<PAGE>
EXHIBIT 2.1
SHARE ACQUISITION AGREEMENT
BY AND AMONG
MEDIAPLEX, INC.
THE INTERPUBLIC GROUP OF COMPANIES, INC.
McCANN-ERICKSON USA, INC.
AND
ADWARE SYSTEMS, INC.
Dated as of June 30, 2000
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TABLE OF CONTENTS
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ARTICLE I PURCHASE AND SALE OF COMPANY CAPITAL STOCK.................................................. 1
1.1 Definitions.................................................................................... 1
1.2 Purchase and Sale.............................................................................. 3
1.3 Closing........................................................................................ 3
1.4 No Further Ownership Rights in Company Shares.................................................. 4
1.5 Taking of Necessary Action; Further Action..................................................... 4
1.6 Post-Closing Adjustment to the Purchase Price.................................................. 5
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLER AND THE COMPANY................................... 6
2.1 Organization of the Company.................................................................... 6
2.2 Subsidiaries................................................................................... 7
2.3 Company Capital Structure...................................................................... 7
2.4 Authority...................................................................................... 7
2.5 Noncontravention............................................................................... 8
2.6 Consents....................................................................................... 8
2.7 Financial Statements........................................................................... 9
2.8 No Undisclosed Liabilities..................................................................... 9
2.9 Absence of Changes............................................................................. 9
2.10 Tax Matters.................................................................................... 11
2.11 Restrictions on Business Activities............................................................ 13
2.12 Title of Properties; Absence of Liens and Encumbrances; Condition of Equipment................. 14
2.13 Intellectual Property.......................................................................... 15
2.14 Contracts...................................................................................... 20
2.15 Governmental Authorization..................................................................... 22
2.16 Litigation..................................................................................... 22
2.17 No Liquidation, Insolvency, Winding-Up......................................................... 22
2.18 Accounts Receivable............................................................................ 23
2.19 Books and Records.............................................................................. 23
2.20 Environmental Matters.......................................................................... 23
2.21 Brokers' and Finders' Fees..................................................................... 24
2.22 Employee Matters and Benefit Plans............................................................. 24
2.23 Interested Party Transactions.................................................................. 29
2.24 Suppliers...................................................................................... 29
2.25 No Illegal Payments, Etc....................................................................... 29
2.26 Insurance...................................................................................... 29
2.27 Compliance with Laws........................................................................... 30
2.28 Warranties; Indemnities........................................................................ 30
2.29 Complete Copies of Materials................................................................... 30
2.30 Representations Complete....................................................................... 30
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ARTICLE IIIA ADDITIONAL REPRESENTATIONS AND WARRANTIES OF SELLER...................................... 30
3A.1 Ownership..................................................................................... 30
3A.2 Authority..................................................................................... 30
3A.3 Noncontrovention.............................................................................. 31
3A.4 Consents...................................................................................... 31
3A.5 Investment Representations.................................................................... 31
3A.6 Buyer Disclosure Documents.................................................................... 32
ARTICLE IIIB ADDITIONAL REPRESENTATIONS AND WARRANTIES OF PARENT..................................... 33
3B.1 Authority..................................................................................... 33
3B.2 Noncontravention.............................................................................. 33
3B.3 Consents...................................................................................... 33
3B.4 Buyer Disclosure Documents.................................................................... 34
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER.................................................... 34
4.1 Organization, Standing and Power............................................................... 34
4.2 Authority...................................................................................... 34
4.3 Capital Structure.............................................................................. 35
4.4 Issuance of Buyer Common Stock................................................................. 35
4.5 Capital Resources.............................................................................. 35
4.6 SEC Documents; Buyer Financial Statements...................................................... 35
4.7 Accredited Investor............................................................................ 35
4.8 No Conflict.................................................................................... 36
4.9 Consents....................................................................................... 36
4.10 Absence of Certain Changes or Events.......................................................... 36
4.11 Brokers' and Finders' Fees.................................................................... 36
ARTICLE V CONDUCT PRIOR TO THE CLOSING................................................................ 36
5.1 Conduct of Business of the Company............................................................. 36
5.2 No Solicitation................................................................................ 39
ARTICLE VI ADDITIONAL AGREEMENTS...................................................................... 39
6.1 Ownership of Company Shares.................................................................... 39
6.2 Access to Information.......................................................................... 39
6.3 Confidentiality................................................................................ 40
6.4 Expenses....................................................................................... 40
6.5 Public Disclosure.............................................................................. 40
6.6 Consents....................................................................................... 40
6.7 Reasonable Efforts............................................................................. 41
6.8 Notification of Certain Matters................................................................ 41
6.9 Financial Statements........................................................................... 41
6.10 Services Agreements........................................................................... 41
6.11 Parent Employee Plans......................................................................... 42
6.12 Non-Competition Agreement..................................................................... 42
6.13 Tax Matters................................................................................... 42
6.14 Transfer of Assets............................................................................ 45
6.15 Trade Secrets, Know-how and Confidential Information.......................................... 46
6.16 Equitable Remedy.............................................................................. 46
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6.17 Additional Documents and Further Assurances.................................................... 46
ARTICLE VII CONDITIONS TO THE CLOSING................................................................. 46
7.1 Conditions to Obligations of Each Party to Effect the Acquisition............................... 46
7.2 Additional Conditions to Obligations of Seller and the Company.................................. 47
7.3 Additional Conditions to the Obligations of Buyer............................................... 48
ARTICLE VIII SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION.............................. 50
8.1 Survival of Representations and Warranties...................................................... 50
8.2 Indemnification by Parent and Seller............................................................ 51
8.3 Claims Against the Escrow Fund.................................................................. 51
8.4 Limitations on Parent and Seller Indemnification................................................ 51
8.5 Indemnification by Buyer........................................................................ 51
8.6 Limitations on Buyer Indemnification............................................................ 51
8.7 Claims Procedure................................................................................ 52
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER.......................................................... 53
9.1 Termination..................................................................................... 53
9.2 Effect of Termination........................................................................... 54
9.3 Amendment....................................................................................... 54
9.4 Extension; Waiver............................................................................... 54
ARTICLE X GENERAL PROVISIONS.......................................................................... 54
10.1 Notices......................................................................................... 54
10.2 Interpretation.................................................................................. 56
10.3 Counterparts.................................................................................... 56
10.4 Entire Agreement; Assignment.................................................................... 57
10.5 Severability.................................................................................... 57
10.6 Other Remedies.................................................................................. 57
10.7 Governing Law................................................................................... 57
10.8 Rules of Construction........................................................................... 57
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INDEX OF EXHIBITS
Exhibit Description
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Exhibit A Form of Escrow Agreement
Exhibit B Company Disclosure Schedule
Exhibit C Form of Service Agreements
Exhibit D Form of Legal Opinion of Wilson Sonsini Goodrich & Rosati,
P.C., counsel to Buyer
Exhibit E Form of Legal Opinion of counsel to Parent, Seller and the
Company
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SHARE ACQUISITION AGREEMENT
This SHARE ACQUISITION AGREEMENT (the "Agreement") is made and entered into
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as of June 30, 2000 by and among Mediaplex, Inc., a Delaware corporation
("Buyer"), The Interpublic Group of Companies, Inc., a Delaware corporation
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("Parent"), McCann-Erickson USA, Inc., a Delaware corporation and a wholly owned
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subsidiary of Parent ("Seller"), and AdWare Systems, Inc., a Kentucky
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corporation and a wholly-owned subsidiary of Seller (the "Company").
