\n Conversion Right of Series A Common 2,135,713
\n Preferred Stock
\n Conversion Right of Series B Common 3,965,518
\n Preferred Stock
\n Conversion Right of Series E Common 666,667
\n Preferred Stock
\n Conversion Right of Series F Common 3,588,619
\n Preferred Stock
\n Conversion Right of Series G Common 3,000,000
\n Preferred Stock
\n Options under the Company Common see Schedule
\n Existing Option Plan 2.1
\n<\/c><\/c><\/s><\/caption>\n<\/table>\nThere are no Stock Rights outstanding with respect to the Company except as set
\nforth in this Section 2.1(a), and the terms, and record and beneficial owners,
\nof such Stock Rights are as set forth in SCHEDULE 2.1. Except as disclosed in
\nSCHEDULE 2.1, the Company is not a party to any stockholders agreement,
\nregistration rights agreement or other Contract with respect to capital stock or
\nStock Right issued or to be issued by it.<\/p>\n
(b) All of the issued and outstanding capital stock of the Company has
\nbeen duly and validly authorized and issued and is fully paid and
\nnon-assessable, and has not been issued in violation of any preemptive or
\nsimilar rights of any stockholder or any applicable securities law. Except as
\ndisclosed in SCHEDULE 2.1, no Person has any right to require the Company to
\nredeem, purchase or otherwise reacquire any capital stock issued by the Company
\nor any Stock Rights with respect to any capital stock issued by the Company.
\nThere are no preemptive or similar rights in respect of any capital stock of the
\nCompany except as set forth in SCHEDULE 2.1.<\/p>\n
(c) Subject to the dividend contemplated by Section 6.8, the Company has
\nnever declared or paid any dividend or made any distribution in respect of any
\nof its capital stock or any Stock Rights with respect thereto, or, except as set
\nforth in SCHEDULE 2.1, directly or indirectly redeemed, purchased or otherwise
\nacquired any of the capital stock issued by it or any Stock Rights with respect
\nthereto.<\/p>\n
2.2 ORGANIZATION; GOOD STANDING. The Company is a corporation duly
\norganized, validly existing and in good standing under the laws of the
\nCommonwealth of Pennsylvania and has all requisite corporate power and authority
\nto own, lease and operate its Properties and to conduct the Business as
\ncurrently conducted. The Company is not required to be qualified to do business
\nas a foreign corporation in any jurisdiction. The Company is not a partner in
\nany general or limited partnership or a member in any limited liability company.<\/p>\n
6<\/p>\n
2.3. AUTHORITY. The Company has all requisite power and authority under
\napplicable corporate law to execute and deliver this Agreement and to perform
\nthe transactions contemplated hereby. The execution and delivery of this
\nAgreement and the consummation of the transactions contemplated hereby have been
\nduly authorized by all requisite corporate action on the part of the Company
\n(subject to the vote or consent of its stockholders approving the Merger and
\nthis Agreement) and no other approval on the part of the Company is necessary
\nunder applicable corporate law for the execution, delivery and performance of
\nthis Agreement.<\/p>\n
2.4 NO VIOLATION. The execution and delivery of this Agreement and the
\nconsummation of the transactions contemplated hereby (i) will not violate or
\nconflict with the articles of incorporation or by-laws of the Company, (ii)
\nexcept as set forth in SCHEDULE 2.4, do not require any Third-Party Action with
\nrespect to the Company, (iii) do not violate any Legal Requirement or Order
\napplicable to the Company, (iv) do not conflict with or constitute a default
\nunder, or result in the acceleration or right of acceleration of any obligations
\nor the termination or right of termination of any rights under any Contract to
\nwhich the Company is a party, and (v) will not result in the creation or
\nimposition of any Lien, claim, charge, restriction, equity or encumbrance of any
\nkind upon or give any Person any interest or right in or with respect to any of
\nthe Properties, assets, business, agreements or Contracts of the Company.<\/p>\n
2.5 NO BROKERS, FINDERS, ETC. Neither the Company nor (with respect to
\neach Stockholder) such Stockholder has engaged any agent, broker, finder or
\ninvestment or commercial banker in connection with the negotiation, execution or
\nperformance of this Agreement or the transactions contemplated hereby, except
\nthe engagement of Chase H&Q by the Company, whose terms of engagement are fully
\nand accurately set forth in SCHEDULE 2.5.<\/p>\n
B. Each Stockholder, with respect to itself, himself or herself only,
\nhereby represents and warrants to the Buyer that, on and as of the date hereof:<\/p>\n
2.6. POWER AND AUTHORITY. Such Stockholder has all requisite power and
\nauthority to execute and deliver this Agreement and the Stockholder Agreement to
\nperform the transactions contemplated hereby.<\/p>\n
2.7 TITLE. Such Stockholder is the sole record and beneficial owner of
\nthe shares of Company stock set forth opposite such Stockholder’s name on
\nSCHEDULE 2.1. Such shares are free and clear of all Third-Party Rights, and
\nsuch Stockholder has the full and unrestricted right, power and authority to
\nvote such shares in favor of, and have such shares participate in, the Merger.<\/p>\n
2.8 AUTHORITY; ENFORCEABILITY. Such Stockholder has full right and
\npower and all authorization and approval required by any Legal Requirement, and
\nby any Contract to which such Stockholder is a party to vote his, her or its
\nshares in favor of the Merger. The execution, delivery and performance of this
\nAgreement and the Stockholder Agreement by such Stockholder have been duly
\nauthorized by all necessary action. This Agreement and the Stockholder
\nAgreement is each legally binding on and enforceable against such Stockholder in
\naccordance with its terms. The execution, delivery and performance of this
\nAgreement and the Stockholder Agreement by such Stockholder and the consummation
\nby such Stockholder of all of the transactions contemplated hereby and thereby
\n(x) do not violate any Legal Requirement or Order applicable to such Stockholder
\nand (y) do not conflict with or constitute a default (with or without the giving
\nof notice<\/p>\n
7<\/p>\n
or the passage of time or both) under, or result in any acceleration or right of
\nacceleration of any obligations under, any Contract to which such Stockholder is
\na party.<\/p>\n
2.9 SECURITIES STATUS. Such Stockholder is acquiring Buyer Stock under
\nthe terms of this Agreement for such Stockholder’s own account. Such
\nStockholder understands that the Buyer Stock has not been registered under the
\nAct by reason of its issuance or contemplated issuance in a transaction exempt
\nfrom the registration and prospectus delivery requirements of the Act. Such
\nStockholder is an “accredited investor,” as that term is defined in Section
\n501(a) of Regulation D of the Act.<\/p>\n
2.10 TRANSFER AND ASSIGNMENT. Any transfer or assignment of the Buyer
\nStock must be made in compliance with the Act and applicable state securities
\nlaws, established to the reasonable satisfaction of the Company. There are no
\nagreements, refusal rights or arrangements of any kind between such Stockholder
\nand any other party that require such Stockholder to offer or sell the Buyer
\nStock to any Person, whether in connection with the transaction contemplated by
\nthis Agreement, any resale of the Buyer Stock in the future or otherwise.<\/p>\n
2.11 LEGENDS. Such Stockholder understands that the certificate(s)
\nevidencing the Buyer Stock may bear a legend substantially as follows, if the
\nBuyer Stock is issued pursuant to a California Permit or under an S-4:<\/p>\n
[if pursuant to a California Permit: THE SHARES REPRESENTED BY THIS
\n CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
\n 1933.] THE SHARES HAVE BEEN ACQUIRED IN A RULE 145 TRANSACTION, AS
\n DEFINED IN RULE 145 ISSUED BY THE SECURITIES AND EXCHANGE
\n COMMISSION. THE SHARES MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED
\n OR HYPOTHECATED ONLY IN COMPLIANCE WITH THE LIMITATIONS OF RULE 145,
\n ESTABLISHED TO THE REASONABLE SATISFACTION OF THE COMPANY.<\/p>\n
and any legend required by any applicable state laws or regulations. If the
\nBuyer Stock is issued other than pursuant to a California Permit or an S-4
\npursuant to Section 7.11, such certificate(s) will be appropriately legended, as
\nrequired by applicable law.<\/p>\n
2.12 TAX STATUS. Each Stockholder understands and acknowledges that the
\nqualification of the Merger as a reorganization under Section 368(a)(2)(E) of
\nthe Code is dependent on a number of factors outside the control of the Buyer.
\nEach Stockholder confirms that he, she or it has relied upon his, her or its own
\ntax counsel, and not on the Buyer or any representative of the Buyer, with
\nrespect to such qualification.<\/p>\n
SECTION 3 BUSINESS REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS AND THE
\n COMPANY<\/p>\n
The Stockholders and the Company represent and warrant to the Buyer that,
\non and as of the date hereof:<\/p>\n
3.1 SUBSIDIARIES, ETC. The Company does not beneficially own any equity
\nor debt interest (except as a creditor in the ordinary course of business),
\ndirect or indirect, in any Person.<\/p>\n
8<\/p>\n
3.2 FINANCIAL STATEMENTS, ETC.<\/p>\n
(a) FINANCIAL STATEMENTS. SCHEDULE 3.2(a) contains copies of the audited
\nconsolidated balance sheets and consolidated statements of operations and
\nretained earnings and of cash flows for the Company at and for each of the three
\nyears ended December 31, 1997, December 31, 1998 and December 31, 1999 (the
\n“LAST FISCAL YEAR-END”) (the “AUDITED STATEMENTS”) and copies of the unaudited
\nconsolidated balance sheets and consolidated statements of operations for the
\nCompany at and for the period February 29, 2000 (the “INTERIM STATEMENTS” and,
\ntogether with the Audited Statements, the “FINANCIAL STATEMENTS”). The
\nFinancial Statements fairly present the consolidated financial condition of the
\nCompany at the dates indicated and the consolidated results of operations and
\ncash flows of the Company for the periods indicated in accordance with GAAP
\nconsistently applied throughout the periods indicated (except as stated therein
\nand, in the case of the Interim Statements, for the absence of statements of
\nretained earnings and cash flows and footnotes and subject to normal,
\nnonmaterial year-end adjustments).<\/p>\n
(b) HSR ACT. The balance sheet included in the Interim Statements is the
\nCompany’s last regularly prepared balance sheet within the meaning of the HSR
\nAct. The Company is its own ultimate parent entity within the meaning of the
\nHSR Act.<\/p>\n
(c) CERTAIN INDEBTEDNESS. SCHEDULE 3.2(c) sets forth all obligations of
\nthe Company and its Subsidiaries with respect to borrowed money, debt
\nsecurities, capitalized leases and the deferred payment of the purchase price of
\nproperty or services over an original term of 6 months or more, and the Property
\nof the Company, if any, subject to a Lien to secure any of such obligations.<\/p>\n
(d) ABSENCE OF CERTAIN LIABILITIES. The Company has no liability or
\nobligation of any nature, whether absolute, accrued, contingent or otherwise,
\narising out of acts or omissions heretofore occurring, or circumstances
\ncurrently or heretofore existing, except: (i) as expressly set forth in this
\nAgreement (including without limitation disclosures in the Schedules hereto);
\n(ii) as accrued in the balance sheet included in the Audited Statements or
\nInterim Statements; (iii) for liabilities and obligations incurred since the
\nLast Fiscal Year-End in the ordinary course of business consistent in nature and
\namount with past practice; and (iv) liabilities and obligations of a kind not
\nrequired to be accrued in a balance sheet at the date hereof prepared in
\naccordance with GAAP which individually (or in the aggregate for related
\nmatters) will not subject the Company to Damages in excess of $75,000.<\/p>\n
(e) ABSENCE OF CERTAIN CHANGES. Since the Last Fiscal Year-End, except
\nas set forth in SCHEDULE 3.2(e):<\/p>\n
(i) The Company has operated its business in the ordinary course.<\/p>\n
(ii) There has been no material adverse change in the assets,
\n business, liabilities, financial condition, results of operations or
\n customer base of the Company.<\/p>\n
(iii) There has not been any damage, destruction or condemnation
\n known to the Company with respect to Property having an aggregate net book
\n value on the Company’s books in excess of $75,000, net of any insurance
\n recoveries.<\/p>\n
9<\/p>\n
(iv) There has not been any change in the accounting methods,
\n practices or principles of the Company.<\/p>\n
(v) The Company has not sold, transferred or otherwise disposed
\n of (or agreed or committed to sell, transfer or otherwise dispose of) any
\n Property other than the sale of inventory in the ordinary course, or
\n canceled, compromised, released or assigned any debt or claim in its
