased\nor agreed to purchase or otherwise acquire any debt or equity securities of any\ncorporation, partnership, joint venture, firm, or other entity.\n\n                 (k)      Neither the Company nor any Subsidiary has entered\ninto any material transaction or contract, or made any commitment to do the\nsame, except in the ordinary and usual course of business.  Neither the Company\nnor any Subsidiary has made any expenditure or commitment for the purchase,\nacquisition, construction, or improvement of a capital asset except in the\nordinary and usual course of business.  Neither the Company nor any Subsidiary\nhas waived any right of substantial value or cancelled any material debts or\nclaims or voluntarily suffered any extraordinary losses.\n\n                 (l)      Neither the Company nor any Subsidiary has sold,\nassigned, transferred, or conveyed, or committed itself to sell, assign,\ntransfer or convey, any Company Intellectual Property Rights (as defined in\nSection 2.10), except for the licensing of software to customers, distributors,\nand\n\n\n                                      -14-\n   19\nresellers in the ordinary and usual course of business, and neither the\nCompany nor any Subsidiary has entered into any product development, technology\nor product sharing, or similar strategic arrangement with any other party.\n\n                 (m)      Neither the Company nor any Subsidiary has effected\nor agreed to effect any amendment or supplement to any employee profit sharing,\nstock option, stock purchase, pension, bonus, incentive, retirement, medical\nreimbursement, life insurance, deferred compensation or any other employee\nbenefit plan or arrangement. Neither the Company nor any Subsidiary has paid or\ncommitted itself to pay to or for the benefit of any of its directors, officers,\nemployees, consultants or shareholders any compensation of any kind other than\nwages, salaries, and benefits at times and rates in effect prior to the date of\nthe Company Balance Sheet (other than regularly scheduled increases for\nnon-officer employees in the ordinary and usual course of business). Neither the\nCompany nor any Subsidiary has effected or agreed to effect any change,\nincluding by way of hiring or involuntary termination, in the employment or\nengagement terms of any of its directors, executive officers, or key employees.\n\n                 (n)      Since July 22, 1994, the Company has not effected or\ncommitted itself to effect any amendment or modification to its Articles of\nIncorporation or Bylaws.\n\n                 (o)      The Company has not changed in any way its accounting\nmethods or practices (including any change in depreciation or amortization\npolicies or rates, any changes in policies in making or reversing accruals, or\nany change in capitalization of software development costs).\n\n                 (p)      Neither the Company nor any Subsidiary has made any\nloan to any person or entity, and neither the Company nor any Subsidiary has\nguaranteed the payment of any loan or debt of any person or entity, except for\n(i) travel or similar advances made to employees in connection with their\nemployment duties in the ordinary and usual course of business, consistent with\npast practices and (ii) accounts receivable incurred in the ordinary and usual\ncourse of business consistent with past practices.\n\n                 (q)      Neither the Company nor any Subsidiary has changed in\nany material respect the prices or royalties set or charged by the Company or\nsuch Subsidiary.\n\n                 (r)      Neither the Company nor any Subsidiary has negotiated\nor agreed to do any of the things described in the preceding clauses (a)\nthrough (q) (other than negotiations with Parent and its representatives\nregarding the transactions contemplated by this Agreement).\n\n         II.7    Taxes.\n\n                 (a)      Definition of Taxes.  For the purposes of this\nAgreement, \"TAX\" or collectively, \"TAXES,\" means any and all\nfederal, state, local and foreign taxes, assessments, and other governmental\ncharges, duties, impositions and liabilities, including taxes based upon or\nmeasured by gross receipts, income, profits, sales, use and occupation, and\nvalue added, ad valorem, transfer, franchise, withholding,\n\n\n                                      -15-\n   20\npayroll, recapture, employment, excise and property taxes, together with all\ninterest, penalties and additions imposed with respect to such amounts and any\nobligations under any agreements or arrangements with any other person with\nrespect to such amounts and including any liability for taxes of a predecessor\nentity.\n\n                 (b)      Tax Returns and Audits.\n\n                           (i)    The Company and each Subsidiary has\naccurately prepared and timely filed all required federal, state, local and\nforeign returns, estimates, information statements, and reports (\"RETURNS\")\nrelating to Taxes of the Company, any Subsidiary, or their operations and have\npaid all Taxes shown to be due on such Returns.  Such Returns are true and\ncorrect in all material respects and have been completed in accordance with\napplicable law.\n\n                          (ii)    The Company and each Subsidiary as of the\nEffective Time (A) will have paid or accrued all Taxes it is required to pay or\naccrue and (B) will have withheld with respect to its employees all federal and\nstate income taxes, Taxes pursuant to the Federal Insurance Contribution Act\n(\"FICA\"), Taxes pursuant to the Federal Unemployment Tax Act (\"FUTA\"), and\nother Taxes required to be withheld.\n\n                         (iii)    Neither the Company nor any Subsidiary has\nbeen delinquent in the payment of any Tax nor is there any Tax deficiency\noutstanding, proposed, or assessed against the Company or any Subsidiary, nor\nhas the Company or any Subsidiary executed any unexpired waiver of any statute\nof limitations on or extending the period for the assessment or collection of\nany Tax.\n\n                          (iv)    No audit or other examination of any Return\nof the Company or any Subsidiary by any Tax authority is presently in progress,\nnor has the Company or any Subsidiary been notified of any request for such an\naudit or other examination.\n\n                           (v)    No adjustment relating to any Returns filed\nby the Company or any Subsidiary has been proposed formally or informally by\nany Tax authority to the Company or any of its subsidiaries or any\nrepresentative thereof.\n\n                          (vi) Neither the Company nor any Subsidiary has any\nliability for unpaid Taxes which has not been accrued or reserved against in\naccordance with GAAP on the Company Balance Sheet, whether asserted or\nunasserted, contingent or otherwise other than any liability for unpaid Taxes\nthat may have accrued since the date of the Company Balance Sheet in connection\nwith the operation in the ordinary course of the business of the Company and the\nSubsidiaries. The accrual for Taxes of the Company and the Subsidiaries shown on\nthe Company Balance Sheet is sufficient to discharge the Taxes for all periods\n(or the portion of any period) ending on or prior to the date of the Company\nBalance Sheet, and no Taxes will be incurred by the Company or any Subsidiary\nbetween that date and the Closing Date, except in the ordinary course of\nbusiness.\n\n\n                                      -16-\n   21\n                         (vii) The Company has provided Parent copies of all\nfederal, state, and foreign income and all state sales and use Tax Returns of\nthe Company or any Subsidiary for each of the Company's last five fiscal years.\n\n                        (viii)    There are (and, as of immediately following\nthe Closing, there will be) no liens, pledges, charges, claims, security\ninterests or other encumbrances of any kind (\"LIENS\") on the assets of the\nCompany or any Subsidiary relating to or attributable to Taxes, other than\nLiens for Taxes not yet due and payable or Liens that would not materially\nimpair the use of the encumbered assets.\n\n                          (ix)    There is no contract, agreement, plan or\narrangement to which the Company is a party as of the date of this Agreement,\nincluding but not limited to the provisions of this Agreement, covering any\nemployee or former employee of the Company or any Subsidiary that, individually\nor collectively, could give rise to the payment of any amount that would not be\ndeductible pursuant to Sections 280G, 404 or 162(m) of the Code.\n\n                           (x)    Neither the Company nor any Subsidiary has\nfiled any consent agreement under Section 341(f) of the Code or agreed to have\nSection 341(f)(2) of the Code apply to any disposition of a subsection (f)\nasset (as defined in Section 341(f)(4) of the Code) owned by the Company.\n\n                          (xi)    Neither the Company nor any Subsidiary is\nparty to or has any obligation under any tax-sharing, tax indemnity or tax\nallocation agreement or arrangement.\n\n                         (xii)    Except as may be required as a result of the\nMerger, the Company and the Subsidiary have not been and will not be required to\ninclude any adjustment in taxable income for any tax period (or portion thereof)\npursuant to Section 481 or Section 263A of the Code or any comparable provision\nunder state or foreign tax laws as a result of transactions, events or\naccounting methods employed prior to the Closing.\n\n                        (xiii)    None of the assets of the Company or any\nSubsidiary is tax exempt use property within the meaning of Section 168(h) of\nthe Code.\n\n                         (xiv)    The Company Schedules list (A) any foreign\ntax holidays, (B) any intercompany transfer pricing agreements, or other\narrangements that have been established by the Company or any Subsidiary with\nany Tax authority, and (C) any expatriate programs or policies affecting the\nCompany or any Subsidiary.\n\n         II.8    Restrictions on Business Activities.  There is no agreement\n(noncompetition, field of use, or otherwise), judgment, injunction, order, or\ndecree binding upon the Company or any Subsidiary which has or reasonably could\nbe expected to have the effect of prohibiting or impairing any business\npractice of the Company or any Subsidiary, any acquisition of property\n(tangible or intangible) by the Company or any Subsidiary, or the conduct of\nany line of business by the Company or any Subsidiary.  Without limiting the\nforegoing, neither the Company nor any Subsidiary has entered into any\nagreement under\n\n\n                                      -17-\n   22\n\nwhich the Company or any Subsidiary is restricted from selling, licensing, or\notherwise distributing any products to any class of customers, in any geographic\narea, during any period of time or in any segment of the market.\n\n         II.9    Title to Properties; Absence of Liens and Encumbrances.\n\n                 (a)      Neither the Company nor any Subsidiary owns any real\nproperty, nor has the Company or any Subsidiary ever owned any real property.\nSchedule 2.9(a) sets forth a list of all real property currently leased by the\nCompany and the Subsidiaries, the name of the lessor, and the date and term of\nthe lease and each amendment thereto.  All such current leases are in full\nforce and effect, are valid and effective in accordance with their respective\nterms, and there is not, under any of such leases, any existing default or\nevent of default (or event which with notice or lapse of time, or both, would\nconstitute an event of default) that would give rise to a claim in an amount\ngreater than $15,000.  To the knowledge of the Company, neither its operations\nnor the operation of the Subsidiaries on any such real property, nor such real\nproperty, including improvements thereon, violate in any material respect any\napplicable building code, zoning requirement, or classification, or pollution\ncontrol ordinance or statute relating to the particular property to such\noperations, and such non-violation is not dependent, in any instance, on\nso-called non-conforming use exceptions.\n\n                 (b)      The Company and the Subsidiaries have good and valid\ntitle to, or, in the case of leased properties and assets, valid leasehold\ninterests in, all of their tangible properties and assets, real, personal and\nmixed, used or held for use in their business, free and clear of any Liens,\nexcept as reflected in the Company Financial Statements, except for liens\ncreated by the lessors of such properties or assets, and except for Liens for\nTaxes not yet due and payable and such imperfections of title and encumbrances,\nif any, which are not material in character, amount or extent, and which do not\nmaterially detract from the value, or materially interfere with the present\nuse, of the property subject thereto or affected thereby.\n\n         II.10   Intellectual Property.  For the purposes of this Agreement,\nthe following terms have the following definitions:\n\n         \"INTELLECTUAL PROPERTY\" shall mean any or all of the following and all\n         rights in, arising out of, or associated therewith:  (i) all United\n         States, international and foreign patents and applications therefor\n         and all reissues, divisions, renewals, extensions, provisionals,\n         continuations and continuations-in-part thereof; (ii) all inventions\n         (whether or not patentable), invention disclosures, improvements,\n         trade secrets, proprietary information, know how, computer software\n         programs (in both source code and object code form), technology,\n         technical data and customer lists, tangible or intangible proprietary\n         information, and all documentation relating to any of the foregoing;\n         (iii) all copyrights, copyrights registrations and applications\n         therefor, and all other rights corresponding thereto throughout the\n         world; (iv) all industrial designs and any registrations and\n         applications therefor throughout the world; (v) all trade names,\n         logos, common law trademarks and service marks, trademark and service\n         mark registrations and applications\n\n\n                                      -18-\n   23\n         therefor throughout the world; (vi) all databases and data collections\n         and all rights therein throughout the world; (vii) all moral and\n         economic rights of authors and inventors, however denominated,\n         throughout the world; and (viii) any similar or equivalent rights to\n         any of the foregoing anywhere in the world.\n\n         \"COMMERCIAL SOFTWARE RIGHTS\" shall mean packaged commercially\n         available software programs generally available to the public through\n         retail dealers in computer software which have been licensed to the\n         Company or a Subsidiary pursuant to end-user licenses and which are\n         used in the business of the Company and the Subsidiaries but are in no\n         way a component of or incorporated in any products of the Company or\n         any Subsidiary or any related Company Intellectual Property.\n\n         \"COMPANY INTELLECTUAL PROPERTY\" shall mean any Intellectual Property\n         that is used in the business of the Company and the Subsidiaries as\n         currently conducted and as proposed to be conducted.\n\n         \"REGISTERED INTELLECTUAL PROPERTY\" shall mean all United States,\n         international and foreign: (i) patents and patent applications\n         (including provisional applications); (ii) registered trademarks,\n         applications to register trademarks, intent-to-use applications, or\n         other registrations or applications related to trademarks; (iii)\n         registered copyrights and applications for copyright registration; and\n         (iv) any other Intellectual Property that is the subject of an\n         application, certificate, filing, registration or other document\n         issued, filed with, or recorded by any state, government or other\n         public legal authority.\n\n         \"COMPANY REGISTERED INTELLECTUAL PROPERTY\" means all of the Registered\n         Intellectual Property owned by, or filed in the name of, the Company.\n\n                 (a)      Schedule 2.10(a) sets forth a complete list of all\nRegistered Intellectual Property and all material Intellectual Property\nincluded in the Company Intellectual Property and specifies the jurisdictions\nin which such Company Intellectual Property has been issued or registered or in\nwhich an application for such issuance and registration has been filed,\nincluding the respective registration or application numbers and the names of\nall registered owners, together with a list of all software products currently\nmarketed by the Company and the Subsidiaries and an indication as to which, if\nany, of such software products have been registered for copyright protection\nwith the United States Copyright Office and any foreign offices and by whom\nsuch items have been registered.