\nARTICLE VI TERMINATION, AMENDMENT AND WAIVER…………………………………………….33<\/p>\n 6.1 Termination…………………………………………………………….33
\n 6.2 Effect of Termination……………………………………………………34
\n 6.3 Amendment………………………………………………………………34
\n 6.4 Extension; Waiver……………………………………………………….34<\/p>\n
ARTICLE VII GENERAL PROVISIONS…………………………………………………………34<\/p>\n
7.1 Notices………………………………………………………………..34
\n 7.2 Interpretation………………………………………………………….35
\n 7.3 Counterparts……………………………………………………………35
\n 7.4 Miscellaneous…………………………………………………………..36
\n 7.5 Governing Law…………………………………………………………..36
\n 7.6 Attorneys’ Fees…………………………………………………………36
\n 7.7 Resolution of Disputes; Stipulation Regarding Confidentiality………………..36
\n 7.8 Rules of Construction……………………………………………………36
\n<\/c><\/c><\/s><\/table>\n
-iii-
\n 5<\/p>\n
AGREEMENT AND PLAN OF REORGANIZATION<\/p>\n
This AGREEMENT AND PLAN OF REORGANIZATION (the “Agreement”) is made and
\nentered into as of December 11, 1999, by and among (i) Sagent Technology, Inc.,
\na Delaware corporation (“Parent”), (ii) Floco Acquisition Corp., a Delaware
\ncorporation (“Merger Sub”) and a wholly owned subsidiary of Parent, (iii)
\nQualitative Marketing Software, Inc., a Delaware corporation (the “Company”),
\nand (iv) Paul Wray, George Rebhan and J. Beach Clow each individually as
\nstockholders of the Company (the “Major Stockholders”).<\/p>\n
RECITALS
\nA. The Boards of Directors of each of the Company, Parent and Merger Sub believe
\nthat it is in the best interests of each company and their respective
\nstockholders that the Company and Merger Sub combine into a single company
\nthrough the statutory merger of the Merger Sub with and into the Company in
\naccordance with the terms and conditions contained herein (the “Merger”) and, in
\nfurtherance thereof, have approved the Merger.<\/p>\n
B. The Company has 80,013 shares of common stock, par value $1.00
\n per share (the “Company Common Stock”), and 357.08 shares of
\n preferred stock, par value $100.00 per share (the “Company
\n Preferred Stock”), issued and outstanding as of the date hereof
\n and held of record by those individuals listed on Exhibit A
\n (collectively, the “Stockholders”).<\/p>\n
C. As of the date hereof, the Company has 16,912 shares of Company
\n Common Stock (the “Option Shares”) subject to unexercised options
\n (each, a “Company Option”) granted by the Company to those
\n individuals listed on Exhibit A (collectively, the “Option
\n Holders”).<\/p>\n
D. Pursuant to the Merger, among other things, (i) the outstanding
\n shares of Company Common Stock shall be converted into shares of
\n the common stock, par value $0.001 per share, of Parent (the
\n “Parent Common Stock”) at the rate determined herein, (ii) the
\n outstanding shares of Company Preferred Stock shall be converted
\n into shares of Parent Common Stock at the rate determined herein,
\n and (iii) the outstanding Company Options shall be assumed by
\n Parent and converted into options to purchase Parent Common Stock
\n at the rate determined herein.<\/p>\n
E. The Company, Parent and Merger Sub desire to make certain
\n representations, warranties, covenants and other agreements in
\n connection with the Merger and the other transactions
\n contemplated hereby.<\/p>\n
F. The parties intend, by executing this Agreement, to adopt a plan
\n of reorganization within the meaning of Section 368 of the
\n Internal Revenue Code of 1986, as amended (the “Code”).<\/p>\n
6<\/p>\n
G. Concurrently herewith, the Major Stockholders have entered into,
\n executed and delivered to Parent the Noncompetition Agreements,
\n substantially in the form attached hereto as Exhibit D.<\/p>\n
NOW, THEREFORE, in consideration of the covenants, promises and representations
\nset forth herein, and for other good and valuable consideration, the receipt and
\nsufficiency of which is hereby acknowledged, the parties agree as follows:<\/p>\n
ARTICLE I
\n THE MERGER<\/p>\n
1.1 The Merger. At the Effective Time (as defined in Section 1.2) and
\nsubject to and upon the terms and conditions of this Agreement, the Certificate
\nof Merger attached hereto as Exhibit B (the “Certificate of Merger”) and the
\napplicable provisions of the Delaware General Corporation Law (“Delaware Law”),
\nthe Merger Sub shall be merged with and into the Company, the separate corporate
\nexistence of the Merger Sub shall cease and the Company shall continue as the
\nsurviving corporation under the laws of the State of Delaware. As a result of
\nthe Merger, the Company shall become a wholly owned, direct subsidiary of
\nParent. The Company as the surviving corporation after the Merger is hereinafter
\nsometimes referred to as the “Surviving Corporation.”<\/p>\n
1.2 Closing; Effective Time. The Closing of the transactions
\ncontemplated hereby (the “Closing”) shall take place at 3:00 p.m., California
\ntime at the offices of Wilson Sonsini Goodrich & Rosati, P.C., 650 Page Mill
\nRoad, Palo Alto, California, 94304 on December 11, 1999, or at such other time,
\ndate and location as the parties hereto agree (the “Closing Date”). On the next
\nbusiness day after the Closing Date, the parties hereto shall cause the Merger
\nto be consummated by filing the Certificate of Merger with the Secretary of
\nState of the State of Delaware, in accordance with the relevant provisions of
\nDelaware Law. The Merger shall become effective immediately upon the filing of
\nthe Certificate of Merger with the Secretary of State of the State of Delaware
\n(the “Effective Time”).<\/p>\n
1.3 Effect of the Merger. At the Effective Time, the effect of the
\nMerger shall be as provided in this Agreement, the Certificate of Merger and the
\napplicable provisions of Delaware Law. Without limiting the generality of the
\nforegoing, and subject thereto, at the Effective Time all the property, rights,
\nprivileges, powers and franchises of the Company and Merger Sub shall vest in
\nthe Surviving Corporation, and all debts, liabilities and duties of the Company
\nand Merger Sub shall become the debts, liabilities and duties of the Surviving
\nCorporation.<\/p>\n
1.4 Certificate of Incorporation; Bylaws.<\/p>\n
(a) Unless otherwise determined by Parent prior to the Closing,
\nat the Effective Time, the Certificate of Incorporation of Merger Sub shall be
\nthe Certificate of Incorporation of the Surviving Corporation until thereafter
\namended as provided by Delaware Law and such Certificate of Incorporation;
\nprovided, however, that Article I of the Certificate of Incorporation of the
\nMerger<\/p>\n
-2-
\n 7<\/p>\n
Sub shall be amended to read as follows: “The name of the corporation is
\nQualitative Marketing Software, Inc.”<\/p>\n
(b) At the Effective Time, the Bylaws of Merger Sub, as in effect
\nimmediately prior to the Effective Time, shall be the Bylaws of the Surviving
\nCorporation until thereafter amended as provided by Delaware Law and such
\nBylaws.<\/p>\n
1.5 Directors and Officers. The directors of Merger Sub immediately
\nprior to the Effective Time shall be the initial directors of the Surviving
\nCorporation as of the Effective Time, each to hold office in accordance with the
\nCertificate of Incorporation and Bylaws of the Surviving Corporation. The
\nofficers of Merger Sub immediately prior to the Effective Time shall be the
\ninitial officers of the Surviving Corporation as of the Effective Time, each to
\nhold office in accordance with the Bylaws of the Surviving Corporation.<\/p>\n
1.6 Effect on Capital Stock. At the Effective Time, by virtue of the
\nMerger and without any action on the part of Merger Sub, the Company, the Option
\nHolders and the Stockholders, the following shall occur:<\/p>\n
(a)(i) Conversion of Company Common Stock and Company Preferred
\nStock. Each share of Company Common Stock issued and outstanding immediately
\nprior to the Effective Time (other than any Dissenting Shares (as defined and to
\nthe extent provided in Section 1.7(a) and the shares held in treasury) will be
\ncancelled and extinguished and be converted automatically into the right to
\nreceive a number of shares of Parent Common Stock equal to (i) (A)
\n$59,964,225.00 divided by (B) the average of the closing prices (the “Average
\nPrice”) of the Parent Common Stock traded on the NASDAQ National Market System
\nfor the 20 trading days prior to the Effective Time (ii) divided by the sum of
\n(A) the total number of shares of Company Common Stock outstanding as of the
\nEffective Time plus (B) the total number of Option Shares outstanding as of the
\nEffective Time. Such quotient shall be referred to in this Agreement as the
\n“Common Exchange Ratio.” Each share of Company Preferred Stock issued and
\noutstanding immediately prior to the Effective Time (other than any Dissenting
\nShares, (as defined and to the extent provided in Section 1.7(a)) will be
\ncancelled and extinguished and be converted automatically into the right to
\nreceive a number of shares of Parent Common Stock equal to (i) (A) $35,775.00
\ndivided by (B) the Average Price divided by (ii) 357.08. Such quotient shall be
\nreferred to herein as the “Preferred Exchange Ratio.” For purpose of this
\nAgreement, the Common Exchange Ratio and the Preferred Exchange Ratio shall be
\nreferred to collectively as the “Exchange Ratio.” The Average Price, the Common
\nExchange Ratio and the Preferred Exchange Ratio are set forth on Exhibit A
\nhereto.<\/p>\n
(ii) Acquisition of Company Options. At the Effective Time,
\neach outstanding option to purchase shares of Company Common Stock (each a
\n“Company Option”) under the option agreements on Section 2.14(e) of the
\nDisclosure Schedule (the “Company Option Agreements”) entered into between the
\nCompany and its Option Holders, will be assumed by Parent. Each Company Option
\nso assumed by Parent under this Agreement shall continue to have, and be subject
\nto, the same terms and conditions set forth in the Company Option Agreements
\nimmediately prior to<\/p>\n
-3-
\n 8<\/p>\n
the Effective Time, except that (i) such Company Option will be exercisable for
\nthat number of whole shares of Parent Common Stock equal to the product of the
\nnumber of shares of Company Common Stock that were issuable upon exercise of
\nsuch Company Option immediately prior to the Effective Time (thus treating all
\nsuch Company Options as being fully vested immediately prior to the Effective
\nTime in the amount of shares of Company Common Stock set forth on Exhibit A)
\nmultiplied by the Common Exchange Ratio, rounded down to the nearest whole
\nnumber of shares of Parent Common Stock, and (ii) the per share exercise price
\nfor the shares of Parent Common Stock issuable upon exercise of such assumed
\nCompany Option will be equal to the quotient determined by dividing the exercise
\nprice per share of Company Common Stock at which such Company Option was
\nexercisable immediately prior to the Effective Time by the Common Exchange
\nRatio, rounded up to the nearest whole cent. Promptly after the Effective Time,
\nParent will issue to each Option Holder a document evidencing the foregoing
\nassumption of such Company Option by Parent.<\/p>\n
(b) Capital Stock of Merger Sub. Each share of common stock,
\n$0.001 par value, of Merger Sub issued and outstanding immediately prior to the
\nEffective Time shall be converted into and exchanged for one validly issued,
\nshare of common stock of the Surviving Corporation.<\/p>\n
(c) Adjustments to Exchange Ratio. The Exchange Ratio shall be
\nadjusted to reflect fully the effect of any stock split, reverse split, stock
\ndividend (including any dividend or distribution of securities convertible into
\nParent Common Stock or Company Common Stock or Company Preferred Stock),
\nreorganization, recapitalization or other like change with respect to Parent
\nCommon Stock or Company Common Stock or Company Preferred Stock occurring after
\nthe date hereof and prior to the Effective Time.<\/p>\n
(d) Fractional Shares. No fraction of a share of Parent Common
\nStock will be issued, but in lieu thereof each holder of shares of Company
\nCommon Stock or Company Preferred 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 to be received by such holder) shall receive from
\nParent promptly after the Effective Time an amount of cash (rounded to the
\nnearest whole cent) equal to the product of (i) such fraction, multiplied by
\n(ii) the Average Price.<\/p>\n
1.7 Dissenting Shares.<\/p>\n
(a) Notwithstanding any provision of this Agreement to the
\ncontrary, any shares of capital stock of the Company held by a holder who has
\nperfected appraisal rights for such shares in accordance with Delaware Law
\n(“Dissenting Shares”) shall not be converted into or represent a right to
\nreceive Parent Common Stock pursuant to Section 1.6, but the holder thereof
\nshall only be entitled to such appraisal rights as are granted pursuant to
\nDelaware Law.<\/p>\n
(b) Notwithstanding the provisions of Section 1.7(a), if any
\nholder of Dissenting Shares shall effectively withdraw or lose (through failure
\nto perfect or otherwise) his or her appraisal rights, then, as of the later of
\nthe Effective Time or the occurrence of such event, such holder’s shares shall
\nautomatically be converted into and represent only the right to receive Parent
\nCommon<\/p>\n
-4-
\n 9<\/p>\n
Stock, cash for fractional shares, if any, as may be required pursuant to
\nSection 1.6(d) and any dividends or distributions payable pursuant to Section
\n1.8(e), in each case without interest thereon, upon surrender of the certificate
\nrepresenting such shares.<\/p>\n
(c) The Company shall give Parent (i) prompt notice of any
\nwritten demand received by the Company to require the Company to purchase shares
\nof the Company Common Stock or Company Preferred Stock pursuant to the
\napplicable provisions of Delaware Law and (ii) the opportunity to participate in
\nall negotiations and proceedings with respect to such demands. Unless otherwise
\nrequired by Delaware Law, the Company shall not, except with the prior written
\nconsent of Parent, voluntarily make any payment with respect to any such demands
\nor offer to settle or settle any such demands. 1.8 Surrender of Certificates.<\/p>\n
(a) Exchange Agent. ChaseMellon Shareholder Services, L.L.C.