\n favor, where the aggregate amount of such sales, transfers, dispositions,
\n cancellations, compromises, releases or assignments exceeds $75,000.<\/p>\n
(vi) The Company has not instituted, settled or agreed to settle
\n any litigation, action or proceeding before any Governmental Agency.<\/p>\n
(vii) The Company has not assumed, guaranteed, endorsed or
\n otherwise become responsible (or otherwise agreed to become responsible)
\n for the obligations of any other Person, except for the endorsement of
\n negotiable instruments in the ordinary course of business.<\/p>\n
(viii) The Company has not granted (or agreed or committed to grant)
\n any increase in compensation or fringe benefits other than normal salary
\n increases consistent with prior periods and employment offer letters
\n issued in the ordinary course of business.<\/p>\n
3.3 TAXES.<\/p>\n
(a) The Company has properly completed and filed, within the time and in
\nthe manner prescribed by law, all Tax returns and other documents required to be
\nfiled in respect of all Taxes, and all such returns and other documents are
\ntrue, correct and complete, except for any nonfilings and errors which in the
\naggregate will not result in Damages in excess of $75,000. The Company has
\nfurnished to the Buyer copies of all income Tax returns of the Company for the
\npast four years. The Company has, within the time and in the manner prescribed
\nby law, paid all Taxes that are due and payable. The Company has established
\nreserves on its books that are adequate for the payment of all Taxes not yet due
\nand payable.<\/p>\n
(b) (i) None of such returns contained a disclosure statement under
\n Section 6662 of the Code or any similar provision of foreign law;<\/p>\n
(ii) The Company has not received written notice from any federal
\n or foreign taxing authority asserting any deficiency against the Company
\n or claim for additional Taxes in connection therewith, other than any
\n deficiency or claim which has been previously settled or for which
\n appropriate reserves are included in the Interim Statements;<\/p>\n
(iii) The Company has not received any notice of any pending
\n action, audit, proceeding or investigation with respect to the assessment
\n or collection of federal or foreign Taxes or a claim for refund made by
\n the Company with respect to federal or foreign Taxes previously paid;<\/p>\n
(iv) All amounts that are required to be collected or withheld by
\n the Company with respect to federal or foreign Taxes have been duly
\n collected or withheld, and all such<\/p>\n
10<\/p>\n
amounts that are required to be remitted to any federal or foreign taxing
\n authority have been duly remitted;<\/p>\n
(v) No audit has been conducted of any federal or foreign income
\n tax return filed by the Company. The time during which such returns
\n remain open for examination has expired in accordance with applicable
\n statute and regulations, except for those returns for which the normally
\n applicable statutory\/regulatory period has not yet elapsed;<\/p>\n
(vi) The Company has not requested nor been granted any currently
\n effective waiver or extension of any statute of limitations with respect
\n to the assessment or filing of any federal or foreign Tax or return with
\n respect thereto;<\/p>\n
(vii) No consent has been filed under Section 341(f) of the Code
\n with respect to the Company;<\/p>\n
(viii) The Company is not required to include in income any
\n adjustment pursuant to Section 481(a) of the Code (or similar provisions
\n of foreign laws or regulations) by reason of a change in accounting method
\n nor does the Company have any knowledge that the Internal Revenue Service
\n (or other federal or foreign taxing authority) has proposed, or is
\n considering, any such change in accounting method; and<\/p>\n
(ix) The Company is not a party to and is not bound by nor has any
\n continuing obligation under any tax sharing or similar agreement or
\n arrangement with any Person.<\/p>\n
3.4 TITLE TO PROPERTIES.<\/p>\n
(a) The Company owns no real Property.<\/p>\n
(b) SCHEDULE 3.4(b) is a true and complete summary based on the books and
\nrecords of the Company of all items of personal Property owned by the Company
\nwith a net book value at the Last Fiscal Year-End in excess of $7,500 per item.<\/p>\n
(c) Except as set forth in SCHEDULE 3.4(c), the Company has good title to
\nall of its Properties, in each case free and clear of all Third-Party Rights.<\/p>\n
(d) The Company owns all material items of non-inventory tangible and
\nintangible personal Property that were owned as of the Last Fiscal Year-End and
\nused in generating the revenue shown in the last audited statement of operations
\nof the Company for the fiscal year ending on the Last Fiscal Year-End previously
\ndelivered to the Buyer, subject to any sales or dispositions of tangible
\npersonal Property since the Last Fiscal Year-End in the ordinary course of
\nbusiness.<\/p>\n
3.5 INVENTORIES. Since the Last Fiscal Year-End, all sales of inventory
\nhave been made in the ordinary course of business and no inventory has been
\npledged as collateral.<\/p>\n
3.6 ACCOUNTS RECEIVABLE. The accounts receivable of the Company (i) are
\nbona fide and arose from valid sales in the ordinary course of business in
\nmaterial conformity with all applicable Legal Requirements, (ii) are valid and
\nbinding obligations of the debtors requiring no further performance by the
\nCompany, and (iii) subject to the allowance for doubtful accounts receivable in<\/p>\n
11<\/p>\n
the balance sheet included in the Interim Statements, are fully collectible and
\nnot subject to any offsets or counterclaims and do not represent guaranteed
\nsale, sell-or-return transactions or any other similar understanding. No
\naccounts receivable have been pledged as collateral to any Person. The amounts
\nshown for accounts receivable in the Financial Statements reflect an allowance
\nfor doubtful accounts receivable in accordance with GAAP.<\/p>\n
3.7 LEASES, ETC. SCHEDULE 3.7 lists all leases, rental agreements,
\nconditional sales contracts and other similar Contracts under which the Company
\nleases (as lessor or lessee) any real or personal Property with rental payments
\nexceeding $15,000 per year (collectively, the “DISCLOSABLE LEASES”). All
\nDisclosable Leases are, in all material respects, valid, in good standing and
\nenforceable by the Company in accordance with their terms. Neither the Company
\nnor any other party to any Disclosable Lease is in material breach thereof. The
\nCompany enjoys peaceable possession of all real estate premises subject to
\nDisclosable Leases to which it is a party and to all personal Property subject
\nto Disclosable Leases to which it is a party.<\/p>\n
3.8 FACILITIES, EQUIPMENT. The Company owns or leases all material
\nland, buildings and equipment used in the operation of its business. The
\nCompany has not received any notice of any material violation of any Legal
\nRequirement or Order by the Company’s facilities which has not been corrected,
\nand no facility of the Company is in material violation of any Legal Requirement
\nor Order.<\/p>\n
3.9 INSURANCE. SCHEDULE 3.9 lists and describes briefly all binders and
\npolicies of liability, theft, life, fire and other forms of insurance and surety
\nbonds, insuring the Company or any of its Properties, assets and business as of
\nthe date hereof. All policies and binders listed in SCHEDULE 3.9 are valid and
\nin good standing and in full force and effect and the premiums have been paid
\nwhen due. Except for any claims set forth in SCHEDULE 3.9, there are no
\noutstanding unpaid claims under such policy or binder, and, except as set forth
\nin SCHEDULE 3.9, the Company has not received any notice of cancellation,
\ngeneral disclaimer of liability or non-renewal of any such policy or binder.<\/p>\n
3.10 EMPLOYMENT AND BENEFIT MATTERS.<\/p>\n
(a) SCHEDULE 3.10(a) lists each of the following for each employee of the
\nCompany: name, hire date, current salary and currently held options (including
\nthe vesting schedule applicable to such options). None of the employees listed
\non SCHEDULE 3.10(a) has given Company notice of his or her intention to resign
\nhis or her position with the Company and Company has no present intention to
\nterminate such employees.<\/p>\n
(b) SCHEDULE 3.10(b) lists all of the following items which are
\napplicable to the Company: (i) employment Contracts with any employee, officer
\nor director; and (ii) Contracts or arrangements with any Person providing for
\nbonuses, profit sharing payments, deferred compensation, stock options, stock
\npurchase rights, retainer, consulting, incentive, severance pay or retirement
\nbenefits, life, medical or other insurance, payments triggered by a change in
\ncontrol or any other employee benefits or any other payments, “fringe benefits”
\nor perquisites which are not terminable at will without liability to the Company
\nor which are subject to ERISA. The contracts or arrangements referred to in the
\nforegoing clause (ii) are herein called “BENEFIT PLANS.”<\/p>\n
12<\/p>\n
(c) Neither the Company, nor any of its ERISA Affiliates, has any union
\ncontracts, collective bargaining, union or labor agreements or other Contract
\nwith any group of employees, labor union or employee representative(s), nor has
\nthe Company or any ERISA Affiliate ever participated in or contributed to any
\nsingle employer defined benefit plan or multi-employer plan within the meaning
\nof ERISA Section 3(37), nor is the Company currently engaged in any labor
\nnegotiations, excepting minor grievances, nor is the Company the subject of any
\nunion organization effort. The Company is in material compliance with
\napplicable Legal Requirements respecting employment and employment practices and
\nterms and conditions of employment, including without limitation health and
\nsafety and wages and hours. No unfair labor practice complaint is pending
\nagainst the Company before the National Labor Relations Board or other
\nGovernmental Agency. There is no labor dispute, strike, slowdown or work
\nstoppage pending or threatened against the Company.<\/p>\n
(d) True and correct copies of each Benefit Plan listed in SCHEDULE
\n3.10(b) that is subject to ERISA (a “COMPANY ERISA PLAN”) and related trust
\nagreements, insurance contracts, and summary descriptions have been delivered or
\nmade available to the Buyer by the Company. The Company has also delivered or
\nmade available to the Buyer a copy of the two most recently filed IRS Forms
\n5500, with attached financial statement and accountant’s opinion, if applicable,
\nfor each Company ERISA Plan. The Company has also delivered or made available
\nto the Buyer a copy of, in the case of each Company ERISA Plan intended to
\nqualify under Section 401(a) of the Code, the most recent Internal Revenue
\nService letter as to its qualification under Section 401(a) of the Code.
\nNothing has occurred prior to or since the issuance of such letters to cause the
\nloss of qualification under the Code of any of such plans.<\/p>\n
(e) None of the Company ERISA Plans has participated in, engaged in or
\nbeen a party to any prohibited transaction as defined in ERISA or the Code, and
\nthere are no material claims pending or overtly threatened, involving any
\nBenefit Plan listed in SCHEDULE 3.10(b). There have been no material violations
\nof any reporting or disclosure requirements with respect to any Company ERISA
\nPlan.<\/p>\n
(f) Neither the Company nor any of its ERISA Affiliates has any liability
\nfor any excise tax imposed by Section 4971, 4972, 4974, 4975, 4976, 4977, 4978,
\n4978B, 4979, 4979A, 4980 or 4980B of the Code.<\/p>\n
(g) The Company and its ERISA Affiliates do not maintain any plans
\nproviding benefits within the meaning of Section 3(1) of ERISA (other than group
\nhealth plan continuation coverage under Section 601 of ERISA and 4980B(f) of the
\nCode) to former employees or retirees.<\/p>\n
3.11 CONTRACTS. Except as shown on SCHEDULES 3.7 and 3.11, and except
\nfor Contracts fully performed or terminable at will without liability to the
\nCompany (both before and after the Effective Time), the Company is not a party
\nto any Contract (i) which materially affects the Company, its business,
\nProperties, assets, operations or financial condition, (ii) which contemplates
\nperformance by the Company during a remaining period of more than one year
\n(90 days in the case of any purchase Contract) or involves remaining commitments
\nfor sale or purchase in excess of $62,500, (iii) under which the rights or
\nobligations of any party will change, accelerate, terminate, vest or in any
\nother way be affected by the consummation of the Merger or (iv) in which any
\nAffiliate of the Company has any direct or indirect economic interest. True and
\ncomplete copies of each Contract<\/p>\n
13<\/p>\n
disclosable on SCHEDULE 3.11 (a “DISCLOSABLE CONTRACT”) have been delivered to
\nthe Buyer. Each Disclosable Contract is, in all material respects, valid, in
\ngood standing and enforceable by the Company in accordance with its terms.