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RECITALS
WHEREAS, the Board of Directors of Buyer believes it is in the best
interests of Buyer and its stockholders that Buyer purchase all the outstanding
Company Capital Stock (as defined in Section 1.1) from Seller (the
"Acquisition");
-----------
WHEREAS, Parent and Seller desire that Seller sell all the outstanding
Company Capital Stock to Buyer; and
WHEREAS, Parent, Seller and the Company, on the one hand, and Buyer, on the
other hand, desire to make certain representations, warranties, covenants and
other agreements in connection with the Acquisition.
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
PURCHASE AND SALE OF COMPANY CAPITAL STOCK
1.1 Definitions. For all purposes of this Agreement, the following terms
-----------
shall have the following meanings:
"Actual Company Revenues" shall mean all Company Revenues (as defined
-----------------------
below) for the fiscal year ended December 31, 2000.
"Additional Stock Consideration" shall mean the number of unregistered
------------------------------
shares of Buyer Common Stock equal to the lesser of (i) the quotient of (x) the
product of (A) three multiplied by (B) the amount by which Actual Company
Revenues (as determined in accordance with Section 1.6(a) and as set forth in
the Final Statement) exceed Committed Revenues, divided by (y) the Ten Day
Average Closing Price, with such quotient being rounded down to the nearest
whole share; and (ii) the quotient of (x) $3,000,000, divided by (y) the Ten Day
Average Closing Price, with such quotient being rounded down to the nearest
whole share.
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"Buyer Common Stock" shall mean shares of common stock of Buyer,
------------------
$0.0001 par value per share.
"Cash Consideration" shall mean a cash amount of $4,000,000.
------------------
"Committed Revenues" shall mean Company Revenues (as defined below) of
------------------
$9,087,100 for the fiscal year ended December 31, 2000.
"Company Capital Stock" shall mean (i) shares of Company Common Stock,
---------------------
and (ii) any other capital stock of the Company.
"Company Common Stock" shall mean all shares of common stock of the
--------------------
Company, no par value per share.
"Company Customers" shall mean (i) current or former customers of the
-----------------
Company as of the Closing Date and (ii) any Parent Affiliate or Seller
Affiliate.
"Company Revenues" shall mean all revenue accrued by the Company in
----------------
accordance with GAAP for services or products provided to Company Customers
through existing products and services offered by the Company on the Closing
Date. For purposes of the foregoing sentence, existing products and services
offered by the Company on the Closing Date shall be deemed to include upgrades
to and new versions of any such existing products and services only if such
upgrades and/or new versions do not incorporate material Technology or
Intellectual Property Rights of Buyer (excluding for this purpose Technology or
Intellectual Property Rights of the Company acquired by Buyer as a result of the
Acquisition).
"GAAP" shall mean U.S. generally accepted accounting principles.
----
"Material Adverse Effect" shall mean any change, event or effect that
-----------------------
is or that would reasonably be expected to be materially adverse to the
business, assets (including intangible assets), financial condition or results
of operations of the Company and the Subsidiary, taken as a whole.
"Parent Affiliate" shall mean any entity that directly, or indirectly
----------------
through one or more intermediaries, controls or is controlled by, or is under
common control with Parent.
"Purchase Price" shall mean the Cash Consideration and the Stock
--------------
Consideration (as adjusted in accordance with Section 1.6 hereof to reflect the
Additional Stock Consideration or the Stock Consideration Reduction, as
applicable).
"Related Agreements" shall mean all such other agreements, documents
------------------
and other instruments required in this Agreement to be executed and delivered in
connection with the transactions contemplated hereby.
"Seller Affiliate" shall mean any entity that directly, or indirectly
----------------
through one or more intermediaries, controls or is controlled by, or is under
common control with Seller.
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"Stock Consideration" shall mean the number of unregistered shares of
-------------------
Buyer Common Stock equal to the quotient of $23,261,300 divided by the Ten Day
Average Closing Price, with such quotient being rounded down to the nearest
whole share.
"Stock Consideration Reduction" shall mean the number of unregistered
-----------------------------
shares of Buyer Common Stock equal to the lesser of: (i) the quotient of (x)
the product of (A) three multiplied by (B) the amount by which Committed
Revenues exceed Actual Company Revenues (as determined in accordance with
Section 1.6(a) and as set forth in the Final Statement), divided by (y) the Ten
Day Average Closing Price, with such quotient being rounded down to the nearest
whole share; and (ii) the quotient of (x) $3,000,000, divided by (y) the Ten Day
Average Closing Price, with such quotient being rounded down to the nearest
whole share.
"Subsidiary" shall mean AdWare Systems Canada, Inc., a wholly owned
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subsidiary of the Company.
"Ten Day Average Closing Price" shall mean the average closing price
-----------------------------
of one share of Buyer Common Stock as reported on the Nasdaq National Market for
the ten consecutive trading days beginning on and inclusive of the fourteenth
trading day prior to the Closing Date and ending on and inclusive of the fifth
trading day prior to the Closing Date.
1.2 Purchase and Sale. At the Closing and subject to and upon the terms
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and conditions of this Agreement, Buyer shall purchase from Seller and Seller
shall sell, convey, transfer, assign and deliver to Buyer, free and clear of all
liens, encumbrances or other defects of title, all the outstanding shares of
Company Capital Stock (the "Company Shares").
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1.3 Closing.
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(a) Unless this Agreement is earlier terminated pursuant to Section
9.1, closing of the Acquisition (the "Closing") will take place as promptly as
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practicable, but no later than five business days following satisfaction or
waiver of the conditions set forth in Article VII, at the offices of Wilson
Sonsini Goodrich & Rosati, Professional Corporation, 650 Page Mill Road, Palo
Alto, California, unless another place or time is agreed to in writing by Buyer,
Parent and Seller. The date upon which the Closing actually occurs is herein
referred to as the "Closing Date."
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(b) At the Closing, Parent and Seller shall deliver or cause to be
delivered to Buyer the following:
(i) one or more stock certificates representing the Company
Shares duly endorsed or accompanied by stock powers duly endorsed in blank, with
any required transfer stamps affixed thereto; and
(ii) all other documents, agreements, certificates, instruments
or writings required to be delivered by Parent, Seller or the Company on or
prior to the Closing Date pursuant to this Agreement or as may be reasonably
requested by any party hereto in order to consummate the transactions
contemplated by this Agreement.
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(c) At the Closing, Buyer shall deliver to Seller the following:
(i) the Cash Consideration, payable by wire transfer to an
account of Seller designated in writing by Seller and delivered to Buyer at
least two business days prior to the Closing Date;
(ii) a stock certificate representing 90% of the Stock
Consideration, rounded down to the nearest whole share, registered in the name
of Seller; and
(iii) all other documents, agreements, certificates or writings
required to be delivered by Buyer on or prior to the Closing Date pursuant to
this Agreement or as may be reasonably requested by any party hereto in order to
consummate the transactions contemplated by this Agreement.
(d) At the Closing, Buyer shall deliver to the Escrow Agent a stock
certificate representing 10% of the Stock Consideration, rounded up to the
nearest whole share (the "Escrow Shares"), registered in the name of the Escrow
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Agent, to the Escrow Agent appointed pursuant to a certain Escrow Agreement
by and among Buyer, Parent, Seller, and the Escrow Agent, substantially in
the form attached hereto as Exhibit A (the "Escrow Agreement").