\nshall act as exchange agent (the “Exchange Agent”) in the Merger.<\/p>\n
(b) Parent to Provide Parent Common Stock. Promptly after the
\nEffective Time, Parent shall make available to the Exchange Agent for exchange
\nin accordance with this Article I, the shares of Parent Common Stock issuable
\npursuant to Section 1.6 in exchange for outstanding shares of Company Common
\nStock and Company Preferred Stock.<\/p>\n
(c) Exchange Procedures. At or before the Effective Time, each
\nholder of a certificate or certificates (the “Certificates”) which immediately
\nprior to the Effective Time represented outstanding shares of Company Common
\nStock or Company Preferred Stock shall surrender to the Parent for cancellation
\nthe Certificates, duly endorsed to Parent or accompanied by duly executed stock
\npowers or assignments separate from certificate transferring title to such
\nshares to Parent. Promptly after the Effective Time, and against receipt of such
\nCertificates, the Parent or Exchange Agent, as the case may be, shall issue to
\neach tendering holder of a Certificate a certificate for the number of shares of
\nParent Common Stock to which such holder is entitled pursuant to the Merger,
\ncash for fractional shares, if any, as may be required pursuant to Section
\n1.6(d) and any dividends or distributions payable pursuant to Section 1.8(e) and
\nthe Certificate so surrendered shall forthwith be cancelled.
\nTo the extent that any holder of a Certificate does not so surrender such
\nCertificate at or before the Effective Time, then promptly after the Effective
\nTime, the Surviving Corporation shall cause to be mailed to each such holder of
\nrecord of a Certificate or Certificates, (i) a letter of transmittal (which
\nshall specify that delivery shall be effected, and risk of loss and title to the
\nCertificates shall pass, only upon delivery of the Certificates to the Exchange
\nAgent and shall be in such form and have such other provisions as Parent may
\nreasonably specify) and (ii) instructions for use in effecting the surrender of
\nthe Certificates in exchange for certificates representing shares of Parent
\nCommon Stock, cash for fractional shares, if any, as may be required pursuant to
\nSection 1.6(d) and any dividends or distributions payable pursuant to Section
\n1.8(e). Upon surrender of a Certificate for cancellation to the Exchange Agent
\nafter the Effective Time, or to such other agent or agents as<\/p>\n
-5-
\n 10<\/p>\n
may be appointed by Parent, together with such letter of transmittal, duly
\ncompleted and validly executed in accordance with the instructions thereto, the
\nholder of such Certificate shall be entitled to receive in exchange therefore a
\ncertificate representing the number of whole shares of Parent Common Stock to
\nwhich such holder is entitled pursuant to the Merger, cash for fractional
\nshares, if any, as may be required pursuant to Section 1.6(d) and any dividends
\nor distributions payable pursuant to Section 1.8(e) and the Certificate so
\nsurrendered shall forthwith be cancelled. Until so surrendered, each outstanding
\ncertificate that, prior to the Effective Time, represented shares of Company
\nCommon Stock or Company Preferred Stock will be deemed from and after the
\nEffective Time, for all corporate purposes, other than the payment of dividends,
\nto evidence the ownership of the number of full shares of Parent Common Stock
\ninto which such shares of Company Common Stock or Company Preferred Stock shall
\nhave been so converted and the right to receive an amount in cash in lieu of the
\nissuance of any fractional shares in accordance with Section 1.6(d).<\/p>\n
(d) Delivery of Parent Common Stock. The Parent Common Stock to
\nbe issued pursuant to the share exchange under Section 1.8(c) shall be delivered
\nto the holders of Certificates in such denominations as set forth on Exhibit A
\nhereto.<\/p>\n
(e) 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 holder of any unsurrendered Certificate with
\nrespect to the shares of Parent Common Stock represented thereby until the
\nholder of record of such Certificate shall surrender such Certificate. Subject
\nto applicable law, following surrender of any such Certificate, there shall be
\npaid to the record holder of the certificates representing whole shares of
\nParent Common Stock issued in exchange therefor, without interest, at the time
\nof such surrender, the amount of dividends or other distributions with a record
\ndate after the Effective Time theretofore paid with respect to such whole shares
\nof Parent Common Stock.<\/p>\n
(f) Transfers of Ownership. If any certificate for shares of
\nParent Common Stock is to be issued in a name other than that in which the
\nCertificate surrendered in exchange therefore is registered, it will be a
\ncondition of the issuance thereof that the Certificate so surrendered will be
\nproperly endorsed and otherwise in proper form for transfer and that the person
\nrequesting such exchange will have paid to Parent or any agent designated by it
\nany transfer or other taxes required by reason of the issuance of a certificate
\nfor shares of Parent Common Stock in any name other than that of the registered
\nholder of the Certificate surrendered, or established to the satisfaction of
\nParent or any agent designated by it that such tax has been paid or is not
\npayable.<\/p>\n
(g) No Liability. Notwithstanding anything to the contrary in
\nthis Section 1.8, none of the Exchange Agent, the Parent, the Surviving
\nCorporation or any party hereto shall be liable to a holder of shares of Parent
\nCommon Stock, Company Common Stock or Company Preferred Stock for any amount
\nproperly paid to a public official pursuant to any applicable abandoned
\nproperty, escheat or similar law. <\/p>\n
1.9 No Further Ownership Rights in Company Common Stock or Company
\nPreferred Stock. All shares of Parent Common Stock issued upon the surrender for
\nexchange of shares of Company<\/p>\n
-6-
\n 11<\/p>\n
Common Company Stock or Company Preferred Stock in accordance with the terms
\nhereof (including any cash paid in respect thereof) shall be deemed to have been
\nissued in full satisfaction of all rights pertaining to such shares of Company
\nCommon Stock and Company Preferred Stock and, from and after the Effective Time,
\nthere shall be no further registration of transfers on the records of the
\nSurviving Corporation of shares of Company Common Stock and Company Preferred
\nStock which were outstanding immediately prior to the Effective Time. If, after
\nthe Effective Time, Certificates are presented to the Surviving Corporation for
\nany reason, they shall be cancelled and exchanged as provided in this Article I.<\/p>\n
1.10 Lost, Stolen or Destroyed Certificates. In the event any
\ncertificates evidencing shares of Company Common Stock or Company Preferred
\nStock shall have been lost, stolen or destroyed, the Exchange Agent shall issue
\nin exchange for such lost, stolen or destroyed certificates, upon the making of
\nan affidavit of that fact by the holder thereof, such shares of Parent Common
\nStock and cash for fractional shares, if any, as may be required pursuant to
\nSection 1.6(d) and any dividends or distributions payable pursuant to Section
\n1.8(e); provided, however, that Parent may, in its discretion and as a condition
\nprecedent to the issuance thereof, require the owner of such lost, stolen or
\ndestroyed certificates to deliver a bond in such sum as it may reasonably direct
\nas indemnity 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.<\/p>\n
1.11 Taking of Necessary Action; Further Action. If, at any time after
\nthe Effective Time, any further action is necessary or desirable to carry out
\nthe purposes of this Agreement and to vest the Surviving Corporation with full
\nright, title and possession to all assets, property, rights, privileges, powers
\nand franchises of the Company and Merger Sub, the officers and directors of the
\nCompany and Merger Sub are fully authorized in the name of their respective
\ncorporations or otherwise to take, and will take, all such lawful and necessary
\naction, so long as such action is consistent with this Agreement.<\/p>\n
ARTICLE II
\n REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE MAJOR
\n STOCKHOLDERS<\/p>\n
As of the Closing Date (unless otherwise indicated herein), the Company and the
\nMajor Stockholders represent and warrant to Parent and Merger Sub, subject to
\nthe exceptions set forth in the Disclosure Schedule attached hereto as Exhibit C
\n(the “Disclosure Schedule”), as set forth below in this Article II. Whenever the
\nwords “to the knowledge of” or “known to” or similar phrases are used in this
\nArticle II with respect to a particular fact or circumstance, they shall mean
\n(even if the knowledge is attributed in this Article II solely to the Company)
\nactual knowledge of any of the Major Stockholders of such particular fact or
\ncircumstance, or knowledge by any of the Major Stockholders of other facts or
\ncircumstances from which a reasonable person should have known of such
\nparticular fact or circumstance. The disclosures made on the Disclosure Schedule
\nshall not,<\/p>\n
-7-
\n 12<\/p>\n
by the fact of their disclosure, be deemed to acknowledge that disclosure of
\nsuch information is required under this Article II. To the extent a disclosure
\nitem is included on one Section of the Disclosure Schedule, it shall not be
\nnecessary for the Company to repeat it on a separate Section of the Disclosure
\nSchedule. <\/p>\n
2.1 Organization of the Company. The Company is a corporation duly
\norganized, validly existing and in good standing under the laws of the State of
\nDelaware. The Company has the requisite corporate power to own its property and
\nto carry on its business as it is now being conducted and as proposed to be
\nconducted by the Company. The Company is duly qualified or licensed to do
\nbusiness and is in good standing as a foreign corporation in each jurisdiction
\nwhere the character of the properties owned, leased or operated by it or the
\nnature of its activities makes such qualification or licensing necessary, except
\nas set forth on Section 2.1 of the Disclosure Schedule and except where the
\nfailure to be so duly qualified or licensed would not have a Material Adverse
\nEffect on the Company. For purposes of this Agreement, the term “Material
\nAdverse Effect” means any occurrence or effect that would be reasonably likely
\nto have a material adverse effect on the business, assets (including intangible
\nassets), financial condition or results of operations of the party to this
\nAgreement referred to. The Company has made available to Parent at the Closing a
\ntrue and correct copy of its Certificate of Incorporation and Bylaws, each as
\namended to date.<\/p>\n
2.2 Company Capital Structure. The authorized capital stock of the
\nCompany consists of 100,000 shares of Company Common Stock and 357.08 shares of
\nCompany Preferred Stock. As of the date hereof, there are 80,013 shares of
\nCompany Common Stock and 357.08 shares of Company Preferred Stock issued and
\noutstanding held by the persons, and in the amounts, set forth in Section 2.2 of
\nthe Disclosure Schedule. As of the date hereof, there are 356 shares of Company
\nCommon Stock held in treasury. As of the date hereof, there are 16,912 shares of
\nthe Company Common Stock reserved for issuance upon the exercise of the Company
\nOptions. Section 2.2 of the Disclosure Schedule sets forth the following
\ninformation with respect to each such Company Option: (i) the date on which each
\nsuch Company Option was granted; (ii) the number of shares of Company Common
\nStock subject to each such Company Option; (iii) the exercise price for each
\nsuch Company Option; and (vi) the name of the Option Holder. The Company has
\nmade available to Parent accurate and complete copies of all Company Option
\nAgreements evidencing the Company Options listed on Section 2.2 of the
\nDisclosure Schedule. Except as set forth in Section 2.2 of the Disclosure
\nSchedule, all outstanding shares of Company Common Stock and Company Preferred
\nStock have been duly authorized and validly issued, and are fully paid and
\nnon-assessable and not subject to preemptive rights created by statute, the
\nCertificate of Incorporation or Bylaws of the Company or any agreement to which
\nthe Company is a party or by which it is bound. Except as set forth in Section
\n2.2 of the Disclosure Schedule, there are no other options, warrants, calls,
\nrights, commitments or agreements of any character to which the Company is a
\nparty or by which it is bound obligating the Company to issue, deliver, sell,
\nrepurchase or redeem, or cause to be issued, delivered, sold, repurchased or
\nredeemed, any shares of the capital stock of the Company or obligating the
\nCompany to grant, extend, accelerate the vesting of, change the price of, or
\notherwise amend or enter into any such option, warrant, call, right, commitment
\nor agreement.<\/p>\n
-8-
\n 13<\/p>\n
2.3 Subsidiaries and Investments. Set forth in Section 2.3 of the
\nDisclosure Schedule is a list of each of the Company’s subsidiaries (the
\n“Subsidiaries” and individually a “Subsidiary”). Each Subsidiary is a
\ncorporation duly organized, validly existing and in good standing under the laws
\nof the jurisdiction of its incorporation (as set forth in Section 2.3 of the
\nDisclosure Schedule), and has the requisite corporate power to own or lease all
\nof its property and to carry on its business as it is now being conducted. Also
\nset forth in Section 2.3 of the Disclosure Schedule is a list of jurisdictions
\nin which each Subsidiary is qualified or licensed to do business as a foreign
\ncorporation. Such jurisdictions are the only jurisdictions where the character
\nof the properties owned, leased or operated by each Subsidiary or the nature of
\nits activities makes such qualification or licensing necessary, except where the
\nfailure to be so duly qualified or licensed would not have a Material Adverse
\nEffect on the Subsidiary and the Company, taken as a whole. All of the
\noutstanding shares of capital stock of each Subsidiary have been duly authorized
\nand validly issued, are fully paid and nonassessable, and are owned, of record