\nNeither the Company nor any other party to any Disclosable Contract is in
\nmaterial breach thereof.<\/p>\n
3.12 OFFICERS AND DIRECTORS, ETC. SCHEDULE 3.12 is a true and complete
\nlist of:<\/p>\n
(a) the names of each of the Company’s officers and directors;<\/p>\n
(b) the name of each bank or other financial institution in which the
\nCompany has an account, deposit or safe deposit box and the names of all persons
\nauthorized to draw thereon or to have access thereto; and<\/p>\n
(c) the name of each bank or other financial institution in which the
\nCompany has a line of credit or other loan facility.<\/p>\n
3.13 CORPORATE DOCUMENTS. The Company has furnished or made available to
\nthe Buyer or its representatives true, correct and complete copies of (i) the
\narticles of incorporation and bylaws of the Company, (ii) the minute books of
\nthe Company containing all records required to be set forth of all proceedings,
\nconsents, actions and meetings of the stockholders and board of directors of the
\nCompany; (iii) all material Permits and Orders with respect to the Company and
\n(iv) the stock transfer books of the Company setting forth all transfers of any
\ncapital stock.<\/p>\n
3.14 LEGAL PROCEEDINGS, CLAIMS. There is no action, suit, proceeding or
\ninvestigation pending in any court or before any arbitrator or before or by any
\nGovernmental Agency against the Company or any of its Properties or business,
\nand no such action, suit, proceeding or investigation currently threatened. The
\nCompany is not currently subject to any claim by any Person, whether or not such
\nclaim involves the threat of any action, suit, proceeding or investigation,
\nother than claims which in the aggregate do not exceed $50,000.<\/p>\n
3.15 COMPLIANCE WITH INSTRUMENTS, ORDERS AND LEGAL REQUIREMENTS. The
\nCompany is not in material violation of, or in default in any material respect
\nwith respect to, any term or provision of its articles of incorporation or
\nbylaws, or any Order or any Legal Requirement applicable to the Company.<\/p>\n
3.16 PERMITS. The Company holds all Permits material to the conduct of
\nits business as and where now conducted. There is not pending nor, threatened
\nany proceedings to terminate, revoke, limit or impair any material Permit.<\/p>\n
3.17 INTELLECTUAL PROPERTY.<\/p>\n
(a) Except as set forth on SCHEDULE 3.17(a), the Company or a Subsidiary
\nowns, solely and exclusively, and free and clear of any Third-Party Right, all
\ntitle to and rights in all Intellectual Property that are used in the business
\nof the Company and its Subsidiaries as currently conducted (collectively, the
\n“COMPANY INTELLECTUAL PROPERTY”). “INTELLECTUAL PROPERTY” means patents, patent
\nrights, trademarks, trademark rights, trade names, trade name rights, service
\nmarks, copyright registrations, copyrights, and any applications for any of the
\nforegoing, net lists, schematics, industrial models, inventions, technology,
\nknow-how, trade secrets, computer software programs or<\/p>\n
14<\/p>\n
applications (in both source code and object code form), development
\ndocumentation, programming tools, data, technical information, and tangible or
\nintangible proprietary information or material.<\/p>\n
(b) SCHEDULE 3.17(b) lists all patents, patent applications, trademarks,
\ntrade names, service marks and copyrights included in the Company Intellectual
\nProperty which have been registered, issued or applied for and the jurisdictions
\nin which such Company Intellectual Property right has been issued, registered or
\napplied for.<\/p>\n
(c) SCHEDULE 3.17(c) lists (i) all licenses, sublicenses and other
\nagreements, written or unwritten, to which the Company or any Subsidiary is a
\nparty and pursuant to which any Person is authorized to use, resell, sublicense
\nor market or distribute any Company Intellectual Property, and (ii) all written,
\nand all material unwritten, licenses, sublicenses and other agreements to which
\nthe Company or any Subsidiary is a party and pursuant to which the Company or
\nany Subsidiary is authorized to use, resell or distribute any third-party
\nIntellectual Property, including without limitation software, opensource,
\nfreeware, shareware and hardware, (collectively, “THIRD-PARTY INTELLECTUAL
\nPROPERTY”) which are incorporated in or are a part of any products which the
\nCompany or any Subsidiary has sold, resold, licensed or sublicensed, or which is
\nmaterial to the current operations of the Company and its Subsidiaries, other
\nthan (in the case of Third-Party Intellectual Property used internally only)
\nreadily-obtainable standard products with wide retail distribution. The Company
\nand each Subsidiary has, and at the relevant times in the past had, all
\nnecessary rights to resell or distribute any hardware and software of a third
\nparty which it resells or distributes or has resold or distributed. Neither the
\nCompany nor any Subsidiary is in material violation of any license, sublicense
\nor agreement described in SCHEDULE 3.17(c). To the knowledge of the Company,
\nneither the Company nor any Subsidiary, or any of the products or operations of
\neither, is in material violation of or materially infringes any Third-Party
\nIntellectual Property. Except as set forth on SCHEDULE 3.17(c), neither the
\nCompany nor any Subsidiary has received any claim that it has lost or will lose
\nany rights of the Company or any Subsidiary under any licenses to Third-Party
\nIntellectual Property to which the Company or such Subsidiary is a party. The
\nexecution and delivery of this Agreement by the Company and the consummation of
\nthe transactions contemplated hereby will neither cause the Company or any
\nSubsidiary to be in violation or default under any such license, sublicense or
\nagreement nor entitle any other party to any such license, sublicense or
\nagreement to terminate or modify such license, sublicense or agreement. Except
\nas listed on SCHEDULE 3.17(c), neither the Company nor any Subsidiary has
\nassigned or licensed to any third party any right, title or interest in the
\nCompany Intellectual Property. Except as listed on SCHEDULE 3.17(c), neither
\nthe Company nor any Subsidiary is contractually obligated to pay any
\ncompensation to any third party for the use of the Company Intellectual Property
\nor the Third-Party Intellectual Property.<\/p>\n
(d) To the Company’s knowledge, there is no material unauthorized use,
\ndisclosure, infringement or misappropriation of any Company Intellectual
\nProperty or any Third-Party Intellectual Property licensed by or through the
\nCompany by any third party, including without limitation any employee or former
\nemployee of the Company or any Subsidiary. Neither the Company nor any
\nSubsidiary has entered into any agreement to indemnify any other person against
\nany charge of infringement of any Third-Party Intellectual Property, other than
\nindemnification provisions contained in purchase orders arising in the ordinary
\ncourse of business.<\/p>\n
(e) To the Company’s knowledge, all patents, registered trademarks,
\nregistered service marks and registered copyrights held by the Company and its
\nSubsidiaries are valid and subsisting.<\/p>\n
15<\/p>\n
To the Company’s knowledge, there is no assertion or claim (or basis therefor)
\nchallenging the validity of any Company Intellectual Property. Neither the
\nCompany nor any Subsidiary has been sued in any suit, action or proceeding, or
\notherwise notified of any claim, which involves a claim of infringement of any
\npatent, trademark, service mark, copyright or violation of any trade secret or
\nother proprietary right of any third party. To the Company’s knowledge neither
\nthe conduct of the business of the Company and its Subsidiaries as currently
\nconducted nor the manufacture, sale, licensing or use of any of the products of
\nthe Company and its Subsidiaries as now manufactured, sold or licensed or used,
\ninfringes on or conflicts with, in any way, any trademark, trademark right,
\ntrade name, trade name right, service mark or copyright, or, to the Company’s
\nknowledge, any patent, patent right, industrial model or invention, of any third
\nparty that individually or in the aggregate has or is reasonably likely to have
\na Material Adverse Effect. To the Company’s knowledge and except as set forth
\non SCHEDULE 3.17(e), no third party is challenging the ownership by the Company
\nnor any Subsidiary, or the validity or effectiveness of, any of the Company
\nIntellectual Property. Neither the Company nor any Subsidiary has brought any
\naction, suit or proceeding for infringement of Company Intellectual Property or
\nbreach of any license or agreement involving Company Intellectual Property
\nagainst any third party. There are no pending, or to the Company’s knowledge,
\nthreatened interference, re-examinations, oppositions or nullities involving any
\npatents, patent rights or applications therefor of the Company or any
\nSubsidiary. Except as set forth on SCHEDULE 3.17(e), to the Company’s
\nknowledge, there is no breach or violation by a third party of, or actual or
\nthreatened, loss of rights under, any licenses to which the Company is a party.<\/p>\n
(f) Except as set forth in SCHEDULE 3.17(f), the Company or a Subsidiary
\nhas secured written assignments from all current and former consultants and
\nemployees who contributed to the creation or development of the Company
\nIntellectual Property currently being provided or marketed to customers or
\ncurrently being used by the Company or a Subsidiary of the rights to such
\ncontributions that the Company or such Subsidiary does not already own by
\noperation of law, recognizing the Company’s or Subsidiary’s ownership of all
\nsuch Company Intellectual Property and agreeing to hold such of it as is not
\nprotected by patents, patent applications or copyright (“CONFIDENTIAL
\nINFORMATION”) in confidence and not to use any Confidential Information except
\nin connection with such consultant’s or employee’s work for the Company or a
\nSubsidiary.<\/p>\n
(g) The Company and each of its Subsidiaries has taken all commercially
\nreasonable steps to protect and preserve the confidentiality of all Confidential
\nInformation. Except as set forth on SCHEDULE 3.17(g), all use, disclosure or
\nappropriation of Confidential Information by or to a third party has been
\npursuant to the terms of a written confidentiality or nondisclosure agreement
\nbetween the Company or any Subsidiary and such third party. SCHEDULE 3.17(g)
\nlists all such agreements currently in effect.<\/p>\n
(h) SCHEDULE 3.17(h) lists (including names, addresses, contact names,
\ntelephone numbers and termination date and next renewal date) of all Contracts
\nor other arrangements currently in effect pursuant to which the Company or any
\nSubsidiary is obligated to provide installation, maintenance or other support
\nservices (collectively, the “SUPPORT AGREEMENTS”). Except for any nonstandard
\nmaintenance agreements specified as such in SCHEDULE 3.17(h), all of the Support
\nAgreements are in all material respects in the form of the license agreement
\nidentified as the standard maintenance agreement set forth in SCHEDULE 3.17(h).
\nThe versions of the products currently supported by the Company are set forth in
\nSCHEDULE 3.17(h).<\/p>\n
16<\/p>\n
(i) There are no material defects in the Company’s products, and there
\nare no material errors in any documentation, specifications, manuals, user
\nguides, promotional material, internal notes and memos, technical documentation,
\ndrawings, flow charts, diagrams, source language statements, demo disks,
\nbenchmark test results, and other written materials related to, associated with
\nor used or produced in the development of the Company’s or its Subsidiaries’
\nproducts, which defects or errors have or are reasonably like to have,
\nindividually or in the aggregate, a Material Adverse Effect.<\/p>\n
(j) SCHEDULE 3.17(j) lists, as of the date hereof, all written
\nagreements or other arrangements under which the Company or any Subsidiary has
\nprovided or agreed to provide source code of the Company or any Subsidiary or
\nany other Company Intellectual Property to any third Person, whether pursuant to
\nescrow arrangements or otherwise.<\/p>\n
(k) The Company has made available to the Buyer copies of the Company’s
\nstandard forms of end-user licenses. Except as disclosed in SCHEDULE 3.17(k)
\n(which describes the material variations from the standard form of end-user
\nlicense), as of the date hereof, Company has not entered into any end-user
\nlicenses which contain terms materially different than as set forth in the
\nstandard forms of such agreements made available to Purchaser.<\/p>\n
(l) No government funding or university or college facilities were used
\nin the development of any product currently marketed or currently proposed to be
\nmarketed, and no such product was developed pursuant to any contract or other
\nagreement with any Person except pursuant to contracts or agreements listed in
\nSCHEDULE 3.17(l).<\/p>\n
(m) The Company categorizes warranty claims against it as critical and
\nnon-critical. There have been no critical warranty claims related to products
\ncurrently or previously marketed by the Company that are pending or were made
\nwithin the past twelve months. Except as set forth in SCHEDULES 3.17(c) AND
\n3.17(m), to the knowledge of the Company, the Company has not made any material
\noral or written representations or warranties with respect to its products or
\nservices.<\/p>\n
3.18 CAPITAL EXPENDITURES. SCHEDULE 3.18 sets forth, by nature and
\namount, all capital expenditures of the Company in excess of $10,000
\nindividually for which commitments have been or are budgeted to be made, or for
\nwhich payments or current liabilities have been made or incurred or are budgeted
\nto be made or incurred, after the Last Fiscal Year-End. The aggregate amount of
\ncapital expenditures of $10,000 or less individually so committed or budgeted
\n(other than workstations acquired in the ordinary course of business for new
\nemployees) does not exceed $50,000.<\/p>\n
3.19 ENVIRONMENTAL MATTERS. There are no Hazardous Materials used or
\npresent at any location used by the Company in the conduct of the Business,
\nexcept for any Hazardous Materials constituting normal office supplies. To the
\nknowledge of the Company, no location currently or previously used by the
\nCompany is contaminated by any Hazardous Material, and no event has occurred and