\n\n                 (b)      Schedule 2.10(b) sets forth a complete list of (i)\nany requests the Company or any Subsidiary has received to make any such\nregistration, including the identity of the requestor and the item requested to\nbe so registered and the jurisdiction for which such request has been made;\n(ii) all licenses, sublicenses, and other agreements to which the Company or\nany Subsidiary is a party and pursuant to which the Company, any Subsidiary, or\nany other person is authorized to use any Company Intellectual Property or\ntrade secret material to the Company or any Subsidiary, and includes the\nidentity of all parties\n\n\n                                      -19-\n   24\nthereto, a description of the nature and subject matter thereof, the applicable\nroyalty, and the term thereof (other than standard customer, distributor, and\nreseller software license agreements entered into by the Company or any\nSubsidiary in the ordinary course of business); and (iii) any agreement pursuant\nto which a third party has licensed or transferred any Intellectual Property to\nthe Company (other than licenses of Commercial Software Rights). The execution\nand delivery of this Agreement by the Company, and the consummation of the\ntransactions contemplated hereby, will cause neither the Company nor any\nSubsidiary to be in violation or default under any such license, sublicense or\nagreement, nor entitle any other party to any such license, sublicense or\nagreement to terminate or modify such license, sublicense or agreement.\n\n                 (c)      Neither the Company nor any Subsidiary has been sued\nor charged as a defendant in any claim, suit, action, or proceeding which\ninvolves a claim of infringement of any Intellectual Property of any third\nparty and which has not been finally terminated prior to the date hereof nor\ndoes the Company have any knowledge of any such charge or claim, and there is\nnot any infringement liability with respect to, or infringement or violation\nby, the Company or any Subsidiary of any Intellectual Property of another.  No\nCompany Intellectual Property or product of the Company or any of Subsidiary is\nsubject to any outstanding decree, order, judgment, or stipulation restricting\nin any manner the licensing of products by the Company and the Subsidiaries.\n\n                 (d)      Each item of Company Registered Intellectual Property\nis valid and subsisting, all necessary registration, maintenance and renewal\nfees currently due in connection with such Registered Intellectual Property\nhave been made and all necessary documents, recordations and certificates in\nconnection with such Registered Intellectual Property have been filed with the\nrelevant patent, copyright, trademark or other authorities in the United States\nor foreign jurisdictions, as the case may be, for the purposes of maintaining\nsuch Registered Intellectual Property.\n\n                 (e)      The Company or a Subsidiary is the sole and exclusive\nowner or licensee of, with all right, title, and interest in and to each item\nof Company Intellectual Property, free and clear of any Lien, and has sole and\nexclusive rights (and is not contractually obligated to pay any compensation to\nany third party in respect thereof) to the use thereof or the material covered\nthereby in connection with the services or products in respect of which the\nCompany Intellectual Property is being used.  Neither the Company nor any\nSubsidiary uses or is licensed to use, and none of their products include or\nincorporate, any (i) software distributed free of charge on a trial basis for\nwhich a paid license would be required for commercial distribution, (ii)\nsoftware whose ownership has been retained by a third party who controls its\ndistribution, or (iii) any other code obtained from the public domain.\n\n                 (f)      To the extent that any material Intellectual Property\nhas been developed or created by a third party for the Company or any\nSubsidiary, the Company or a Subsidiary has a written agreement with such third\nparty with respect thereto, and the Company or a Subsidiary thereby either (i)\nhas obtained ownership of, and is the exclusive owner of, or (ii) has obtained\na license (sufficient for the conduct of its business as currently conducted\nand as proposed to be conducted) to all such third party's\n\n\n                                      -20-\n   25\nIntellectual Property in such work, material or invention by operation of law or\nby valid assignment, to the fullest extent it is legally possible to do so.\n\n                 (g)      The Company has not transferred ownership of, or\ngranted any exclusive license with respect to, any Intellectual Property that\nis or was material Company Intellectual Property, to any third party.\n\n                 (h)      All contracts, licenses and agreements relating to\nthe Company Intellectual Property are in full force and effect.  The execution\nand delivery of this Agreement by the Company and the consummation of the\ntransactions contemplated hereby will neither violate nor result in the breach,\nmodification, cancellation, termination, or suspension of such contracts,\nlicenses and agreements.  The Company is in compliance with, and has not\nbreached any term of such contracts, licenses and agreements and, to the\nknowledge of the Company, all other parties to such contracts, licenses and\nagreements are in compliance with, and have not breached any term of, such\ncontracts, licenses and agreements.  Following the Closing Date, the Surviving\nCorporation will be permitted to exercise all of the Company's rights under\nsuch contracts, licenses and agreements to the same extent the Company would\nhave been able to had the transactions contemplated by this Agreement not\noccurred and without the payment of any additional amounts or consideration\nother than ongoing fees, royalties, or payments which the Company would\notherwise be required to pay.\n\n                 (i)      No claims with respect to Company Intellectual\nProperty have been asserted or, to the Company's knowledge, are threatened by\nany person, nor to the Company's knowledge are there any valid grounds for any\nbona fide claims (i) to the effect that the manufacture, sale, licensing or use\nof any of the products of the Company and the Subsidiaries infringes on or\nmisappropriates any Intellectual Property or constitutes unfair competition or\ntrade practices under the laws of any jurisdiction; (ii) against the use by the\nCompany or any Subsidiary of any Intellectual Property used in the business of\nthe Company and the Subsidiaries as currently conducted or as proposed to be\nconducted; or (iii) challenging the ownership by the Company or any Subsidiary,\nvalidity or effectiveness of any Company Intellectual Property.  The business\nof the Subsidiaries as currently conducted or as proposed to be conducted has\nnot and does not infringe on any proprietary right of any third party.  To the\nCompany's knowledge, there is no unauthorized use, infringement or\nmisappropriation of any Company Intellectual Property by any third party,\nincluding any employee or former employee of the Company or any Subsidiary.\n\n                 (j)      To the Company's knowledge, neither the Company nor\nany Subsidiary has breached or violated the terms of its license, sublicense,\nor other agreement relating to any Commercial Software Rights, and the Company\nand the Subsidiaries have a valid right to use such Commercial Software Rights\nunder such licenses and agreements.  Neither the Company nor any Subsidiary is\nor will be as a result of the execution and delivery of this Agreement or the\nperformance of the Company's obligations hereunder, in violation of any\nlicense, sublicense, or agreement relating to Commercial Software Rights.  No\nclaims with respect to the Commercial Software Rights have been asserted or, to\nthe knowledge of the Company, are threatened by any person against the Company\nor any Subsidiary, nor to the knowledge of the Company is there any valid\ngrounds for any bona fide claims (i) to the effect \n\n\n                                      -21-\n   26\nthat the use of any product as now used or proposed for use by the Company and\nthe Subsidiaries infringes on any Intellectual Property, (ii) against the use by\nthe Company or any Subsidiary of any Company Intellectual Property, or (iii)\nchallenging the validity or effectiveness of any of the rights of the Company\nand the Subsidiaries to use Commercial Software Rights. To the knowledge of the\nCompany, there is no material unauthorized use, infringement, or\nmisappropriation of any of the Commercial Software Rights by the Company or any\nSubsidiary or any employee or former employee of the Company or any Subsidiary.\nTo the knowledge of the Company, no Commercial Software Right is subject to any\noutstanding order, judgment, decree, stipulation, or agreement restricting in\nany manner the use thereof by the Company or any Subsidiary.\n\n                 (k)      The Company has taken reasonable steps to protect the\nCompany's rights in the Company's confidential information and trade secrets\nthat it wishes to protect or any trade secrets or confidential information of\nthird parties provided to the Company, and, without limiting the foregoing, the\nCompany has and enforces a policy requiring each employee and contractor to\nexecute a proprietary information\/confidentiality agreement substantially in\nthe form provided to Parent and all current and former employees and\ncontractors of the Company have executed such an agreement, except where the\nfailure to do so is not reasonably expected to be material to the Company.\n\n         II.11   Compliance; Permits; Restrictions.\n\n                 (a)      Neither the Company nor any Subsidiary is in conflict\nwith, or in default or in violation of (i) any law, rule, regulation, order,\njudgment or decree applicable to the Company or any Subsidiary or by which the\nCompany or any Subsidiary or any of their respective properties is bound or\naffected or (ii) any note, bond, mortgage, indenture, contract, agreement,\nlease, license, permit, franchise or other instrument or obligation to which\nthe Company or any Subsidiary is a party or by which the Company or any\nSubsidiary or any of their respective properties are bound or affected, except\nfor conflicts, violations and defaults that (individually or in the aggregate)\nwould not cause the Company to lose any material benefit or incur any material\nliability.  No investigation or review by any Governmental Entity is pending\nor, to the Company's knowledge, has been threatened against the Company or any\nSubsidiary, nor, to the Company's knowledge, has any Governmental Entity\nindicated an intention to conduct an investigation of the Company or any\nSubsidiary.\n\n                 (b)      The Company and the Subsidiaries hold, to the extent\nlegally required, all permits, licenses, variances, exemptions, orders and\napprovals from governmental authorities that are material to and required for\nthe operation of the business of the Company or such Subsidiary as currently\nconducted (collectively, the \"COMPANY PERMITS\").  The Company and the\nSubsidiaries are in compliance in all material respects with the terms of the\nCompany Permits, except where the failure to be in compliance with the terms of\nthe Company Permits would not have a Material Adverse Effect on the Company.\n\n         II.12   Litigation.  Except as disclosed in the Company Schedules,\nthere is no action, suit, proceeding, claim, arbitration, or investigation\npending before any court or administrative agency against the Company or any\nSubsidiary (or any officer, director, or key employee of the Company or any\n\n\n                                      -22-\n   27\nSubsidiary in their capacity as such).  To the Company's knowledge, no such\naction, proceeding, claim, arbitration, or investigation has been threatened,\nand the Company is not aware of any basis for any such action, suit,\nproceeding, claim, arbitration, or investigation.  No Governmental Entity has\nat any time challenged or questioned the legal right of the Company to design,\nmanufacture, offer or sell any of its products in the present manner or style\nthereof.\n\n         Except as disclosed in Schedule 2.12, the Company has never been\nsubject to an audit, compliance review, investigation, or like contract review\nby the GSA office of the Inspector General or other Governmental Entity or\nagent thereof in connection with any government contract (a \"GOVERNMENT\nAUDIT\").  To the Company's knowledge, no Government Audit is threatened or\nreasonably anticipated, and in the event of such Government Audit, to the\nknowledge of the Company, no basis would exist for a finding of noncompliance\nwith any material provision of any government contract or a refund of any\namounts paid or owed by any Governmental Entity pursuant to such government\ncontract.  For each item disclosed in Schedule 2.12, a true and complete copy\nof all correspondence and documentation with respect thereto has been provided\nto Parent.\n\n         II.13   Interested Party Transactions.  Except as set forth in\nSchedule 2.13, no officer, director, or key employee of the Company or any\nSubsidiary or any holder of 5% or more of the Company's outstanding capital\nstock (nor any ancestor, sibling, descendant, or spouse of any of such persons,\nor any trust, partnership or corporation in which any of such persons has an\neconomic interest) has, directly or indirectly, (i) an economic interest in any\nentity which furnishes or sells services or products that the Company or any\nSubsidiary furnishes or sells, or proposes to furnish or sell, (ii) an economic\ninterest in any entity that purchases from or sells or furnishes to the Company\nor any Subsidiary any goods or services, or (iii) a beneficial interest in any\ncontract or agreement of the Company or any Subsidiary; provided, however, that\nno officer, director, key employee, or shareholder of the Company or any\nSubsidiary shall be deemed to have such an economic interest solely by virtue\nof holding less than one percent (1%) of the outstanding voting stock of a\ncorporation whose equity securities are traded on a recognized stock exchange in\nthe United States or quoted on The Nasdaq Stock Market. There are no receivables\nof the Company or any Subsidiary owing by any director, officer, employee, or\nconsultant to the Company or any Subsidiary (or any ancestor, sibling,\ndescendant, or spouse of any such persons, or any trust, partnership, or\ncorporation in which any of such persons has an economic interest), other than\nadvances in the ordinary and usual course of business for reimbursable business\nexpenses (as determined in accordance with the Company's established employee\nreimbursement policies and consistent with past practice).\n\n         II.14   Brokers' and Finders' Fees.  Except for fees payable to\nNationsBanc Montgomery Securities (\"MONTGOMERY\") pursuant to an engagement\nletter dated April 20, 1998, a copy of which has been provided to Parent, the\nCompany has not incurred, nor will it incur, directly or indirectly, any\nliability for brokerage or finders' fees or agents' commissions or any similar\ncharges in connection with this Agreement or any transaction contemplated\nhereby.\n\n         II.15   Employee Benefit Plans.\n\n\n                                      -23-\n   28\n                 (a)      Definitions.  With the exception of the definition of\n\"Affiliate\" set forth in Section 2.15(a)(i) below (which definition shall apply\nonly to this Section 2.15), for purposes of this Agreement, the following terms\nshall have the meanings set forth below:\n\n                           (i)    \"AFFILIATE\" shall mean any other person or\nentity under common control with the Company within the meaning of Section\n414(b), (c), (m) or (o) of the Code and the regulations issued thereunder;\n\n                          (ii)    \"COMPANY EMPLOYEE PLAN\" shall mean any plan,\nprogram, policy, practice, contract, agreement or other arrangement providing\nfor compensation, severance, termination pay, performance awards, stock or\nstock-related awards, fringe benefits or other employee benefits or\nremuneration of any kind, whether written or unwritten or otherwise, funded or\nunfunded, including without limitation, each \"employee benefit plan,\" within\nthe meaning of Section 3(3) of ERISA which is or has been maintained,\ncontributed to, or required to be contributed to, by the Company or any\nAffiliate for the benefit of any Employee\n\n                         (iii)    \"COBRA\" shall mean the Consolidated Omnibus\nBudget Reconciliation Act of 1985, as amended\n\n                          (iv)    \"DOL\" shall mean the Department of Labor;\n\n                           (v)    \"EMPLOYEE\" shall mean any current, former, or\nretired employee, officer, or director of the Company or any Affiliate;\n\n                          (vi)    \"EMPLOYEE AGREEMENT\" shall mean each\nmanagement, employment, severance, consulting, relocation, repatriation,\nexpatriation, visas, work permit or similar agreement or contract between the\nCompany or any Affiliate and any Employee or consultant;\n\n                         (vii)    \"ERISA\" shall mean the Employee Retirement\nIncome Security Act of 1974, as amended;\n\n                        (viii)    \"FMLA\" shall mean the Family Medical Leave\nAct of 1993, as amended;\n\n                          (ix)    \"INTERNATIONAL EMPLOYEE PLAN\" shall mean each\nCompany Employee Plan that has been adopted or maintained by the Company,\nwhether informally or formally, for the benefit of Employees outside the United\nStates;\n\n                           (x)    \"IRS\" shall mean the Internal Revenue Service;\n\n                          (xi)    \"MULTIEMPLOYER PLAN\" shall mean any \"Pension\nPlan\" (as defined below) which is a \"multiemployer plan,\" as defined in Section\n3(37) of ERISA;\n\n\n                                      -24-\n   29\n                         (xii)    \"PBGC\" shall mean the Pension Benefit Guaranty\nCorporation; and\n\n                        (xiii)    \"PENSION PLAN\" shall mean each Company\nEmployee Plan which is an \"employee pension benefit plan,\" within the meaning\nof Section 3(2) of ERISA.