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(e) All certificates representing the Stock Consideration and, if
applicable, Additional Stock Consideration shall bear the following legends:
(i) "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"). SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED UNLESS
A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO SUCH TRANSFER OR, IN
THE OPINION OF COUNSEL SATISFACTORY TO THE ISSUER, SUCH TRANSFER MAY BE MADE
PURSUANT TO RULE 144 OR REGISTRATION UNDER THE ACT IS UNNECESSARY IN ORDER FOR
SUCH TRANSFER TO COMPLY WITH THE ACT."
(ii) Any legend required by the blue sky or securities laws of
any state or jurisdiction to the extent such laws are applicable to the shares
represented by the certificate so legended.
1.4 No Further Ownership Rights in Company Shares. All consideration paid
---------------------------------------------
in respect of the surrender for exchange of the Company Shares in accordance
with the terms hereof, shall be deemed to be full satisfaction of all Seller's
rights pertaining to such Company Shares.
1.5 Taking of Necessary Action; Further Action. If, at any time after the
------------------------------------------
Closing Date, any further action is necessary or desirable to carry out the
purposes of this Agreement and to ensure that the Company retains full right,
title and possession to all of its assets, property, rights, privileges, powers
and franchises, Buyer, Parent, Seller and the Company will take all such lawful
and reasonably necessary action.
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1.6 Post-Closing Adjustment to the Purchase Price.
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(a) Determination of Actual Company Revenues.
----------------------------------------
(i) As soon as practicable but no later than February 28,
2001, Buyer shall deliver to Seller a statement of the Actual Company Revenues
(the "Revenue Statement"), which will be determined in accordance with GAAP
-----------------
applied on a consistent basis, but applied to the Company as if it were a stand
alone entity, which Revenue Statement shall be calculated and audited by Buyer's
certified public accountants. If Seller determines in good faith that the amount
of the Actual Company Revenues as so computed on the Revenue Statement is
inaccurate, Seller shall have thirty (30) days following its receipt of the
Revenue Statement in which to deliver written notice of such disagreement to
Buyer. Such notice shall (i) set forth the Seller's determination of Actual
Company Revenues and (ii) specify in reasonable detail the nature of Seller's
basis for its disagreement with Buyer's calculation. Seller's failure to give
written notice to Buyer within the thirty (30) day period shall constitute
acceptance of the amount of Actual Company Revenues as set forth on the Revenue
Statement, and in such case the Revenue Statement shall become the "Final
Statement."
(ii) If Buyer and Seller resolve their disagreement in the
determination of Actual Company Revenues within thirty (30) days after Buyer's
receipt of written notice of such disagreement, then Buyer and Seller shall set
forth such agreement in writing, and in such case such agreement shall become
the "Final Statement."
(iii) If Buyer and Seller are unable to resolve their
disagreement in the determination of Actual Company Revenues within thirty (30)
days after Buyer's receipt of written notice of such disagreement, Buyer and
Seller will refer the dispute to an accounting firm of national recognition
mutually acceptable to Buyer and Seller, and not then representing Buyer,
Parent, Seller or the Company (the "Independent Accountant"). The Independent
----------------------
Accountant shall make a determination of Actual Company Revenues, which shall be
set forth in writing and furnished to Buyer and Seller, which determination
shall be conclusive and binding. In such case, the Independent Accountant's
final written determination of Actual Company Revenues shall become the "Final
Statement."
(iv) Fifty percent (50%) of the fees and expenses of the
Independent Accountant shall be paid by Buyer and fifty percent (50%) of the
fees and expenses of the Independent Accountant shall be paid by Seller;
provided, however, that the non-prevailing party shall reimburse the prevailing
-------- -------
party for its portion of such fees and expenses. For purposes of the foregoing,
Seller shall be the prevailing party if the Independent Accountant's
determination of Actual Company Revenues exceeds by 10% or more the Actual
Company Revenues as set forth in the Revenue Statement and Buyer shall be the
prevailing party if the Independent Accountant's determination of Actual Company
Revenues is less than 10% higher than the Actual Company Revenues as set forth
in the Revenue Statement.
(b) Increase in Stock Consideration. In the event that Actual
-------------------------------
Company Revenues (as determined in accordance with Section 1.6(a) and as set
forth in the Final Statement) exceed
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Committed Revenues, Buyer shall deliver to Seller no later than March 31, 2001
(or, in the event of a dispute referred to the Independent Accountant as set
forth in Section 1.6(a)(iii) above, no later than the date ten business days
after delivery to the Buyer and Seller of the Independent Accountant's final
determination if such date is later than March 31, 2001), a stock certificate,
registered in the name of Seller, representing the Additional Stock
Consideration.
(c) Decrease in Stock Consideration. In the event that Committed
-------------------------------
Revenues exceed Actual Company Revenues (as determined in accordance with
Section 1.6(a) and as set forth in the Final Statement), Seller shall deliver to
Buyer no later than March 31, 2001 (or, in the event of a dispute referred to
the Independent Accountant as set forth in Section 1.6(a)(iii) above, no later
than the date ten business days following delivery to the Buyer and Seller of
the Independent Accountant's final determination if such date is later than
March 31, 2001), a stock certificate representing the Stock Consideration
Reduction duly endorsed or accompanied by stock powers duly endorsed in blank,
with any required transfer stamps affixed thereto. Buyer shall cause its
transfer agent to take all actions necessary by such transfer agent to effect
the delivery set forth in this Section 1.6(c).
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER AND THE COMPANY
Each of the Company and, to their respective knowledge, each of Parent and
Seller hereby, jointly and severally, represents and warrants to Buyer, subject
to such exceptions as are specifically disclosed in the disclosure schedule
(referencing the appropriate section and paragraph numbers) and dated as of the
date hereof supplied by the Company to Buyer and attached hereto as Exhibit B
---------
(the "Company Disclosure Schedule"), that on the date hereof and as of the
---------------------------
Closing as though made at the Closing as follows:
2.1 Organization of the Company. The Company is a corporation duly
---------------------------
organized, validly existing and in good standing under the laws of the State of
Kentucky. The Company has the corporate power and authority to own its
properties and to carry on its business as now being conducted and as proposed
to be conducted. The Company is duly qualified to do business and in good
standing as a foreign corporation in each jurisdiction in which such
qualification is required, except for such failures to be so duly qualified that
could not reasonably be expected to have a Material Adverse Effect. The Company
has delivered to Buyer a true and correct copy of its charter documents and
bylaws, each as amended to date. Section 2.1 of the Company Disclosure Schedule
lists the directors and officers of the Company and sets forth all other names
under which the operations now being conducted by the Company have been
conducted. The Company is not in violation of any term of its charter documents
or its bylaws. The Company is not in violation of the term of any agreement,
instrument, judgment, decree, order, statute, rule or government regulation
applicable to the Company or to which the Company is a party, where any
violation, noncompliance or default would result in, either individually or in
the aggregate, a Material Adverse Effect.
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2.2 Subsidiaries. Except as set forth on Section 2.2 of the Company
------------
Disclosure Schedule, the Company does not have, and has never had, any
subsidiaries or affiliated companies and does not otherwise own, and has not
otherwise owned, any shares in the capital of or any interest in, or control,
directly or indirectly, any corporation, partnership, association, joint venture
or other business entity. The Subsidiary is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or formation. The Subsidiary is duly qualified to do business and
in good standing in a foreign corporation in each jurisdiction in which such
qualification is required, except for such failures to be so duly qualified that
could not reasonably be expected to have a Material Adverse Effect. The
Subsidiary is not in violation of any term of its charter documents or its
bylaws. The Subsidiary is not in violation of any term of any agreement,
instrument, judgment, decree, order, statute, rule or government regulation
applicable to the Subsidiary or to which the Subsidiary is a party, where any
violation, noncompliance or default would result in, either individually or in
the aggregate a Material Adverse Effect. All of the shares of capital stock of
the Subsidiary are owned of record and beneficially by the Company.