\nno activity has been or is being conducted by the Company or any other Person
\nwhich has resulted or could reasonably result in contamination of any location
\ncurrently or previously used by the Company by any Hazardous Material. To the
\nknowledge of the Company, no Government Agency has commenced any investigation
\nor proceeding with respect to the contamination of any location currently or
\npreviously used by the Company by any Hazardous Material.<\/p>\n
17<\/p>\n
3.20 ILLEGAL PAYMENTS. To the knowledge of the Company, none of the
\nCompany or any director, officer, employee, or agent of the Company has,
\ndirectly or indirectly, paid or delivered any fee, commission, or other sum of
\nmoney or item of property however characterized to any broker, finder, agent,
\ngovernment official, or other person, in the United States or any other country,
\nin any manner related to the business or operations of the Company, which the
\nCompany or any such director, officer, employee, or agent knows or has reason to
\nbelieve to have been illegal under any law.<\/p>\n
3.21 CONFIDENTIALITY OBLIGATIONS. The Company is not in possession of
\nany information, documents or materials under an obligation of confidentiality
\nor non-use to any other Person other than pursuant to a Contract described in
\nSCHEDULE 3.11. To the knowledge of the Company, the conduct of the Business as
\npresently conducted does not violate or conflict with the obligation of
\nconfidentiality or non-use to any other Person.<\/p>\n
3.22 AFFILIATE TRANSACTIONS. SCHEDULE 3.22 lists all transactions since
\nthe Company’s inception, and all obligations currently in effect (whenever
\narising), between the Company or any subsidiary of the Company on the one hand
\nand any Affiliate of the Company or any Person related to an Affiliate of the
\nCompany by blood or marriage on the other hand.<\/p>\n
3.23 INFORMATION PROVIDED. The information supplied in writing to the
\nBuyer or its advisors by the Company and the Stockholders for inclusion in the
\napplication for issuance of a California permit under Section 25142 of the
\nCalifornia Corporations Code (the “CALIFORNIA PERMIT”) shall not, at the time
\nthe fairness hearing is held pursuant to such Section and the time the
\nqualification of such securities is effective under such Section contain any
\nuntrue statement of a material fact or omit to state any material fact required
\nto be stated therein or necessary in order to make the statements therein, in
\nlight of the circumstances under which they were made, not misleading. The
\ninformation supplied by the Company and the Stockholders for inclusion in any
\nRegistration Statement shall not, on the date the Registration Statement is
\nfiled, at the time such holders vote or consent to the Merger and at the
\nEffective Time, contain any statement which, at such time, is false or
\nmisleading with respect to any material fact, or omit to state any material fact
\nnecessary in order to make the statements made therein, in light of the
\ncircumstances under which they are made, not false or misleading; or omit to
\nstate any material fact necessary to correct any previously communicated
\nstatement which has become false or misleading. The information supplied by the
\nCompany and the Stockholders for inclusion in any information statement or
\ninformation statement\/prospectus (the “INFORMATION STATEMENT”) to be sent to the
\nholders of Shares in connection with such holders’ consideration of the Merger
\nshall not, on the date the Information Statement is first mailed to such
\nholders, at the time such holders vote or consent to the Merger and at the
\nEffective Time, contain any statement which, at such time, is false or
\nmisleading with respect to any material fact, or omit to state any material fact
\nnecessary in order to make the statements made therein, in light of the
\ncircumstances under which they are made, not false or misleading; or omit to
\nstate any material fact necessary to correct any previously communicated
\nstatement which has become false or misleading. Notwithstanding the foregoing,
\nneither the Company nor any Stockholder makes any representation, warranty or
\ncovenant with respect to any information supplied by the Buyer or Merger Sub
\nthat is contained in such permit application or such information statement.<\/p>\n
18<\/p>\n
3.24 REPRESENTATIONS. No representation or warranty by the Company in
\nthis Agreement, or in any document furnished by the Company pursuant hereto
\ncontains any untrue statement of a material fact or omits to state a fact
\nnecessary to make the statements contained herein and therein not misleading.<\/p>\n
SECTION 4 REPRESENTATIONS AND WARRANTIES OF BUYER<\/p>\n
The Buyer hereby represents and warrants to the Stockholders and the
\nCompany that, on and as of the date hereof:<\/p>\n
4.1 ORGANIZATION, STANDING, ETC. OF BUYER AND MERGER SUB. The Buyer is
\na corporation duly organized, validly existing and in good standing under the
\nlaws of the State of Delaware. The Merger Sub is a corporation duly organized,
\nvalidly existing and in good standing under the laws of the State of
\nPennsylvania. The Buyer and Merger Sub have full power and authority under
\napplicable corporate law to own, lease and operate their Properties and to carry
\non the business in which they are engaged.<\/p>\n
4.2 AUTHORITY; ENFORCEABILITY. The Buyer and Merger Sub have all
\nnecessary power and authority under applicable corporate law to execute, deliver
\nand perform their obligations under this Agreement. The execution, delivery and
\nperformance of this Agreement and the consummation of the transactions
\ncontemplated hereby by the Buyer and Merger Sub has been duly authorized by all
\nnecessary action under applicable corporate law and no other approvals are
\nrequired. This Agreement is legally binding on and enforceable against the
\nBuyer and Merger Sub in accordance with its terms. The execution, delivery and
\nperformance of this Agreement by the Buyer and Merger Sub and the consummation
\nby the Buyer and Merger Sub of all of the transactions contemplated hereby, (w)
\nwill not violate or conflict with the certificate or articles of incorporation
\nor bylaws of the Buyer or Merger Sub, (x) do not require any Third-Party Action
\nrelating to the Buyer or Merger Sub except those listed on SCHEDULE 4.2, (y) do
\nnot violate any Legal Requirement or Order applicable to the Buyer or Merger Sub
\nand (z) do not conflict with or constitute a default (with or without the giving
\nof notice or the passage of time or both) under, or result in any acceleration
\nor right of acceleration of any obligations under, any Contract to which the
\nBuyer or Merger Sub is a party, where, in each case, the absence of such
\nThird-Party Action or such violation, conflict, default or acceleration would in
\nany way adversely affect the transactions contemplated hereby.<\/p>\n
4.3 SEC INFORMATION. As of their respective filing dates (except as
\nthereafter amended) all documents that the Buyer has filed with the SEC (the
\n“BUYER SEC DOCUMENTS”) have complied in all material respects with the
\napplicable requirements of the Act or the Exchange Act, and none of the Buyer
\nSEC Documents has contained any untrue statement of a material fact or omitted
\nto state a material fact required to be stated therein or necessary in order to
\nmake the statements made therein, in light of the circumstances under which they
\nwere made, not misleading except to the extent corrected by a subsequently filed
\nBuyer SEC Document.<\/p>\n
4.4 INFORMATION PROVIDED. The information supplied in writing by the
\nBuyer for inclusion in the application for issuance of the California Permit
\nwill not, at the time the fairness hearing is held pursuant to such Section and
\nthe time the qualification of such securities is effective under such Section
\ncontain any untrue statement of a material fact or omit to state any material
\nfact required to be stated therein or necessary in order to make the statements
\ntherein with respect to such<\/p>\n
19<\/p>\n
information, in light of the circumstances under which they were made, not
\nmisleading. The information supplied by the Buyer for inclusion in any
\nRegistration Statement shall not, on the date the Registration Statement is
\nfiled, at the time such holders vote or consent to the Merger and at the
\nEffective Time, contain any statement which, at such time, is false or
\nmisleading with respect to any material fact with respect to such information,
\nor omit to state any material fact necessary in order to make the statements
\nmade therein with respect to such information, in light of the circumstances
\nunder which they are made, not false or misleading; or omit to state any
\nmaterial fact necessary to correct any previously communicated statement with
\nrespect to such information which has become false or misleading. The
\ninformation supplied by the Buyer for inclusion in the Information Statement
\nshall not, on the date the Information Statement is first mailed to such
\nholders, at the time such holders vote or consent to the Merger and at the
\nEffective Time, contain any statement which, at such time, is false or
\nmisleading with respect to any material fact with respect to such information,
\nor omit to state any material fact necessary in order to make the statements
\nmade therein with respect to such information, in light of the circumstances
\nunder which they are made, not false or misleading; or omit to state any
\nmaterial fact necessary to correct any previously communicated statement with
\nrespect to such information which has become false or misleading.
\nNotwithstanding the foregoing, neither the Buyer nor Merger Sub makes any
\nrepresentation, warranty or covenant with respect to any information supplied by
\nthe Company or the Stockholders that is contained in such permit application,
\nRegistration Statement or Information Statement.<\/p>\n
SECTION 5 CONDITIONS TO OBLIGATIONS OF BUYER AT CLOSING<\/p>\n
The obligations of the Buyer hereunder to be performed at the Closing are
\nsubject to the satisfaction at or prior to the Closing of the following
\nconditions, except for any condition the Buyer may waive in writing in
\naccordance with Section 8.3.<\/p>\n
5.1 REPRESENTATIONS AND WARRANTIES.<\/p>\n
(a) The representations and warranties contained in Section 2 shall have
\nbeen true on the date of this Agreement and shall be true at and as of
\nimmediately prior to the Closing with the same effect as though made at and as
\nof immediately prior to the Closing, subject to the right of the Company to
\nupdate schedules to disclose developments between the date hereof and the
\nClosing Date which are not materially adverse.<\/p>\n
(b) The representations and warranties contained in Section 3 which are
\nqualified as to materiality or a specified dollar amount shall have been true on
\nthe date of this Agreement and shall be true at and as of immediately prior to
\nthe Closing with the same effect as though made at and as of immediately prior
\nto the Closing, subject to the right of the Company to update schedules to
\ndisclose developments between the date hereof and the Closing Date which are not
\nmaterially adverse.<\/p>\n
(c) The representations and warranties contained in Section 3 which are
\nnot qualified as to materiality or a specified dollar amount shall have been
\ntrue in all material respects on the date of this Agreement and shall be true in
\nall material respects at and as of immediately prior to the Closing with the
\nsame effect as though made at and as of immediately prior to the Closing,
\nsubject to the right of the Company to update schedules to disclose developments
\nbetween the date hereof and the Closing Date which are not materially adverse.<\/p>\n
20<\/p>\n
5.2 CLOSING CERTIFICATE. Each Stockholder and the Company shall have
\ndelivered to the Buyer his, her or its certificate dated the date of the Closing
\nthat the conditions specified in Section 5.1 are satisfied. Such certificate
\nshall be deemed a representation and warranty of the Stockholder and the Company
\nunder Sections 2 and 3 for all purposes of this Agreement.<\/p>\n
5.3 PERFORMANCE. The Stockholders and the Company shall have performed
\nand complied in all material respects with all covenants required herein to be
\nperformed or complied with by them or it on or before the Closing.<\/p>\n
5.4 THIRD-PARTY ACTION. All Third-Party Action required in order to
\nconsummate the Closing on the terms hereof shall have been taken, except to the
\nextent that the failure to secure such Third Party Action will not, in the
\nBuyer’s business judgment, materially adversely affect the operations, results
\nof operations, value or liabilities of the Company following the Effective Time.<\/p>\n
5.5 OPINION OF COUNSEL. The Buyer shall have received from Morgan,
\nLewis & Bockius, LLP, counsel to the Company and the Stockholders, an opinion
\ndated the date of the Closing, in form and substance customary for similar
\ntransactions.<\/p>\n
5.6 TRANSACTIONAL LITIGATION. No action, suit or proceeding before any
\nGovernmental Agency shall have been commenced, and no investigation by any
\nGovernmental Agency shall have been commenced or overtly threatened, against the
\nCompany, the Buyer, Merger Sub, or any of their respective principals, officers,
\ndirectors or shareholders seeking to restrain, prevent or change the
\ntransactions contemplated hereby or questioning the validity or legality of any
\nof such transactions or seeking damages in connection with any of such
\ntransactions other than the exercise of Dissenters’ Rights.<\/p>\n
5.7 INTERIM EVENTS. None of the events listed in Sections 7.9(a)
\nthrough (h) shall have occurred.<\/p>\n
5.8 MANAGEMENT CHANGES. No change in the chief executive officer of the
\nCompany shall have occurred from the date hereof.<\/p>\n
5.9 EQUITY HOLDER AGREEMENTS. The individuals designated in SCHEDULE
\n5.9 shall have entered into Equity Holder Agreements in the form attached as
\nEXHIBIT C.<\/p>\n
5.10 EMPLOYMENT AGREEMENTS. The individuals designated in SCHEDULE 5.9
\nshall have entered into employment agreements with the Buyer as provided in
\nSection 1.18(d).<\/p>\n
5.11 NONCOMPETITION AGREEMENTS. The individuals designated in SCHEDULE
\n5.11 shall have entered into amendments to their existing noncompetition
\nagreements with the Company to extend the noncompetition period to the later of