\n\n                 (b)      Schedule.  Schedule 2.15 contains an accurate and\ncomplete list of each Company Employee Plan and each material Employee\nAgreement.  The Company does not have any plan or commitment to establish any\nnew Company Employee Plan, to modify any Company Employee Plan or Employee\nAgreement (except to the extent required by law or to conform any such Company\nEmployee Plan or Employee Agreement to the requirements of any applicable law,\nin each case as previously disclosed to Parent in writing, or as required by\nthis Agreement), or to enter into any Company Employee Plan or material\nEmployee Agreement, nor does it have any intention or commitment to do any of\nthe foregoing.\n\n                 (c)      Documents.  The Company has provided to Parent\n(i) correct and complete copies of all documents embodying each Company\nEmployee Plan and each Employee Agreement including all amendments thereto and\nwritten interpretations thereof; (ii) the most recent annual actuarial\nvaluations, if any, prepared for each Company Employee Plan; (iii) the three\n(3) most recent annual reports (Form Series 5500 and all schedules and\nfinancial statements attached thereto), if any, required under ERISA or the\nCode in connection with each Company Employee Plan or related trust; (iv) if\nthe Company Employee Plan is funded, the most recent annual and periodic\naccounting of Company Employee Plan assets; (v) the most recent summary plan\ndescription together with the summary of material modifications thereto, if\nany, required under ERISA with respect to each Company Employee Plan; (vi) all\nIRS determination, opinion, notification and advisory letters, and rulings\nrelating to Company Employee Plans and copies of all applications and\ncorrespondence to or from the IRS or the DOL with respect to any Company\nEmployee Plan; (vii) all material written agreements and contracts relating to\neach Company Employee Plan, including, but not limited to, administrative\nservice agreements, group annuity contracts and group insurance contracts;\n(viii) all communications material to any Employee or Employees relating to any\nCompany Employee Plan and any proposed Company Employee Plans, in each case,\nrelating to any amendments, terminations, establishments, increases or\ndecreases in benefits, acceleration of payments or vesting schedules or other\nevents which would result in any material liability to the Company; (ix) all\nCOBRA forms and related notices; and (x) all registration statements and\nprospectuses prepared in connection with each Company Employee Plan.\n                 (d)      Employee Plan Compliance.  (i) The Company has\nperformed in all material respects all obligations required to be performed by\nit under, is not in default or violation of, and has no knowledge of any\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; (ii) each Company Employee Plan intended to qualify under\nSection 401(a) of the Code and each trust intended to qualify under Section\n501(a) of the Code has either received a favorable determination letter from\nthe IRS with respect to each such Plan as to its qualified \n\n\n                                      -25-\n   30\nstatus under the Code, including all amendments to the Code effected by the Tax\nReform Act of 1986 and subsequent legislation, or has remaining a period of time\nunder applicable Treasury regulations or IRS pronouncements in which to apply\nfor such a determination letter and make any amendments necessary to obtain a\nfavorable determination; (iii) no \"prohibited transaction,\" within the meaning\nof Section 4975 of the Code or Sections 406 and 407 of ERISA, and not otherwise\nexempt under Section 408 of ERISA, has occurred with respect to any Company\nEmployee Plan; (iv) there are no actions, suits or claims pending, or, to the\nknowledge of the Company, threatened or reasonably anticipated (other than\nroutine claims for benefits) against any Company Employee Plan or against the\nassets of any Company Employee Plan; (v) each Company Employee Plan can be\namended, terminated or otherwise discontinued after the Effective Time in\naccordance with its terms, without liability to Parent, the Company or any of\nits Affiliates (other than ordinary administration expenses typically incurred\nin a termination event); (vi) there are no audits, inquiries or proceedings\npending or, to the knowledge of the Company or any Affiliates, threatened by the\nIRS or DOL with respect to any Company Employee Plan; and (vii) neither the\nCompany nor any Affiliate is subject to any penalty or tax with respect to any\nCompany Employee Plan under Section 402(i) of ERISA or Sections 4975 through\n4980 of the Code.\n\n                 (e)      Pension Plans.  The Company does not now, nor has it\never, maintained, established, sponsored, participated in, or contributed to,\nany Pension Plan which is subject to Title IV of ERISA or Section 412 of the\nCode.\n\n                 (f)      Multiemployer Plans.  At no time has the Company\ncontributed to or been requested to contribute to any Multiemployer Plan.\n\n                 (g)      No Post-Employment Obligations.  No Company Employee\nPlan provides, or has any liability to provide, retiree life insurance, retiree\nhealth or other retiree employee welfare benefits to any person for any reason,\nexcept as may be required by COBRA or other applicable statutes, and the\nCompany has never represented, promised or contracted (whether in oral or\nwritten form) to any Employee (either individually or to Employees as a group)\nor any other person that such Employee(s) or other person would be provided\nwith retiree life insurance, retiree health or other retiree employee welfare\nbenefit, except to the extent required by statute.\n\n                 (h)      Neither the Company nor any Affiliate has, prior to\nthe Effective Time, and in any material respect, violated any of the health\ncare continuation requirements of COBRA, the requirements of FMLA or any\nsimilar provisions of state law applicable to its Employees.\n                 (i)      Effect of Transaction\n\n                           (i)    The execution of this Agreement and the\nconsummation of the transactions contemplated hereby will not (either alone or\nupon the occurrence of any additional or subsequent events) constitute an event\nunder any Company Employee Plan, Employee Agreement, trust or loan that will or\nmay 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.\n\n\n                                      -26-\n   31\n                          (ii)    No payment or benefit which will or may be\nmade by the Company or its Affiliates with respect to any Employee as a result\nof the transactions contemplated by this Agreement will be characterized as an\n\"excess parachute payment,\" within the meaning of Section 280G(b)(1) of the\nCode.\n\n                 (j)      Employment Matters.  The Company (i) is in compliance\nin all material respects with all applicable foreign, federal, state and local\nlaws, rules and regulations respecting employment, employment practices, terms\nand conditions of employment and wages and hours, in each case, with respect to\nEmployees; (ii) has withheld all amounts required by law or by agreement to be\nwithheld from the wages, salaries and other payments to Employees; (iii) is not\nliable for any arrears of wages or any taxes or any penalty for failure to\ncomply with any of the foregoing; and (iv) is not liable for any material\npayment to any trust or other fund or to any governmental or administrative\nauthority, with respect to unemployment compensation benefits, social security\nor other benefits or obligations for Employees (other than routine payments to\nbe made in the normal course of business and consistent with past practice).\nThere are no pending, threatened or reasonably anticipated claims or actions\nagainst the Company under any worker's compensation policy or long-term\ndisability policy.  To the Company's knowledge, no employee of the Company has\nviolated any employment contract, nondisclosure agreement or noncompetition\nagreement by which such employee is bound due to such employee being employed\nby the Company and disclosing to the Company or using trade secrets or\nproprietary information of any other person or entity.\n\n                 (k)      Labor.  No work stoppage or labor strike against the\nCompany is pending, threatened or reasonably anticipated.  The Company does not\nknow of any activities or proceedings of any labor union to organize any\nEmployees.  There are no actions, suits, claims, labor disputes or grievances\npending, or, to the knowledge of the Company, threatened or reasonably\nanticipated relating to any labor, safety or discrimination matters involving\nany Employee, including, without limitation, charges of unfair labor practices\nor discrimination complaints, which, if adversely determined, would,\nindividually or in the aggregate, result in any material liability to the\nCompany. Neither the Company nor any of its subsidiaries has engaged in any\nunfair labor practices within the meaning of the National Labor Relations Act.\nThe Company is not presently, nor has it been in the past, a party to, or bound\nby, any collective bargaining agreement or union contract with respect to\nEmployees, and no collective bargaining agreement is being negotiated by the\nCompany.\n\n                 (l)      International Employee Plan.  Each International\nEmployee Plan has been established, maintained and administered in material\ncompliance with its terms and conditions and with the requirements prescribed\nby any and all statutory or regulatory laws that are applicable to such\nInternational Employee Plan.  Furthermore, no International Employee Plan has\nunfunded liabilities, that as of the Effective Time, will not be offset by\ninsurance or fully accrued.  Except as required by law, no condition exists\nthat would prevent the Company or Parent from terminating or amending any\nInternational Employee Plan at any time for any reason.\n\n\n                                      -27-\n   32\n         II.16   Environmental Matters.  The Company and each of the\nSubsidiaries (i) have obtained all approvals which are required to be obtained\nunder all applicable federal, state, foreign or local laws or any regulation,\ncode, plan, order, decree, judgment, notice or demand letter issued, entered,\npromulgated or approved hereunder relating to pollution or protection of the\nenvironment, including laws relating to emissions, discharges, releases or\nthreatened releases of pollutants, contaminants, or hazardous or toxic\nmaterials or wastes into ambient air, surface water, ground water, or land or\notherwise relating to the manufacture, processing, distribution, use,\ntreatment, storage, disposal, transport, or handling of pollutants,\ncontaminants or hazardous or toxic materials or wastes by the Company or the\nSubsidiaries (\"ENVIRONMENTAL LAWS\"); (ii) are in compliance with all terms and\nconditions of such required approvals, and prohibitions, requirements,\nobligations, schedules and timetables contained in applicable Environmental\nLaws or any event, condition, circumstance, activity, practice, incident,\naction or plan which is reasonably likely to interfere with or prevent\ncontinued compliance with or which would give rise to any common law or\nstatutory liability, or otherwise form the basis of any claim, action, suit or\nproceeding, against the Company or any of the Subsidiaries based on or\nresulting from the manufacture, processing, distribution, use, treatment,\nstorage, disposal, transport or handling, or the emission, discharge or release\ninto the environment, of any pollutant, contaminant or hazardous or toxic\nmaterial or waste; and (iv) have taken all actions necessary under applicable\nEnvironmental Laws to register any products or materials required to be\nregistered by the Company or the Subsidiaries (or any of their respective\nagents) thereunder.\n\n         II.17   Agreements, Contracts, and Commitments.  Except as set forth\nin Schedule 2.17, neither the Company nor any Subsidiary is a party to or is\nbound by:\n\n                 (a)      any employment or consulting agreement, contract or\ncommitment with any officer, director, higher level employee, or member of the\nCompany's Board of Directors, other than those that are terminable by the\nCompany or any Subsidiary on no more than thirty days' notice without liability\nor financial obligation, except to the extent general principles of wrongful\ntermination law may limit the ability of the Company or any Subsidiary to\nterminate employees at will;\n\n                 (b)      any agreement or plan, including, without limitation,\nany stock option plan, stock appreciation right plan or stock purchase plan,\nany of the benefits of which will be increased, or the vesting of benefits of\nwhich will be accelerated, by the occurrence of any of the transactions\ncontemplated by this Agreement or the value of any of the benefits of which\nwill be calculated on the basis of any of the transactions contemplated by this\nAgreement;\n                 (c)      any collective bargaining agreements;\n\n                 (d)      any bonus, deferred compensation, pension, profit\nsharing or retirement plans;\n\n                 (e)      any agreement of indemnification or any guaranty\n(other than as set forth in standard customer, distributor, and reseller\nsoftware license agreements entered into in connection with the sale or license\nof software products in the ordinary course of business);\n\n\n                                      -28-\n   33\n                 (f)      any agreement, contract or commitment relating to the\ndisposition or acquisition of assets or any interest in any business enterprise\noutside the ordinary course of the Company's business since July 26, 1996;\n\n                 (g)      any distribution, joint marketing, or development\nagreement under which the Company or any Subsidiary has continuing obligations\nto jointly market any product, technology or service, or any agreement pursuant\nto which the Company or any Subsidiary has continuing obligations to jointly\ndevelop any intellectual property that will not be owned, in whole or in part,\nby the Company or such Subsidiary;\n\n                 (h)      any agreement, contract, or commitment to provide\nsource code to any third party for any product or technology;\n\n                 (i)      any agreement containing any covenant limiting the\nfreedom of the Company or any Subsidiary to engage in any line of business or\nto compete with any person or entity; or\n\n                 (j)      any agreement, contract or commitment currently to\nlicense any third party to manufacture or reproduce any product, service or\ntechnology (other than as set forth in standard distributor and reseller\nsoftware license agreements entered into in the normal course of business).\n\n         Neither the Company nor any Subsidiary, is in breach, violation or\ndefault under, and neither the Company nor any Subsidiary has received notice\nthat it has breached, violated or defaulted under, any of the terms or\nconditions of any of the agreements, contracts, or commitments to which the\nCompany or any Subsidiary is a party or by which it is bound that are required\nto be disclosed in the Company Schedules pursuant to clauses (a) through (j)\nabove or pursuant to Section 2.10 hereof (any such agreement, contract or\ncommitment, a \"COMPANY CONTRACT\").  Each Company Contract is in full force and\neffect and, except as otherwise disclosed in Schedule 2.17, is not subject to\nany default thereunder of which the Company has knowledge by any party\nobligated to the Company or any Subsidiary pursuant thereto.\n\n         II.18   Change of Control Payments.  Schedule 2.18 sets forth each\nplan or agreement pursuant to which any amounts may become payable (whether\ncurrently or in the future) to current or former officers and directors of the\nCompany or any Subsidiary as a result of or in connection with the Merger.\n\n         II.19   Statements; Proxy Statement\/Prospectus.  