2.3 Company Capital Structure.
-------------------------
(a) The authorized capital stock of the Company consists only of two
thousand (2,000) shares of authorized Common Stock, no par value per share. One
hundred (100) shares of Common Stock are issued and outstanding as of the date
hereof. All issued and outstanding shares of Company Capital Stock are held by
Seller. All outstanding shares of the Company Capital Stock are duly authorized,
validly issued, fully paid and non-assessable. There are no declared or accrued
unpaid dividends with respect to any shares of the Company Capital Stock. No
person or entity is entitled to any preemptive or similar right with respect to
the issuance of any Company Capital Stock. The Company has no other capital
stock authorized, issued or outstanding.
(b) Neither the Company nor the Subsidiary has ever adopted or
maintained any stock option plan or other plan providing for equity compensation
of any person. There are no options, warrants, calls, rights, commitments or
agreements of any character, written or oral, contingent or otherwise, to which
the Company or the Subsidiary is a party or by which it is bound obligating the
Company or the Subsidiary to issue, deliver, sell, repurchase or redeem, or
cause to be issued, delivered, sold, repurchased or redeemed, any shares of
Company Capital Stock or any shares of capital stock of the Subsidiary or
obligating the Company or the Subsidiary to grant or enter into any such option,
warrant, call, right, commitment or agreement. There are no outstanding or
authorized stock appreciation, phantom stock, profit participation, or other
similar rights with respect to the Company or the Subsidiary. There are no
voting trusts, proxies, or other agreements or understandings with respect to
the voting stock of the Company or the Subsidiary. As a result of the
Acquisition, Buyer will be the record and sole beneficial owner of all
outstanding Company Capital Stock and all rights to acquire or receive any
Company Capital Stock.
2.4 Authority. The Company has all requisite power and authority to enter
---------
into this Agreement and any Related Agreements (as defined below) to which it is
a party and to consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and any Related Agreements to which it
is a party and the consummation of the transactions
-7-
<PAGE>
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of the Company and no further action is required on
the part of the Company to authorize the Agreement, any Related Agreements to
which it is a party or the transactions contemplated hereby and thereby. The
Board of Directors of the Company has unanimously approved this Agreement, the
Acquisition and any Related Agreements. This Agreement has been, and any Related
Agreements to which the Company is a party have been or will have been prior to
the Closing, duly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by the other parties hereto and thereto,
constitute the valid and binding obligation of the Company, enforceable in
accordance with their respective terms, except as such enforceability may be
limited by principles of public policy and subject to the laws of general
application relating to bankruptcy, insolvency and the relief of debtors and to
rules of law governing specific performance, injunctive relief or other
equitable remedies.
2.5 Noncontravention. Except as disclosed on Section 2.5 of the Company
----------------
Disclosure Schedule:
(a) The execution and delivery of this Agreement and any Related
Agreements to which it is a party by the Company do not, and, the consummation
of the transactions contemplated hereby and thereby will not conflict with, or
result in any violation of, or default under (with or without notice or lapse of
time, or both), or give rise to a right of termination, cancellation,
modification or acceleration of any obligation or loss of any benefit under (any
such event, a "Conflict") (i) any provision of the charter documents or bylaws
--------
(or like document) of the Company or the Subsidiary, (ii) any material mortgage,
indenture, lease, contract or other material agreement or instrument, permit,
concession, franchise or license to which the Company or the Subsidiary is a
party or any of their respective properties or assets are subject, or (iii) any
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to the Company or the Subsidiary; and
(b) The execution and delivery of this Agreement and any Related
Agreements to which the Company is a party by the Company do not, and the
consummation of the transactions contemplated hereby and thereby will not
require any notice under any material agreements, contract, lease, license,
instrument or other arrangement to which the Company or the Subsidiary is a
party or by which the Company or the Subsidiary is bound or to which any of
their respective assets are subject (or result in the imposition of a Lien (as
defined in Section 2.10(b)) upon the Company or the Subsidiary or any of their
assets or properties).
2.6 Consents. No consent, waiver, approval, order or authorization of, or
--------
registration, declaration or filing with, any court, administrative agency or
commission or other federal, state, county, local or other foreign governmental
authority, instrumentality, agency or commission ("Governmental Entity") or any
-------------------
third party, including a party to any material agreement with the Company or the
Subsidiary (so as not to trigger any Conflict), is required by or with respect
to the Company or the Subsidiary in connection with the execution and delivery
of this Agreement and any Related Agreements to which the Company is a party or
the consummation of the transactions contemplated hereby and thereby, except for
those consents and approvals set forth on Section 2.6 of the Company Disclosure
Schedule (which sets forth a true, correct and complete list of the identities
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of any person whose consent or approval is so required and the matter, agreement
or contract to which such consent relates).
2.7 Financial Statements. Section 2.7 of the Company Disclosure Schedule
--------------------
sets forth the Company's unaudited balance sheet as of December 31, 1999 and the
related unaudited statements of income for the twelve-month period ended
December 31, 1999 (the "Year-End Financials") and the Company's unaudited
-------------------
balance sheet as of May 31, 2000 (the "Most Recent Balance Sheet") and the
-------------------------
related unaudited statements of income for the five month period then ended
(collectively, the "Interim Financials"). The Year-End Financials and the
------------------
Interim Financials are correct in all material respects and the Interim
Financials have been prepared in accordance with GAAP applied on a basis
consistent throughout the periods indicated and consistent with each other
(except that the Interim Financials do not contain all the notes that may be
required by GAAP). The Year-End Financials and Interim Financials present fairly
the financial condition and operating results of the Company as of the dates and
during the periods indicated therein, subject in the case of the Interim
Financials to normal year-end adjustments, which are not expected to be material
in amount or significance, and subject in the case of the Year-End Financials to
normal year-end adjustments similar to those for the Interim Financials, which
may be material in amount in the case of adjustments made to reflect the Company
as a stand-alone entity.
2.8 No Undisclosed Liabilities. The Company does not have any liability,
--------------------------
indebtedness, expense, claim, deficiency, guaranty or endorsement of any type,
whether accrued, absolute, contingent or matured ("Liability"), which
---------
individually or in the aggregate (i) has, as of the date of the Most Recent
Balance Sheet, not been reflected or reserved against in the Most Recent Balance
Sheet, or (ii) has not arisen in the ordinary course of business consistent with
past practices since the date of the Most Recent Balance Sheet.