\n(i) one year from termination of employment and (ii) the second anniversary of
\nthe Effective Time.<\/p>\n
5.12 KEY CUSTOMERS. No material adverse change shall have occurred since
\nDecember 31, 1999 in the current or prospective business relationships between
\nthe Company and any of the following customers: BetaResearch and Golden
\nChannels.<\/p>\n
21<\/p>\n
5.13 STOCKHOLDER APPROVAL. The Stockholders shall have approved the
\nMerger and no Stockholders entitled to vote thereon shall have filed notices of
\nintention to dissent which would result in cash payment, at the Average Price,
\nof more than $12,000,000.<\/p>\n
5.14 EMPLOYEES. Not less than 90% of the technical employees and key
\nnon-technical employees of the Company as of the date hereof (other than any who
\ndie or become long-term disabled) shall have signed and delivered letters
\nsatisfactory to Buyer confirming their intention to continue their employment
\nwith the Surviving Corporation following the Merger. If the Merger has not been
\nconsummated within 75 days after the date hereof, the Company and the Buyer will
\ndiscuss and seek to mutually agree on an appropriate adjustment to the 90%
\nretention rate to reflect normal attrition.<\/p>\n
5.15 TERMINATION OF AGREEMENTS. All agreements between the Company and
\nits stockholders, or among its stockholders, relating to registration rights,
\nfirst refusal or first offer rights, pre-emptive or percentage maintenance
\nrights, co-sale rights and similar rights shall have terminated on or before the
\nEffective Time in accordance with their terms or a termination agreement
\nreasonably satisfactory to the Buyer.<\/p>\n
5.16 CORPORATE AND OTHER PROCEEDINGS. All corporate and other
\nproceedings on the part of the Company and the Stockholders in connection with
\nthe transactions to be consummated at the Closing, and all documents and
\ninstruments incident to such transactions, shall be reasonably satisfactory in
\nsubstance and form to the Buyer.<\/p>\n
SECTION 6 CONDITIONS TO STOCKHOLDERS’ AND COMPANY’S OBLIGATIONS AT CLOSING<\/p>\n
The obligations of the Stockholders and the Company hereunder to be
\nperformed at the Closing are subject to the satisfaction at or prior to the
\nClosing of the following conditions, except for any condition the Holders’ Agent
\nmay waive in accordance with Section 8.3.<\/p>\n
6.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
\nof the Buyer contained in Section 4 shall have been true in all material
\nrespects on the date of this Agreement and shall be true in all material
\nrespects at and as of immediately prior to the Closing with the same effect as
\nthough made at and as of immediately prior to the Closing.<\/p>\n
6.2 CLOSING CERTIFICATE. The Buyer shall have delivered to the Company
\na certificate dated the date of the Closing that the conditions specified in
\nSection 6.1 are satisfied, and that the Buyer has not been affected by any
\nmaterial adverse change since the date of this Agreement. Such certificate
\nshall be deemed a representation and warranty of the Buyer under Sections 4 for
\nall purposes of this Agreement.<\/p>\n
6.3 PERFORMANCE. The Buyer and Merger Sub shall have performed and
\ncomplied in all material respects with all covenants required herein to be
\nperformed or complied with by the Buyer and Merger Sub on or before the Closing.<\/p>\n
6.4 THIRD-PARTY ACTION. All Third-Party Action required in order to
\nconsummate the Closing on the terms hereof, other than any the absence of which
\nin the aggregate would not have a material effect on the transactions
\ncontemplated hereby, shall have been taken.<\/p>\n
22<\/p>\n
6.5 OPINION OF COUNSEL. The Stockholders and the Company shall have
\nreceived at the Closing from McCutchen, Doyle, Brown & Enersen, LLP, counsel to
\nthe Buyer and Merger Sub, an opinion dated the date of the Closing, in form and
\nsubstance customary for similar transactions.<\/p>\n
6.6 TRANSACTIONAL LITIGATION. No action, suit or proceeding before any
\nGovernmental Agency shall have been commenced, and no investigation by any
\nGovernmental Agency shall have been commenced or overtly threatened, against the
\nCompany, the Buyer, Merger Sub or any of their respective principals, officers,
\ndirectors or stockholders seeking to restrain, prevent or change the
\ntransactions contemplated hereby or questioning the validity or legality of any
\nof such transactions or seeking damages in connection with any of such
\ntransactions other than Dissenters’ Rights.<\/p>\n
6.7 DIVIDEND. The Company shall have distributed to the holders of
\nShares a cash dividend in an amount equal to the excess, if any, immediately
\nprior to the Effective Time, of the Company’s cash and cash equivalents over
\n$1,000,000.<\/p>\n
6.8 STOCKHOLDER APPROVAL. With respect to the Company’s closing
\nobligations only, the Merger shall have been approved by not less than a
\nmajority of the Shares entitled to vote thereon.<\/p>\n
6.9 LISTING. The Buyer Stock to be issued in the Merger shall have been
\nduly listed for trading on the Nasdaq National Market System.<\/p>\n
6.10 CORPORATE AND OTHER PROCEEDINGS. All corporate and other
\nproceedings on the part of the Buyer and Merger Sub in connection with the
\ntransactions to be consummated at the Closing, and all documents and instruments
\nincident to such transactions, shall be reasonably satisfactory in substance and
\nform to the Company.<\/p>\n
6.11 TAX OPINION. The Company and its stockholders shall have received
\nan opinion, reasonably satisfactory in form and substance to the Company, as to
\nthe qualification of the Merger under Section 368(a)(2(E) of the Code from
\nMorgan, Lewis & Bockius LLP or another similarly-qualified law firm.<\/p>\n
6.12 PERMIT OR REGISTRATION. The California Permit shall have been
\nissued or a registration statement on the form determined pursuant to
\nSection 7.11 shall have become effective.<\/p>\n
SECTION 7 COVENANTS<\/p>\n
7.1 NON-DISCLOSURE. Each party agrees not to divulge or communicate, or
\nuse for any purpose other than evaluating this transaction or exercising rights
\nas a party hereto, any information or materials concerning this Agreement, the
\nnegotiation between the parties hereto and the transactions contemplated hereby,
\nexcept to the extent that such information (w) is or hereafter becomes lawfully
\nobtainable from other sources, (x) is required to be disclosed to a Governmental
\nAgency having jurisdiction over the party or its Affiliates, (y) is otherwise
\nrequired by law to be disclosed or (z) is disclosed following a waiver in
\nwriting from the other parties. Promptly after the Effective Time, the Buyer
\nand the Company will issue a mutually agreeable press release concerning the
\ntransactions contemplated hereby. The parties also hereby ratify and confirm
\nthe Mutual Nondisclosure Agreement dated March 8, 2000, which shall continue in
\neffect.<\/p>\n
23<\/p>\n
7.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES, INDEMNIFICATION.<\/p>\n
(a) SURVIVAL. All representations and warranties made under Section 2, 3
\nor 4 shall survive the Closing, for one year in the case of Section 3, and any
\ninvestigation with respect thereto by an authorized party. Following the
\nClosing, however, the Company shall have no liability with respect to any
\nrepresentation or warranty and shall not be subject to any contribution,
\nindemnity or similar claims with respect thereto by any Stockholder or any other
\nPerson. For purposes of this Section 7.2, such representations and warranties
\nwill be deemed amended by any schedule update delivered by the Company pursuant
\nto Sections 5.1 (a), (b) and (c), and by any additional written disclosure by
\nthe Company expressly making an exception to a specified representation or
\nwarranty, which additional disclosure is acknowledged and accepted in writing by
\nthe Buyer prior to the Effective Time (it being understood that the Buyer shall
\nhave complete discretion whether or not to acknowledge and accept any such
\nadditional disclosure which is materially adverse).<\/p>\n
(b) REPRESENTATIONS AND WARRANTIES IN SECTION 3. In the event of any
\nmisrepresentation or breach of warranty in Section 3 (it being agreed that for
\npurposes of determining the existence of any such misrepresentation, all such
\nrepresentations, warranties or covenants of the Stockholders and the Company
\nthat are qualified as to materiality or as to a specified threshold or minimum
\namounts shall be deemed to be not so qualified), the Buyer shall be entitled to
\nrecover the related Recoverable Amount solely from the Escrow Account, provided
\nthat (i) the Buyer gives notice of such misrepresentation or breach in
\naccordance with the Escrow Agreement, in reasonable detail, specifying the
\namount of the claim, on or before 5:00 p.m. Pacific Time on the Last Escrow
\nClaim Date, it being understood that no recovery may be had against the Escrow
\nAccount with respect to any claim which is not the subject of such a notice
\ngiven by such time, and (ii) the Buyer shall not be entitled to any such
\nrecovery unless the aggregate Recoverable Amount for all claims made under this
\nSection 7.2(b) exceeds $350,000, in which event the Buyer may recover from the
\nEscrow Account the entire Recoverable Amount.<\/p>\n
“RECOVERABLE AMOUNT” means Damages, if any, proximately resulting to the
\nBuyer on account of any misrepresentation, breach of warranty or breach of
\ncovenant.<\/p>\n
The Company, the Stockholders, any Affiliate of the Company or any
\nAffiliate of the Stockholders shall not have any liability or obligation of any
\nkind to the Buyer, or any other Person on account of the subject matter of any
\nrepresentation or warranty made in Section 3, except from the Escrow Account as
\nstated in this Section 7.2. Notwithstanding anything in this Section 7.2, any
\nliability or obligation resulting from fraud or willful misconduct shall not be
\nsubject to any of the limitations or thresholds stated in this Section 7.2(b).<\/p>\n
(c) PRE-CLOSING TAXES, BROKERAGE, EXPENSES. The Buyer shall be entitled
\nto recover against the Escrow Account for Damages to it resulting from (i) the
\nfailure of the Company to pay Taxes required to be paid or accrued under GAAP on
\nor before the Closing or (ii) any claim by any broker, finder or similar person
\nclaiming through the Company or any Stockholder for any broker’s fee, finder’s
\nfee, commission or similar amount, other than as set forth in SCHEDULE 2.5 or
\n(iii) any other transaction expenses incurred by the Company in addition to
\nthose set forth in the second sentence of Section 8.2.<\/p>\n
24<\/p>\n
(d) INDIVIDUAL TRANSACTIONAL REPRESENTATIONS AND WARRANTIES OF THE
\nSTOCKHOLDERS. Each Stockholder individually, for himself, herself or itself
\nonly, hereby agrees to indemnify, defends and hold the Buyer harmless against
\nDamages resulting from breaches by him, her or it of the representations and
\nwarranties in part B of Section 2. Without limitation on other remedies
\navailable to the Buyer, amounts recoverable against individual Stockholders
\npursuant to this Section 7.2(d) shall first be asserted against the individual
\nStockholder’s entitlement to distributions from the Escrow Account.<\/p>\n
(e) LIMITATIONS. Nothing in this Section 7.2 shall limit the
\nindemnification available to the Buyer and the Stockholders under Sections 7.11,
\nif applicable.<\/p>\n
7.3 DISPUTED AND THIRD-PARTY CLAIMS.(a) If the Buyer shall give notice
\nof a claim in accordance with Section 7.2, and the Buyer and the Holders’ Agent
\ndo not resolve such matter by written agreement within 45 days after such notice
\nis given, the dispute will be settled exclusively by arbitration before a single
\narbitrator appointed by the American Arbitration Association. The Buyer and the
\nHolders’ Agent shall each bear their own expenses (including without limitation
\nthe fees and expenses of legal counsel and accountants) in connection with such
\narbitration. The arbitral award shall allocate the arbitrator’s fees and
\nexpenses according to the relative success of the Buyer and the Holders’ Agent
\nin the arbitration, as determined by the arbitrator.<\/p>\n
(b) To the extent a claim by the Buyer under Section 7.2 relates to a
\nclaim asserted against a party to this Agreement (other than to enforce this
\nAgreement) (a “THIRD-PARTY CLAIM”) and the Buyer gives notice of the assertion
\nof the Third-Party Claim, then the Holders’ Agent will have the option,
\nexercisable by written notice to the Buyer within 20 days after receipt of the
\nBuyer’ notice, to control the defense of such Third-Party Claim. All expenses
\n(including, without limitation, attorneys’ fees) incurred by the Holders’ Agent
\nin connection with their assumption of control of the defense of a Third-Party
\nClaim shall be paid by the Holders’ Agent from the sources specified in the
\nEscrow Agreement. If the Holders’ Agent has not assumed the defense of a Third-
\nParty Claim, then the Buyer shall have the right to control the defense of the
\nThird-Party Claim, and the expenses reasonably incurred by the Buyer in
\nconnection with such defense shall be recoverable as part of the underlying
\nclaim on the same basis and subject to the same limitations as stated in Section
\n7.2 and this Section.<\/p>\n
(c) The party controlling the defense may use counsel selected by it, but
\nif the other party reasonably objects (within 20 days after designation of
\ncounsel initially selected) on account of such counsel’s representation or
\npotential representation of the designating party in matters in which the Buyer’
\nand the Stockholders’ or the Company’s interests are adverse or potentially
\nadverse, the designating party shall select other counsel free of any such
\nadverse representation. The party controlling the defense shall have the right,
\nin its discretion exercised in good faith and upon the advice of counsel, to
\nsettle such matter, either before or after the initiation of litigation, at such
\ntime and upon such terms as they deem fair and reasonable, PROVIDED that (i) at
\nleast 10 days’ prior notice shall be given to the other party of the intention
\nto settle the Third-Party Claim, (ii) no settlement by the controlling party
\nshall include any equitable relief binding on the noncontrolling party, and
\n(iii) the controlling party shall not agree to any settlement of such Third-
\nParty Claim without the prior written consent of the other party, which consent
\nshall not be unreasonably withheld. The noncontrolling party will have the