\nand beneficially, by the Company, free and clear of all liens, encumbrances,
\nequities, options or claims whatsoever. Except for the shares of capital stock
\nof each Subsidiary issued in the Company’s name, no Subsidiary has outstanding
\nany other equity securities or securities options, warrants or rights of any
\nkind, convertible into, exchangeable for, or otherwise entitling any person to
\nacquire, equity securities of such Subsidiary. Neither the Company nor any
\nSubsidiary owns, directly or indirectly, any capital stock or other equity or
\nownership or proprietary interest in any other corporation, partnership,
\nassociation, trust, joint venture or other entity.<\/p>\n
2.4 Authority. The Company has all requisite corporate power and
\nauthority to enter into this Agreement and the other documents contemplated
\nhereunder to which the Company will be a party (collectively, the “Company
\nTransaction Documents”) and, subject only to the approval of the Merger by the
\nStockholders under the provisions of Delaware Law, the Company’s Certificate of
\nIncorporation and the Stock Restriction and Retirement Agreement (as listed on
\nSection 2.2 of the Disclosure Schedule), to consummate the transactions
\ncontemplated hereby and thereby. The execution and delivery of this Agreement
\nand the Company Transaction Documents by the Company and the consummation by the
\nCompany of the transactions contemplated hereby and thereby have been duly
\nauthorized by all necessary corporate action on the part of the Company. This
\nAgreement has been duly executed and delivered by the Company and , assuming the
\ndue authorization, execution and delivery by Parent and Merger Sub, constitutes
\nthe valid and binding obligation of the Company, enforceable against the Company
\nin accordance with its terms, subject to (i) laws of general application
\nrelating to bankruptcy, insolvency and the relief of debtors, and (ii) rules of
\nlaw governing specific performance, injunctive relief and other equitable
\nremedies. Each of the Company Transaction Documents, when executed and delivered
\nby the Company shall be, assuming the due authorization, execution and delivery
\nby Parent and Merger Sub if applicable, the valid and binding obligation of the
\nCompany, enforceable against the Company in accordance with its terms, subject
\nto (i) laws of general application relating to bankruptcy, insolvency and the
\nrelief of debtors, and (ii) rules of law governing specific performance,
\ninjunctive relief and other equitable remedies.<\/p>\n
2.5 No Conflict; No Default; Consents. Except as set forth in Section
\n2.5 of the Disclosure Schedule, the execution and delivery of this Agreement by
\nthe Company do not and the Company Transaction Documents when executed and
\ndelivered by the Company will not, and the consummation of the transactions
\ncontemplated hereby and thereby by the Company will not,<\/p>\n
-9-
\n 14<\/p>\n
conflict with, or result in any violation of, or default under (with or without
\nnotice or lapse of time, or both), or give rise to a right of termination,
\ncancellation or acceleration of any obligation or loss of any benefit under (i)
\nany provision of the Certificate of Incorporation or Bylaws, each as amended as
\nof the date hereof, of the Company, (ii) any material mortgage, indenture,
\nlease, contract or other agreement or instrument, permit, concession, franchise,
\nor license to which the Company or any of its properties or assets are subject,
\nor (iii) any judgment, order, decree, statute, law, ordinance, rule or
\nregulation applicable to the Company or its properties or assets except to the
\nextent such conflict, violation, default or other effect would not, in the case
\nof clauses (ii) and (iii) above, have a Material Adverse Effect on the Company
\nor would not prevent, prohibit or materially obstruct the ability of any of the
\nCompany, Major Stockholders, Parent or Merger Sub to consummate the transactions
\ncontemplated hereby or in any of the Company Transaction Documents. Except as
\nset forth in Section 2.5 of the Disclosure Schedule, no consent, waiver,
\napproval, order or authorization of, or registration, declaration or filing
\nwith, any court, administrative agency or commission or other governmental
\nauthority or instrumentality (“Governmental Entity”), or any third party,
\nincluding a party to any agreement with the Company, is required by or with
\nrespect to the Company in connection with the execution and delivery of this
\nAgreement, any Company Transaction Document or the consummation of the
\ntransactions contemplated hereby or thereby, except for (i) the filing of the
\nCertificate of Merger with the Delaware Secretary of State, (ii) such consents,
\napprovals, orders, authorizations, registrations, declarations and filings as
\nmay be required under applicable federal and state securities laws and the laws
\nof any foreign country, (iii) the approval of this Agreement and the Merger by
\nthe Stockholders (which approval must include approval by Stockholders holding
\nmore than 60% of the outstanding shares of the Company Common Stock and by the
\nStockholder holding the outstanding shares of the Company Preferred Stock), and
\n(iv) such other consents, authorizations, waivers, filings, approvals,
\nregistrations, orders and declarations which, if not obtained or made, would not
\nhave a Material Adverse Effect on the Company or would not prevent or materially
\ndelay consummation of the Merger or otherwise prevent the Company from
\nperforming its obligations under this Agreement.<\/p>\n
2.6 Intentionally Omitted.<\/p>\n
2.7 Company Financial Statements. Section 2.7 of the Disclosure Schedule
\nsets forth the Company’s audited consolidated balance sheet as of December 31,
\n1998 and the related audited consolidated statements of income and cash flows
\nfor the twelve-month period ended December 31, 1998 (the “Year-End Financials”)
\nand the Company’s unaudited consolidated balance sheet as of September 30, 1999,
\nand the related unaudited statements of income and cash flows for the nine-month
\nperiod ended September 30, 1999 (the “Interim Financials”). Except as set forth
\non Section 2.7 of the Disclosure Schedule, the Year-End Financials are correct
\nin all material respects and have been prepared in accordance with GAAP applied
\non a basis consistent throughout the periods indicated therein (except as may be
\nindicated in the notes thereto). Except as set forth on Section 2.7 of the
\nDisclosure Schedule, the Interim Financials are correct in all material respects
\nand have been prepared in accordance with GAAP applied on a basis consistent
\nthroughout the periods indicated therein, subject to normal year-end
\nadjustments. The Year-End Financials and the Interim Financials present fairly
\nin all material respects the consolidated financial condition and consolidated
\noperating results of the Company and any consolidated Subsidiaries as of the
\ndates and during the periods indicated therein. The Company’s unaudited balance
\nsheet as of September 30, 1999 shall be hereinafter referred to as the “Company
\nCurrent Balance Sheet.”<\/p>\n
-10-
\n 15<\/p>\n
2.8 No Undisclosed Liabilities. The Company does not have any
\nliabilities, either accrued or contingent (whether or not required to be
\nreflected in financial statements in accordance with generally accepted
\naccounting principles), and whether due or to become due, which individually or
\nin the aggregate are material and (i) have not been reflected in the Company
\nCurrent Balance Sheet, (ii) have not been specifically described in this
\nAgreement or in Section 2.8 of the Disclosure Schedule or elsewhere on the
\nDisclosure Schedule or (iii) are not normal or recurring liabilities incurred
\nsince September 30, 1999 in the ordinary course of business consistent with past
\npractices.<\/p>\n
2.9 No Changes. Except as disclosed on Section 2.9 of the Disclosure
\nSchedule, since the date of the Company Current Balance Sheet, there has not
\nbeen, occurred or arisen any:<\/p>\n
(a) material adverse change in the financial condition,
\nliabilities, assets or business of the Company;<\/p>\n
(b) amendments or changes in the Certificate of Incorporation or
\nBylaws of the Company;<\/p>\n
(c) capital expenditure by the Company, either individually or in
\nthe aggregate, exceeding $5,000;<\/p>\n
(d) destruction, damage to, or loss of any assets of the Company
\n(whether or not covered by insurance) that constitutes a Material Adverse Effect
\non the Company;<\/p>\n
(e) labor trouble or claim of wrongful discharge of which the
\nCompany has received written notice or which is known to the Company, or other
\nunlawful labor practice or action;<\/p>\n
(f) change in accounting methods or practices (including any
\nchange in depreciation or amortization policies or rates) by the Company or any
\nnegotiations or discussions relating thereto;<\/p>\n
(g) revaluation by the Company of any of its assets;<\/p>\n
(h) declaration, setting aside, or payment of a dividend or other
\ndistribution with respect to the shares of capital stock of the Company, or any
\ndirect or indirect redemption, purchase or other acquisition by the Company of
\nany of its shares of capital stock;<\/p>\n
(i) increase in the salary or other compensation payable or to
\nbecome payable by the Company to any of its officers, directors or employees, or
\nthe declaration, payment, or commitment or obligation of any kind for the
\npayment, by the Company, of a bonus or other additional salary or compensation
\nto any such person , except for normal increases of cash compensation and
\nbonuses as set forth on Section 2.9(i) of the Disclosure Schedule;<\/p>\n
(j) acquisition, sale or transfer of any material asset of the
\nCompany other than in the ordinary course of business;<\/p>\n
-11-
\n 16<\/p>\n
(k) amendment or termination of any material contract, agreement
\nor license to which the Company is a party;<\/p>\n
(l) loan by the Company to any person or entity, or guaranty by
\nthe Company of any loan;<\/p>\n
(m) waiver or release of any material right or claim of the
\nCompany in excess of $10,000 on an individual basis, including any write-off or
\nother compromise of any account receivable of the Company;<\/p>\n
(n) the commencement or notice or threat of commencement of any
\ngovernmental proceeding against or investigation of the Company or its affairs,
\nto the best of the Company’s knowledge;<\/p>\n
(o) other event or condition of any character that has or might
\nreasonably be expected to have a Material Adverse Effect on the Company; or<\/p>\n
(p) issuance or sale by the Company of any of its shares or of
\nany other of its securities except the grant of Company Options as set forth on
\nSection 2.2 of the Disclosure Schedule.<\/p>\n
2.10 Tax and Other Returns and Reports.<\/p>\n
(a) Definition of Taxes. For the purposes of this Agreement,
\n“Tax” or, collectively, “Taxes” means any and all federal, state, local and
\nforeign taxes, assessments and other governmental charges, duties, impositions
\nand liabilities relating to taxes, including taxes based upon or measured by
\ngross receipts, income, profits, sales, use and occupation, and value added, ad
\nvalorem, transfer, franchise, withholding, payroll, recapture, employment,
\nexcise and property taxes, together with all interest, penalties and additions
\nimposed with respect to such amounts and any obligations under any agreements or
\narrangements with any other person with respect to such amounts and including
\nany liability for taxes of a predecessor entity.<\/p>\n
(b) Tax Returns and Audits. Except as set forth in Section 2.10
\nof the Disclosure Schedule:<\/p>\n
(i) To the Company’s knowledge, as of the Closing Date, the
\nCompany has prepared and timely filed (or caused to be prepared and timely
\nfiled) or made a timely request for extension for all federal, state, local and
\nforeign returns, estimates, information statements and reports (collectively the
\n“Returns”) required to be filed by the Company with any Tax authority relating
\nto any and all Taxes concerning or attributable to the Company or its operations
\nand such Returns are true and correct in all material respects and have been
\ncompleted in all material respects in accordance with applicable law.<\/p>\n
-12-
\n 17<\/p>\n
(ii) To the Company’s knowledge, as of the Closing Date, it:
\n(A) has paid or accrued all Taxes it is required to pay or accrue and (B) will
\nhave withheld and timely remitted with respect to its employees all federal and
\nstate income Taxes, FICA, FUTA and other Taxes required to be withheld and
\nremitted.<\/p>\n
(iii) There are no liens, pledges, charges, claims, security
\ninterests or other encumbrances of any sort (“Liens”) on the assets of the
\nCompany relating to or attributable to Taxes other than Liens for Taxes not yet
\ndue and payable.<\/p>\n
(iv) The Company’s tax basis in its assets for purposes of
\ndetermining its future amortization, depreciation and other federal income tax
\ndeductions is properly reflected on the Company’s tax books and records.<\/p>\n
(v) The Company has established (and until the Effective Time
\nwill establish) on its books and records reserves (to be specifically designated
\nas an increase to current liabilities) that are adequate for the payment of all
\nTaxes not yet due and payable.<\/p>\n
(vi) No federal, state, local or foreign audits or other
\nadministrative proceedings or court proceedings are presently pending with
\nregard to any Taxes or Returns.<\/p>\n
(vii) The Company is not a party to any tax-sharing or
\nallocation agreement, nor does the Company owe any amount under any tax-sharing
\nor allocation agreement.<\/p>\n
(viii) No representation is made herein regarding the size and
\navailability of net operating losses of the Company. 2.11 Restrictions on
\nBusiness Activities. Except as set forth in Section 2.11 of the Disclosure
\nSchedule, there is no material agreement, judgment, injunction, order or decree
\nbinding upon the Company which has the effect of prohibiting or materially
\nimpairing any business practice of the Company, any acquisition of property by
\nthe Company or the conduct of business by the Company as currently conducted.