The information\nsupplied by the Company for inclusion in the Registration Statement (as defined\nin Section 3.2(b)) shall not at the time the Registration Statement is filed\nwith the SEC and at the time it becomes effective under the Securities\nAct contain any untrue statement of a material fact or omit to state any\nmaterial fact required to be stated therein or necessary in order to make the\nstatements therein, in light of the circumstances under which they are made,\nnot false or misleading.  The information supplied by the Company for inclusion\nin the proxy statement\/prospectus to be sent to the shareholders of the Company\nin connection with the meeting of the Company's shareholders to consider the\napproval and adoption of this Agreement and the approval \n\n\n                                      -29-\n   34\nof the Merger (the \"COMPANY SHAREHOLDERS' MEETING\") (such proxy\nstatement\/prospectus as amended or supplemented being referred to herein as the\n\"PROXY STATEMENT\/PROSPECTUS\") shall not, on the date the Proxy\nStatement\/Prospectus is first mailed to the Company's shareholders or at the\ntime of the Company Shareholders' Meeting, contain any untrue statement of a\nmaterial fact or omit to state any material fact required to be stated therein\nor necessary in order to make the statements therein, in light of the\ncircumstances under which they are made, not false or misleading; or omit to\nstate any material fact necessary to correct any statement in any earlier\ncommunication with respect to the solicitation of proxies for the Company\nShareholders' Meeting which has become false or misleading. The Proxy\nStatement\/Prospectus will comply as to form in all material respects with the\nprovisions of the Securities Act, the Exchange Act, and the rules and\nregulations thereunder. If, at any time prior to the Effective Time, any event\nrelating to the Company or any of its affiliates, officers, or directors should\nbe discovered by the Company which is required to be set forth in an amendment\nto the Registration Statement or a supplement to the Proxy Statement\/Prospectus,\nthe Company shall promptly inform Parent. Notwithstanding the foregoing, the\nCompany makes no representation or warranty with respect to any information\nsupplied by Parent or Merger Sub which is contained in any of the foregoing\ndocuments.\n\n         II.20   Board Approval.  The Board of Directors of the Company has, as\nof the date of this Agreement, unanimously determined (i) that the Merger is\nfair to and in the best interests of the Company and its shareholders and (ii)\nto recommend that the shareholders of the Company approve and adopt this\nAgreement and approve the Merger.\n\n         II.21   Fairness Opinion.  The Company's Board of Directors has\nreceived a written opinion from Montgomery, dated as of the date hereof, to the\neffect that as of the date hereof, the Exchange Ratio is fair to the Company's\nshareholders from a financial point of view.  The Company has delivered a copy\nof such opinion to Parent.\n\n         II.22   Section 11.75 of the Illinois General Corporation Law Not\nApplicable.  The Board of Directors of the Company has taken all actions so\nthat the restrictions contained in Section 11.75 of the Illinois Business\nCorporation Act applicable to a \"business combination\" (as defined in such\nSection 11.75) will not apply to the execution, delivery, or performance of\nthis Agreement or to the consummation of the Merger or the other transactions\ncontemplated by this Agreement.\n\n\n                                  ARTICLE III\n\n            REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB\n\n         Parent and Merger Sub represent and warrant to the Company as follows:\n\n         III.1   Organization of Parent and Merger Sub.  Parent is a\ncorporation duly organized, validly existing, and in good standing under the\nlaws of the State of Delaware.  Merger Sub is a corporation duly organized,\nvalidly existing, and in good standing under the laws of the State of Delaware.\nEach of Parent \n\n\n                                      -30-\n   35\nand Merger Sub has the corporate power to own its properties and\nto carry on its business as now being conducted and is duly qualified to do\nbusiness and is in good standing in each jurisdiction in which the failure to\nbe so qualified would have a material adverse effect on the ability of Parent\nand Merger Sub to consummate the transactions contemplated hereby.\n\n         III.2   Authority.\n\n                 (a       Parent and Merger Sub have all requisite corporate\npower and authority to enter into this Agreement and to consummate the\ntransactions contemplated hereby.  The execution and delivery of this Agreement\nand the consummation of the transactions contemplated hereby have been duly\nauthorized by all necessary corporate action on the part of Parent and Merger\nSub.  This Agreement has been duly executed and delivered by Parent and Merger\nSub and constitutes the valid and binding obligation of Parent and Merger Sub,\nenforceable in accordance with its terms.  The execution and delivery of this\nAgreement does not, and the consummation of the transactions contemplated\nhereby and thereby will not, conflict with, or result in any violation of, or\ndefault (with or without notice or lapse of time, or both), or give rise to a\nright of termination, cancellation or acceleration of any obligation or to loss\nof a benefit under any provision of (i) the Certificate of Incorporation or\nBylaws of Parent or Merger Sub or (ii) any mortgage, indenture, lease, contract\nor other agreement or instrument, permit, concession, franchise, license,\njudgment, order, decree, statute, law, ordinance, rule or representation\napplicable to Parent or on which Parent's business, financial condition,\noperations or prospects is substantially dependent, the breach, violation,\ndefault, termination or forfeiture of which would result in a material adverse\neffect upon the ability of Parent or Merger Sub to consummate the Merger, or a\nMaterial Adverse Effect on Parent or Merger Sub.\n\n                 (b       No consent, approval, order or authorization of, or\nregistration, declaration or filing with any Governmental Entity is required to\nbe obtained or made by Parent or Merger Sub in connection with the execution\nand delivery of this Agreement or the consummation of the Merger, except for\n(i) the filing of a Registration Statement (the \"REGISTRATION STATEMENT\") on\nForm S-4 (or any similar successor form thereto) with the SEC in accordance\nwith the Securities Act; (ii) the Merger Filings with the Secretaries of State\nof the States of Delaware and Illinois; (iii) such consents, approvals,\norders, authorizations, registrations, declarations and filings as may be\nrequired under applicable federal, foreign and state securities (or related)\nlaws and the securities or antitrust laws of any foreign country; and (iv) such\nother consents, authorizations, filings, approvals and registrations which if\nnot obtained or made would not be material to Parent or the Company or have a\nmaterial adverse effect on the ability of the parties hereto to consummate the\nMerger.\n\n         III.3   Parent Common Stock.  The Parent Common Stock to be issued\npursuant to the Merger has been duly authorized and will, when issued and\ndelivered in accordance with this Agreement be validly issued, fully paid and\nnonassessable will not be subject to any restrictions on resale under the\nSecurities Act, other than restrictions imposed by Rule 145 promulgated under\nthe Securities Act.\n\n         III.4   SEC Filings; Parent Financial Statements.\n\n\n                                      -31-\n   36\n                 (a       Parent has filed all forms, reports, and documents\nrequired to be filed by Parent with the SEC and has made available to the\nCompany such forms, reports, and documents in the form filed with the SEC.  All\nsuch required forms, reports and documents (including those that Parent may\nfile subsequent to the date hereof) are referred to herein as the \"PARENT SEC\nREPORTS.\" As of their respective filing dates, the Parent SEC Reports (i)\ncomplied in all material respects with the requirements of the Securities Act\nor the Exchange Act, as the case may be, and the rules and regulations of the\nSEC thereunder applicable to such Parent SEC Reports and (ii) did not at the\ntime they were filed (or if amended or superseded by a filing prior to the date\nof this Agreement, then on the date of such filing) contain any untrue\nstatement of a material fact or omit to state a material fact required to be\nstated therein or necessary in order to make the statements therein, in the\nlight of the circumstances under which they were made, not misleading.\n\n                 (b       Each of the consolidated financial statements of\nParent (including, in each case, the notes thereto), included in the Parent SEC\nReports (the \"PARENT FINANCIAL STATEMENTS\"), including each Parent SEC Report\nfiled after the date hereof until the Closing, (i) complied as to form in all\nmaterial respects with the published rules and regulations of the SEC with\nrespect thereto; (ii) was prepared in accordance with GAAP applied on a\nconsistent basis throughout the periods indicated (except as may be indicated\nin the notes thereto or, in the case of unaudited statements, as may be\npermitted by the SEC on Form 10-Q under the Exchange Act); and (iii) fairly\npresented the consolidated financial position of Parent and its subsidiaries as\nat the respective dates thereof and the consolidated results of Parent's\noperations and cash flows for the periods indicated (subject, in the case of\nunaudited financial statements, to normal audit adjustments).  There has been\nno change in Parent's accounting policies except as described in the notes to\nthe Parent Financial Statements.\n\n         III.5   No Material Adverse Change.  Since December 31, 1997, Parent\nhas conducted its business in the ordinary course and there has not occurred\n(a) any material adverse change in the financial condition, results of\noperations, liabilities, assets (including intangible assets), business, or\nprospects of Parent and its subsidiaries, taken as a whole; (b) any amendment or\nchange in the Certificate of Incorporation or Bylaws of Parent; or (c) any\ndamage to, destruction or loss of any assets of the Parent (whether or not\ncovered by insurance) that materially and adversely affects the financial\ncondition or business of Parent and its subsidiaries, taken as a whole.\n\n         III.6   Statements; Proxy Statement\/Prospectus.  The information\nsupplied by Parent for inclusion in the Registration Statement shall not at the\ntime the Registration Statement is filed with the SEC, and at the time it\nbecomes effective under the Securities Act, contain any untrue statement of a\nmaterial fact or omit to state any material fact required to be stated therein\nor necessary in order to make the statements therein, in light of the\ncircumstances under which they are made, not false or misleading.  The\ninformation supplied by Parent for inclusion in the Proxy Statement\/Prospectus\nshall not, on the date the Proxy Statement\/Prospectus is first mailed to the\nCompany's shareholders or at the time of the Company Shareholders' Meeting\ncontain any untrue statement of a material fact or omit to state any material\nfact required to be stated therein or necessary in order to make the statements\ntherein, in light \n\n\n                                      -32-\n   37\nof the circumstances under which they are made, not false or misleading; or omit\nto state any material fact necessary to correct any statement in any earlier\ncommunication with respect to the solicitation of proxies for the Company\nShareholders' Meeting which has become false or misleading. If at any time prior\nto the Effective Time, any event relating to Parent or any of its affiliates,\nofficers or directors should be discovered by Parent which is required to be set\nforth in an amendment to the Registration Statement or a supplement to the Proxy\nStatement\/Prospectus, Parent shall promptly inform the Company. Notwithstanding\nthe foregoing, Parent makes no representation or warranty with respect to any\ninformation supplied by the Company which is contained in any of the foregoing\ndocuments.\n\n\n                                   ARTICLE IV\n\n                      CONDUCT PRIOR TO THE EFFECTIVE TIME\n\n         IV.1    Conduct of Business by the Company.  During the period from\nthe date of this Agreement and continuing until the earlier of the termination\nof this Agreement pursuant to its terms or the Effective Time, the Company\nagrees (except to the extent that Parent shall otherwise consent in writing) to\ncarry on its business and to cause the Subsidiaries to carry on their business\nin the ordinary course in substantially the same manner as heretofore conducted\nand in compliance in all material respects with all applicable laws and\nregulations, to pay their debts and Taxes when due (subject to good faith\ndisputes over such debts or Taxes), to pay or perform other material\nobligations when due, and to use all reasonable efforts consistent with past\npractice and policies to preserve intact their present business organizations,\nkeep available the services of their present officers and key employees, and\npreserve their relationships with customers, suppliers, distributors,\nlicensors, licensees, and others having business dealings with them, all with\nthe goal of preserving unimpaired the goodwill and ongoing businesses of the\nCompany and the Subsidiaries at the Effective Time. The Company shall promptly\nnotify Parent of any event which materially adversely affects the Company, any\nSubsidiary, or their businesses. Except as expressly contemplated by this\nAgreement or disclosed in Schedule 4.1, the Company shall not, and shall not\npermit any Subsidiary to, without the prior written consent of Parent:\n\n                 (a       Waive any stock repurchase rights, accelerate, amend\nor change the period of exercisability of any Company Options or Company Common\nStock subject to vesting, or reprice options granted under any employee,\nconsultant, director or other stock plans or authorize cash payments in\nexchange for any options granted under any of such plans;\n\n                 (b       Grant any severance or termination pay to any\ndirector, officer or employee except pursuant to written agreements\noutstanding, or policies existing, on the date hereof and as disclosed in the\nCompany Schedules, or adopt any new severance plan;\n\n                 (c       Transfer or license to any person or entity or\notherwise extend, amend, or modify in any respect any rights to the Company\nIntellectual Property (other than end-user licenses granted to \n\n\n                                      -33-\n   38\ncustomers of the Company and the Subsidiaries in the ordinary course of\nbusiness), or enter into grants to future patent rights;\n\n                 (d       Enter into or amend any agreements pursuant to which\nany other party is granted marketing, distribution, or similar rights of any\ntype or scope with respect to any products or products licensed by the Company\nand the Subsidiaries;\n\n                 (e       Amend or otherwise modify (or agree to do so), except\nin the ordinary course of business, or violate the terms of, any of the\nagreements set forth or described in the Company Schedules;\n\n                 (f       Commence any litigation except to enforce its rights\nunder or to interpret this Agreement or any other agreement, obligation, or\narrangement contemplated hereby or entered into or established in connection\ntherewith.