\nright to be represented by counsel, solely at its own expense. The controlling
\nparty shall keep the other party advised of the status of the Third-Party Claim
\nand the<\/p>\n
25<\/p>\n
defense thereof and shall consider in good faith recommendations made by the
\nother party with respect thereto.<\/p>\n
(d) Unless otherwise agreed by the parties, arbitration under
\nSection 7.3(a) of a claim by the Buyer with respect to a Third-Party Claim shall
\nbe deferred until the resolution of the Third-Party Claim.<\/p>\n
7.4 TERMINATION OF THIS AGREEMENT. If any condition of the Closing
\nstated in Section 5 is not satisfied on or before July 15, 2000 (if the
\nCalifornia Permit has been issued on or before July 1, 2000) or October 15, 2000
\n(in all other cases), then, provided the Buyer is not in material default
\nhereunder, the Buyer may at any time thereafter terminate any further
\nobligations under this Agreement by giving written notice thereof to the Company
\nand the Holders’ Agent. If any condition of the Closing stated in Section 6 is
\nnot satisfied on or before such date, then, provided the Company and the
\nStockholders are not in material default hereunder, the Company and the Holders’
\nAgent may at any time thereafter terminate any further obligations under this
\nAgreement by giving written notice thereof to the Buyer. Any such termination
\nwill not, however, terminate or otherwise affect the obligations of the parties
\nunder Sections 7.1 or 8.1. This Agreement may be so terminated, or terminated
\nby mutual agreement of the parties upon the authorization of their respective
\nboards of directors, notwithstanding approval of this Agreement by the
\nstockholders of any or all parties.<\/p>\n
7.5 REASONABLE BUSINESS EFFORTS, NO INCONSISTENT ACTION. Each party
\nwill use its, his or her reasonable business efforts to cause the conditions
\nover which it has control to be satisfied on or before the Closing. No party
\nwill take any action which will foreseeably result in the nonsatisfaction of any
\ncondition stated in Section 5 or 6 on or before the Closing.<\/p>\n
7.6 ACCESS. Between the date of this Agreement and the Closing or any
\nearlier termination of this Agreement in accordance with its terms, the Company
\nwill (i) give the Buyer and its authorized representatives access to its books,
\nrecords, Properties, officers, attorneys and accountants and permit the Buyer to
\nmake inspections and copies of such books and records, and (ii) furnish the
\nBuyer with such financial information and operating data and other information
\nwith respect to its business and Properties, and to discuss with the Buyer and
\nits authorized representative its affairs, all as the Buyer may from time to
\ntime reasonably request for the purposes of this Agreement, during normal office
\nhours. Any on-site visit shall be subject to reasonable advance notice and to
\nbeing accompanied by an officer or designated employee of the Company.<\/p>\n
7.7 NO SOLICITATION OR NEGOTIATION. The Company and the Stockholders
\nagree that, between the date of this Agreement and the Closing or any earlier
\ntermination of this Agreement in accordance with its terms, they will not (and
\nwill not permit any person or entity which they control to) seek or entertain,
\nor negotiate any terms of, a Strategic Transaction with any party other than the
\nBuyer and its affiliates, or give any information concerning its business to any
\nsuch party, or enter into any agreement inconsistent with the proposed
\ntransaction with the Buyer. A “STRATEGIC TRANSACTION” means (i) any form of
\nacquisition, direct or indirect, whether by purchase, merger, stock sale
\n(primary or secondary), reinsurance or any other structure, of any significant
\n(15% or greater in the aggregate) portion of the Company’s consolidated business
\nor a significant (15% or greater in the aggregate) equity interest therein,
\n(ii) any arrangement whereby effective operating control of the Company’s
\nconsolidated business or a portion thereof is granted to another party or
\n(iii) any transaction involving the recapitalization, restructuring,
\nliquidation, dissolution or other<\/p>\n
26<\/p>\n
similar type of transaction involving the Company. During such period, the
\nCompany will promptly notify the Buyer of the content and identity of any
\nproposal or communication it receives from any such person concerning any
\nStrategic Transaction.<\/p>\n
7.8 INTERIM FINANCIAL INFORMATION. The Company will supply to the Buyer
\nunaudited consolidated monthly financial statements within 30 business days of
\nthe end of each month ending between the date of this Agreement and the Closing
\nor any earlier termination of this Agreement in accordance with its terms,
\nprepared on a basis consistent with the unaudited consolidated financial
\nstatements for the preceding months, together with additional monthly reports
\nsubstantially in the form heretofore delivered to the Company’s Board of
\nDirectors. For purposes of these statements, employee bonuses and similar
\nexpenses may be accrued based on actual results for the year to date and
\nbudgeted results for the balance of the year.<\/p>\n
7.9 INTERIM CONDUCT OF BUSINESS. From the date of this Agreement until
\nthe Closing or any earlier termination of this Agreement in accordance with its
\nterms, unless approved by the Buyer in writing, the Company will operate its
\nbusiness consistently with past practice and in the ordinary course of business,
\nand will not:<\/p>\n
(a) merge or consolidate with or agree to merge or consolidate
\n with, or sell or agree to sell all or substantially all of its Property
\n to, or purchase or agree to purchase all or substantially all of the
\n Property of, or otherwise acquire, any other Person or a division thereof,
\n except as provided in this Agreement;<\/p>\n
(b) amend its articles of incorporation or by-laws except as may be
\n necessary to effect this Agreement and the transaction contemplated hereby
\n (which the Company agrees to complete on a timely basis);<\/p>\n
(c) make any changes in its accounting methods, principles or
\n practices, except as required by GAAP;<\/p>\n
(d) sell, consume or otherwise dispose of any Property, except in
\n the ordinary course of business consistent with past practices;<\/p>\n
(e) authorize for issuance, issue, sell or deliver any additional
\n shares of its capital stock of any class or any Stock Rights with respect
\n to its capital stock, other than, in each case, the issuance of Common
\n Stock pursuant to the exercise of any conversion rights under Shares
\n outstanding on the date hereof and the exercise of any stock options
\n outstanding on the date hereof;<\/p>\n
(f) except as contemplated in Section 6.8, declare any dividend on,
\n make any distribution with respect to, or redeem or repurchase, its
\n capital stock;<\/p>\n
(g) except as provided in Section 1.18(f), modify, amend or
\n terminate any Benefit Plans, except as required under Legal Requirements
\n or any Disclosable Contract; or<\/p>\n
(h) authorize or enter into an agreement to do any of the
\n foregoing.<\/p>\n
7.10 FAIRNESS HEARING.<\/p>\n
27<\/p>\n
(a) As soon as practicable after the execution of this Agreement, the
\nCompany shall prepare, with the cooperation of the Buyer, the Information
\nStatement for the holders of Shares to approve this Agreement and the
\ntransactions contemplated hereby. The Information Statement shall constitute a
\ndisclosure document for the offer and issuance of the shares of Buyer Stock to
\nbe received by the holders of Shares. The Buyer and the Company shall each use
\nreasonable commercial efforts to cause the Information Statement to comply with
\napplicable federal and state securities laws requirements. Each of the Buyer
\nand the Company agree to provide promptly to the other such information
\nconcerning its business and financial statements and affairs as, in the
\nreasonable judgment of the providing party or its counsel, may be required or
\nappropriate for inclusion in the Information Statement, or in any amendments or
\nsupplements thereto, and to cause its counsel and auditors to cooperate with the
\nother’s counsel and auditors in the preparation of the Information Statement.
\nThe Company will promptly advise the Buyer, and the Buyer will promptly advise
\nthe Company, in writing if at any time prior to the Effective Time either shall
\nobtain knowledge of any facts that might make it necessary or appropriate to
\namend or supplement the Information Statement in order to make the statements
\ncontained or incorporated by reference therein not misleading or to comply with
\napplicable law. The Information Statement shall contain the recommendation of
\nthe Company’s Board of Directors and the Stockholders that the holders of Shares
\napprove the Merger and this Agreement and the conclusion of the Company’s Board
\nof Directors that the terms and conditions of the Merger are advisable and fair
\nand reasonable to the holders of Shares. The Company shall not include in the
\nInformation Statement any information with respect to the Buyer or its
\naffiliates or associates, the form and content of which information shall not
\nhave been approved by the Buyer prior to such inclusion.<\/p>\n
(b) As soon as practicable after the execution of this Agreement, and
\nsubject to Section 7.10(a), the Buyer shall prepare, with the cooperation of the
\nCompany, the application for the California Permit. The Buyer and the Company
\nshall each use commercially reasonable efforts to cause such application to
\ncomply with the requirements of applicable federal and state laws, and agrees to
\nprovide promptly to the other such information concerning its business and
\nfinancial statements and affairs as, in the reasonable judgment of the providing
\nparty or its counsel, may be required or appropriate for inclusion in such
\napplication, or in any amendments or supplements thereto, and to cause its
\ncounsel and auditors to cooperate with the other’s counsel and auditors in the
\npreparation of such application. The Company will promptly advise the Buyer,
\nand the Buyer will promptly advise the Company, in writing if at any time prior
\nto the Effective Time it shall obtain knowledge of any facts that might make it
\nnecessary or appropriate to amend or supplement such application in order to
\nmake the statements contained or incorporated by reference therein not
\nmisleading or to comply with applicable law. The Buyer shall not include in
\nsuch application any information with respect to the Company or its affiliates
\nor associates, the form and content of which information shall not have been
\napproved by the Company prior to such inclusion.<\/p>\n
(c) If the California Permit is not issued on or before June 1, 2000,
\nthen the parties will proceed without a California Permit, and Section 7.11 will
\napply.<\/p>\n
7.11 REGISTRATION.<\/p>\n
(a) FORM OF REGISTRATION. In the event a hearing for the California
\nPermit is not granted by the California Department of Corporations by May 1,
\n2000 or such Department issues a determination against granting a hearing prior
\nto that date, the Buyer and the Company will<\/p>\n
28<\/p>\n
promptly commence preparation of an S-4 pursuant to Section 7.11(b). If a
\nhearing is denied at a later date or the hearing held but the California Permit
\nnot issued, the parties agree to consult and seek to reach agreement upon an
\nalternative form of registration, such as a resale prospectus under Form S-3,
\nthat provides liquidity at least equivalent (as to amount and timing) for
\nCompany stockholders to the liquidity that would have been provided by a
\nCalifornia Permit, but on a more cost-effective but substantially as timely
\nbasis than an S-4, if available, and otherwise the parties will promptly
\ncommence the preparation of an S-4.<\/p>\n
(b) S-4. Promptly after this Section 7.11(b) becomes applicable, the
\nBuyer and the Company will jointly prepare and file with the SEC the Information
\nStatement forming part of a registration statement on Form S-4 (the “S-4”). The
\nBuyer and the Company will use all reasonable efforts to cause the S-4 to become
\neffective as promptly as practicable after the date this Section 7.11(b) becomes
\napplicable. The Buyer and the Company will provide promptly to one another such
\ninformation concerning its business and financial statements and affairs as is,
\nin the reasonable judgment of the providing party or its counsel, required or
\nappropriate for inclusion in the Information Statement and the S-4, or in any
\namendments or supplements thereto, and will cause their respective counsel and
\naccountants to cooperate with one another in the preparation of the Information
\nStatement and the S-4. The Company and the Buyer will notify the other promptly
\nupon the receipt of any comments of the SEC or its staff or any other government
\nofficials relating to the Information Statement, S-4 or any amendment or
\nsupplement thereto, and will supply the other with copies of all correspondence
\nbetween such party or any of its representatives, on the one hand, and the SEC
\nor its staff or any other government officials, on the other hand, relating to
\nthe Information Statement, S-4 or any amendment or supplement thereto. Whenever
\nany event occurs which is required to be set forth in an amendment or
\nsupplement, the Information Statement or the S-4, the Company or the Buyer, as
\nthe case may be, will promptly inform the other of such occurrence and cooperate
\nin filing with the SEC or its staff or any other government official, and\/or
\nfurnishing to shareholders of the Company, such amendment or supplement. No
\namendment or supplement to the Information Statement or the S-4 will be made
\nwithout the approval of both the Company and the Buyer, which approval shall not
\nbe unreasonably withheld or delayed. The Company and the Buyer will each advise
\nthe other, promptly after it receives notice thereof, of the time when the S-4
\nhas become effective or any supplement or amendment has been filed, of the
\nissuance of any stop order, or of any request by the SEC for amendment of
\nInformation Statement or the S-4 or comments thereon and responses thereto or
\nrequest by the SEC for additional information. The Information Statement shall
\ncontain the recommendation of the Company’s Board of Directors and the
\nStockholders that the holders of Shares approve the Merger and this Agreement.