\n2.12 Title to Properties; Absence of Liens and Encumbrances; Condition of
\nEquipment.<\/p>\n
(a) Except as set forth in Section 2.12(a) of the Disclosure
\nSchedule, the Company neither owns nor leases any real property.<\/p>\n
(b) The Company has good and valid title to, or, in the case of
\nleased properties and assets, valid leasehold interests in, all of its material
\ntangible properties and assets, real, personal and mixed, used in its business.
\nSection 2.12(b) of the Disclosure Schedule sets forth as to all assets and
\nleasehold interests all Liens thereon except for (i) such imperfections of title
\nand encumbrances, if any, which are not substantial in character, amount or
\nextent, and which do not materially detract from the value, or materially
\ninterfere with the present use, of the property subject thereto or affected
\nthereby, and (ii) Liens for Taxes not yet due and payable.<\/p>\n
-13-
\n 18<\/p>\n
(c) Section 2.12(c) of the Disclosure Schedule set forth all
\nmaterial equipment (the “Equipment”) owned or leased by the Company. The
\nEquipment is, taken as a whole, (i) adequate for the conduct of the business of
\nthe Company consistent with its past practice, (ii) suitable for the uses to
\nwhich it is currently employed, (iii) in good operating condition except for
\nordinary wear and tear, (iv) regularly and properly maintained, and (v) not
\nobsolete, dangerous or in need of renewal or replacement, except for renewal or
\nreplacement in the ordinary course of business.<\/p>\n
2.13 Intellectual Property.<\/p>\n
(a) For the purposes of this Agreement, the following terms have
\nthe following definitions:<\/p>\n
“Intellectual Property” shall mean any or all of the
\nfollowing, in any form and embodied in any media: (i) works of authorship
\nincluding, without limitation, computer programs, source code and executable
\ncode, whether embodied in software, firmware or otherwise, documentation,
\ndesigns, files, records, data and mask works, (ii) inventions (whether or not
\npatentable), improvements, and technology, (iii) proprietary and confidential
\ninformation, trade secrets and know how, (iv) databases, data compilations and
\ncollections and technical data, (v) logos, trade names, trade dress, trademarks
\nand service marks, (vi) domain names, web addresses and sites, and (vii) tools,
\nmethods and processes.<\/p>\n
“Intellectual Property Rights” shall mean worldwide common
\nlaw and statutory rights associated with (i) patents and patent applications,
\n(ii) copyrights, copyrights registrations and copyrights applications and
\n“moral” rights, (iii) the protection of trade and industrial secrets and
\nconfidential information, (iv) other proprietary rights relating to intangible
\nintellectual property, (v) trademarks, trade names and service marks, (vi)
\nanalogous rights to those set forth above, and (vii) divisions, continuations,
\nrenewals, reissuances and extensions of the foregoing (as applicable) now
\nexisting or hereafter filed, issued or acquired.<\/p>\n
“Company Intellectual Property” shall mean any Intellectual
\nProperty and Intellectual Property Rights that are owned by or exclusively
\nlicensed to the Company.<\/p>\n
“Registered Intellectual Property Rights” shall mean
\nIntellectual Property Rights that have been registered, filed, certified or
\notherwise perfected by recordation with any state, government or other public
\nlegal authority.<\/p>\n
(b) Section 2.13(b) of the Disclosure Schedule lists all
\nRegistered Intellectual Property Rights owned by, or filed in the name of, the
\nCompany (the “Company Registered Intellectual Property”) and lists any
\nproceedings or actions before any court or tribunal (including the United States
\nPatent and Trademark Office (the “PTO”) or equivalent authority anywhere in the
\nworld) related to any of the Company Registered Intellectual Property except for
\nany proceeding or action which, if adversely determined, would not have a
\nMaterial Adverse Effect on the Company; provided, however, that none of such
\nCompany Registered Intellectual Property has been registered<\/p>\n
-14-
\n 19<\/p>\n
by the Company with any state government or other public legal authority.
\nSection 2.13 (b) of the Disclosure Schedule also lists and identifies all
\ncomputer software that is owned by the Company (collectively, the “Owned
\nSoftware”) and all computer software (other than Owned Software) that is used by
\nthe Company for any purpose whatsoever in its business as presently conducted
\n(collectively, the “Licensed Software”). The Owned Software and the Licensed
\nSoftware are collectively referred to as the “Software”.<\/p>\n
(c) Each item of Company Intellectual Property owned by the
\nCompany, including all Company Registered Intellectual Property listed in
\nSection 2.13(b) of the Disclosure Schedule, is free and clear of any Liens
\nexcept for Liens for Taxes not yet due and payable, and is exclusively owned by
\nthe Company.<\/p>\n
(d) To the extent that any material Intellectual Property has
\nbeen developed or created independently or jointly by any person other than the
\nCompany for which the Company has, directly or indirectly, paid, the Company has
\na written agreement with such person with respect thereto and each is as set
\nforth on Section 2.13(d) of the Disclosure Schedule, and the Company thereby
\nhas obtained exclusive ownership of or has obtained a license to use all such
\nIntellectual Property and associated Intellectual Property Rights by operation
\nof law, by agreement or by valid assignment.<\/p>\n
(e) The Company has not transferred ownership of or granted any
\nlicense of or right to use or authorized the retention of any rights to use any
\nIntellectual Property or Intellectual Property Rights that is or was Company
\nIntellectual Property, to any other person, except for those contracts, licenses
\nand agreements described in Section 2.13(g) or listed on Section 2.13(g) of the
\nDisclosure Schedule.<\/p>\n
(f) Except (i) for Intellectual Property the absence of which
\nwould not have a Material Adverse Effect on the Company, and (ii) widely
\navailable business software used in the Company’s business, the Company
\nIntellectual Property constitutes all of the Intellectual Property used in
\nand\/or necessary to the conduct of the business of the Company as it currently
\nis conducted, including, without limitation, the design, development,
\nmanufacture, use, import and sale of products, technology and services
\n(including products, technology or services currently under development). To the
\nknowledge of the Company, the Company has valid licenses to all software owned
\nby third parties that is used in and\/or necessary to the operation of the
\nCompany’s products as they are currently used, and the Company is not in default
\nwith respect to any such license.<\/p>\n
(g) Except for “shrink-wrap” and similar widely available
\nthird-party commercial end-user licenses, the contracts, licenses and agreements
\nlisted in Section 2.13(g) of the Disclosure Schedule include all material
\ncontracts, licenses and agreements to which the Company is a party with respect
\nto any Company Intellectual Property owned by the Company. No person who has
\nlicensed Intellectual Property or Intellectual Property Rights to the Company
\nhas ownership rights or license rights to improvements made by the Company in
\nsuch licensed Intellectual Property.<\/p>\n
-15-
\n 20<\/p>\n
(h) Section 2.13(h) of the Disclosure Schedule lists all material
\ncontracts, licenses and agreements between the Company and any other person
\nwherein or whereby the Company has agreed to, or assumed, any obligation or duty
\nto warrant, indemnify, reimburse, hold harmless, guaranty or otherwise assume or
\nincur any obligation or liability or provide a right of rescission with respect
\nto the infringement or misappropriation by the Company or such other person of
\nthe Intellectual Property Rights of any person other than the Company.<\/p>\n
(i) To the knowledge of the Company, except as set forth in
\nSection 2.13(i) of the Disclosure Schedule, the operation of the business of the
\nCompany as it currently is conducted, including but not limited to the design,
\ndevelopment, use, import, manufacture and sale of the products, technology or
\nservices (including products, technology or services currently under
\ndevelopment) of the Company, does not infringe or misappropriate the
\nIntellectual Property Rights of any person, violate the rights of any person
\n(including rights to privacy or publicity), or constitute unfair competition or
\ntrade practices under the laws of any jurisdiction. Except as set forth in
\nSection 2.13(i) of the Disclosure Schedule the Company has not received notice
\nfrom any person claiming that such operation or any act, product, technology or
\nservice (including products, technology or services currently under development)
\nof the Company infringes or misappropriates the Intellectual Property Rights of
\nany person or constitutes unfair competition or trade practices under the laws
\nof any jurisdiction (nor to the knowledge of the Company and the Major
\nStockholders is there any reasonable basis therefor).<\/p>\n
(j) Each material item of Company Registered Intellectual
\nProperty is valid and subsisting, and, except as set forth on Section 2.13(j) of
\nthe Disclosure Schedule all necessary, currently due registration, maintenance
\nand renewal fees due in connection with such Company Registered Intellectual
\nProperty have been paid and all necessary documents and certificates in
\nconnection with such Company Registered Intellectual Property have been filed
\nwith the relevant patent, copyright, trademark or other authorities in the
\nUnited States or foreign jurisdictions, as the case may be, for the purposes of
\nmaintaining such Company Registered Intellectual Property. Except as set forth
\nin Section 2.13(j) of the Disclosure Schedule there are no actions that must be
\ntaken by the Company within sixty (60) days of the scheduled Closing Date,
\nincluding the payment of any registration, maintenance or renewal fees or the
\nfiling of any documents, applications or certificates for the purposes of
\nmaintaining, perfecting or preserving or renewing any Company Registered
\nIntellectual Property. In each case in which the Company has acquired any
\nIntellectual Property Rights from any person, the Company has obtained a valid
\nand enforceable assignment sufficient to irrevocably transfer all rights in such
\nIntellectual Property and the associated Intellectual Property Rights (including
\nthe right to seek past and future damages with respect thereto) to the Company
\nand, to the maximum extent provided for by, and in accordance with, applicable
\nlaws and regulations, the Company has recorded each such assignment with the
\nrelevant governmental authorities, including the PTO, the U.S. Copyright Office,
\nor their respective equivalents in any relevant foreign jurisdiction, as the
\ncase may be.<\/p>\n
-16-
\n 21<\/p>\n
(k) Except as set forth in Section 2.13(k) of the Disclosure
\nSchedule, there are no contracts, licenses or agreements between the Company and
\nany other person with respect to Company Intellectual Property under which there
\nis any dispute known to the Company regarding the scope of such contract,
\nlicense or agreement, or performance under such contract, license or agreement
\nincluding with respect to any payments to be made or received by the Company
\nthereunder which, if adversely determined, would not have a Material Adverse
\nEffect on the Company.<\/p>\n
(l) To the knowledge of the Company, no person is infringing or
\nmisappropriating any Company Intellectual Property.<\/p>\n
(m) Except as set forth in Section 2.13(m) of the Disclosure
\nSchedule, the Company has taken all reasonable steps in order to protect the
\nCompany’s rights in confidential information and trade secrets of the Company or
\nconfidential information or trade secrets of third parties provided to the
\nCompany. Except as set forth in Section 2.13(m) of the Disclosure Schedule all
\ncurrent and former employees, consultants and contractors of the Company who
\nhave or have had access to confidential, proprietary or trade secret information
\nof the Company (“Recipients”) have entered into proprietary information,
\nconfidentiality or assignment of inventions agreements (or similar types of
\nagreements) with the Company. Section 2.13(m) of the Disclosure Schedule
\ncontains a list of all Recipients indicating those who have signed the
\nagreements and those who have not entered into such agreements and a description
\nof the type of each such agreement.<\/p>\n
(n) No material Company Intellectual Property or service of the
\nCompany is subject to any proceeding or outstanding decree, order or judgment,
\nor, with respect to agreements only, except as would not have a Material Adverse
\nEffect on the Company, any stipulation that restricts in any manner the use,
\ntransfer or licensing thereof by the Company or may affect the validity, use or
\nenforceability of such Company Intellectual Property.<\/p>\n
(o) Except as set forth in Section 2.13(i) of the Disclosure
\nSchedule no (i) product, technology, service or publication of the Company, (ii)
\nmaterial published or distributed by the Company or (iii) conduct or statement
\nof the Company knowingly constitutes obscene material, a defamatory statement or
\nmaterial, false advertising or, except as would not have a Material Adverse
\nEffect on the Company, otherwise violates any law or regulation.<\/p>\n
(p) All of the Company’s products (including products currently
\nunder development) will record, store, process, calculate and present calendar
\ndates falling on and after (and if applicable, spans of time including) January
\n1, 2000, and will calculate any information dependent on or relating to such
\ndates in the same manner, and with the same functionality, data integrity and
\nperformance, as the products record, store, process, calculate and present
\ncalendar dates on or before December 31, 1999, or calculate any information
\ndependent on or relating to such dates (collectively, “Year 2000 Compliant”).