\n\n                 (g       Declare, set aside, or pay any dividends on or make\nany other distributions (whether in cash, stock, equity securities, or\nproperty) in respect of any capital stock or split, combine, or reclassify any\ncapital stock or issue or authorize the issuance of any other securities in\nrespect of, in lieu of, or in substitution for any capital stock;\n\n                 (h       Purchase, redeem or otherwise acquire, directly or\nindirectly, any shares of capital stock of the Company or any Subsidiary,\nexcept repurchases of unvested shares at cost in connection with the\ntermination of the employment relationship with any employee pursuant to stock\noption or purchase agreements in effect on the date hereof;\n\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 the Company's capital stock or securities convertible into,\nor subscriptions, rights, warrants or options to acquire, or other agreements\nor commitments of any character obligating it to issue any such shares or other\nconvertible securities (other than Company Common Stock issued upon exercise of\nCompany Options outstanding as of the date hereof and the Warrants);\n\n                 (j       Cause, permit or propose any amendments to its\nArticles of Incorporation, Bylaws or similar governing instruments;\n\n                 (k       Acquire or agree to acquire by merging or\nconsolidating with, or by purchasing any equity interest in or a portion of the\nassets of, or by any other manner, any business or any corporation,\npartnership, association or other business organization or division thereof, or\notherwise acquire or agree to acquire any assets which are material,\nindividually or in the aggregate, to the business of the Company or enter into\nany joint ventures, strategic partnerships, or alliances;\n\n                 (l       Sell, lease, license, encumber or otherwise dispose\nof any properties or assets which are material, individually or in the\naggregate, to the business of the Company;\n\n\n                                      -34-\n   39\n\n                 (m       Incur any indebtedness for borrowed money or\nguarantee any such indebtedness of another person, issue or sell any debt\nsecurities or options, warrants, calls or other rights to acquire any debt\nsecurities of the Company or any Subsidiary, enter into any \"keep well\" or\nother agreement to maintain any financial statement condition or enter into any\narrangement having the economic effect of any of the foregoing;\n\n                 (n       Effect or agree to effect, including by way of hiring\nor involuntary termination, any change in its directors, officers, or key\nemployees;\n\n                 (o       Adopt or amend any employee benefit plan or employee\nstock purchase or employee stock option plan, or enter into any employment\ncontract or collective bargaining agreement (other than offer letters and\nletter agreements entered into in the ordinary course of business consistent\nwith past practice with employees who are terminable \"at will\"), pay or agree\nto pay any special bonus or special remuneration to any director, employee, or\nconsultant or increase the salaries or wage rates or fringe benefits (including\nrights to severance or indemnification) of its directors, officers, employees\nor consultants other than in the ordinary course of business, consistent with\npast practice, or change in any material respect any management policies or\nprocedures;\n\n                 (p       Make any payments outside of the ordinary course of\nbusiness in excess of $75,000;\n\n                 (q       Except in the ordinary course of business, modify,\namend or terminate any material contract or agreement to which the Company or\nany Subsidiary is a party or waive, release, or assign any material rights or\nclaims thereunder;\n\n                 (r       Revalue any of its assets, including, without\nlimitation, writing down the value of inventory or writing off notes or\naccounts receivable other than in the ordinary course of business;\n\n                 (s       Except as required by GAAP, effect any changes in its\naccounting methods, principles, or practices; \n\n                 (t       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, provided that Parent shall not\nunreasonably withhold its consent to any of the foregoing;\n\n                 (u       Engage in any action with the intent to directly or\nindirectly adversely impact any of the transactions contemplated by this\nAgreement; or\n\n                 (v       Agree in writing or otherwise to take any of the\nactions described in Article 4 (a) through (u) above.\n\n\n                                      -35-\n   40\n         IV.2    Termination of 401(k) Plans.  The Company agrees to terminate\nthe 401(k) plans of the Company and of Facility Management Systems, Inc.\nimmediately prior to the Effective Time, unless Parent, in its sole and\nabsolute discretion, agrees to sponsor and maintain such plans by providing the\nCompany with written notice of such election at least three (3) days before the\nEffective Time.\n\n\n                                   ARTICLE V\n\n                             ADDITIONAL AGREEMENTS\n\n         V.1     Proxy Statement\/Prospectus; Registration Statement; Other\nFilings; Board Recommendations.  As promptly as practicable after the execution\nof this Agreement, the Company and Parent will prepare, and file with the SEC,\nthe Proxy Statement\/Prospectus, and Parent will prepare and file with the SEC\nthe Registration Statement in which the Proxy Statement\/Prospectus will be\nincluded as a prospectus.  Each of the Company and Parent will respond to any\ncomments of the SEC, will use its respective commercially reasonable efforts to\nhave the Registration Statement declared effective under the Securities Act as\npromptly as practicable after such filing, and, subject to Section 5.2(c), the\nCompany will cause the Proxy Statement\/Prospectus to be mailed to its\nshareholders at the earliest practicable time after the Registration Statement\nis declared effective by the SEC. As promptly as practicable after the date of\nthis Agreement, each of the Company and Parent will prepare and file any other\nfilings required to be filed by it under the Exchange Act, the Securities Act or\nany other federal, foreign or Blue Sky or related laws relating to the Merger\nand the transactions contemplated by this Agreement (the \"OTHER FILINGS\"). Each\nof the Company and Parent will notify the other promptly upon the receipt of any\ncomments from the SEC or its staff or any other government officials and of any\nrequest by the SEC or its staff or any other government officials for amendments\nor supplements to the Registration Statement, the Proxy Statement\/Prospectus, or\nany Other Filing or for additional information and will supply the other with\ncopies of all correspondence between such party or any of its representatives,\non the one hand, and the SEC, or its staff or any other government officials, on\nthe other hand, with respect to the Registration Statement, the Proxy\nStatement\/Prospectus, the Merger or any Other Filing. Each of the Company and\nParent will cause all documents that it is responsible for filing with the SEC\nor other regulatory authorities under this Section 5.1(a) to comply in all\nmaterial respects with all applicable requirements of law and the rules and\nregulations promulgated thereunder. Whenever any event occurs which is required\nto be set forth in an amendment or supplement to the Proxy Statement\/Prospectus,\nthe Registration 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 the SEC or its staff or any other government officials, and\/or\nmailing to shareholders of the Company, such amendment or supplement.\n\n         V.2     Meeting of Company Shareholders.\n\n                 (a)      Promptly after the date hereof, the Company will take\nall action necessary in accordance with the Illinois Law and its Articles of\nIncorporation and Bylaws to convene the Company \n\n\n                                      -36-\n   41\nShareholders' Meeting to be held as promptly as practicable, and in any event\n(to the extent permissible under applicable law) within 45 days after the\ndeclaration of effectiveness of the Registration Statement, for the purpose of\nvoting upon this Agreement and the Merger or the issuance of shares of Parent\nCommon Stock pursuant to the Merger, respectively, subject to Section 5.2(c).\nThe Company will use its commercially reasonable efforts to solicit from its\nshareholders proxies in favor of the adoption and approval of this Agreement and\nthe approval of the Merger and will take all other action necessary or advisable\nto secure the vote or consent of its shareholders required by the rules of\nNasdaq or Illinois Law to obtain such approvals. Notwithstanding anything to the\ncontrary contained in this Agreement, the Company may adjourn or postpone the\nCompany Shareholders' Meeting to the extent necessary to ensure that any\nnecessary supplement or amendment to the Prospectus\/Proxy Statement is provided\nto the Company's shareholders in advance of a vote on the Merger and this\nAgreement or, if as of the time for which the Company Shareholders' Meeting is\noriginally scheduled (as set forth in the Prospectus\/Proxy Statement), there are\ninsufficient shares of Company Common Stock represented (either in person or by\nproxy) to constitute a quorum necessary to conduct the business of the Company's\nShareholders' Meeting. Subject to Section 5.2(c), the Company shall ensure that\nthe Company Shareholders' Meeting is called, noticed, convened, held and\nconducted, and that all proxies solicited by the Company in connection with the\nCompany Shareholders' Meeting are solicited, in compliance with Illinois Law,\nits Articles of Incorporation and Bylaws, the rules of Nasdaq, and all other\napplicable legal requirements. The Company's obligation to call, give notice of,\nconvene and hold the Company Shareholders' Meeting in accordance with this\nSection 5.2(a) shall not be limited to or otherwise affected by the\ncommencement, disclosure, announcement, or submission to the Company of any\nAcquisition Proposal (as defined in Section 5.4), or by any withdrawal,\namendment, or modification of the recommendation of the Board of Directors of\nthe Company with respect to the Merger, except as permitted by Section 5.2(c).\n\n                 (b)      Subject to Section 5.2(c), (i) the Board of Directors\nof the Company shall unanimously recommend that the Company's shareholders vote\nin favor of and adopt and approve this Agreement and the Merger at the Company\nShareholders' Meeting; (ii) the Prospectus\/Proxy Statement shall include a\nstatement to the effect that the Board of Directors of the Company has\nunanimously recommended that the Company's shareholders vote in favor of and\nadopt and approve this Agreement and the Merger at the Company Shareholders'\nMeeting; and (iii) neither the Board of Directors of the Company nor any\ncommittee thereof shall withdraw, amend or modify, or propose or resolve to\nwithdraw, amend or modify in a manner adverse to Parent, the unanimous\nrecommendation of the Board of Directors of the Company that the Company's\nshareholders vote in favor of and adopt and approve this Agreement and the\nMerger.  For purposes of this Agreement, the recommendation of the Board of\nDirectors shall be deemed to have been modified in a manner adverse to Parent\nif such recommendation shall no longer be unanimous.\n\n                 (c)      Nothing in this Agreement shall prevent the Board of\nDirectors of the Company from withholding, withdrawing, amending or modifying\nits unanimous recommendation in favor of the Merger if (i) a Superior Offer (as\ndefined below) is made to the Company and is not withdrawn, (ii) neither the\nCompany nor any of its representatives shall have violated any of the\nrestrictions set forth in Section 5.4, and (iii) the Board of Directors of the\nCompany or any committee thereof concludes in \n\n\n                                      -37-\n   42\n\ngood faith, after consultation with its outside legal counsel, that, in light of\nsuch Superior Offer, the withholding, withdrawal, amendment, or modification of\nsuch recommendation is required in order for the Board of Directors of the\nCompany or any committee thereof to comply with its fiduciary obligations to the\nCompany's shareholders under applicable law. Subject to applicable laws, nothing\ncontained in this Section 5.2 shall limit the Company's obligation to hold and\nconvene the Company Shareholders' Meeting (regardless of whether the unanimous\nrecommendation of the Board of Directors of the Company shall have been\nwithdrawn, amended, or modified); provided, however, that in the event the Board\nof Directors of the Company shall recommend a Superior Offer to the shareholders\nof the Company in accordance with the provisions of Section 5.2(c) and such\nrecommendation occurs prior to the date of mailing of the Prospectus\/Proxy\nStatement to the shareholders of the Company (the \"SHAREHOLDER MAILING DATE\")\nand the Company is not otherwise in material breach of this Agreement, the\nCompany's obligation to hold and convene the Company Shareholders' Meeting shall\ncease. For purposes of this Agreement, \"SUPERIOR OFFER\" shall mean an\nunsolicited, bona fide written offer made by a third party to consummate any of\nthe following transactions: (i) a merger, consolidation, business combination,\nrecapitalization, liquidation, dissolution or similar transaction involving the\nCompany pursuant to which the shareholders of the Company immediately preceding\nsuch transaction hold less than 50% of the equity interest in the surviving or\nresulting entity of such transaction; (ii) a sale or other disposition by the\nCompany of assets representing in excess of 50% of the fair market value of the\nCompany's business immediately prior to such sale; or (iii) the acquisition by\nany person or group (including by way of a tender offer or an exchange offer or\nissuance by the Company), directly or indirectly, of beneficial ownership or a\nright to acquire beneficial ownership of shares representing in excess of 50% of\nthe voting power of the then outstanding shares of capital stock of the Company,\non terms that the Board of Directors of the Company determines, in its\nreasonable judgment, after consultation with its financial advisor, to be more\nfavorable to the Company's shareholders from a financial point of view than the\nterms of the Merger; provided, however, that any such offer shall not be deemed\nto be a \"Superior Offer\" if any financing required to consummate the transaction\ncontemplated by such offer is not committed and is not likely in the judgment of\nthe Company's Board of Directors to be obtained by such third party on a timely\nbasis.\n\n         V.3     Confidentiality; Access to Information.\n\n                 (a       Confidentiality Agreement.  The parties acknowledge\nthat the Company and Parent have previously executed a Mutual Confidentiality\nAgreement, dated as of November 12, 1997 (the \"CONFIDENTIALITY AGREEMENT\"),\nwhich Confidentiality Agreement will continue in full force and effect in\naccordance with its terms.\n\n                 (b       Access to Information.  Each of the Company and\nParent will afford the other party and its accountants, counsel and other\nrepresentatives reasonable access during normal business hours to the\nproperties, books, records and personnel of the Company during the period prior\nto the Effective Time to obtain all information concerning the business,\nincluding the status of product development efforts, properties, results of\noperations and personnel of such party.  No information or knowledge obtained\nin any investigation pursuant to this Section 5.3 will affect or be deemed to\nmodify \n\n\n                                      -38-\n   43\nany representation or warranty contained herein or the conditions to the\nobligations of the parties to consummate the Merger.\n\n         V.4     No Solicitation.\n\n                 (a       From and after the date of this Agreement until the\nEffective Time or termination of this Agreement pursuant to Article VII, the\nCompany and the Subsidiaries will not, nor will they authorize or permit any of\ntheir respective officers, directors, affiliates or employees or any investment\nbanker, attorney, or other advisor or representative retained by any of them\nto, directly or indirectly, (i) solicit, initiate, encourage or induce the\nmaking, submission or announcement of any Acquisition Proposal; (ii)\nparticipate in any discussions or negotiations regarding, or furnish to any\nperson any non-public information with respect to, or take any other action to\nfacilitate any inquiries or the making of any proposal that constitutes or may\nreasonably be expected to lead to, any Acquisition Proposal; (iii) engage in\ndiscussions with any person with respect to any Acquisition Proposal, except as\nto the existence of these provisions; (iv) subject to Section 5.2(c), approve,\nendorse or recommend any Acquisition Proposal; or (v) enter into any letter of\nintent or similar document or any contract agreement or commitment\ncontemplating or otherwise relating to any Acquisition Transaction (as\nhereinafter defined); provided, however, that prior to the approval of this\nAgreement by the required vote of the Company's shareholders, this Section\n5.4(a) shall not prohibit the Company from furnishing nonpublic information\nregarding the Company and the Subsidiaries to, entering into a confidentiality\nagreement with or entering into discussions with, any person or group in\nresponse to an Acquisition Proposal submitted by such person or group (and not\nwithdrawn) if (A) neither the Company nor any representative of the Company or\nany of the Subsidiaries shall have violated any of the restrictions set forth\nin this Section 5.4; (B) the Board of Directors of the Company concludes in\ngood faith, after consultation with its outside legal counsel, that such action\nis required in order for the Board of Directors of the Company to comply with\nits fiduciary obligations to the Company's shareholders under applicable law;\n(C) prior to furnishing any such nonpublic information to, or entering into\ndiscussions with, such person or group, the Company gives Parent written notice\nof the identity of such person or group and of the Company's intention to\nfurnish nonpublic information to, or enter into discussions with, such person\nor group and the Company receives from such person or group an executed\nconfidentiality agreement containing customary limitations on the use and\ndisclosure of all nonpublic written and oral information furnished to such\nperson or group by or on behalf of the Company and such limitations are at\nleast as restrictive as the limitations set forth in the Confidentiality\nAgreement; and (D) contemporaneously with furnishing any such nonpublic\ninformation to such person or group, the Company furnishes such nonpublic\ninformation to Parent (to the extent such nonpublic information has not been\npreviously furnished by the Company to Parent).  