\nThe Buyer will mail the Information Statement to the Company’s stockholders at
\nthe addresses provided by the Company. To the extent required by applicable
\nlaw, the Buyer will at its expense qualify the offer of the Buyer Stock under
\nthe “blue sky” laws of any state of the United States or the District of
\nColumbia as necessary to consummate the Merger. If this Section 7.11(b) becomes
\napplicable, the parties will enter into indemnification agreement customary for
\nsimilar S-4 transactions.<\/p>\n
(c) S-3. If a registration on Form S-3 is determined to be appropriate
\npursuant to Section 7.11(a), this Section 7.11(c) shall apply.<\/p>\n
(i) Upon the written request of the holders of the Buyer Stock
\ncertifying that they have a bona fide intention to sell a specified number, not
\nless than 300,000, of shares of Buyer<\/p>\n
29<\/p>\n
Stock, the Buyer shall file a S-3 (the “S-3”), registering the number of shares
\nBuyer Stock so specified (the “REGISTRABLE SECURITIES”) for non-underwritten
\nresale into the open market.<\/p>\n
(ii) In order to effect the registration, the Buyer shall:<\/p>\n
(1) prepare and file the S-3 with respect to the Registrable
\nSecurities and use its best efforts to cause the S-3 to become effective and
\nremain effective for at least 120 days;<\/p>\n
(2) prepare and file with the SEC such amendments and
\nsupplements to the S-3 and the prospectus used in connection therewith as may be
\nnecessary to comply with the provisions of the Act with respect to the
\ndisposition of all securities covered by the S-3;<\/p>\n
(3) furnish to the Stockholders the numbers of copies of the
\nprospectus, including a preliminary prospectus, in conformity with the
\nrequirements of the Act, and such other documents as the Stockholders may
\nreasonably request in order to facilitate the disposition of the Registrable
\nSecurities;<\/p>\n
(4) use its best efforts to register and qualify the
\nsecurities covered by the S-3 under other securities or blue sky laws of such
\njurisdictions as shall be reasonably appropriate for distribution of the
\nsecurities covered by the S-3, provided that the Buyer shall not be required in
\nconnection therewith or as a condition thereto to qualify to do business or to
\nfile a general consent to service of process in any such states or
\njurisdictions; and<\/p>\n
(5) notify the Stockholders, at any time when a prospectus
\nrelating thereto is required to be delivered under the Act, of the happening of
\nany event as a result of which the prospectus included in such S-3, as then in
\neffect, includes an untrue statement of a material fact or omits to state a
\nmaterial fact required to be stated therein or necessary to make the statements
\ntherein not misleading in light of the circumstances then existing.<\/p>\n
(iii) It shall be a condition precedent to the obligation of the
\nBuyer under this Section 7.11(c) that the each Stockholder shall furnish to the
\nBuyer such information regarding such Stockholder, the shares of Registrable
\nSecurities held by such Stockholder and the intended method of disposition of
\nsuch shares as shall reasonably be required to effect the registration of the
\nRegistrable Securities.<\/p>\n
(iv) The Buyer shall bear and pay all expenses incurred by the
\nBuyer in connection with any registration, filing or qualification of the
\nRegistrable Securities with respect to registrations pursuant to this Section
\n7.11(c), including (without limitation) all registration, filing, qualification,
\nprinter’s fees, accounting fees and expenses and the fees of a single attorney
\nfor the Stockholders, but shall not be responsible for other charges relating to
\nthe Buyer Stock and expenses or any taxes imposed with respect to the
\nRegistrable Securities on the sale and transfer thereof.<\/p>\n
(v) To the extent permitted by law, the Buyer will indemnify and
\nhold harmless any Stockholder and each person, if any, who controls Stockholder
\nwithin the meaning of the Act or the Exchange Act, against any losses, claims,
\ndamages, or liabilities (joint or several) to which they may become subject
\nunder the Act, or the Exchange Act, or other federal or state law, insofar as
\nsuch losses, claims, damages, or liabilities (or actions in respect thereof)
\narise out of or are based upon any of the following statements, omissions or
\nviolations (collectively a “VIOLATION”): (i) any untrue<\/p>\n
30<\/p>\n
statement or alleged untrue statement of a material fact contained in the S-3,
\nincluding any preliminary prospectus or final prospectus contained therein or
\nany amendments or supplements thereto, (ii) the omission or alleged omission to
\nstate therein a material fact required to be stated therein, or necessary to
\nmake the statements therein not misleading, or (iii) any violation or alleged
\nviolation by the Buyer of the Act, the Exchange Act, any state securities law or
\nany rule or regulation promulgated under the Act, or the Exchange Act or any
\nstate securities law; and the Buyer will pay to such Stockholder or controlling
\nperson, as incurred, any legal or other expenses reasonably incurred by them in
\nconnection with investigating or defending any such loss, claim, damage,
\nliability, or action; PROVIDED, HOWEVER, that the indemnity agreement contained
\nin this subsection (1) shall not apply to amounts paid in settlement of any such
\nloss, claim, damage, liability, or action if such settlement is effected without
\nthe consent of the Buyer (which consent shall not be unreasonably withheld), nor
\nshall the Buyer be liable to any indemnitee for any such loss, claim, damage,
\nliability, or action to the extent that it arises out of or is based upon a
\nViolation which occurs in reliance upon and in conformity with written
\ninformation furnished by such indemnitee expressly for use in connection with
\nsuch registration.<\/p>\n
(vi) To the extent permitted by law, Stockholder will indemnify
\nand hold harmless the Buyer, each of its directors, each of its officers who has
\nsigned the S-3, each person, if any, who controls the Buyer within the meaning
\nof the Act, any other shareholder selling securities in the S-3 and any
\ncontrolling person of any such other shareholder, against any losses, claims,
\ndamages, or liabilities (joint or several) to which any of the foregoing persons
\nmay become subject, under the Act, or the Exchange Act, or other federal or
\nstate law, insofar as such losses, claims, damages, or liabilities (or actions
\nin respect thereto) arise out of or are based upon any Violation, in each case
\nto the extent (and only to the extent) that such Violation occurs in reliance
\nupon and in conformity with written information furnished by Stockholder
\nexpressly for use in connection with such registration; and Stockholder will
\npay, as incurred, any legal or other expenses reasonably incurred by any person
\nintended to be indemnified pursuant to this Section 7.11(c)(vi), in connection
\nwith investigating or defending any such loss, claim, damage, liability, or
\naction; PROVIDED, HOWEVER, that the indemnity agreement contained in this
\nSection 7.11(c)(vi) shall not apply to amounts paid in settlement of any such
\nloss, claim, damage, liability or action if such settlement is effected without
\nthe consent of the Stockholder, which consent shall not be unreasonably
\nwithheld; and PROVIDED, THAT, in no event shall any indemnity obligation under
\nthis Section 7.11(c)(vi) (together with any obligation to contribute under
\nSection 7.11(c)(ix)) exceed the gross proceeds from the offering received by
\nStockholder.<\/p>\n
(viii) Promptly after receipt by an indemnified party under this
\nSection 7.11(c) of notice of the commencement of any action (including any
\ngovernmental action), such indemnified party will, if a claim in respect thereof
\nis to be made against any indemnifying party under this Section 7.11(c), deliver
\nto the indemnifying party a written notice of the commencement thereof and the
\nindemnifying party shall have the right to participate in, and, to the extent
\nthe indemnifying party so desires, jointly with any other indemnifying party
\nsimilarly noticed, to assume the defense thereof with counsel mutually
\nsatisfactory to the parties; PROVIDED, HOWEVER, that an indemnified party
\n(together with all other indemnified parties which may be represented without
\nconflict by one counsel) shall have the right to retain one separate counsel,
\nwith the fees and expenses to be paid by the indemnifying party, if
\nrepresentation of such indemnified party by the counsel retained by the
\nindemnifying party would be inappropriate due to actual or potential differing
\ninterests between such indemnified party and any other party represented by such
\ncounsel in such proceeding. The failure<\/p>\n
31<\/p>\n
to deliver written notice to the indemnifying party within a reasonable time of
\nthe commencement of any such action, if prejudicial to its ability to defend
\nsuch action, shall relieve such indemnifying party of any liability to the
\nindemnified party under this Section 7.11(c), but the omission so to deliver
\nwritten notice to the indemnifying party will not relieve it of any liability
\nthat it may have to any indemnified party otherwise than under this
\nSection 7.11(c).<\/p>\n
(ix) If the indemnification provided for in this Section 7.11(c) is
\nheld by a court of competent jurisdiction to be unavailable to an indemnified
\nparty with respect to any loss, liability, claim, damage, or expense referred
\nto therein, then the indemnifying party, in lieu of indemnifying such
\nindemnified party hereunder, shall contribute to the amount paid or payable by
\nsuch indemnified party as a result of such loss, liability, claim, damage, or
\nexpense in such proportion as is appropriate to reflect the relative fault of
\nthe indemnifying party on the one hand and of the indemnified party on the other
\nin connection with the statements or omissions that resulted in such loss,
\nliability, claim, damage, or expense as well as any other relevant equitable
\nconsiderations. The relative fault of the indemnifying party and of the
\nindemnified party shall be determined by reference to, among other things,
\nwhether the untrue or alleged untrue statement of a material fact or the
\nomission to state a material fact relates to information supplied by the
\nindemnifying party or by the indemnified party and the parties’ relative intent,
\nknowledge, access to information, and opportunity to correct or prevent such
\nstatement or omission. In no event shall any Stockholder’s obligation to
\ncontribute under this Section 7.11(c)(ix) (together with any obligation to
\nindemnify under Section 7.11(c)(vi)) exceed the gross proceeds from the offering
\nreceived by such Stockholder.<\/p>\n
(x) The obligations of the Buyer and Stockholder under this
\nSection 7.11(c) shall survive the completion of any offering of Registrable
\nSecurities in the S-3.<\/p>\n
7.12 NOTICE OF CERTAIN EVENTS. The Company shall notify the Buyer, and
\nthe Buyer shall promptly notify the Company, of:<\/p>\n
(i) receipt of any notice or other communication from any Person
\n alleging that the consent of such Person is or may be required in
\n connection with the transactions contemplated by this Agreement;<\/p>\n
(ii) receipt of any notice or other communication from any
\n Governmental Entity in connection with the transactions contemplated by
\n this Agreement;<\/p>\n
(iii) receipt of notice that any action, suit, claim, investigation
\n or proceeding has been commenced or, to the knowledge of the Company,
\n threatened, against or involving the Company, the Buyer or Merger Sub, as
\n applicable, which, if pending on the date of this Agreement, would have
\n been required to have been disclosed pursuant to Section 3.14 or which
\n relates to the transactions contemplated by this Agreement;<\/p>\n
(iv) the occurrence or non-occurrence of any event the occurrence
\n or non-occurrence of which would be likely to cause any representation or
\n warranty of it (and, in the case of the Buyer, of Merger Sub) contained in
\n this Agreement to be untrue or inaccurate; and<\/p>\n
(v) any failure of the Company, the Buyer or Merger Sub, as the
\n case may be, to comply with or satisfy any covenant, condition or
\n agreement to be complied with or satisfied by it hereunder<\/p>\n
32<\/p>\n
The delivery of any notice pursuant to this Section 7.12 shall not limit or
\notherwise affect the remedies available to the party receiving such notice.<\/p>\n
7.13 COMPANY LOCATION. The Buyer currently intends to maintain the
\nprincipal offices of the Company in the Horsham, PA area and agrees to do so for
\nnot less than 2 years from the date of this Agreement, unless Ami Miron approves
\notherwise.<\/p>\n
7.14 MINIMUM DAMAGES. In the event the Merger does not occur due to a
\nbreach by the Buyer or the Company, the damages recoverable by the nonbreaching
\nparty for such breach shall not be less than $25,000,000. In all events, such
\nremedy shall be in addition to, and not in lieu of, any and all remedies, legal,
\nequitable or other, otherwise available under this Agreement and applicable law.<\/p>\n
SECTION 8 MISCELLANEOUS<\/p>\n
8.1 BUYER BROKERAGE. The Buyer has not engaged any agent, broker, finder
\nor investment or commercial banker in connection with the negotiation, execution
\nor performance of this Agreement or the transactions contemplated hereby, other
\nthan Credit Suisse First Boston, for whose fees and expenses, the Buyer will be
\nsolely responsible. The Buyer shall indemnify, defend and hold the Company and
\nthe Stockholders harmless against and in respect of any claim for brokerage fees
\nor other commissions incurred or owing due to any such engagement or alleged
\nengagement.<\/p>\n
8.2 EXPENSES. If the transactions contemplated by this Agreement are
\nnot consummated, the Company and the Buyer shall each pay their own fees and
\nexpenses incident to the negotiation, preparation, execution, delivery and
\nperformance hereof, including, without limitation, the fees and expenses of
\ntheir respective counsel, accountants, bankers, brokers, and other experts. If
\nthe transactions contemplated by this Agreement are consummated, the Buyer
\nshall, in addition to its own fees and expenses, pay (or bear, through the
\nCompany’s payment) the reasonable fees and expenses of the Company incident to
\nthe negotiation, preparation, execution, delivery and performance of this
\nAgreement, including, without limitation, the investment banking fees set forth
\nin SCHEDULE 2.5 and the reasonable fees and expenses of its counsel and
\naccountants.<\/p>\n
8.3 COMPLETE AGREEMENT; WAIVER AND MODIFICATION, ETC. This Agreement
\nconstitutes the entire agreement between the parties pertaining to the subject
\nmatter hereof and supersedes all prior and contemporaneous agreements and
\nunderstandings of the parties, but excluding the Non-Disclosure Agreement dated
\nMarch 8, 2000 between the Buyer and the Company, which shall continue in effect.
\nThere are no representations or warranties by any party except those expressly
\nstated or provided for herein, any implied warranties being hereby expressly
\ndisclaimed. There are no covenants or conditions except those expressly stated
\nherein. No amendment, supplement or termination of or to this Agreement, and no
\nwaiver of any of the provisions hereof, shall be binding on a party unless made
\nin a writing signed by such party. This Agreement may be modified by mutual
\nagreement of the parties as authorized by their respective boards of directors,
\nnotwithstanding approval hereof and thereof by the stockholders of the parties,
\nsubject to the limitations imposed by the Pennsylvania Business Corporation Law.
\nNothing in this Agreement shall be construed to give any Person other than the
\nexpress parties hereto any rights or remedies.<\/p>\n
8.4 NOTICES. All notices, requests, demands, claims and other
\ncommunications hereunder shall be in writing and shall be given by delivery (by
\nmail or otherwise) or transmitted to the address<\/p>\n
33<\/p>\n
or facsimile number listed below, and will be effective (in all cases) upon
\nreceipt. Without limiting the generality of the foregoing, a mail, express,
\nmessenger or other receipt signed by any Person at such address shall
\nconclusively evidence delivery to and receipt at such address, and any printout
\nshowing successful facsimile transmission of the correct total pages to the
\ncorrect facsimile number shall conclusively evidence transmission to and receipt
\nat such facsimile number.<\/p>\n
(a) If to the Buyer or Merger Sub:<\/p>\n
Liberate Technologies
\n 2 Circle Star Way
\n San Carlos, California 94070-6200
\n attention: Gordon Yamate
\n facsimile: 650-701-5258<\/p>\n
with a copy to:<\/p>\n
McCutchen, Doyle, Brown & Enersen, LLP
\n 3150 Porter Drive
\n Palo Alto, CA 94304
\n attention: Bartley C. Deamer
\n facsimile: 650-849-4800<\/p>\n
(b) If to the Company:<\/p>\n
MoreCom, Inc.