\nAll of the Company’s software products (i) will lose no functionality with
\nrespect to the introduction of records containing dates falling on or after
\nJanuary 1, 2000 and (ii) will be interoperable with other products used and
\ndistributed by the Company that<\/p>\n
-17-
\n 22<\/p>\n
may deliver records to the Company’s products or receive records from the
\nCompany’s products, or interact with the Company’s products, including but not
\nlimited to back-up and archived data. To the Company’s knowledge all of the
\nCompany’s internal computer and technology products and systems are Year 2000
\nCompliant. 2.14 Agreements, Contracts and Commitments. Except as disclosed in
\nSection 2.14 of the Disclosure Schedule or elsewhere in the Disclosure Schedule,
\nthe Company does not have and is not a party to:<\/p>\n
(a) any collective bargaining agreements,<\/p>\n
(b) any agreements that contain any unpaid severance liabilities
\nor obligations,<\/p>\n
(c) any bonus or incentive compensation plans or arrangements,
\nexcept for commission plans with sales persons,<\/p>\n
(d) any employment or consulting agreement, contract or
\ncommitment with an employee or individual consultant or salesperson or
\nconsulting or sales agreement, contract or commitment with a firm or other
\norganization, in each case which is not terminable by the Company on thirty (30)
\ndays notice without liability to the Company, except to the extent general
\nprinciples of wrongful termination law may limit the Company’s ability to
\nterminate employees at will,<\/p>\n
(e) any agreement or plan, including, without limitation, any
\nstock option plan, stock appreciation right plan or stock purchase plan, any of
\nthe benefits of which will be increased, or the vesting of benefits of which
\nwill be accelerated, by the occurrence of any of the transactions contemplated
\nby this Agreement or the value of any of the benefits of which will be
\ncalculated on the basis of any of the transactions contemplated by this
\nAgreement,<\/p>\n
(f) any fidelity or surety bond or completion bond,<\/p>\n
(g) any lease of personal property having a value individually in
\nexcess of $25,000,<\/p>\n
(h) any agreement of indemnification or guaranty not entered into
\nin the ordinary course of business except for agreements for indemnification
\nprovided by the Company to licensees or other third parties in connection with
\nthe sale or license of the Company’s software products or services,<\/p>\n
(i) any agreement, contract or commitment containing any covenant
\nlimiting the freedom of the Company to engage in its business or compete with
\nany entity except for agreements not to compete provided by the Company to
\nlicensees or other third parties in connection with the sale or license of the
\nCompany’s software products or services,<\/p>\n
-18-
\n 23<\/p>\n
(j) any agreement, contract or commitment relating to capital
\nexpenditures and involving future obligations in excess of $25,000, over the
\nlife of any such agreement, contract or commitment,<\/p>\n
(k) any agreement, contract or commitment currently in force
\nrelating to the disposition or acquisition of assets of the Company not in the
\nordinary course of business or the disposition or acquisition of any ownership
\ninterest in any corporation, partnership, joint venture or other business
\nenterprise,<\/p>\n
(l) any mortgages, indentures, loans or credit agreements,
\nsecurity agreements or other agreements or instruments relating to the borrowing
\nof money by the Company or extension of credit by the Company, including
\nguaranties referred to in clause (h) hereof,<\/p>\n
(m) any purchase order or contract for the purchase of raw
\nmaterials or acquisition of assets involving $5,000 or more,<\/p>\n
(n) any construction contracts,<\/p>\n
(o) any distribution, joint marketing or development agreement,<\/p>\n
(p) any other agreement, contract or commitment which involves
\nthe payment of $50,000 or more by the Company and is not cancelable without
\npenalty within thirty (30) days, or<\/p>\n
(q) any agreement which has a value of $50,000 or more. The
\nCompany has not breached, and has not received in writing any claim, and none of
\nthe Major Stockholders has received any written notice that the Company has
\nbreached, any of the material terms or conditions of any material agreement,
\ncontract or commitment to which it is bound that is required to be disclosed in
\nSection 2.14 of the Disclosure Schedule in such manner as would permit any other
\nparty to cancel or terminate the same. <\/p>\n
2.15 Interested Party Transactions. Except as disclosed in Section 2.15
\nof the Disclosure Schedule, no officer or director of the Company or person who
\nowns at least five percent (5%) of the issued and outstanding Company Common
\nStock (nor any parent, child or spouse of any of such persons, or any trust,
\npartnership or corporation in which any of such persons has or has had an
\ninterest), has or has had, directly or indirectly, (i) an interest in any entity
\nwhich furnished or sold, or furnishes or sells, services or products which the
\nCompany furnishes or sells or proposes to furnish or sell, or (ii) any interest
\nin any entity which purchases from or sells or furnishes to the Company any
\ngoods or services, or (iii) a beneficial interest in any contract or agreement
\ndescribed in Section 2.13; provided that ownership of no more than one percent
\n(1%) of the outstanding voting stock of a publicly traded corporation shall not
\nbe deemed an “interest in any entity” for purposes of this Section 2.15.<\/p>\n
2.16 Governmental Authorization. Section 2.16 of the Disclosure Schedule
\naccurately lists each material federal, state, county, local or foreign
\ngovernmental consent, license, permit,<\/p>\n
-19-
\n 24<\/p>\n
grant, or other authorization issued to the Company (i) pursuant to which the
\nCompany currently operates or holds any interest in any of its properties or
\n(ii) which is required for the operation of its business or the holding of any
\nsuch interest, except where the absence of which would have a Material Adverse
\nEffect on the Company or would prevent, prohibit or materially impede the
\nability of the Company, the Major Stockholders, Parent or Merger Sub to complete
\nthe transactions contemplated hereby or in the Company Transaction Documents
\n(herein collectively called “Company Authorizations”). To the best of the
\nCompany’s knowledge, except as set forth in Section 2.16 of the Disclosure
\nSchedule the Company Authorizations are in full force and effect and constitute
\nall Company Authorizations required to permit the Company to operate or conduct
\nits business or hold any interest in its properties, except where the absence of
\nwhich would have a Material Adverse Effect on the Company or would prevent,
\nprohibit or materially impede the ability of the Company, the Major
\nStockholders, Parent or Merger Sub to complete the transactions contemplated
\nhereby or in the Company Transaction Documents. <\/p>\n
2.17 Litigation. Except as set forth as Schedule 2.17 of the Disclosure
\nSchedule, to the best of the Company’s knowledge, there is no action, suit,
\nclaim or proceeding of any nature pending or threatened against the Company, its
\nproperties or any of its officers or directors, in their capacities as agents of
\nthe Company. To the best of the Company’s knowledge, there is no investigation
\npending or, to the Company’s knowledge, threatened against the Company, its
\nproperties or any of its officers or directors, in their capacities as agents of
\nthe Company, by or before any Governmental Entity. To the best of the Company’s
\nknowledge, no Governmental Entity has at any time challenged or questioned the
\nlegal right of the Company to manufacture, offer or sell any of its products in
\nthe present manner or style thereof.<\/p>\n
2.18 Accounts Receivable. The Company has made available to Parent a
\nlist of all accounts receivable of the Company as of September 30, 1999 along
\nwith a range of days elapsed since invoice.<\/p>\n
2.19 Minute Books. Except as set forth in Section 2.19 of the Disclosure
\nSchedule, the minute books of the Company made available to counsel for Parent
\ncontain complete and accurate minutes of all meetings of directors and
\nStockholders or actions by written consent since the time of incorporation of
\nthe Company.<\/p>\n
2.20 Brokers’ and Finders’ Fees. Except as disclosed in Section 2.20 of
\nthe Disclosure Schedule, the Company has not incurred, nor will it incur,
\ndirectly or indirectly, any liability for brokerage or finders’ fees or agents’
\ncommissions or any similar charges in connection with this Agreement or any
\ntransaction contemplated hereby.<\/p>\n
2.21 Insurance. Section 2.21 of the Disclosure Schedule sets forth a
\nlist of insurance policies and fidelity bonds covering the assets, business,
\nequipment, properties, operations, employees, officers and directors of the
\nCompany.<\/p>\n
2.22 Compliance With Laws. Except as disclosed in Section 2.22 of the
\nDisclosure Schedule, and except as to matters of which the Company has no
\nknowledge or which do not either individually or in the aggregate result in a
\nMaterial Adverse Effect with respect to the Company, the Company has complied
\nwith, is not in violation of, and has not received any notices of violation with<\/p>\n
-20-
\n 25<\/p>\n
respect to, any federal, state or local statute, law or regulation with respect
\nto the conduct of its business, or the ownership or operation of its business
\nassets.<\/p>\n
2.23 Complete Copies of Materials. The Company has delivered or made
\navailable to Parent or its counsel true and complete copies of each document (or
\nsummaries of same) referenced in the Disclosure Schedule.<\/p>\n
2.24 Binding Agreements; No Default. Each of the contracts, agreements
\nand other instruments set forth in the Disclosure Schedule to which the Company
\nis a party is a legal, binding, and enforceable obligation by or against the
\nCompany in accordance with its terms (assuming such contract, agreement or
\ninstrument has been duly authorized, executed and delivered by the other
\nparty(ies) thereto and except to the extent that its non-enforceability would
\nnot have a Material Adverse Effect on the Company), and to the Company’s
\nknowledge no party with whom the Company has an agreement or contract is in
\nmaterial default thereunder or has breached any material terms or provisions
\nthereof (subject to all applicable bankruptcy, insolvency, reorganization and
\nother laws applicable to creditors’ rights and remedies, all rules of law
\ngoverning specific performance and injunctive relief and to the exercise of
\njudicial discretion in accordance with general principles of equity).<\/p>\n
2.25 Environmental Matters.<\/p>\n
(a) Hazardous Material. The Company has not: (i) operated any
\nunderground storage tanks at any property that the Company has at any time
\nowned, operated, occupied or leased; or (ii) illegally released any amount of
\nany substance that has been designated by any Governmental Entity or by
\napplicable federal, state or local law as radioactive, toxic, hazardous or
\notherwise a danger to health or the environment, including, without limitation,
\nPCBs, asbestos, petroleum, urea-formaldehyde and all substances listed as
\nhazardous substances pursuant to the Comprehensive Environmental Response,
\nCompensation, and Liability Act of 1980, as amended, or defined as a hazardous
\nwaste pursuant to the United States Resource Conservation and Recovery Act of
\n1976, as amended, and the regulations promulgated pursuant to said laws (a
\n“Hazardous Material”), but excluding janitorial supplies properly and safely
\nmaintained. No Hazardous Materials are present, as a result of the deliberate
\nactions of the Company or, to the Company’s knowledge, as a result of any
\nactions of any third party or otherwise, in, on or under any property, including
\nthe land and the improvements, ground water and surface water thereof, that the
\nCompany has at any time owned, operated, occupied or leased except for such
\nHazardous Materials which would not have a Material Adverse Effect on the
\nCompany.<\/p>\n
(b) Hazardous Materials Activities. Except as would not have a
\nMaterial Adverse Effect on the Company, the Company has not illegally
\ntransported, stored, used, manufactured, disposed of, released or exposed its
\nemployees or others to Hazardous Materials in violation of any law in effect on
\nor before the Closing Date, nor has the Company illegally disposed of,
\ntransported, sold, or manufactured any product containing a Hazardous Material
\n(any or all of the foregoing being collectively referred to as “Hazardous
\nMaterials Activities”) in violation of any rule,<\/p>\n
-21-
\n 26<\/p>\n
regulation, treaty or statute promulgated by any Governmental Entity in effect
\non or before the date hereof to prohibit, regulate or control Hazardous
\nMaterials or any Hazardous Material Activity.<\/p>\n
(c) Permits. Except as would not have a Material Adverse Effect
\non the Company, the Company currently holds all environmental approvals,
\npermits, licenses, clearances and consents (the “Environmental Permits”)
\nnecessary for the conduct of any Hazardous Material Activities by the Company
\nand other businesses of the Company as such activities and businesses are
\ncurrently being conducted.<\/p>\n
(d) Environmental Liabilities. No action, proceeding, revocation
\nproceeding, amendment procedure, writ, injunction or claim is pending or, to the
\nCompany’s knowledge, threatened against the Company concerning any Environmental
\nPermit, Hazardous Material or any Hazardous Materials Activity of the Company.