2.9 Absence of Changes. Except as set forth on Section 2.9 of the Company
------------------
Disclosure Schedule and except for changes that occurred in the ordinary course
of business consistent with past practices, since the date of the Most Recent
Balance Sheet, there has not been, occurred or arisen any:
(a) transaction by the Company or the Subsidiary;
(b) amendments or changes to the charter documents, bylaws (or like
document), stockholder agreements or other organizational documents of the
Company or the Subsidiary;
(c) capital expenditure or commitment by the Company or the
Subsidiary, in an amount in excess of $10,000;
(d) destruction of, damage to or loss of any material assets,
business or customer of the Company or the Subsidiary (whether or not covered by
insurance);
(e) labor trouble or claim of wrongful discharge or other unlawful
labor practice or action;
-9-
<PAGE>
(f) change in accounting methods or practices (including any change
in depreciation or amortization policies or rates) by the Company or the
Subsidiary;
(g) revaluation by the Company or the Subsidiary of any of its
assets;
(h) declaration, setting aside or payment of a dividend or other
distribution with respect to the Company Capital Stock or the capital stock of
the Subsidiary, or any direct or indirect redemption, purchase or other
acquisition by the Company of its capital stock;
(i) increase in the salary or other compensation payable or to become
payable by the Company or the Subsidiary to any of its officers, directors,
employees or advisors, or the declaration, payment or commitment or obligation
of any kind for the payment by the Company or the Subsidiary of a bonus or other
additional salary or compensation to any such person;
(j) agreement, contract, covenant, instrument, lease, license or
commitment to which the Company or the Subsidiary is a party or by which they or
any of their respective assets is bound or any termination, extension, amendment
or modification to the terms of any agreement, contract, covenant, instrument,
lease, license or commitment to which the Company or the Subsidiary is a party
or by which they or any of their respective assets is bound;
(k) inbound license agreement with respect to the Technology or
Intellectual Property Rights (as each is defined in Section 2.13) of any third
party or any outbound license agreement with respect to the Company Intellectual
Property (as defined in Section 2.13) with any third party;
(l) agreement with any person or entity providing for the possible
acquisition, transfer or disposition (whether by way of merger, purchase of
capital stock, purchase of assets or otherwise) of any material portion of the
capital stock or assets of another entity;
(m) sale, lease or other disposition of any of the assets or
properties of the Company or the Subsidiary, other than the sale, lease or other
disposition of inventory in the ordinary course of business consistent with past
practice, or any creation of any security interest in such assets or properties,
other than mechanic's, materialmen's and similar liens;
(n) loan by the Company or the Subsidiary to any person or entity,
incurring by the Company or the Subsidiary of any indebtedness, guaranteeing by
the Company of any indebtedness, issuance or sale of any debt securities of the
Company or the Subsidiary or guaranteeing of any debt securities of others,
except for advances to employees that do not exceed $5,000 (in any one case) or
$25,000 (in the aggregate) for travel and business expenses in the ordinary
course of business consistent with past practices;
(o) waiver or release of any right or claim of the Company or the
Subsidiary, including any write-off or other compromise of any account
receivable of the Company or the Subsidiary;
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<PAGE>
(p) the commencement or notice or, to the Company's knowledge, threat of
commencement of any lawsuit or proceeding or investigation against the Company,
the Subsidiary, or any officer or director of the Company or the Subsidiary (by
reason of such person's status as an officer or director of the Company or the
Subsidiary) or any of their Affiliates (as defined in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act of 1934, as amended);
(q) notice of any claim or potential claim of ownership by any person or
entity other than the Company of the Company Intellectual Property (as defined
in Section 2.13) owned by or developed or created by the Company or of
infringement by the Company or the Subsidiary of any other person's Intellectual
Property Rights (as defined in Section 2.13);
(r) issuance or sale, or contract to issue or sell, by the Company or the
Subsidiary of any shares of its capital stock or securities exchangeable,
convertible or exercisable therefor, or any securities, warrants, options or
rights to purchase any of the foregoing;
(s) change in pricing or royalties set or charged by the Company or the
Subsidiary to its customers or licensees or in pricing or royalties set or
charged by persons or entities who have licensed Technology or Intellectual
Property Rights (as each is defined in Section 2.13) to the Company or the
Subsidiary;
(t) hiring or firing of employees;
(u) any event or condition of any character that has had a Material
Adverse Effect; or
(v) negotiation or agreement by the Company or any director, officer or
employee thereof to do any of the things described in the preceding clauses (a)
through (u).
2.10 Tax Matters.
-----------
(a) Definition of Taxes. For the purposes of this Agreement,
-------------------
"Tax" or, collectively, "Taxes", means (i) any and all federal, state, local and
--- -----
foreign taxes, assessments and other governmental charges, duties, impositions
and liabilities, including taxes based upon or measured by gross receipts,
income, profits, sales, use and occupation, and value added, ad valorem,
transfer, franchise, withholding, payroll, recapture, employment, excise and
property taxes, together with all interest, penalties and additions imposed with
respect to such amounts; (ii) any liability for the payment of any amounts of
the type described in clause (i) as a result of being a member of an affiliated,
consolidated, combined or unitary group for any period; and (iii) any liability
for the payment of any amounts of the type described in clause (i) or (ii) as a
result of any express or implied obligation to indemnify any other person or as
a result of any obligations under any agreements or arrangements with any other
person with respect to such amounts and including any liability for taxes of a
predecessor entity.
-11-
<PAGE>
(b) Tax Returns and Audits.
----------------------
(i) As of the Closing, the Company and the Subsidiary will
have prepared and timely filed all required federal, state, local and foreign
returns, estimates, information statements and reports ("Returns") relating to
-------
any and all Taxes concerning or attributable to the Company, the Subsidiary or
their operations and such Returns are true and correct and have been completed
in accordance with applicable law.
(ii) As of the Closing, the Company and the Subsidiary (A) will
have paid all Taxes they are required to pay and will have withheld with respect
to their employees all federal and state income taxes, Federal Insurance
Contribution Act ("FICA"), Federal Unemployment Tax Act ("FUTA") and other
---- ----
Taxes required to be withheld, and (B) will have accrued on the Most Recent
Balance Sheet all Taxes attributable to the periods covered by the Most Recent
Balance Sheet and will not have incurred any liability for Taxes for the period
prior to the Closing other than in the ordinary course of business.
(iii) Neither the Company nor the Subsidiary has been delinquent
in the payment of any Tax, nor is there any Tax deficiency outstanding, assessed
or proposed against the Company or the Subsidiary, nor has there been any waiver
of any statute of limitations on or extending the period for the assessment or
collection of any Tax other than Federal Income Tax for the years 1994, 1995 and
1996 as part of a Parent waiver.
(iv) No audit or other examination of any Return of the Company
or the Subsidiary is presently in progress, and neither Parent, the Seller nor
the Company have been notified of any request for such an audit or other
examination other than a Federal Income Tax audit for the years 1994, 1995 and
1996 as part of a Parent audit.
(v) No adjustment relating to any Returns filed by either
Parent, the Seller, the Company or the Subsidiary has been proposed formally or
informally by any Tax authority to either Parent, the Seller, the Company, the
Subsidiary or any representative thereof.
(vi) Neither the Company nor the Subsidiary has any liabilities
for unpaid federal, state, local and foreign Taxes which have not been accrued
or reserved against on the Most Recent Balance Sheet, whether asserted or
unasserted, contingent or otherwise, and the Company and the Subsidiary have not
incurred any liability for Taxes since the date of the Most Recent Balance Sheet
other than in the ordinary course of business.
(vii) The Company has made available to Buyer or its legal
counsel, copies of all foreign, pro forma federal and state income Returns for
1996, 1997 and 1998 and all state sales and use Returns for the Company filed
for 1997, 1998 and 1999.
(viii) There are (and immediately following the Closing there
will be) no liens, pledges, charges, claims, restrictions on transfer,
mortgages, security interests or other encumbrances of any sort (collectively,
"Liens") on the assets of the Company or the Subsidiary relating to or
-----
attributable to Taxes other than Liens for Taxes not yet due and payable.
-12-
<PAGE>
(ix) Except as set forth on Section 2.10(b)(ix) of the Company
Disclosure Schedule, neither Parent, the Seller nor the Company has any
knowledge of any basis for the assertion of any claim relating or attributable
to Taxes which, if adversely determined, would result in any Lien on the assets
of the Company or the Subsidiary.