\n Two Walnut Grove Drive, Suite 200
\n Horsham, PA 19033
\n attention: Ami Miron
\n facsimile: 215-733-9401<\/p>\n
with a copy to:<\/p>\n
Alan Goldberg
\n 2828 Charter Road
\n Philadelphia, PA 19154
\n facsimile: 215-676-1991<\/p>\n
and
\n Stephen Goodman
\n Morgan, Lewis & Bockius LLP
\n 1701 Market Street
\n Philadelphia, PA 19103
\n facsimile: 215-963-5299<\/p>\n
34<\/p>\n
(c) If to the Stockholders:<\/p>\n
c\/o Ami Miron
\n 1644 Tuckerstown Road
\n Dresher, PA 19025
\n facsimile: 215-773-9401<\/p>\n
with a copy to:<\/p>\n
Alan Goldberg
\n 2828 Charter Road
\n Philadelphia, PA 19154
\n facsimile: 215-676-1991<\/p>\n
Any party may change its address or facsimile number for purposes of this
\nSection 8.4 by giving the other party written notice of the new address or
\nfacsimile number in accordance with this Section 8.4, PROVIDED it is a normal
\nstreet address, or normal operating facsimile number, in the continental United
\nStates.<\/p>\n
8.5 LAW GOVERNING. This Agreement shall be interpreted in accordance
\nwith and governed by the laws of the State of Delaware, without regard to
\nprinciples of conflicts of laws.<\/p>\n
8.6 HEADINGS; REFERENCES; “HEREOF,” ETC. The Section headings in this
\nAgreement are provided for convenience only, and shall not be considered in the
\ninterpretation hereof. References herein to Sections, Exhibits or Schedules
\nrefer, unless otherwise specified, to the designated Section of or Exhibit or
\nSchedule to this Agreement. Terms such as “herein,” “hereto” and “hereof” refer
\nto this Agreement as a whole.<\/p>\n
8.7 SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
\nof and be binding upon the heirs, executors, administrators and successors of
\nthe parties hereto, but no right or liability or obligation arising hereunder
\nmay be assigned by any party hereto.<\/p>\n
8.8 COUNTERPARTS, SEPARATE SIGNATURE PAGES. This Agreement may be
\nexecuted in any number of counterparts, or using separate signature pages. Each
\nsuch executed counterpart and each counterpart to which such signature pages are
\nattached shall be deemed to be an original instrument, but all such counterparts
\ntogether shall constitute one and the same instrument.<\/p>\n
8.9 SEVERABILITY. In the event any of the provisions of this Agreement
\nshall be declared by a court or arbitrator to be void or unenforceable, then
\nsuch provision shall be severed from this Agreement without affecting the
\nvalidity and enforceability of any of the other provisions hereof, and the
\nparties shall negotiate in good faith to replace such unenforceable or void
\nprovisions with a similar clause to achieve, to the extent permitted under law,
\nthe purpose and intent of the provisions declared void and unenforceable.<\/p>\n
8.10 ATTORNEYS’ FEES. In the event any suit, counterclaim, arbitration
\nor other proceeding is brought to enforce or interpret the provisions of this
\nAgreement, the prevailing side (the Buyer, on the one hand, and the Company
\nand\/or the Stockholders on the other hand) shall be entitled to recover from the
\nnonprevailing side, in addition to all other remedies available at equity and
\nlaw, the<\/p>\n
35<\/p>\n
cost, including but not limited to reasonable attorneys’ fees, incurred by the
\nprevailing side therein, including any appeal or other subsequent proceeding. A
\nside shall be considered to prevail if it secures a more favorable result than
\nthe other side (who shall be considered the nonprevailing party), as determined
\nby the arbitrator or judge.<\/p>\n
SECTION 9 GLOSSARY<\/p>\n
ACT – the Securities Act of 1933, as amended.<\/p>\n
AFFILIATE – a Person who controls, is controlled by or is under common
\ncontrol with another Person, or who directly or indirectly owns 10% or more of
\nthe voting power in such other Person, or of whose voting power such other
\nPerson (or a Person holding 10% or more of the voting power in such other
\nPerson) owns 10% or more. For purposes of this definition, “control” means the
\npossession, directly or indirectly, of the power to direct or cause the
\ndirection of the management and policies of a Person, whether through the
\nownership of voting securities, by contract or otherwise.<\/p>\n
AGREEMENT – this Plan and Agreement of Reorganization, including the
\nExhibits and Schedules hereto.<\/p>\n
AVERAGE PRICE – Section 1.8.<\/p>\n
AUDITED STATEMENTS – Section 3.2(a).<\/p>\n
BENEFIT PLANS – Section 3.10(a).<\/p>\n
BUSINESS – introductory paragraphs.<\/p>\n
BUYER – introductory paragraphs.<\/p>\n
BUYER SEC DOCUMENTS – Section 4.3.<\/p>\n
BUYER SHARE AMOUNT – Section 1.8.<\/p>\n
BUYER STOCK – Section 1.8.<\/p>\n
CALIFORNIA PERMIT – Section 3.23.<\/p>\n
CLOSING – Section 1.1.<\/p>\n
CODE – the Internal Revenue Code of 1986, as amended.<\/p>\n
COMMON STOCK – the Common Stock of the Company.<\/p>\n
COMPANY – introductory paragraphs.<\/p>\n
COMPANY ERISA PLAN – Section 3.10(d).<\/p>\n
COMPANY INTELLECTUAL PROPERTY – Section 3.17.<\/p>\n
36<\/p>\n
CONFIDENTIAL INFORMATION – Section 3.17(f).<\/p>\n
COMPANY EXISTING OPTION PLAN – the Company’s 1998 Stock Option Plan, as
\namended.<\/p>\n
CONTRACT – any agreement, written or oral, or any promissory note or other
\ninstrument of a contractual nature, which is intended to be enforceable against
\nthe Person in question or against any Property of such Person. Any Person which
\nis, or any of whose Property is, subject to enforcement of a Contract shall, for
\npurposes of this Agreement, be deemed a party to it.<\/p>\n
DAMAGES – any loss, loss in value, cost, liability or expense actually
\nincurred, including without limitation, costs and expenses of litigation and
\nreasonable attorneys’ fees, but excluding in each case incidental, consequential
\nor punitive damages. (The foregoing exclusion of punitive damages does not
\napply, however, to any punitive damages awarded in a Third-Party Claim.) All
\nDamages shall be net of (i) any applicable insurance recovery (net of any
\nretrospective premium adjustment), (ii) any related net realized tax benefit
\n(taking any applicable recovery into account), (iii) any related refund or
\nrecovery realized by the Buyer, (iv) any related reserve included in the Interim
\nStatements, and (v) any other reserve (whether or not related to the Damages in
\nquestion) included in the Interim Statements, to the extent that, at the time of
\ndetermination of Damages under this Agreement, such other reserve has proved to
\nbe in excess of the Company’s actual losses or liabilities reserved against
\n(PROVIDED, that such other reserves shall thereafter be reduced by the excess
\nthus utilized for netting).<\/p>\n
DERIVATIVE WORK – Section 3.17(l).<\/p>\n
DISCLOSABLE CONTRACT – Section 3.11.<\/p>\n
DISCLOSABLE LEASES – Section 3.7.<\/p>\n
DISSENTERS’ RIGHTS – Section 1.17<\/p>\n
EFFECTIVE TIME – Section 1.2.<\/p>\n
ERISA – the Employee Retirement Income Security Act of 1974, as amended,
\nand any successor statute.<\/p>\n
ERISA AFFILIATE – any company which, as of the relevant measuring date
\nunder ERISA, is or was a member of a controlled group of corporations or trades
\nor businesses (as defined in Sections 414(b), (c), (m) or (o) of the Code) of
\nwhich a Coast Company is or was a member.<\/p>\n
ESCROW ACCOUNT – the Property held by the escrow agent under the Escrow
\nAgreement.<\/p>\n
ESCROW AGREEMENT – Section 1.5(a).<\/p>\n
EXCHANGE RATIO – Section 1.8.<\/p>\n
EXCHANGE ACT – the Securities Exchange Act of 1934, as amended.<\/p>\n
FINANCIAL STATEMENTS – Section 3.2(a).<\/p>\n
37<\/p>\n
FULLY-DILUTED COMPANY SHARES – Section 1.8.<\/p>\n
GAAP – generally accepted accounting principles applied on a consistent
\nbasis, as set forth in authoritative pronouncements which are applicable to the
\ncircumstances as of the date in question. The requirement that such principles
\nbe applied on a “consistent basis” means that accounting principles observed in
\nthe period in question are comparable in all material respects to those applied
\nin the preceding periods, except as change is permitted or required under or
\npursuant to such accounting principles.<\/p>\n
GOVERNMENTAL AGENCY – any agency, department, board, commission, district
\nor other public organ, whether federal, state, local or foreign.<\/p>\n
HAZARDOUS MATERIAL – all or any of the following: (i) any substance the
\npresence of which requires investigation or remediation under any applicable law
\nor regulation; (ii) substances that are defined or listed in, or otherwise
\nclassified pursuant to, any applicable laws or regulations as “hazardous
\nsubstances,” “hazardous materials,” “hazardous wastes,” “toxic substances,” or
\nany other formulation intended to define, list or classify substances by reason
\nof deleterious properties such as ignitability, corrosivity, reactivity,
\ncarcinogenicity, reproductive toxicity or “EP toxicity;” (iii) any petroleum
\nproducts, explosives or radioactive materials; and (iv) asbestos in any form or
\nelectrical equipment which contains any oil or dielectric fluid containing
\nlevels of polychlorinated biphenyls in excess of fifty parts per million.<\/p>\n
HOLDERS’ AGENT – Ami Miron<\/p>\n
HSR ACT – the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as
\namended, and all regulations issued thereunder.<\/p>\n
INFORMATION STATEMENT – Section 3.23.<\/p>\n
INTELLECTUAL PROPERTY – Section 3.17(a).<\/p>\n
INTERIM STATEMENTS – Section 3.2(a).<\/p>\n
LAST ESCROW CLAIM DATE – the first anniversary of the Closing Date.<\/p>\n
LAST FISCAL YEAR-END – Section 3.2(a).<\/p>\n
LEGAL REQUIREMENT – a statute, regulation, ordinance or similar legal
\nrequirement, whether federal, state, local or foreign, or any requirement of a
\npermit or other authorization issued by a Governmental Agency.<\/p>\n
LIEN – any lien, security interest, mortgage, deed of trust, pledge,
\nhypothecation, capitalized lease or interest or right for security purposes.<\/p>\n
MERGER SUB – introductory paragraphs.<\/p>\n
NEW OPTION PLAN(S) – Section 1.18(f).<\/p>\n
38<\/p>\n
ORDER – any judgment, injunction, order or similar mandatory direction of,
\nor stipulation or agreement filed with, a Governmental Agency, court, judicial
\nbody, arbitrator or arbitral body.<\/p>\n
PERMIT – a permit, license, franchise, certificate of authority or similar
\ninstrument issued by a Governmental Agency.<\/p>\n
PERSON – an individual, or a corporation, partnership, limited liability
\ncompany, trust, association or other entity of any nature, or a Governmental
\nAgency.<\/p>\n
PREFERRED STOCK – the Series A Preferred Stock, the Series B Preferred
\nStock, the Series E Preferred Stock, the Series F Preferred Stock and Series G
\nPreferred Stock of the Company.<\/p>\n
PROPERTY – any interest in any real, personal or mixed property, whether
\ntangible or intangible.<\/p>\n
RECOVERABLE AMOUNT – Section 7.2(b).<\/p>\n
REGISTRATION STATEMENT – a registration statement filed under the Act
\npursuant to Section 7.11.<\/p>\n
S-3 – Section 7.11(c).<\/p>\n
S-4 – Section 7.11(b).<\/p>\n
SEC – the Securities and Exchange Commission.<\/p>\n
SHARES – Section 1.8.<\/p>\n
STOCK RIGHT – any right (including without limitation any option or
\nwarrant or subscription right) to acquire any capital stock or any other Stock
\nRight or any instrument convertible into or exchangeable for any capital stock
\nor any other Stock Right.<\/p>\n
STOCKHOLDER AGREEMENT – Section 1.18.<\/p>\n
STOCKHOLDERS – introductory paragraphs.<\/p>\n
STRATEGIC TRANSACTION – Section 7.7.<\/p>\n
SUPPORT AGREEMENTS – Section 3.17.<\/p>\n
TAX – any federal, state, local or foreign tax, assessment, duty, fee and
\nother governmental charge or imposition of any kind, whether measured by
\nproperties, assets, wages, payroll, purchases, value added, payments, sales,
\nuse, business, capital stock, surplus or income, and any addition, interest,
\npenalty, deficiency imposed with respect to any Tax.<\/p>\n
THIRD-PARTY ACTION – any consent, waiver, approval, license or other
\nauthorization of, or notice to, or filing with, any other Person, whether or not
\na Governmental Agency, and the expiration of any associated mandatory waiting
\nperiod.<\/p>\n
39<\/p>\n
THIRD-PARTY CLAIM – Section 7.3(b).<\/p>\n
THIRD-PARTY RIGHT – any Lien on any Property of the Person in question, or
\nany right (other than the rights of the Buyer hereunder) (i) to acquire, lease,
\nuse, dispose of, vote or exercise any right or power conferred by any Property
\nof such Person, or (ii) restricting the Person’s right to lease, use, dispose
\nof, vote or exercise any right or power conferred by any Property of such
\nPerson.<\/p>\n
VIOLATION – Section 7.10(e)(1).<\/p>\n
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]<\/p>\n
40<\/p>\n
IN WITNESS WHEREOF, the parties have executed this Plan and Agreement of
\nReorganization.<\/p>\n
BUYER: LIBERATE TECHNOLOGIES<\/p>\n
By:
\n ——————————–
\n Name: Mitchell E. Kertzman
\n Title: President and CEO<\/p>\n
MERGER SUB: LT ACQUISITION CORPORATION<\/p>\n
By:
\n ——————————–
\n Name: Mitchell E. Kertzman
\n Title: President and CEO<\/p>\n
COMPANY: MORECOM, INC.<\/p>\n
By:
\n ——————————–
\n Name:
\n Title:<\/p>\n
STOCKHOLDERS:<\/p>\n
——————————
\n Name:<\/p>\n
——————————
\n Name:<\/p>\n
——————————
\n Name:<\/p>\n
——————————
\n Name:<\/p>\n
EXHIBITS<\/p>\n
A Support Agreement
\nB Escrow Agreement
\nC Equity Holder Agreement<\/p>\n
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