\nThe Company has no knowledge of any fact or circumstance which could reasonably
\nbe expected to involve the Company in any environmental litigation or impose
\nupon the Company any environmental liability in each case which would have a
\nMaterial Adverse Effect on the Company.<\/p>\n
2.26 Employee Matters and Benefit Plans.<\/p>\n
(a) Definitions. With the exception of the definition of
\n“Affiliate” set forth in Section 2.26(a)(i) below (such definition shall only
\napply to this Section 2.26), for purposes of this Agreement, the following terms
\nshall have the meanings set forth below:<\/p>\n
(i) “Affiliate” shall mean any other person or entity under
\ncommon control with the Company within the meaning of Section 414(b), (c), (m)
\nor (o) of the Code and the regulations thereunder;<\/p>\n
(ii) “Company Employee Plan” shall refer to any plan, program,
\npolicy, contract, agreement or other arrangement providing for compensation,
\nseverance, termination pay, performance awards, stock or stock-related awards,
\nfringe benefits or other employee benefits or remuneration of any kind, written
\nor otherwise, funded or unfunded, including without limitation, each “employee
\nbenefit plan,” within the meaning of Section 3(3) of ERISA, which is or has been
\nmaintained, contributed to, or required to be contributed to, by the Company or
\nany Affiliate for the benefit of any “Employee” (as defined below), and pursuant
\nto which the Company or any Affiliate has or may have any material liability,
\ncontingent or otherwise;<\/p>\n
(iii) “Consultant” shall mean any person with whom the Company
\ncurrently has a Consulting Agreement;<\/p>\n
(iv) “Consulting Agreement” shall mean any agreement pursuant
\nto which the Company has hired a Consultant;<\/p>\n
-22-
\n 27<\/p>\n
(v) “Employee” shall mean any current employee, officer, or
\ndirector of the Company or any Affiliate;<\/p>\n
(vi) “Employee Agreement” shall refer to each management,
\nemployment, severance, relocation, repatriation, expatriation, visa, work permit
\nor similar agreement or contract between the Company or any Affiliate and any
\nEmployee;<\/p>\n
(vii) “ERISA” shall mean the Employee Retirement Income
\nSecurity Act of 1974, as amended<\/p>\n
(viii) “IRS” shall mean the Internal Revenue Service;<\/p>\n
(ix) “Multiemployer Plan” shall mean any “Pension Plan” (as
\ndefined below) which is a “multiemployer plan,” as defined in Section 3(37) of
\nERISA; and<\/p>\n
(x) “Pension Plan” shall refer to each Company Employee Plan
\nwhich is an “employee pension benefit plan,” within the meaning of Section 3(2)
\nof ERISA.<\/p>\n
(b) Schedule. Section 2.26(b) of the Disclosure Schedule contains
\nan accurate and complete list of each Company Employee Plan, each Employee
\nAgreement and each Consulting Agreement. The Company does not have any stated
\nplan or commitment to establish any new Company Employee Plan or Employee
\nAgreement, to modify any Company Employee Plan or Employee Agreement (except to
\nthe extent required by law or to conform any such Company Employee Plan or
\nEmployee Agreement to the requirements of any applicable law, in each case as
\npreviously disclosed to Parent in writing, or as required by this Agreement), or
\nto enter into any Company Employee Plan or Employee Agreement.<\/p>\n
(c) Documents. The Company has provided or made available to
\nParent (i) correct and complete copies of all documents embodying each Company
\nEmployee Plan and each Employee Agreement including all amendments thereto; (ii)
\nthe most recent annual actuarial valuations, if any, prepared for each Company
\nEmployee Plan; (iii) the three most recent annual reports (Series 5500 and all
\nschedules thereto), if any, required under ERISA or the Code in connection with
\neach Company Employee Plan or related trust; and (iv) the most recent summary
\nplan description together with the most recent summary of material
\nmodifications, if any, required under ERISA with respect to each Company
\nEmployee Plan.<\/p>\n
(d) Employee Plan Compliance. Except as set forth on Section
\n2.26(d) of the Disclosure Schedule, (i) the Company has performed in all
\nmaterial respects all material obligations required to be performed by it under
\neach Company Employee Plan and each Company Employee Plan has been established
\nand maintained in all material respects in accordance with its terms and in
\nmaterial compliance with all applicable laws, statutes, orders, rules and
\nregulations, including but not limited to ERISA or the Code; (ii) no “prohibited
\ntransaction,” within the meaning of Section 4975 of the Code or Section 406 of
\nERISA, has occurred with respect to any Company<\/p>\n
-23-
\n 28<\/p>\n
Employee Plan; (iii) there are no actions, suits or claims pending, or, to the
\nknowledge of the Company, threatened (other than routine claims for benefits)
\nagainst any Company Employee Plan or against the assets of any Company Employee
\nPlan; (iv) each Company Employee Plan can be amended, terminated or otherwise
\ndiscontinued after the Effective Time in accordance with its terms, without
\nliability to the Company, Parent or any of its Affiliates (other than ordinary
\nadministration expenses typically incurred pursuant to an amendment or a
\ntermination event); (v) there are no inquiries or proceedings pending or, to the
\nknowledge of the Company, threatened by the IRS or DOL with respect to any
\nCompany Employee Plan; and (vi) neither the Company nor any Affiliate is subject
\nto any penalty or tax with respect to any Company Employee Plan under Section
\n402(i) of ERISA or Sections 4975 through 4980 of the Code.<\/p>\n
(e) Pension Plans. The Company does not now, nor has it ever,
\nmaintained, established, sponsored, participated in, or contributed to, any
\nPension Plan which is subject to Part 3 of Subtitle B of Title I of ERISA, Title
\nIV of ERISA or Section 412 of the Code.<\/p>\n
(f) Multiemployer Plans. At no time has the Company contributed
\nto any Multiemployer Plan.<\/p>\n
(g) PBGC Compliance. The Company has paid all premiums (and
\ninterest charges and penalties for late payment, if applicable) due the Pension
\nBenefit Guaranty Corporation (“PBGC”) with respect to each Pension Plan for each
\nplan year they are up for which premiums are required. The Company has not
\nengaged in, nor is it a successor or parent corporation to an entity that has
\nengaged in, a transaction described in Section 4069 of ERISA. There has been no
\n“reportable event” (as defined in Section 4043(b) of ERISA and the PBGC
\nregulations under such Section) with respect to any Pension Plan. No filing has
\nbeen made by the Company with the PBGC, and no proceeding has been commenced by
\nthe PBGC, to terminate any Pension Plan. To the knowledge of the Company, no
\ncondition exists and no event has occurred that would constitute grounds for the
\ntermination of any Pension Plan by the PBGC.<\/p>\n
(h) No Post-Employment Obligations. No Company Employee Plan
\nprovides, or has any liability to provide, life insurance, medical or other
\nemployee benefits to any Employee upon his or her retirement or termination of
\nemployment for any reason, except as may be required by statute.<\/p>\n
(i) Effect of Transaction.<\/p>\n
(i) Except as set forth on Section 2.26(i)(i) of the
\nDisclosure Schedule, the execution of this Agreement and the consummation of the
\ntransactions contemplated hereby will not (either alone or upon the occurrence
\nof any additional or subsequent events) constitute an event under any Company
\nEmployee Plan, Employee Agreement or Consulting Agreement that will or may
\nresult in any payment (whether of severance pay or otherwise), acceleration,
\nforgiveness of indebtedness, stock option vesting, distribution, increase in
\nbenefits or obligation to fund benefits with respect to any Employee, except as
\nmay be required by statute.<\/p>\n
-24-
\n 29<\/p>\n
(ii) No payment or benefit which will or may be made by the
\nCompany or any of its Affiliates with respect to any Employee pursuant to the
\nterms of any Employee Agreement will be characterized as an “excess parachute
\npayment,” within the meaning of Section 280G(b)(1) of the Code.<\/p>\n
(j) Employment Matters. The Company (i) is in compliance in all
\nmaterial respects with all material 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 and Consultants; (ii) has withheld all amounts required by law or by
\nagreement to be withheld from the wages, salaries and other payments to
\nEmployees; (iii) is not liable for any arrears of wages or any Taxes or any
\npenalty for failure to comply with any of the foregoing; and (iv) is not liable
\nfor any payment to any trust or other fund or to any governmental or
\nadministrative authority, with respect to unemployment compensation benefits,
\nsocial security or other benefits or obligations for Employees (other than
\nroutine payments to be made in the normal course of business and consistent with
\npast practice).<\/p>\n
(k) Labor. No work stoppage or labor strike against the Company
\nis pending or, to the best knowledge of the Company, threatened. The Company is
\nnot involved in or, to the knowledge of the Company, threatened with, any labor
\ndispute, grievance, or litigation relating to labor, safety or discrimination
\nmatters involving any Employee, including, without limitation, charges of unfair
\nlabor practices or discrimination complaints, which, if adversely determined,
\nwould, individually or in the aggregate, have a Material Adverse Effect on 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
\nwhich would, individually or in the aggregate, directly or indirectly have a
\nMaterial Adverse Effect on the Company. The Company is not presently, nor has it
\nbeen in the past, a party to, or bound by, any collective bargaining agreement
\nor union contract with respect to Employees and no collective bargaining
\nagreement is being negotiated by the Company.<\/p>\n
2.27 Representations Complete. None of the representations or warranties
\nmade by the Company, nor any statement made in the Disclosure Schedule or any
\ncertificate furnished by the Company pursuant to this Agreement, when all such
\ndocuments are read together in their entirety, contains or will contain at the
\nEffective Time any untrue statement of a material fact at the Effective Time, or
\nomits to state any material fact necessary in order to make the statements
\ncontained herein or therein, in the light of the circumstances under which made,
\nnot misleading at the Effective Time.<\/p>\n
ARTICLE III
\n REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB<\/p>\n
Parent and Merger Sub jointly and severally represent and warrant to the Company
\nand the Major<\/p>\n
-25-
\n 30<\/p>\n
Stockholders as follows:<\/p>\n
3.1 Organization of Parent and Merger Sub. Each of Parent and Merger Sub
\nis a corporation duly organized, validly existing and in good standing under the
\nlaws of the State of Delaware. Parent has the requisite corporate power to own
\nits property and to carry on its business as it is now being conducted and as
\nproposed to be conducted by Parent. Parent is duly qualified or licensed to do
\nbusiness and is in good standing as a foreign corporation in each jurisdiction
\nwhere the character of the properties owned, leased or operated by it or the
\nnature of its activities makes such qualification or licensing necessary, except
\nwhere the failure to be so duly qualified or licensed would not have a Material
\nAdverse Effect on Parent. Parent has made available to the Company at the
\nClosing true and correct copies of the Certificate of Incorporation and Bylaws,
\neach as amended to date, of each of Parent and Merger Sub.<\/p>\n
3.2 Capital Structure of Parent and Merger Sub.<\/p>\n
(a) The authorized stock of Parent consists of 70,000,000 shares
\nof Common Stock, par value $0.001 of which 25,751,698 shares were issued and
\noutstanding as of December 6, 1999, and 5,000,000 shares of Preferred Stock,
\nnone of which are issued or outstanding as of December 6, 1999. The authorized
\ncapital stock of Merger Sub consists of 1,000 shares of Common Stock, par value
\n$0.001, 1,000 shares of which, as of the date hereof, are issued and outstanding
\nand are held by Parent. All such shares have been duly authorized, and all such
\nissued and outstanding shares have been validly issued, are fully paid and
\nnonassessable and are free of any liens or encumbrances other than any liens or
\nencumbrances created by or imposed upon the holders thereof. As of December 6,
\n1999, there were 3,276,000 shares of Common Stock reserved for issuance under
\nParent’s Amended 1995 Stock Option Plan, 2,440,000 shares of Common Stock
\nreserved for issuance under Parent’s 1999 Stock Option Plan, 150,000 shares of
\nCommon Stock reserved for issuance under Parent’s Director Option Plan, and
\n450,000 shares reserved for issuance under Parent’s Employee Stock Purchase Plan
\nand no shares of Common Stock issuable upon exercise of outstanding warrants.