(x) None of the Company's assets nor the Subsidiary's assets
are treated as "tax-exempt use property", within the meaning of Section 168(h)
of the Internal Revenue Code of 1986, as amended, of the United States (the
"Code").
----
(xi) As of the Closing, there will not be any contract,
agreement, plan or arrangement, including but not limited to the provisions of
this Agreement, covering any employee or former employee of the Company or the
Subsidiary that, individually or collectively, could give rise to the payment of
any amount that would not be deductible by the Company as an expense under
applicable law.
(xii) Neither Parent, Seller nor the Company has filed any
consent agreement under Section 341(f) of the Code or agreed to have Section
341(f)(4) of the Code apply to any disposition of a subsection (f) asset (as
defined in Section 341(f)(4) of the Code) owned by Parent, Seller or the
Company.
(xiii) Neither the Company nor the Subsidiary is a party to any
tax sharing, indemnification or allocation agreement, nor does the Company or
the Subsidiary owe any amount under any such agreement.
(xiv) Each of the Company's and the Subsidiary's tax basis in
its assets for purposes of determining its future amortization, depreciation and
other income tax deductions is accurately reflected on the Company's and the
Subsidiary's respective tax books and records.
(xv) Neither the Company nor the Subsidiary is, and neither has
been at any time, a "United States Real Property Holding Corporation" within the
meaning of Section 897(c)(2) of the Code.
(xvi) Neither the Company nor the Subsidiary has been a
participant in a transaction described in Section 355 of the Code.
(c) Executive Compensation Tax. Except as set forth on Section
--------------------------
2.10(c) of the Company Disclosure Schedule, there is no contract, agreement,
plan or arrangement to which either Parent, Seller, the Company or the
Subsidiary is a party, including but not limited to the provisions of this
Agreement, covering any employee or former employee of the Company or the
Subsidiary that, individually or collectively, could give rise to the payment of
any amount that would not be deductible pursuant to Sections 280G, 404 or 162(m)
of the Code.
2.11 Restrictions on Business Activities. Except as set forth in Section
-----------------------------------
2.11 of the Company Disclosure Schedule, there is no agreement (noncompete or
otherwise), commitment, judgment, injunction, order or decree to which the
Company or the Subsidiary is a party or otherwise
-13-
<PAGE>
binding upon the Company or the Subsidiary which prohibits or impairs any
business practice of the Company or the Subsidiary, any acquisition of property
(tangible or intangible) by the Company or the Subsidiary or the conduct of
business by the Company or the Subsidiary. Except as set forth in Section 2.11
of the Company Disclosure Schedule, neither Parent, Seller, the Company nor the
Subsidiary has entered into any agreement under which the Company or the
Subsidiary is restricted from selling, licensing or otherwise distributing any
technology or products to or providing services to, customers or potential
customers or any class of customers, in any geographic area, during any period
of time or in any segment of the market.
2.12 Title of Properties; Absence of Liens and Encumbrances; Condition of
--------------------------------------------------------------------
Equipment.
---------
(a) Except as set forth in Section 2.12(a) of the Company Disclosure
Schedule, neither the Company nor the Subsidiary owns any real property, nor
have they ever owned any real property. Section 2.12(a) of the Company
Disclosure Schedule sets forth a list of all real property currently leased,
subleased or otherwise occupied by the Company or the Subsidiary, the name of
the lessor, the date of the lease, sublease or other occupancy agreement (each a
"Lease"), and each amendment thereto and, with respect to any current Lease,
-----
the aggregate annual rental and/or other fees payable under any such Lease. The
Company has delivered to Buyer correct and complete copies of the Leases listed
on Section 2.12(a) of the Company Disclosure Schedule. With respect to each
Lease listed on Section 2.12(a) of the Company Disclosure Schedule:
(i) the Lease (and, as to a sublease or other similar
occupancy agreement, the master Lease) is in full force and effect, is valid and
effective in accordance with its terms, and there is not, under such master
Lease, any existing default or event of default (or event which with notice or
lapse of time, or both, would constitute a default) by the Company or, to the
Company's knowledge, by any other party thereto;
(ii) upon obtaining any required consents of the landlord
(which consents, if required, are set forth on Section 2.6 of the Company
Disclosure Schedule), the Lease will continue to be legal, valid, binding and
enforceable against the Company and against the other party thereto, and will be
in full force and effect on identical terms following the consummation of the
transactions contemplated hereby;
(iii) to Parent's, Seller's and the Company's knowledge, no
party to the Lease has repudiated any provisions thereof;
(iv) the Company has not assigned, transferred, conveyed,
mortgaged, deeded in trust or encumbered any interest in the leasehold;
(v) all facilities leased thereunder have received all approvals
of governmental authorities (including licenses and permits) required in
connection with the operation thereof as conducted by the Company and have been
operated and maintained in accordance with applicable laws, rules and
regulations; and
-14-
<PAGE>
(vi) all facilities leased thereunder are supplied with
utilities and other services necessary for the operation of said facilities.
(b) Except as set forth on Section 2.12(b) of the Company Disclosure
Schedule, the Company has good and valid title to, or, in the case of leased
properties and assets, valid leasehold interests in, all of its tangible
properties and assets, real, personal and mixed, used or held for use in the
Company's business, free and clear of any Liens, except for (i) Liens disclosed
on the Most Recent Balance Sheet, (ii) Liens for Taxes incurred in the ordinary
course of business which are not yet due and payable, and (iii) mechanic's,
materialmen's and similar Liens incurred in the ordinary course of business.
(c) Section 2.12(c) of the Company Disclosure Schedule lists all
material items of equipment (the "Equipment") owned or leased by the Company or
---------
the Subsidiary and such Equipment is, (i) adequate for the conduct of the
Company's business as currently conducted and proposed to be conducted and (ii)
in good operating condition, regularly and properly maintained, subject to
normal wear and tear.
(d) Except as set forth on Section 2.12(d) of the Disclosure
Schedule, neither Parent, Seller nor any Parent Affiliate has provided nor are
they currently providing any services to the Company or the Subsidiary that are
used in and/or necessary to the conduct of the business of the Company as it
currently is conducted.
2.13 Intellectual Property.
---------------------
(a) Definitions. For all purposes of this Agreement, the
-----------
following terms shall have the following respective meanings:
(i) "Technology" shall mean any or all of the following (i)
----------
works of authorship including, without limitation, computer programs, software
(including all source code and executable code, whether embodied in software,
firmware or otherwise, but excluding all shrink-wrap and similarly publicly
available commercial software) documentation, designs, files, records, data and
mask works, (ii) inventions (whether or not patentable), improvements, and
technology, (iii) proprietary and confidential information, including technical
data and customer and supplier lists, trade secrets and know how, (iv)
databases, data compilations and collections and technical data, (v) logos,
trade names, trade dress, trademarks, service marks, World Wide Web addresses
and domain names, tools, methods and processes, and all instantiations of the
foregoing in any form and embodied in any media.