The Company and the\nSubsidiaries will immediately cease any and all existing activities,\ndiscussions, or negotiations with any parties conducted heretofore with respect\nto any Acquisition Proposal.  Without limiting the foregoing, it is understood\nthat any violation of the restrictions set forth in the preceding two sentences\nby any officer, director, or employee of the Company or any Subsidiary or any\ninvestment banker, attorney or other advisor or representative of the Company\nor any Subsidiary shall be deemed to be a breach of this Section 5.4 by the\nCompany.  In addition to the foregoing, the Company shall (i) provide Parent\nwith at least 24 hours prior notice of any meeting of the Company's \n\n\n                                      -39-\n   44\n\nBoard of Directors at which the Company's Board of Directors is reasonably\nexpected to consider a Superior Offer and (ii) not accept or recommend to its\nshareholders a Superior Offer for a period of at least five (5) business days\nafter Parent's receipt of a copy of such Superior Offer (or a written\ndescription of the significant terms and conditions of such Superior Offer, if\nnot in writing).\n\nFor purposes of this Agreement, \"ACQUISITION PROPOSAL\" shall mean any offer or\nproposal (other than an offer or proposal by Parent) relating to any Acquisition\nTransaction. For the purposes of this Agreement, \"ACQUISITION TRANSACTION\" shall\nmean any transaction or series of related transactions other than the\ntransactions contemplated by this Agreement involving (A) any acquisition or\npurchase from the Company by any person or \"group\" (as defined under Section\n13(d) of the Exchange Act and the rules and regulations thereunder) of more than\na 10% interest in the total outstanding voting securities of the Company or any\nof Subsidiary or any tender offer or exchange offer that if consummated would\nresult in any person or \"group\" (as defined under Section 13(d) of the Exchange\nAct and the rules and regulations thereunder) beneficially owning 10% or more of\nthe total outstanding voting securities of the Company or any Subsidiary or any\nmerger, consolidation, business combination or similar transaction involving the\nCompany pursuant to which the shareholders of the Company immediately preceding\nsuch transaction hold less than 90% of the equity interests in the surviving or\nresulting entity of such transaction; (B) any sale, lease (other than in the\nordinary course of business), exchange, transfer, license (other than in the\nordinary course of business), acquisition, or disposition of more than 50% of\nthe assets of the Company; or (C) any liquidation or dissolution of the Company.\n\n                 (b       In addition to the obligations of the Company set\nforth in paragraph (a) of this Section 5.4, the Company, as promptly as\npracticable, shall advise Parent orally and in writing of any request for\nnon-public information which the Company reasonably believes could lead to an\nAcquisition Proposal or of any Acquisition Proposal, or any inquiry with\nrespect to or which the Company reasonably should believe would lead to any\nAcquisition Proposal; the material terms and conditions of such request,\nAcquisition Proposal or inquiry; and the identity of the person or group making\nany such request, Acquisition Proposal or inquiry.  The Company will keep\nParent informed in all material respects of the status and details (including\nmaterial amendments or proposed amendments) of any such request, Acquisition\nProposal or inquiry.\n\n         V.5     Public Disclosure.  Parent and the Company will consult with\neach other, and to the extent practicable, agree, before issuing any press\nrelease or otherwise making any public statement with respect to the Merger,\nthis Agreement, or an Acquisition Proposal and will not issue any such press\nrelease or make any such public statement prior to such consultation, except as\nmay be required by law or any listing agreement with a national securities\nexchange.  The parties have agreed to the text of the joint press release\nannouncing the signing of this Agreement.\n\n         V.6     Reasonable Efforts; Notification.\n\n                 (a       Upon the terms and subject to the conditions set\nforth in this Agreement, each of the parties agrees to use all reasonable\nefforts to take, or cause to be taken, all actions, and to do, or \n\n\n                                      -40-\n   45\ncause to be done, and to assist and cooperate with the other parties in doing,\nall things necessary, proper or advisable to consummate and make effective, in\nthe most expeditious manner practicable, the Merger and the other transactions\ncontemplated by this Agreement, including using reasonable efforts to accomplish\nthe following: (i) the taking of all reasonable acts necessary to cause the\nconditions precedent set forth in Article VI to be satisfied; (ii) the obtaining\nof all necessary actions or nonactions, waivers, consents, approvals, orders and\nauthorizations from Governmental Entities and the making of all necessary\nregistrations, declarations and filings (including registrations, declarations\nand filings with Governmental Entities, if any) and the taking of all reasonable\nsteps as may be necessary to avoid any suit, claim, action, investigation or\nproceeding by any Governmental Entity; (iii) the obtaining of all necessary\nconsents, approvals or waivers from third parties; (iv) the defending of any\nsuits, claims, actions, investigations or proceedings, whether judicial or\nadministrative, challenging this Agreement or the consummation of the\ntransactions contemplated hereby, including seeking to have any stay or\ntemporary restraining order entered by any court or other Governmental Entity\nvacated or reversed; and (v) the execution or delivery of any additional\ninstruments necessary to consummate the transactions contemplated by, and to\nfully carry out the purposes of, this Agreement. In connection with and without\nlimiting the foregoing, the Company and its Board of Directors shall, upon the\nterms and subject to the conditions set forth in this Agreement, if any state\ntakeover statute or similar statute or regulation is or becomes applicable to\nthe Merger, this Agreement or any of the transactions contemplated by this\nAgreement, use all reasonable efforts to ensure that the Merger and the other\ntransactions contemplated by this Agreement may be consummated as promptly as\npracticable on the terms contemplated by this Agreement and otherwise to\nminimize the effect of such statute or regulation on the Merger, this Agreement\nand the transactions contemplated hereby. Notwithstanding anything herein to the\ncontrary, nothing in this Agreement shall be deemed to require the Parent or\nCompany or any Subsidiary or affiliate thereof to agree to any divestiture by\nitself or any of its affiliates of shares of capital stock or of any business,\nassets or property, or the imposition of any material limitation on the ability\nof any of them to conduct their businesses or to own or exercise control of such\nassets, properties and stock.\n\n                 (b       The Company shall give prompt notice to Parent in the\nevent any representation or warranty made by it in this Agreement becomes\nuntrue or inaccurate, or the Company fails to comply with or satisfy in any\nmaterial respect any covenant, condition or agreement to be complied with or\nsatisfied by it under this Agreement, in each case, such that the conditions\nset forth in Section 6.3(a) or 6.3(b) would not be satisfied; provided,\nhowever, that no such notification shall affect the representations,\nwarranties, covenants, or agreements of the parties or the conditions to the\nobligations of the parties under this Agreement.\n\n                 (c       Parent shall give prompt notice to the Company in the\nevent any representation or warranty made by it or Merger Sub in this Agreement\nbecomes untrue or inaccurate, or either Parent or Merger Sub fails to comply\nwith or satisfy in any material respect any covenant, condition or agreement to\nbe complied with or satisfied by it under this Agreement, in each case, such\nthat the conditions set forth in Section 6.2(a) or 6.2(b) would not be\nsatisfied; provided, however, that no such notification shall affect the\nrepresentations, warranties, covenants or agreements of the parties or the\nconditions to the obligations of the parties under this Agreement.\n\n\n                                      -41-\n   46\n\n         V.7     Third Party Consents.  As soon as practicable following the\ndate hereof, each of Parent and the Company will use its commercially\nreasonable efforts to obtain any consents, waivers and approvals under any of\nits or its subsidiaries' respective agreements, contracts, licenses or leases\nrequired to be obtained in connection with the consummation of the transactions\ncontemplated hereby.\n\n         V.8     Stock Options and Employee Benefits.\n\n                 (a       At the Effective Time, each Company Option, whether\nor not exercisable, will be assumed by Parent.  Each Company Option so assumed\nby Parent under this Agreement will continue to have, and be subject to, the\nsame terms and conditions set forth in the 1994 Option Plan immediately prior\nto the Effective Time (including, without limitation, any repurchase rights or\nvesting provisions), except that (i) each Company Option will be exercisable\n(or will become exercisable in accordance with its terms) for that number of\nwhole shares of Parent Common Stock equal to the product of the number of\nshares of Company Common Stock that were issuable upon exercise of such Company\nOption immediately prior to the Effective Time multiplied by the Exchange\nRatio, rounded down to the nearest whole number of shares of Parent Common\nStock and (ii) the per share exercise price for the shares of Parent Common\nStock issuable upon exercise of such assumed Company Option will be equal to\nthe quotient determined by dividing the exercise price per share of Company\nCommon Stock at which such Company Option was exercisable immediately prior to\nthe Effective Time by the Exchange Ratio, rounded up to the nearest whole cent.\n\n                 (b       It is intended that Company Options assumed by Parent\nshall qualify following the Effective Time as incentive stock options as\ndefined in Section 422 of the Code to the extent Company Options qualified as\nincentive stock options immediately prior to the Effective Time, and the\nprovisions of this Section 5.8 shall be applied consistent with such intent.\n\n                 (c       Notwithstanding anything to the contrary in this\nSection 5.8, in lieu of assuming outstanding options under the 1994 Option\nPlan, Parent may, at its election, cause such outstanding options to be\nreplaced by issuing substantially equivalent replacement stock options\ntherefor.\n\n         V.9     Form S-8.  Parent agrees to file a registration statement on\nForm S-8 for the shares of Parent Common Stock issuable with respect to assumed\nCompany Options as soon as is reasonably practicable after the Effective Time\nbut in any event within five (5) days of the Closing Date.\n\n         V.10    Indemnification.\n\n                 (a       From and after the Effective Time, Parent will cause\nthe Surviving Corporation to fulfill and honor in all respects the obligations\nof the Company pursuant to any indemnification agreements between the Company\nand its directors and officers as of the Effective Time (the \"INDEMNIFIED\nPARTIES\") and any indemnification provisions under the Company's Certificate of\nIncorporation or Bylaws as in effect on the date hereof.  The Certificate of\nIncorporation and Bylaws of \n\n\n                                      -42-\n   47\nthe Surviving Corporation will contain provisions with respect to exculpation\nand indemnification that are at least as favorable to the Indemnified Parties as\nthose contained in the Certificate of Incorporation and Bylaws of the Company as\nin effect on the date hereof, which provisions will not be amended, repealed or\notherwise modified for a period of six years from the Effective Time in any\nmanner that would adversely affect the rights thereunder of individuals who,\nimmediately prior to the Effective Time, were directors, officers, employees or\nagents of the Company, unless such modification is required by law.\n\n                 (b       For a period of six years after the Effective Time,\nParent will cause the Surviving Corporation to use its commercially reasonable\nefforts to maintain in effect, if available, directors' and officers' liability\ninsurance covering those persons who are currently covered by the Company's\ndirectors' and officers' liability insurance policy on terms comparable to\nthose applicable to the current directors and officers of the Company;\nprovided, however, that in no event will Parent or the Surviving Corporation be\nrequired to expend in excess of 125% of the annual premium currently paid by\nthe Company for such coverage (or such coverage as is available for 125% of\nsuch annual premium).\n\n         V.11    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.\n\n         V.12    Company Affiliate Agreement.  Schedule 5.12 lists those\npersons who may be deemed to be, in the Company's reasonable judgment,\naffiliates of the Company within the meaning of Rule 145 promulgated under the\nSecurities Act (each a \"COMPANY AFFILIATE\").  The Company will provide Parent\nwith such information and documents as Parent reasonably requests for purposes\nof reviewing such list.  The Company will use its commercially reasonable\nefforts to deliver or cause to be delivered to Parent, as promptly as\npracticable on or following the date hereof, from each Company Affiliate an\nexecuted affiliate agreement in substantially the form attached hereto as\nExhibit D (the \"COMPANY AFFILIATE AGREEMENT\"), each of which will be in full\nforce and effect as of the Effective Time.  Parent will be entitled to place\nappropriate legends on the certificates evidencing any Parent Common Stock to\nbe received by a Company Affiliate pursuant to the terms of this Agreement, and\nto issue appropriate stop transfer instructions to the transfer agent for the\nParent Common Stock, consistent with the terms of the Company Affiliate\nAgreement.\n\n         V.13    Tax-Free Reorganization.  No party shall take any action\neither prior to or after the Effective Time that could reasonably be expected\nto cause the Merger to qualify as a \"reorganization\" under Section 368(a) of\nthe Code.\n\n         V.14    Comfort Letter.  Company shall use its reasonable best efforts\nto cause Price Waterhouse, certified public accountants to Company, to provide\na letter reasonably acceptable to Parent, relating to their review of the\nfinancial statements and other financial data and schedules relating to Company\ncontained in or incorporated by reference in the Registration Statement.\n\n\n                                      -43-\n   48\n         V.15    Shareholder Rights Plan.  Prior to the Effective Time, without\nParent's prior written consent, Company will not adopt a shareholder rights\nplan.\n\n         V.16    Amendment of Redeemable Warrants.  As promptly as practicable\nafter the execution of this Agreement:\n\n                 (a       The Company shall prepare and include within the\nRegistration Statement as part of the Proxy Statement\/Prospectus an information\nstatement meeting the requirements of Schedule 14C of the Exchange Act for the\npurpose of soliciting the holders of the Redeemable Warrants.  The purpose of\nsuch solicitation shall be to seek the requisite approval of the holders of the\nRedeemable Warrants to amend all of the outstanding Redeemable Warrants, such\namendment to be conditioned upon and effective concurrent with the Effective\nTime, to provide that as of the Effective Time, the Redeemable Warrants shall\nbe deemed automatically exchanged for and converted into the right to receive\nthat number of shares of Parent Common Stock, based on the Exchange Ratio, (or\ncash in lieu thereof for any fractional share, in accordance with Section\n1.6(g) above) as would be the case if the Redeemable Warrants had been\nexercised for Company Common Stock immediately prior to the Effective Time on a\nnet issuance basis, based on the average of the last reported sale prices of\nParent Common Stock as reported by Nasdaq on the five (5) most recent trading\ndays ending on the trading day immediately preceding the Effective Time,\nsubject to the surrender of the certificates representing the Redeemable\nWarrants.