\nExcept as set forth above, there are no other options, warrants or other rights
\nto purchase any of the Parent’s authorized and unissued capital stock.<\/p>\n
(b) When issued and delivered in accordance with this Agreement,
\nthe shares of Parent Common Stock to be issued pursuant to the Merger will be
\nduly authorized, validly issued, fully paid, non-assessable and free of any
\npreemptive or similar right, and will be issued in compliance with all
\napplicable federal or state securities laws.<\/p>\n
3.3 Authority. Each of Parent and Merger Sub has all requisite corporate
\npower and authority to enter into this Agreement and the other documents
\ncontemplated hereunder to which Parent or Merger Sub will be a party
\n(collectively, the “Parent Transaction Documents”) and to consummate the
\ntransactions contemplated hereby and thereby. The execution and delivery of this
\nAgreement and the Parent Transaction Documents by Parent and Merger Sub and the
\nconsummation by Parent and Merger Sub of the transactions contemplated hereby
\nand thereby have been duly authorized by all necessary corporate action on the
\npart of Parent and Merger Sub. This Agreement has been duly executed and
\ndelivered by Parent and Merger Sub and, assuming<\/p>\n
-26-
\n 31<\/p>\n
the due authorization, execution and delivery by the Company and Major
\nStockholders, constitutes the valid and binding obligation of Parent and Merger
\nSub, enforceable against them in accordance with its terms, subject to (i) laws
\nof general application relating to bankruptcy, insolvency and the relief of
\ndebtors, and (ii) rules of law governing specific performance, injunctive relief
\nand other equitable remedies. Each of the Parent Transaction Documents, when
\nexecuted and delivered by Parent and Merger Sub shall be, assuming the due
\nauthorization, execution and delivery by the Company and the Major Stockholders,
\nas applicable, the valid and binding obligation of Parent and Merger Sub,
\nenforceable against them in accordance with its terms, subject to (i) laws of
\ngeneral application relating to bankruptcy, insolvency and the relief of
\ndebtors, and (ii) rules of law governing specific performance, injunctive relief
\nand other equitable remedies.<\/p>\n
3.4 No Conflict; No Default; Consents. The execution and delivery of
\nthis Agreement by Parent and Merger Sub, and the Parent Transaction Documents
\nwhen executed and delivered will not, and the consummation of the transactions
\ncontemplated hereby and thereby by Parent and Merger Sub will not, conflict
\nwith, or result in any violation of, or default under (with or without notice or
\nlapse of time, or both), or give rise to a right of termination, cancellation or
\nacceleration of any obligation or loss of any benefit under (i) any provision of
\nthe Certificate of Incorporation or Bylaws, each as amended as of the date
\nhereof, of Parent or Merger Sub, (ii) any material mortgage, indenture, lease,
\ncontract or other agreement or instrument, permit, concession, franchise, or
\nlicense to which Parent or any of its properties or assets are subject, or (iii)
\nany, judgment, order, decree, statute, law, ordinance, rule or regulation
\napplicable to Parent or its properties or assets except to the extent such
\nconflict, violation, default or other effect would not, in the case of clauses
\n(ii) and (iii) above, have a Material Adverse Effect on Parent or would not
\nprevent, prohibit or materially obstruct the ability of Parent or Merger Sub to
\nconsummate the transactions contemplated hereby or in any of the Parent
\nTransaction Documents. No consent, waiver, approval, order or authorization of,
\nor registration, declaration or filing with any Governmental Entity or any third
\nparty to any agreement with Parent, is required by or with respect to Parent or
\nMerger Sub in connection with the execution and delivery of this Agreement, any
\nParent Transaction Document or the consummation of the transactions contemplated
\nhereby or thereby, except for (i) the filing of the Certificate of Merger with
\nthe Delaware Secretary of State, (ii) such consents, approvals, orders,
\nauthorizations, registrations, declarations and filings as may be required under
\napplicable federal and state securities laws and the laws of any foreign country
\nand (iii) such other consents, authorizations, waiver, filings, approvals,
\nregistrations, orders and declarations which, if not obtained or made, would not
\nhave a Material Adverse Effect on Parent, would not prevent or materially delay
\nconsummation of the Merger or otherwise prevent Parent or Merger Sub from
\nperforming its obligations under this Agreement.<\/p>\n
3.5 Representations Complete. None of the representations or warranties
\nmade by Parent or Merger Sub in this Article III, nor any statement made in any
\nlist or other statement separately certified by Parent or Merger Sub, or in any
\ncertificate furnished by Parent pursuant to this Agreement, when all such
\ndocuments are read together in their entirety, contains or will contain at the
\nEffective Time any untrue statement of a material fact at the Effective Time, or
\nomits or will omit to state any material fact necessary in order to make the
\nstatements contained herein or therein, in the light of the circumstances under
\nwhich made, not misleading at the Effective Time.<\/p>\n
-27-
\n 32<\/p>\n
3.6 Securities and Exchange Commission Documents. Parent has provided
\nthe Company with true and complete copies of (i) all documents filed by Parent
\nwith the Securities and Exchange Commission (the “Parent Commission Documents”)
\nfrom May 26, 1999 through the date hereof (the “Filing Period”) and (ii) any
\namendments or modifications to the Parent Commission Documents which have not
\nyet been filed with the Securities and Exchange Commission but are required to
\nbe filed. As of their respective filing dates, the Parent Commission Documents
\ncomplied with the requirements of the Securities Exchange Act of 1934, as
\namended, and the Securities Act of 1933, as amended, and none of the Parent
\nCommission Documents contained any untrue statement of a material fact or
\nomitted to state a material fact required to be stated therein or necessary to
\nmake the statements made therein, in light of the circumstances in which they
\nwere made, not misleading except to the extent corrected by a subsequently filed
\nParent Commission Document prior to the date hereof. The financial statements of
\nParent, including the notes thereto, included in the Parent Commission Documents
\n(the “Parent Financial Statements”) were complete and correct in all material
\nrespects as of their respective dates, complied as to form in all material
\nrespects with applicable accounting requirements and with the published rules
\nand regulations of the Securities and Exchange Commission with respect thereto
\nas of their respective dates, and have been prepared in accordance with
\ngenerally accepted accounting principles applied on a basis consistent
\nthroughout the periods indicated and consistent with each other (except as may
\nbe indicated in the notes thereto or, in the case of unaudited statements
\nincluded in Quarterly Reports on Form 10-Q, as permitted by Form 10-Q of the
\nSecurities and Exchange Commission). The Parent Financial Statements fairly
\npresent the consolidated financial condition and operating results of Parent and
\nits subsidiaries at the dates and during the periods indicated therein (subject,
\nin the case of unaudited statements, to normal, recurring year-end adjustments).
\nThere has been no change in Parent accounting policies except as described in
\nthe notes to the Parent Financial Statements. Except as described in the Parent
\nCommission Documents, to the best of Parent’s knowledge, there is no action,
\nsuit, claim or proceeding of any nature pending against Parent.<\/p>\n
3.7 Interim Operations of Merger Sub. Merger Sub was formed solely for
\nthe purposes of engaging in the transactions contemplated by this Agreement, and
\nhas (i) engaged in no other business activities, (ii) not conducted any
\noperations other than in connection with the transactions contemplated by this
\nAgreement, and (iii) not incurred any material liabilities other than in
\nconnection with the transactions contemplated by this Agreement.<\/p>\n
3.8 Absence of Certain Changes or Events. Since September 30, 1999 and
\nthrough the Effective Time, (i) Parent has conducted its business in the
\nordinary course consistent with past practices, and (ii) there has not been any
\noccurrences, events or other circumstances that, individually or in the
\naggregate, has had or could have a Material Adverse Effect on Parent and its
\nsubsidiaries, taken as a whole.<\/p>\n
3.9 Brokers’ and Finders’ Fees. Parent has not incurred, nor will it
\nincur, directly or indirectly, any liability for brokerage or finders’ fees or
\nagents’ commissions or any similar charges in connection with this Agreement or
\nany transaction contemplated hereby.<\/p>\n
-28-
\n 33<\/p>\n
ARTICLE IV
\n ADDITIONAL AGREEMENTS<\/p>\n
4.1 Expenses. In the event the Merger is not consummated, all expenses
\nincurred in connection with the Merger and this Agreement shall be the
\nobligation of the party incurring such expenses; provided if the Merger shall
\nfail to close for any reason within the control of the Company or Parent, such
\nparty shall reimburse the other for all expenses incurred in connection with the
\nMerger and this Agreement.<\/p>\n
4.2 Public Disclosure. Unless otherwise required by law, prior to the
\nEffective Time no disclosure (whether or not in response to an inquiry)
\nregarding the terms of this Agreement and the transactions contemplated hereby
\nshall be made by any party hereto unless approved by Parent and the Company
\nprior to release, provided that such approval shall not be unreasonably
\nwithheld, subject, in the case of Parent, to Parent’s obligation to comply with
\napplicable securities laws and subject, in the case of the Company, to
\ndisclosure to the Stockholders, the Option Holders and the following third
\nparties after the execution of a nondisclosure agreement acceptable to the
\nParent: Republic Bank, Concentrex Incorporated, Geographic Data Technology, Inc.
\nand American Equity Properties, Inc..<\/p>\n
4.3 FIRPTA. Upon request by Parent after the Effective Time, the Company
\nshall use its best efforts to deliver to the Internal Revenue Service a notice
\nthat it is not a “United States Real Property Holding Corporation” as defined in
\nand in accordance with the requirements of Treasury Regulation Section
\n1.897-2(h)(2).<\/p>\n
4.4 Legal Requirements. Each of Parent, Merger Sub and the Company will
\ntake all reasonable actions necessary to comply promptly with all legal
\nrequirements which may be imposed on them with respect to the consummation of
\nthe transactions contemplated by this Agreement and will promptly cooperate with
\nand furnish information to any party hereto necessary in connection with any
\nsuch requirements imposed upon such other party in connection with the
\nconsummation of the transactions contemplated by this Agreement and will take
\nall reasonable actions necessary to obtain (and will cooperate with the other
\nparties hereto in obtaining) any consent, approval, order or authorization of,
\nor any registration, declaration or filing with, any Governmental Entity or
\nother person, required to be obtained or made in connection with the taking of
\nany action contemplated by this Agreement.<\/p>\n
4.5 Blue Sky Laws. Parent shall take such steps as may be necessary to
\ncomply with the securities and blue sky laws of all jurisdictions which are
\napplicable to the issuance of the Parent Common Stock pursuant hereto. The
\nCompany shall use its best efforts to assist Parent as may be necessary to
\ncomply with the securities and blue sky laws of all jurisdictions which are
\napplicable in connection with the issuance of Parent Common Stock pursuant
\nhereto.<\/p>\n
4.6 Best Efforts; Additional Documents and Further Assurances. Each of
\nthe parties to this Agreement shall each use its best efforts to effectuate the
\ntransactions contemplated hereby and to<\/p>\n
-29-
\n 34<\/p>\n
fulfill and cause to be fulfilled the conditions to closing under this
\nAgreement. Each party hereto, at the reasonable request of another party hereto,
\nshall execute and deliver such other instruments and do and perform such other
\nacts and things as may be necessary or desirable for effecting completely the
\nconsummation of this Agreement and the transactions contemplated hereby.<\/p>\n
4.7 Indemnification. Parent shall either (i) cause the Surviving
\nCorporation to continue to indemnify or (ii) directly indemnify the persons who
\nare currently officers and directors of the Company substantially in accordance
\nwith the Certificate of Incorporation and Bylaws of the Company as they are
\ncurrently in effect and the provisions of Delaware Law for action or inaction by
\nsuch person prior to the Merger. In addition, Parent hereby agrees to indemnify
\nand hold the Major Stockholders harmless against all claims, losses,
\nliabilities, damages, deficiencies, costs and expenses, including reasonable
\nattorneys’ fees and expenses (collectively, “Major Stockholder Damages”)
\nincurred by the Major Stockholder as a result of (i) any guarantee of the
\ncapital leases of the Company by the Major Stockholders as set forth on Section
\n4.7 of the Disclosure Schedule, (ii) any personal guarantees executed by the
\nMajor Stockholders in favor of Republic Bank and (iii) any claim or lawsuit by
\nCorum Ltd. against the Major Stockholders resulting from that certain letter of
\nunderstanding dated July 20, 1998; provided that the indemnity provided herein
\nshall not apply to any Major Stockholder Damages incurred as a result of fraud,
\ngross negligence or willful misconduct on the part of any Major Stockholder. For
\nso long as the insurer under the Company’s officer and director indemnification
\ninsurance policy is willing to continue such insurance policy after the Merger
\nat approximately the same premium as currently in effect, the Parent shall
\ncontinue such policy in effect until the third anniversary of the Closing.<\/p>\n
4.8 Employee Agreements. After the Effective Time, the Company shall use
\nits best efforts to cause each employee of and consultant to the Company to sign
\npromptly a Proprietary Rights and Confidentiality Agreement in Parent’s standard
\nform.<\/p>\n
4.9 Declaration of Registration Rights. Parent hereby grants to the
\nStockholders the registration rights set forth on Exhibit G hereto. Parent shall
\nalso file a registration statement on Form S-8 registering the shares of Parent
\nCommon Stock subject to the Options at substantially the same time as the filing
\nof the registration statement to be filed in accordance with the Declaration of
\nRegistration Rights.<\/p>\n
4.10 Release of Security Interests. The Major Stockholders shall use
\ntheir reasonable best efforts to have all liens, encumbrances and security
\ninterests in favor of Republic Bank terminated as promptly as practicable after
\npayment by Parent of the amounts due and payable to Republic Bank under the loan
\nagreement described in Section 2.5 of the Disclosure Schedule.<\/p>\n
-30-
\n 35<\/p>\n
ARTICLE V
\n CONDITIONS TO THE MERGER<\/p>\n
5.1 Conditions to Obligations of Each Party to Effect the Merger. The
\nrespective obligations of each party to this Agreement to effect the Merger
\nshall be subject to the satisfaction at or prior to the Effective Time of the
\nfollowing conditions:<\/p>\n
(a) Stockholder Approval. This Agreement and the Merger shall
\nhave been approved and adopted by all of the Stockholders of the Company
\nentitled to vote and the sole Stockholder of Merger Sub.<\/p>\n
(b) Board Approval. This Agreement and the Merger shall have been
\napproved and adopted by the requisite vote of the Board of Directors of the
\nCompany, Parent and Merger Sub.<\/p>\n
(c) No Injunctions or Restraints; Illegality. No temporary
\nrestraining order, preliminary or permanent injunction or other order issued by
\nany court of competent jurisdiction or other legal restraint or prohibition
\npreventing the consummation of the Merger or limiting or restricting the
\noperation of the business of the Company following the Merger shall be in
\neffect, nor shall any proceeding brought by an administrative agency or
\ncommission or other governmental authority or instrumentality, domestic or
\nforeign, seeking any of the foregoing be pending; nor shall there be any action
\ntaken, or any statute, rule, regulation or order enacted, entered, enforced or
\ndeemed applicable to the Merger, which makes the consummation of the Merger
\nillegal.<\/p>\n
(d) Non-Competition Agreements. Parent shall have entered into
\nnon-competition agreements with Paul Wray, George Rebhan and Beach Clow
\nsubstantially in the form attached hereto as Exhibit D.<\/p>\n
(e) Approval. Parent, Company and Merger Sub shall have timely
\nobtained all necessary approvals from Governmental Entities. 5.2 Additional
\nConditions to Obligations of Company. The obligations of the Company to
\nconsummate and effect this Agreement and the transactions contemplated hereby
\nshall be subject to the satisfaction at or prior to the Effective Time of each
\nof the following conditions, any of which may be waived, in writing, exclusively
\nby the Company:<\/p>\n
(a) Representations, Warranties and Covenants. The
\nrepresentations and warranties of Parent in this Agreement shall be true and
\ncorrect in all material respects on and as of the Effective Time as though such
\nrepresentations and warranties were made on and as of such time and Parent shall
\nhave performed and complied in all material respects with all covenants,
\nobligations and conditions of this Agreement required to be performed and
\ncomplied with by it as of the Effective Time.<\/p>\n
-31-
\n 36<\/p>\n
(b) Certificate of Parent. The Company shall have been provided
\nwith a certificate executed on behalf of Parent by its Chief Financial Officer
\nto the effect that, as of the Effective Time:<\/p>\n
(i) all representations and warranties made by Parent and
\nMerger Sub under this Agreement are true and complete in all material respects;<\/p>\n
(ii) all covenants, obligations and conditions of this
\nAgreement to be performed by Parent and Merger Sub on or before such date have
\nbeen so performed in all material respects; and<\/p>\n
(iii) the transactions contemplated by this Agreement have
\nbeen approved by the Board of Directors of Parent.<\/p>\n
(c) Legal Opinion. The Company shall have received a legal
\nopinion from Wilson Sonsini Goodrich & Rosati, Professional Corporation, counsel