(ii) "Intellectual Property Rights" shall mean any or all of
----------------------------
the following and all rights in, arising out of, or associated therewith: (i)
all United States and foreign patents and utility models and applications
therefor and all reissues, divisions, reexaminations, renewals, extensions,
provisionals, continuations and continuations-in-part thereof, and equivalent or
similar rights anywhere in the world in inventions and discoveries including
without limitation invention disclosures ("Patents"); (ii) all trade secrets
-------
and other rights in know how and confidential or proprietary information; (iii)
all copyrights, copyrights registrations and applications therefor and all
-15-
<PAGE>
other rights corresponding thereto throughout the world ("Copyrights"); (iv) all
----------
mask works, mask work registrations and applications therefor, and any
equivalent or similar rights in semiconductor masks, layouts, architectures or
topology ("Maskworks"); (v) all industrial designs and any registrations and
---------
applications therefor throughout the world; (vi) all World Wide Web addresses
and domain names and applications and registrations therefor, all trade names,
logos, common law trademarks and service marks, trademark and service mark
registrations and applications therefor and all goodwill associated therewith
throughout the world ("Trademarks"); and (vii) any similar, corresponding or
----------
equivalent rights to any of the foregoing anywhere in the world.
(iii) "Company Intellectual Property" shall mean any Technology
-----------------------------
and Intellectual Property Rights including the Company Registered Intellectual
Property Rights (as defined below) that are owned by or exclusively licensed to
the Company or the Subsidiary.
(iv) "Registered Intellectual Property Rights" shall mean all
---------------------------------------
United States, international and foreign: (i) Patents, including applications
therefor; (ii) registered Trademarks, applications to register Trademarks,
including intent-to-use applications, or other registrations or applications
related to Trademarks; (iii) Copyrights registrations and applications to
register Copyrights; (iv) Mask Work registrations and applications to register
Mask Works; and (v) any other Technology that is the subject of an application,
certificate, filing, registration or other document issued by, filed with, or
recorded by, any state, government or other public legal authority at any time.
(b) Section 2.13(b) of the Company Disclosure Schedule lists all
Registered Intellectual Property Rights owned by, filed in the name of, or
applied for by the Company or the Subsidiary (the "Company Registered
------------------
Intellectual Property Rights") and lists any proceedings or actions before any
-----------------------------
court, tribunal (including the United States Patent and Trademark Office (the
"PTO") or equivalent authority anywhere in the world) related to any of the
---
Company Registered Intellectual Property Rights or Company Intellectual
Property.
(c) Each item of Company Intellectual Property, including all Company
Registered Intellectual Property Rights listed in Section 2.13(b) of the Company
Disclosure Schedule and all Intellectual Property Rights and Technology licensed
to the Company, is free and clear of any Liens or other encumbrances. Except as
set forth in Section 2.13(c) of the Company Disclosure Schedule, the Company is
the exclusive owner or licensee of all Company Intellectual Property.
(d) To the extent that any Technology has been developed or created
independently or jointly by any person other than the Company for which the
Company has, directly or indirectly, paid, the Company has a written agreement
with such person with respect thereto, and except as set forth in Section
2.13(d) of the Company Disclosure Schedule the Company thereby has irrevocably
obtained worldwide, perpetual ownership of, and is the exclusive owner of, all
such Technology and associated Intellectual Property Rights including the right
to seek past and future damages with respect thereto by operation of law or by
valid assignment; and has received the waiver with respect thereto of all non-
assignable rights including but not limited to all author or moral rights. All
employees of the Company and the Subsidiary have entered into a valid and
-16-
<PAGE>
binding written agreement with the Company sufficient to vest title in the
Company of all Technology and Intellectual Property Rights created by such
employee in the scope of his or her employment with the Company or the
Subsidiary.
(e) Except as set forth in Section 2.13(e) of the Company Disclosure
Schedule, neither the Company nor the Subsidiary has transferred ownership of,
or granted any license of or right to use, or authorized the retention of any
exclusive rights to use or joint ownership of, any Technology or Intellectual
Property Right that is or was Company Intellectual Property, to any other
person.
(f) None of the Company Intellectual Property was developed by or on
behalf of or using grants of any Governmental Entity.
(g) Except as set forth in Section 2.13(g) of the Company Disclosure
Schedule, the Company Intellectual Property constitutes all the Technology and
Intellectual Property Rights exclusively or primarily used in and/or necessary
to the conduct of the business of the Company as it currently is conducted,
including, without limitation, the design, development, manufacture, use, import
and sale of products, technology and performances of services (including
products, technology or services currently under development).
(h) Except for Technology and Intellectual Property Rights to be
transferred and assigned to the Company by Parent, Seller and/or Parent
Affiliates in accordance with Section 6.14 of this Agreement, neither Parent,
Seller nor any Parent Affiliate owns or has licensed to the Company any
Technology or Intellectual Property Rights exclusively or primarily used in
and/or necessary to the conduct of the business of the Company as it currently
is conducted, including, without limitation, the design, development,
manufacture, use, import and sale of products, technology and performances of
services (including products, technology or services currently under
development). As of immediately following the Closing, there will be no
Technology or Intellectual Property Rights that are used in and/or necessary for
the conduct of the business of the Company as it currently is conducted, planned
or is contemplated to be conducted that are (i) owned or exclusively licensed
from a third party by Parent, Seller or any Parent Affiliate not the Company, or
(ii) licensed by the Company from Parent, the Seller or any Parent Affiliate not
the Company. As of the Closing, as between Parent, Seller and the Parent
Affiliates, on one hand, and the Company, on the other hand, the Company shall
own all Technology, including all Intellectual Property Rights therein and
thereto, exclusively or primarily used in and/or necessary to the conduct of the
business of the Company as it currently is conducted, planned or is contemplated
to be conducted.
(i) Other than (i) the third party software listed in Section 2.13(g)
of the Company Disclosure Schedule and (ii) inbound "shrink-wrap" and similar
publicly available commercial binary code end-user licenses and outbound
"shrink-wrap" licenses in the form set forth on Section 2.13(i) of the Company
Disclosure Schedule, the contracts, licenses and agreements listed in Section
2.13(i) of the Company Disclosure Schedule include all contracts, licenses and
agreements to which the Company is a party with respect to the license of any
Technology or Intellectual Property Rights. No person who has licensed
Technology or Intellectual Property Rights
-17-
<PAGE>
to the Company has ownership rights or license rights to improvements made by
the Company in such Technology or Intellectual Property Rights which has been
licensed to the Company.
(j) Section 2.13(j) of the Company Disclosure Schedule lists all
contracts, licenses and agreements between the Company and any other person
wherein or whereby the Company has agreed to, or assumed, any obligation or duty
to warrant, indemnify, reimburse, hold harmless, guaranty or otherwise assume or
incur any obligation or liability or provide a right of rescission with respect
to the infringement or misappropriation by the Company or such other person of
the Intellectual Property Rights of any person other than the Company.
(k) Section 2.13(k) of the Company Disclosure Schedule lists all
existing products, services and technology of the Company and all products,
services and technology currently planned or contemplated. The operation of the
business of the Company as it currently is conducted or is contemplated to be
conducted, including but not limited to the design, development, use, import,
branding, advertising, promotion, marketing, manufacture and sale of the
products, technology or services (including products, technology or services
currently under development) of the Company does not and, to Parent's, Seller's
and the Company's knowledge, will not when conducted by Buyer in substantially
the same manner following the Closing, infringe or misappropriate any
Intellectual Property Right (excluding for this purpose Patents issued after the
Closing Date) of any person, violate any right of any person (including any
right to privacy or publicity), or constitute unfair competition or trade
practices under the laws of any jurisdiction, or to the Company's knowledge,
infringe any Patent of any person that issues after the Closing Date, and the
Company has not received notice from any person claiming that such operation or
any act, product, technology or service (including products, technology or
services currently under development) of the Company infringes or
misappropriates any Intellectual Property Right of any person or constitutes
unfair competition or trade practices under the laws of any jurisdiction (nor
does the Company have knowledge of any basis therefor).