\n\n                 (b       The Company shall cooperate with Parent in providing\nall necessary information  required for the solicitation of the holders of the\nRedeemable Warrants as contemplated in subparagraph (a) above in the\npreparation of the Registration Statement, and shall solicit the holders of the\nRedeemable Warrants in accordance with the requirements of Section 14(c) of the\nExchange Act and the related rules and regulations.  The Company shall ensure\nthat the amendment of the Redeemable Warrants is completed in accordance with\nthe requirements of the Warrant Agreement, and shall take such actions as may\nbe reasonably requested by the Warrant Agent (as defined in the Warrant\nAgreement) to effect such amendment.  In addition, the Company shall ensure\nthat the amendment of the Redeemable Warrants is in compliance with all\napplicable state securities laws.\n\n         V.17    Warrant Assumption.  In the event that the amendment of the\nRedeemable Warrants is not completed as provided in Section 5.16 above, Parent\nshall take such actions as shall be necessary to assume the Redeemable Warrants\nin accordance with the provisions of the Warrant Agreement, except that (i)\neach Redeemable Warrant will be exercisable for that number of whole shares of\nParent Common Stock equal to the product of the number of shares of Company\nCommon Stock that were issuable upon exercise of such Redeemable Warrant\nimmediately prior to the Effective Time multiplied by the Exchange Ratio,\nrounded down to the nearest whole number of shares of Parent Common Stock, (ii)\nthe per share exercise price and redemption price for the shares of Parent\nCommon Stock subject to the Redeemable Warrants so assumed will be equal to the\nquotient determined by dividing the exercise price and redemption price per\nshare of Company Common Stock subject to the Redeemable Warrant by the \n\n\n                                      -44-\n   49\nExchange Ratio, rounded up to the nearest whole cent, (iii) and such other\nadjustments may be made as are consistent with the provisions of the Warrant\nAgreement.\n\n\n                                   ARTICLE VI\n\n                            CONDITIONS TO THE MERGER\n\n         VI.1    Conditions to Obligations of Each Party to Effect the Merger.\nThe respective obligations of each party to this Agreement to effect the Merger\nshall be subject to the satisfaction at or prior to the Closing Date of the\nfollowing conditions:\n\n                 (a)      Company Shareholder Approval.  This Agreement and the\nMerger and other transactions contemplated hereby shall have been approved and\nadopted by the Company's shareholders by the requisite vote under applicable\nlaw and the Company's Articles of Incorporation.\n\n                 (b)      Registration Statement Effective; Proxy Statement.\nThe SEC shall have declared the Registration Statement effective.  No stop\norder suspending the effectiveness of the Registration Statement or any part\nthereof shall have been issued and no proceeding for that purpose, and no\nsimilar proceeding in respect of the Proxy Statement\/Prospectus, shall have\nbeen initiated or threatened in writing by the SEC.\n\n                 (c)      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.  All\nmaterial foreign antitrust approvals required to be obtained prior to the\nMerger in connection with the transactions contemplated hereby shall have been\nobtained.\n\n                 (d)      Tax Opinions.  The Company shall have received from\nArcher &amp; Greiner, P.C., and Parent shall have received from Wilson Sonsini\nGoodrich &amp; Rosati, P.C., written opinions to the effect that the Merger will\nconstitute a reorganization within the meaning of Section 368 of the Code.  In\nrendering such opinions, counsel may rely on (and to the extent reasonably\nrequired, the parties shall make) reasonable representations related thereto.\n\n         VI.2    Additional Conditions to Obligations of the Company.  The\nobligation of the Company to consummate and effect the Merger shall be subject\nto the satisfaction on or prior to the Closing Date of each of the following\nconditions, any of which may be waived, in writing, exclusively by the Company:\n\n                 (a)      Representations and Warranties.  Each representation\nand warranty of Parent and Merger Sub contained in this Agreement (i) shall\nhave been true and correct as of the date of this Agreement and (ii) shall be\ntrue and correct on and as of the Closing Date with the same force and effect\n\n\n                                      -45-\n   50\nas if made on the Closing Date except for changes contemplated by this\nAgreement and for those representations and warranties which address matters\nonly as of a particular date (which representations shall have been true and\ncorrect as of such particular date), and except, with regard to the foregoing\nclauses (i) and (ii), in such cases where the failure to be so true and correct\nwould not have a Material Adverse Effect on Parent (it being understood that,\nfor purposes of determining the accuracy of such representations and\nwarranties, (i) all \"Material Adverse Effect\" qualifications and other\nqualifications based on the word \"material\" or similar phrases contained in\nsuch representations and warranties shall be disregarded and (ii) any update of\nor modification to the Parent Schedules made or purported to have been made\nafter the date of this Agreement shall be disregarded).  The Company shall have\nreceived a certificate with respect to the foregoing signed on behalf of Parent\nby an authorized officer of Parent.\n\n                 (b)      Agreements and Covenants.  Parent and Merger Sub\nshall have performed or complied in all material respects with all agreements\nand covenants required by this Agreement to be performed or complied with by\nthem on or prior to the Closing Date, and the Company shall have received a\ncertificate to such effect signed on behalf of Parent by an authorized officer\nof Parent.\n\n                 (c)      Material Adverse Effect.  No Material Adverse Effect\nwith respect to Parent shall have occurred since the date of this Agreement.\n\n         VI.3    Additional Conditions to the Obligations of Parent and Merger\nSub.  The obligations of Parent and Merger Sub to consummate and effect the\nMerger shall be subject to the satisfaction on or prior to the Closing Date of\neach of the following conditions, any of which may be waived, in writing,\nexclusively by Parent:\n\n(a)      Representations and Warranties.  Each representation and warranty of\nthe Company contained in this Agreement (i) shall have been true and correct as\nof the date of this Agreement and (ii) shall be true and correct on and as of\nthe Closing Date with the same force and effect as if made on and as of the\nClosing Date, except for changes contemplated by this Agreement and for those\nrepresentations and warranties which address matters only as of a particular\ndate (which representations shall have been true and correct and except, with\nregard to the foregoing clauses (i) and (ii), in such cases (other than with\nrespect to the representations and warranties set forth in Sections 2.2, 2.3,\nand 2.21) where the failure to be so true and correct would not have a Material\nAdverse Effect on the Company as of such particular date (it being understood\nthat, for purposes of determining the accuracy of such representations and\nwarranties, (i) all \"Material Adverse Effect\" qualifications and other\nqualifications based on the word \"material\" or similar phrases contained in such\nrepresentations and warranties shall be disregarded and (ii) any update of or\nmodification to the Company Schedules made or purported to have been made after\nthe date of this Agreement shall be disregarded)). Parent shall have received a\ncertificate with respect to the foregoing signed on behalf of the Company by the\nChief Executive Officer and the Chief Financial Officer.\n\n                 (b)      Agreements and Covenants.  The Company shall have\nperformed or complied in all material respects with all agreements and\ncovenants required by this Agreement to be performed or \n\n\n                                      -46-\n   51\ncomplied with by it at or prior to the Closing Date, and Parent shall have\nreceived a certificate to such effect signed on behalf of the Company by the\nChief Executive Officer and the Chief Financial Officer of the Company.\n\n                 (c)      Material Adverse Effect.  No Material Adverse Effect\nwith respect to the Company and the Subsidiaries shall have occurred since the\ndate of this Agreement.\n\n                 (d)      Affiliate Agreements.  Each of the Company Affiliates\nshall have entered into the Company Affiliate Agreement and each of such\nagreements will be in full force and effect as of the Effective Time.\n\n                 (e)      Consents.  The Company shall have obtained all\nconsents, waivers and approvals required in connection with the consummation of\nthe transactions contemplated hereby in connection with the agreements,\ncontracts, licenses or leases set forth on Schedule 6.3(e).\n\n                 (f)      Lease Amendment.  Parent, the Company, and Thompson\nEnterprises, L.P. shall have entered an amendment to the Business Lease dated\nJune 1, 1995, providing for (i) the potential adjustment of the applicable rent\nowing thereunder based on a market appraisal to be completed by an independent\nappraiser, (ii) the amendment of the tenant's renewal option thereunder from\none additional  five year term to five additional one year terms, (iii) the\namendment of the environmental indemnification provisions to reflect more\nstandard terms for commercial leases, and (iv) such additional amendments\nrelating to such lease as the parties shall agree.\n\n\n                                  ARTICLE VII\n\n                       TERMINATION, AMENDMENT AND WAIVER\n\n         VII.1   Termination.  This Agreement may be terminated at any time\nprior to the Effective Time, whether before or after the requisite approval of\nthe shareholders of the Company:\n\n                 (a)      by mutual written consent duly authorized by the\nBoards of Directors of Parent and the Company;\n\n                 (b)      by either the Company or Parent if the Merger shall\nnot have been consummated by October 31, 1998 for any reason; provided,\nhowever, that the right to terminate this Agreement under this Section 7.1(b)\nshall not be available to any party whose action or failure to act has been a\nprincipal cause of or resulted in the failure of the Merger to occur on or\nbefore such date and such action or failure to act constitutes a breach of this\nAgreement;\n\n\n                                      -47-\n   52\n                 (c)      by either the Company or Parent if a Governmental\nEntity shall have issued an order, decree or ruling or taken any other action\nin any case having the effect of permanently restraining, enjoining or\notherwise prohibiting the Merger, which order, decree or ruling is final and\nnonappealable;\n\n                 (d)      by either the Company or Parent if the required\napprovals of the shareholders of the Company contemplated by this Agreement\nshall not have been obtained by reason of the failure to obtain the required\nvote at a meeting of the Company's shareholders duly convened therefor or at\nany adjournment thereof (provided that the right to terminate this Agreement\nunder this Section 7.1(d) shall not be available to the Company where the\nfailure to obtain approval of the Company's shareholder shall have been caused\nby the action or failure to act of the Company in breach of this Agreement);\n\n                 (e)      by Parent, if (i) the Board of Directors of the\nCompany shall have withheld, withdrawn or modified in a manner adverse to\nParent its recommendation in favor of adoption and approval of this Agreement\nor the Merger; (ii) the Company shall have failed to include in the Proxy\nStatement\/Prospectus the unanimous recommendation of the Board of Directors of\nCompany in favor of the Merger and this Agreement; (iii) the Board of Directors\nof Company shall have failed to reconfirm such recommendation within ten (10)\nbusiness days after a written request to do so at any time following the\nannouncement or disclosure of an Acquisition Proposal; (iv) the Board of\nDirectors of the Company shall have accepted any Acquisition Proposal or\nrecommended any Acquisition Proposal to the shareholders of the Company; (v)\nthe Company shall have entered into any letter of intent or similar document or\nany agreement, contract or commitment accepting any Acquisition Proposal; or\n(vi) the Board of Directors of the Company shall have resolved to do any of the\nforegoing;\n\n                 (f)      by the Company, upon a breach of any representation,\nwarranty, covenant, or agreement on the part of Parent set forth in this\nAgreement, or if any representation or warranty of Parent shall have become\nuntrue, in either case such that the conditions set forth in Section 6.2(a) or\nSection 6.2(b) would not be satisfied as of the time of such breach or as of\nthe time such representation or warranty shall have become untrue, provided,\nthat if such inaccuracy in Parent's representations and warranties or breach by\nParent is curable by Parent through the exercise of its commercially reasonable\nefforts, then the Company may not terminate this Agreement under this Section\n7.1(f) for ten (10) days after notice from the Company of such breach, provided\nthat Parent continues to exercise such commercially reasonable efforts to cure\nsuch breach;\n\n                 (g)      by Parent, upon a breach of any representation,\nwarranty, covenant or agreement on the part of the Company set forth in this\nAgreement, or if any representation or warranty of Company shall have become\nuntrue, in either case such that the conditions set forth in Section 6.3(a) or\nSection 6.3(b) would not be satisfied as of the time of such breach or as of\nthe time such representation or warranty shall have become untrue, provided,\nthat if such inaccuracy in the Company's representations and warranties or\nbreach by the Company is curable by the Company through the exercise of its\ncommercially reasonable efforts, then Parent may not terminate this Agreement\nunder this Section 7.1(g) for ten (10) days after notice from Parent of such\nbreach, provided that the Company continues to exercise such commercially\nreasonable efforts to cure such breach;\n\n\n                                      -48-\n   53\n                 (h)      by the Company at any time prior to the approval of\nthe Merger by the shareholders of the Company, if the Board of Directors\nrecommends a Superior Offer to the shareholders of the Company in accordance\nwith the provisions of Section 5.4(c); provided that in the event such\nrecommendation occurs after the Shareholder Mailing Date, the right of the\nCompany under this Section 7.1(h) shall not be exercisable until the sooner to\noccur of (A) the date that is one hundred twenty (120) days after the date of\nthis Agreement, or (B) the date of a Company Negative Vote.\n\n         VII.2   Notice of Termination; Effect of Termination.  Any termination\nof this Agreement under Section 7.1 above will be effective immediately upon\nthe delivery of written notice of the terminating party to the other parties\nhereto.  In the event of the termination of this Agreement as provided in\nSection 7.1, this Agreement shall be of no further force or effect, except (i)\nas set forth in this Section 7.2, Section 7.3 and Article VIII (General\nProvisions), each of which shall survive the termination of this Agreement and\n(ii) nothing herein shall relieve any party from liability for any willful or\nintentional breach of this Agreement.  No termination of this Agreement shall\naffect the obligations of the parties contained in the Confidentiality\nAgreement or the Company Option Agreement, all of which obligations shall\nsurvive termination of this Agreement in accordance with their terms.\n\n         VII.3   Fees and Expenses.\n\n                 (a)      General.  Except as set forth in this Section 7.3,\nall fees and expenses incurred in connection with this Agreement and the\ntransactions contemplated hereby shall be paid by the party incurring such\nexpenses whether or not the Merger is consummated; provided, however, that\nParent and the Company shall share equally all fees and expenses, other than\nattorneys' and accountants fees and expenses, incurred in relation to the\nprinting and filing of the Proxy Statement\/Prospectus (including any\npreliminary materials related thereto) and the Registration Statement\n(including financial statements and exhibits) and any amendments or supplements\nthereto.\n\n                 (b)      Company Payments.