\nto Parent, substantially in the form of Exhibit F hereto.<\/p>\n
5.3 Additional Conditions to the Obligations of Parent and Merger Sub.
\nThe obligations of Parent and Merger Sub to consummate and effect this Agreement
\nand the transactions contemplated hereby shall be subject to the satisfaction at
\nor prior to the Effective Time of each of the following conditions, any of which
\nmay be waived, in writing, exclusively by Parent:<\/p>\n
(a) Representations, Warranties and Covenants. The
\nrepresentations and warranties of the Company in this Agreement shall be true
\nand correct in all material respects on and as of the Effective Time as though
\nsuch representations and warranties were made on and as of such time and the
\nCompany shall have performed and complied in all material respects with all
\ncovenants, obligations and conditions of this Agreement required to be performed
\nand complied with by it as of the Effective Time.<\/p>\n
(b) Certificate of the Company. Parent shall have been provided
\nwith a certificate executed on behalf of the Company by its President to the
\neffect that, as of the Effective Time:<\/p>\n
(i) all representations and warranties made by the Company
\nunder this Agreement are true and complete in all material respects;<\/p>\n
(ii) all covenants, obligations and conditions of this
\nAgreement to be performed by the Company on or before such date have been so
\nperformed in all material respects; and<\/p>\n
(iii) attached to such certificate are true and correct copies
\nof the Company’s Certificate of Incorporation, as certified by the Delaware
\nSecretary of State, Bylaws and<\/p>\n
-32-
\n 37<\/p>\n
resolutions of the Company’s Board of Directors and Stockholders approving the
\ntransactions contemplated by this Agreement.<\/p>\n
(c) Third Party Consents. Parent shall have been furnished with
\nevidence satisfactory to it of the consent or approval of those persons whose
\nconsent or approval shall be required in order to assign the agreements with
\nConcentrex Incorporated, Geographic Data Technology, Inc. and American Equity
\nProperties, Inc.<\/p>\n
(d) Legal Opinion. Parent shall have received a legal opinion
\nfrom legal counsel to the Company, in substantially the form of Exhibit E.<\/p>\n
(e) No Material Adverse Changes. There shall not have occurred
\nany material adverse change in the business, properties, results of operations
\nor financial condition of the Company since September 30, 1999.<\/p>\n
(f) Dissenters. No holders of the Company Common Stock or Company
\nPreferred Stock shall have exercised, or shall continue to have the right to
\nexercise, appraisal rights under Delaware Law with respect to the transactions
\ncontemplated by this agreement.<\/p>\n
(g) Release of Security Interests. The Company shall have
\nreceived a pay off letter, substantially in the form attached hereto as Exhibit
\nG from Republic Bank.<\/p>\n
ARTICLE VI
\n TERMINATION, AMENDMENT AND WAIVER<\/p>\n
6.1 Termination. This Agreement may be terminated and the Merger
\nabandoned at any time prior to the Effective Time:<\/p>\n
(a) by mutual written consent of the Company and Parent;<\/p>\n
(b) by Parent if (i) it is not in material breach of its
\nobligations under this Agreement and there has been a material breach of any
\nrepresentation, warranty, covenant or agreement contained in this Agreement on
\nthe part of the Company and such breach has not been cured within five business
\ndays after written notice to the Company or (ii) there shall be any final action
\ntaken, or any statute, rule, regulation or order enacted, promulgated or issued
\nor deemed applicable to the Merger by any Governmental Entity, which would
\nprohibit Parent’s or the Company’s ownership or operation of all or a material
\nportion of the business of the Company, or compel Parent or the Company to
\ndispose of or hold separate all or a material portion of the business or assets
\nof the Company or Parent as a result of the Merger.<\/p>\n
-33-
\n 38<\/p>\n
(c) by the Company if it is not in material breach of its
\nobligations under this Agreement and there has been a material breach of any
\nrepresentation, warranty, covenant or agreement contained in this Agreement on
\nthe part of Parent or Merger Sub and such breach has not been cured within five
\ndays after written notice to Parent;<\/p>\n
(d) by any party hereto if: (i) the Closing has not occurred by
\nFebruary 1, 2000; (ii) there shall be a final, non-appealable order of a federal
\nor state court in effect preventing consummation of the Merger; (iii) there
\nshall be any final action taken, or any statute, rule, regulation or order
\nenacted, promulgated or issued or deemed applicable to the Merger by any
\nGovernmental Entity which would make consummation of the Merger illegal; or (iv)
\nif the Company’s Stockholders do not approve the Merger. Where action is taken
\nto terminate this Agreement pursuant to this Section 6.1, it shall be sufficient
\nfor such action to be authorized by the Board of Directors (as applicable) of
\nthe party taking such action. <\/p>\n
6.2 Effect of Termination.<\/p>\n
(a) In the event of termination of this Agreement as provided in
\nSection 6.1, this Agreement shall forthwith become void and there shall be no
\nliability or obligation on the part of Parent, Merger Sub, the Company or the
\nMajor Stockholders or their respective officers, directors or Stockholders,
\nexcept to the extent that such termination results from the breach by a party
\nhereto of any of its representations, warranties, covenants or agreements set
\nforth in this Agreement.<\/p>\n
6.3 Amendment. This Agreement may be amended by the parties hereto at
\nany time by execution of an instrument in writing signed on behalf of each of
\nthe parties hereto.<\/p>\n
6.4 Extension; Waiver. At any time prior to the Effective Time any party
\nhereto may, to the extent legally allowed, (i) extend the time for the
\nperformance of any of the obligations or other acts of the other parties hereto,
\n(ii) waive any inaccuracies in the representations and warranties made to such
\nparty contained herein or in any document delivered pursuant hereto and (iii)
\nwaive compliance with any of the agreements or conditions for the benefit of
\nsuch party contained herein. Any agreement on the part of a party hereto to any
\nsuch extension or waiver shall be valid only if set forth in an instrument in
\nwriting signed on behalf of such party.<\/p>\n
ARTICLE VII
\n GENERAL PROVISIONS<\/p>\n
7.1 Notices. All notices and other communications hereunder shall be in
\nwriting and shall be deemed given if delivered personally or by commercial
\ndelivery service, or mailed by registered or certified mail (return receipt
\nrequested) or sent via telecopy to the parties at the following addresses (or at
\nsuch other address for a party as shall be specified by like notice):<\/p>\n
-34-
\n 39<\/p>\n
(a) if to Parent or Merger Sub, to:
\n Sagent Technology, Inc.
\n 800 W. El Camino Real
\n Suite 300
\n Mountain View, CA 94040
\n Attn: Chief Executive Officer
\n Tel: (650) 815-3100
\n Fax: (650) 815-3266
\n with a copy to:
\n Wilson Sonsini Goodrich & Rosati, P.C.
\n 650 Page Mill Road
\n Palo Alto, CA 94304-1050
\n Attention: Arthur F. Schneiderman, Esq.
\n Tel: (650) 493-9300
\n Fax: (650) 493-6811<\/p>\n
(b) if to the Company, to:<\/p>\n
Qualitative Marketing Software, Inc.
\n 28050 U.S. Highway 19 North
\n Suite 500
\n Clearwater, FL 33761-2630
\n Tel: (727) 725-9727
\n Fax: (727) 669-5895
\n with a copy to:<\/p>\n
Stichter, Riedel, Blain & Prosser, P.A
\n 110 East Madison Street
\n Suite 200
\n Tampa, Florida 33602
\n Attn: Charles Postler, Esq.
\n Facsimile: (813) 229-1811
\n Telephone: (813) 229-0144<\/p>\n
(c) if to a Stockholder, to the address of such Stockholder
\nlisted on Exhibit A<\/p>\n
7.2 Interpretation. When a reference is made in this Agreement to
\nExhibits, such reference shall be to an Exhibit to this Agreement unless
\notherwise indicated. The words “include,” “includes” and “including” when used
\nherein shall be deemed in each case to be followed by the words “without
\nlimitation.” The table of contents and headings contained in this Agreement are
\nfor reference purposes only and shall not affect in any way the meaning or
\ninterpretation of this Agreement.<\/p>\n
7.3 Counterparts. This Agreement may be executed in one or more
\ncounterparts, all of which shall be considered one and the same agreement and
\nshall become effective when one or<\/p>\n
-35-
\n 40<\/p>\n
more counterparts have been signed by each of the parties and delivered to the
\nother party, it being understood that all parties need not sign the same
\ncounterpart.<\/p>\n
7.4 Miscellaneous. This Agreement and the documents and instruments and
\nother agreements among the parties hereto including the Disclosure Schedule (a)
\nconstitute the entire agreement among the parties with respect to the subject
\nmatter hereof and supersede all prior agreements and understandings, both
\nwritten and oral, among the parties with respect to the subject matter hereof;
\n(b) are not intended to confer upon any other person any rights or remedies
\nhereunder; and (c) shall not be assigned by operation of law or otherwise except
\nas otherwise specifically provided.<\/p>\n
7.5 Governing Law. This Agreement shall be governed in all respects,
\nincluding validity, interpretation and effect, by the laws of the State of
\nCalifornia. All parties hereto agree to service of documents commencing any suit
\ntherein may be made as provided in Section 7.1.<\/p>\n
7.6 Attorneys’ Fees. If any party to this Agreement brings an action
\nagainst another party to this Agreement to enforce its rights under this
\nAgreement, the prevailing party shall be entitled to recover its reasonable
\ncosts and expenses, including attorneys’ fees and costs, incurred in connection
\nwith such action, including any appeal of such action.<\/p>\n
7.7 Resolution of Disputes; Stipulation Regarding Confidentiality(a) .
\nThe parties hereto each agree to work together in good faith to resolve any
\ndisputes which may arise under this Agreement. Such attempts at resolution will
\nbe made at the level of a person to person meeting between the presidents of
\nParent and the Company and the Major Stockholders. Each party agrees that it
\nwill not initiate any litigation against any other party hereto regarding the
\nsubject matter of this Agreement for at least sixty (60) days following such
\nperson to person meeting between the presidents of Parent and the Company and
\nthe Major Stockholders except for (i) motions for a temporary restraining order
\nor other preliminary equitable relief and (ii) circumstances in which a delay
\nfor such period would result in such action being barred as a result of the
\nrelevant statute of limitations expiring. In the event any litigation is
\ninitiated in compliance with this Section, the parties agree jointly to
\nstipulate to the court that all proceedings in such action be kept confidential.<\/p>\n
7.8 Rules of Construction. The parties hereto agree that they have been
\nrepresented by counsel during the negotiation and execution of this Agreement
\nand, therefore, waive the application of any law, regulation, holding or rule of
\nconstruction providing that ambiguities in an agreement or other document will
\nbe construed against the party drafting such agreement or document.<\/p>\n
-36-
\n 41<\/p>\n
IN WITNESS WHEREOF, Parent, Merger Sub, the Company, and the Major Stockholders,
\nhave caused this Agreement to be signed by themselves or their duly authorized
\nrespective officers, all as of the date first written above.<\/p>\n
“PARENT”
\n SAGENT TECHNOLOGY, INC.<\/p>\n
By:
\n —————————————
\n Name:
\n Title:<\/p>\n
“COMPANY”
\n QUALITATIVE MARKETING SOFTWARE, INC.<\/p>\n
By:
\n —————————————
\n Name:
\n Title:<\/p>\n
“MERGER SUB”
\n FLOCO ACQUISITION CORP.<\/p>\n
By:
\n —————————————
\n Name:
\n Title:<\/p>\n
MAJOR STOCKHOLDERS<\/p>\n
——————————————
\n Paul Wray<\/p>\n
——————————————
\n George Rebhan<\/p>\n
——————————————
\n J. Beach Clow<\/p>\n
SIGNATURE PAGE TO AGREEMENT AND PLAN OF REORGANIZATION<\/p>\n
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