\n\n                           (i)    If prior to or concurrent with the\ntermination of this Agreement, (A) the Board of Directors of the Company shall\nhave withheld, withdrawn, or modified in a manner adverse to Parent its\nunanimous recommendation in favor of the adoption and approval of this\nAgreement and the approval of the Merger or (B) Company shall have failed to\ninclude in the Proxy Statement\/Prospectus the unanimous recommendation of the\nBoard of Directors of Company in favor of this Agreement and the Merger, or (C)\nthe Board of Directors of the Company shall have failed to reconfirm such\nunanimous recommendation within ten (10) business days after a written request\nfrom Parent to do so at any time following the announcement or disclosure of an\nAcquisition Proposal, or (D) the Board of Directors of the Company shall have\naccepted any Acquisition Proposal or recommended any Acquisition Proposal to\nthe shareholders of Company, or (E) the Company shall have entered into any\nletter of intent or similar agreement or any contract, agreement, or commitment\naccepting any Acquisition Proposal, or (F) the Board of Directors shall have\nresolved to take any of the actions described in the foregoing clauses (A)\n\n\n                                      -49-\n   54\nthrough (E), then the Company shall pay to Parent an amount equal to $1,700,000\nin immediately available funds within one business day following the earlier to\noccur of (x) the termination of this Agreement pursuant to Section 7.1(e), (y)\nthe termination of this Agreement pursuant to Section 7.1(h), or (z) a Company\nNegative Vote (as defined below); provided, however, that in the event a\npayment is required pursuant to this subparagraph 7.3(b)(i) and within 12\nmonths following the date the Company is required to make such payment the\nCompany consummates a Company Acquisition, the Company shall pay to Parent an\namount (which shall be in addition to the amount previously required to be\npaid) equal to $2,500,000 in immediately payable funds within one business day\nfollowing such consummation.\n\n                          (ii)    If no payment shall be required pursuant to\nclause 7.3(b)(i) above, and if (x) the vote of the shareholders of Company as\ncontemplated by this Agreement approving and adopting this Agreement and\napproving the Merger shall not have been obtained by reason of the failure to\nobtain the required vote at a meeting duly convened therefor or at any\nadjournment thereof (a \"COMPANY NEGATIVE VOTE\") and (y) prior to such Company\nNegative Vote there shall have occurred an Acquisition Proposal which shall\nhave been publicly disclosed, and (z) within 12 months following such Company\nNegative Vote, the Company shall enter into a definitive agreement with respect\nto a Company Acquisition, then Company shall pay to Parent an amount equal to\n$1,700,000 in immediately available funds within one business day following the\nexecution by the Company of such definitive agreement; provided, however, that\nin the event a payment is required pursuant to this subparagraph 7.3(b)(ii) and\nwithin four months following the date the Company is required to make such\npayment the Company consummates a Company Acquisition, the Company shall pay to\nParent an amount (which shall be in addition to the amount previously required\nto be paid) equal to $2,500,000 in immediately payable funds within one business\nday following such consummation. \"COMPANY ACQUISITION\" shall mean any of the\nfollowing transactions or series of related transactions: (i) a merger,\nconsolidation, business combination, recapitalization, liquidation, dissolution\nor similar transaction involving the Company pursuant to which the shareholders\nof the Company immediately preceding such transaction or series of related\ntransactions hold less than 60% of the equity interests in the surviving or\nresulting entity of such transaction or transactions; (ii) a sale and issuance\nby the Company of shares of capital stock of the Company which would, upon\nissuance, represent more than 40% of the outstanding shares of capital stock of\nthe Company; (iii) a sale or other disposition by the Company of assets\n(excluding inventory and used equipment sold in the ordinary course of business)\nrepresenting in excess of 40% of the fair market value of the Company's business\nimmediately prior to such sale; or (iv) the acquisition by any person or group\n(including by way of a tender offer or an exchange offer or issuance by\nCompany), directly or indirectly, of beneficial ownership or a right to acquire\nbeneficial ownership of 40% or more of the then outstanding shares of capital\nstock of the Company.\n\n                 (c)      The Company acknowledges that the agreements\ncontained in Section 7.3(b) are an integral part of the transactions\ncontemplated by this Agreement, and that, without these agreements, Parent\nwould not enter into this Agreement; accordingly, if the Company fails promptly\nto pay the amounts due pursuant to Section 7.3(b), and, in order to obtain such\npayment, Parent commences a suit which results in a judgment against the\nCompany for the amounts set forth in Section 7.3(b) and such judgment is not\nset aside or reversed, Company shall pay to Parent its reasonable costs and\nexpenses\n\n\n                                      -50-\n   55\n(including attorneys' fees and expenses) in connection with such suit,\ntogether with interest on the amounts set forth in Section 7.3(b) at the prime\nrate announced by Bank of America in effect on the date such payment was\nrequired to be made.\n\n                 (d)      Payment of the fees described in Section 7.3(b) above\nshall not be in lieu of damages incurred in the event of breach of this\nAgreement.\n\n         VII.4   Amendment.  Subject to applicable law, this Agreement may be\namended by the parties hereto at any time by execution of an instrument in\nwriting signed on behalf of each of Parent and the Company.\n\n         VII.5   Extension; Waiver.  At any time prior to the Effective Time,\nany party hereto may, to the extent legally allowed, (i) extend the time for\nthe performance of any of the obligations or other acts of the other parties\nhereto, (ii) waive any inaccuracies in the representations and warranties made\nto such party contained herein or in any document delivered pursuant hereto, and\n(iii) waive compliance with any of the agreements or conditions for the benefit\nof such party contained herein. Any agreement on the part of a party hereto to\nany such extension or waiver shall be valid only if set forth in an instrument\nin writing signed on behalf of such party. Delay in exercising any right under\nthis Agreement shall not constitute a waiver of such right.\n\n\n                                  ARTICLE VIII\n\n                               GENERAL PROVISIONS\n\n         VIII.1  Non-Survival of Representations and Warranties.  The\nrepresentations and warranties of the Company, Parent and Merger Sub contained\nin this Agreement shall terminate at the Effective Time, and only the covenants\nthat by their terms survive the Effective Time shall survive the Effective\nTime.\n\n         VIII.2  Notices.  All notices and other communications hereunder shall\nbe in writing and shall be deemed given if delivered personally or by\ncommercial delivery service, or sent via telecopy (receipt confirmed) to the\nparties at the following addresses or telecopy numbers (or at such other\naddress or telecopy numbers for a party as shall be specified by like notice):\n\n                 (a)      if to Parent or Merger Sub, to:\n\n                          Peregrine Systems, Inc.\n                          12670 High Bluff Drive\n                          San Diego, California 92130\n                          Attn:  Richard T. Nelson, General Counsel\n                          Telephone No.:  (619) 481-5000\n                          Facsimile No.:  (619) 794-6033\n\n\n                                      -51-\n   56\n                          with a copy (which shall not constitute notice) to:\n\n                          Wilson Sonsini Goodrich &amp; Rosati, P.C.\n                          650 Page Mill Road\n                          Palo Alto, California 94304-1050\n                          Attn:  Douglas H. Collom, Esq.\n                          Telephone No.:  (650) 493-9300\n                          Facsimile No.:  (650) 493-6811\n\n                          (b)     if to the Company, to:\n\n                          Innovative Tech Systems, Inc.\n                          445 Jacksonville Road, Suite 200\n                          Warminster, Pennsylvania 18974\n                          Attn:  John M. Thompson, President\n                          Telephone No.:  (215) 441-5600\n                          Facsimile No.:  (215) 441-5733\n\n                          with a copy (which shall not constitute notice) to:\n\n                          Archer &amp; Greiner\n                          A Professional Corporation\n                          One Centennial Square\n                          Haddonfield, New Jersey 08033\n                          Attn:  Gary L. Green, Esq.\n                          Telephone No.:  (609) 795-2121\n                          Facsimile No.:  (609) 795-0574\n\n         VIII.3  Interpretation.\n\n                 (a)      When a reference is made in this Agreement to\nExhibits, such reference shall be to an Exhibit to this Agreement unless\notherwise indicated.  When a reference is made in this Agreement to Sections,\nsuch reference shall be to a Section of this Agreement unless otherwise\nindicated.  The words \"INCLUDE,\" \"INCLUDES,\" and \"INCLUDING,\" when used herein,\nshall be deemed in each case to be followed by the words \"without limitation.\"\nThe table of contents and headings contained in this Agreement are for\nreference purposes only and shall not affect in any way the meaning or\ninterpretation of this Agreement.  When reference is made herein to \"THE\nBUSINESS OF\" an entity, such reference shall be deemed to include the business\nof all direct and indirect subsidiaries of such entity.  Reference to the\nsubsidiaries of an entity shall be deemed to include all direct and indirect\nsubsidiaries of such entity.\n\n\n                                      -52-\n   57\n                 (b)      For purposes of this Agreement, the term \"PERSON\"\nshall mean any individual, corporation (including any non-profit corporation),\ngeneral partnership, limited partnership, limited liability partnership, joint\nventure, estate, trust, company (including any limited liability company or\njoint stock company), firm or other enterprise, association, organization,\nentity or Governmental Entity.\n\n                 (c)      For purposes of this Agreement, the term \"MATERIAL\nADVERSE EFFECT\" when used in connection with an entity means any change, event,\nviolation, inaccuracy, circumstance or effect that is materially adverse to the\nbusiness, assets (including intangible assets), capitalization, financial\ncondition, results of operations or prospects of such entity and its\nsubsidiaries taken as a whole, except for those changes, events, violations,\ninaccuracies, circumstances and effects that (i) are caused by conditions\naffecting the United States economy as a whole or affecting the industry in\nwhich such entity competes as a whole, which conditions do not affect such\nentity in a disproportionate manner, or (ii) are related to or result from\nannouncement or pendency of the Merger.\n\n                 (d)      For purposes of this Agreement,\"TO THE KNOWLEDGE OF\nTHE COMPANY\" shall mean the knowledge of any of William M. Thompson, John M.\nThompson, Karen A. Thompson, John R. Smart, Mark R. Hernick, Julie Moore, Jerry\nCox, Hugo J. Affanato, Richard M. Salva, or Jonathan Manin.  \"KNOWLEDGE,\" when\nused in this context shall mean, as to the facts or circumstances represented,\n(i) actual knowledge of such person, and (ii) knowledge that an officer or\ndirector should be expected to have after examination of such books and records\nwhich such officer or director would be expected to examine, and otherwise,\nthrough the exercise of reasonable care in the conduct of the business of the\nCompany.\n\n         VIII.4  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\nof the parties and delivered to the other party, it being understood that all\nparties need not sign the same counterpart.\n\n         VIII.5  Entire Agreement; Third Party Beneficiaries.  This Agreement\nand the documents and instruments and other agreements among the parties hereto\nas contemplated by or referred to herein, including the Company Schedules and\nthe Parent Schedules (a) constitute the entire agreement among the parties with\nrespect to the subject matter hereof and supersede all prior agreements and\nunderstandings, both written and oral, among the parties with respect to the\nsubject matter hereof, it being understood that the Confidentiality Agreement\nshall continue in full force and effect until the Closing and shall survive any\ntermination of this Agreement and (b) are not intended to confer upon any other\nperson any rights or remedies hereunder, except as specifically provided in\nSection 5.10.\n\n         VIII.6  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\nagree to replace such void or unenforceable provision of this Agreement with\n\n\n                                      -53-\n   58\na valid and enforceable provision that will achieve, to the extent possible, the\neconomic, business and other purposes of such void or unenforceable provision.\n\n         VIII.7  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.\n\n         VIII.8  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\nof law thereof; provided that issues involving the corporate governance of any\nof the parties hereto shall be governed by their respective jurisdictions of\nincorporation.  Each of the parties hereto irrevocably consents to the\nexclusive jurisdiction of any state or federal court within the Southern\nDistrict of California, in connection with any matter based upon or arising out\nof this Agreement or the matters contemplated herein, other than issues\ninvolving the corporate governance of any of the parties hereto, agrees that\nprocess may be served upon them in any manner authorized by the laws of the\nState of California for such persons, and waives and covenants not to assert or\nplead any objection which they might otherwise have to such jurisdiction and\nsuch process.\n\n         VIII.9  Rules of Construction.  The parties hereto agree that they\nhave been represented by counsel during the negotiation and execution of this\nAgreement and, therefore, 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.\n\n         VIII.10 Assignment.  No party may assign either this Agreement or any\nof its rights, interests, or obligations hereunder without the prior written\napproval of the other parties.  Subject to the preceding sentence, this\nAgreement shall be binding upon and shall inure to the benefit of the parties\nhereto and their respective successors and permitted assigns.\n\n         VIII.11 Waiver of Jury Trial.  EACH OF PARENT, THE COMPANY AND MERGER\nSUB HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,\nPROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)\nARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF PARENT, THE\nCOMPANY OR MERGER SUB IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND\nENFORCEMENT HEREOF.\n\n\n                                      -54-\n   59\n\n                                     *****\n\n\n                                      -55-\n   60\n         IN WITNESS WHEREOF, Parent, Merger Sub, and the Company have caused\nthis Agreement to be signed as of the date first written above.\n\nPEREGRINE SYSTEMS, INC.                      INNOVATIVE TECH SYSTEMS, INC.\na Delaware Corporation                       an Illinois Corporation\n\n     \/s\/ Stephen P. Gardner                        \/s\/ William M. Thompson\nBy  _______________________________          By  _______________________________\n    Stephen P. Gardner                           William M. Thompson\n    President and Chief Executive Officer        Chairman and Chief Executive\n                                                 Officer\n\n                                             HOMER ACQUISITION CORPORATION\n                                             a Delaware Corporation\n\n                                                  \/s\/ Stephen P. Gardner\n                                             By ________________________________\n                                                 Stephen P. Gardner\n                                                 President and Chief Executive\n                                                 Officer\n\n\n\n\n\n            [Signature Page to Agreement and Plan of Reorganization]\n\n<\/pre>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[7861,8493],"corporate_contracts_industries":[9513],"corporate_contracts_types":[9622,9626],"class_list":["post-43201","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-innovative-tech-systems-inc","corporate_contracts_companies-peregrine-systems-inc","corporate_contracts_industries-technology__software","corporate_contracts_types-planning","corporate_contracts_types-planning__merger"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/43201","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=43201"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=43201"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=43201"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=43201"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}