(l) Each item of Company Registered Intellectual Property Rights is
valid and subsisting, and all necessary registration, maintenance and renewal
fees in connection with such Company Registered Intellectual Property Rights
have been paid and all necessary documents and certificates in connection with
such Company Registered Intellectual Property Rights have been filed with the
relevant patent, copyright, trademark or other authorities in the United States
or foreign jurisdictions, as the case may be, for the purposes of maintaining
such Registered Intellectual Property Rights. Except as set forth in Section
2.13(l) of the Company Disclosure Schedule, there are no actions that must be
taken by the Company or the Subsidiary within ninety (90) days of the Closing
Date, including the payment of any registration, maintenance or renewal fees or
the filing of any responses to PTO office actions, documents, applications or
certificates for the purposes of obtaining, maintaining, perfecting or
preserving or renewing any Registered Intellectual Property Right. For each
product, technology or service of the Company that constitutes or includes a
copyrightable work, the Company has registered the copyright in the latest
version of such work with relevant Governmental Entities, including the U.S.
Copyright Office. In each case in which the Company has acquired any Technology
or Intellectual Property Right from any person, the Company to its knowledge has
obtained a valid and enforceable assignment sufficient to irrevocably
-18-
<PAGE>
transfer all rights in such Technology and the associated Intellectual Property
Rights (including the right to seek past and future damages with respect
thereto) to the Company and, to the maximum extent provided for by, and in
accordance with, applicable laws and regulations, the Company has recorded each
such assignment with the relevant Governmental Entity, including the PTO, the
U.S. Copyright Office, or their respective equivalents in any relevant foreign
jurisdiction, as the case may be. The Company has not claimed "Small Entity"
status or other particular status in the application for any Intellectual
Property Rights, which claim of status was not at the time made, or which has
since become, inaccurate or false or that will no longer be true and accurate as
a result of the Closing.
(m) There are no contracts, licenses or agreements between the
Company and any other person or between the Subsidiary and any other person with
respect to Company Intellectual Property under which there is any dispute
regarding the scope of such agreement, or performance under such agreement
including with respect to any payments to be made or received by the Company or
the Subsidiary thereunder.
(n) Except as set forth on Section 2.13(n) of the Company Disclosure
Schedule, to either Parent's, the Seller's or the Company's knowledge, no person
is infringing or misappropriating any Company Intellectual Property.
(o) The Company has taken all steps that are reasonably required to
protect the Company's rights in confidential information and trade secrets of
the Company or provided by any other person to the Company. Without limiting the
foregoing, the Company has, and enforces, a policy requiring each employee,
consultant and contractor to execute a proprietary information, confidentiality
and assignment agreement, substantially in the form attached hereto as Section
2.13(o) of the Company Disclosure Schedule, and all current and former
employees, consultants and contractors of the Company have executed such an
agreement.
(p) No Company Intellectual Property or service of the Company or the
Subsidiary is subject to any proceeding or outstanding decree, order, judgment
or settlement agreement or stipulation that restricts in any manner the use,
transfer or licensing thereof by the Company or the Subsidiary or may affect the
validity, use or enforceability of such Company Intellectual Property.
(q) No (i) product, technology, service or publication of the
Company, (ii) material published or distributed by the Company, or (iii) conduct
or statement of the Company constitutes obscene material, a defamatory statement
or material, false advertising or otherwise violates any law or regulation.
(r) Except as set forth in Section 2.13(r) of the Company Disclosure
Schedule, all Technology used in or necessary to the conduct of Company's
business was written and created solely by either (i) employees of the Company
acting within the scope of their employment or (ii) by third parties who have
validly and irrevocably assigned all of their rights, including Intellectual
Property Rights therein, to the Company, and no third party owns or has any
rights to any of the Company Intellectual Property.
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<PAGE>
(s) Except as set forth in Section 2.13(s) of the Company Disclosure
Schedule, all Company Intellectual Property will be fully transferable,
alienable or licensable by Buyer without restriction and without payment of any
kind to any third party.
(t) Except as set forth in Section 2.13(t) of the Company Disclosure
Schedule, neither the Company nor the Subsidiary is in material breach of nor
has the Company or the Subsidiary failed to perform in any material respect
under, any of the foregoing contracts, licenses or agreements and, to the
Company's knowledge, no other party to any such contract, license or agreement
is in breach thereof or has failed to perform thereunder.
(u) Neither this Agreement nor the transactions contemplated by this
Agreement, including the assignment to Buyer by operation of law or otherwise of
any contracts or agreements to which the Company is a party, will result in (i)
Buyer's or the Company's granting to any third party any right to or with
respect to any Technology or Intellectual Property Right owned by, or licensed
to, either of them, (ii) either Buyer's or, except as set forth in Section
2.13(u) of the Company Disclosure Schedule, the Company's being bound by, or
subject to, any non-compete or other restriction on the operation or scope of
their respective businesses, (iii) either Buyer's or the Company's being
obligated to pay any royalties or other amounts to any third party in excess of
those payable by Buyer or the Company, respectively, prior to the Closing.
(v) Neither Seller nor the Company has any knowledge of any facts or
circumstances that would render any Company Intellectual Property invalid or
unenforceable. Without limiting the foregoing, neither Parent, Seller nor
Company knows of any information, materials, facts, or circumstances, including
any information or fact that would constitute prior art, that would render any
of the Company Registered Intellectual Property Rights invalid or unenforceable,
or would adversely effect any pending application for any Company Registered
Intellectual Property Right and neither Parent, Seller nor the Company has
misrepresented, or failed to disclose, and has any knowledge of any
misrepresentation or failure to disclose, any fact or circumstances in any
application for any Company Registered Intellectual Property Right that would
constitute fraud or a misrepresentation with respect to such application or that
would otherwise effect the validity or enforceability of any Intellectual
Property Right of Company.
2.14 Contracts. Except as set forth on Section 2.12(a), Section 2.13(g),
---------
Section 2.13(i) or Section 2.14 of the Company Disclosure Schedule, neither the
Company nor the Subsidiary is a party to nor are they bound by:
(a) any agreement (or group of related agreements) for the lease of
personal property to or from any person or entity which requires annual payments
in excess of $10,000;
(b) any agreement (or group of related agreements) for the purchase
of raw materials, commodities, supplies, products, or other personal property,
or for the furnishing or receipt of services which requires annual payments in
excess of $10,000;
(c) any agreement concerning a partnership or joint venture;
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<PAGE>
(d) any mortgages, indentures, loans or credit agreements,
security agreements or other agreements or instruments relating to the borrowing
of money or extension of credit, or any capitalized lease obligation;
(e) any agreement concerning confidentiality or any agreement,
contract or commitment containing any covenant limiting the freedom of the
Company or the Subsidiary to engage in any line of business or to compete with
any person or entity;
(f) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan or arrangement for
the benefit of its current or former directors, officers, and employees;
(g) any collective bargaining agreement;
(h) any employment or consulting agreement, contract or commitment
with an employee or individual consultant or salesperson or consulting or sales
agreement, contract or commitment with a firm or other organization;
(i) any agreement under which it has advanced or loaned any amount
to any of its directors, officers, and employees other than business travel
advances in the ordinary course of business consistent with past practice;
(j) any agreement pursuant to which the Company or the Subsidiary
has an obligation to pay royalties or make other payments in connection with the
sale of products or services by the Company or the Subsidiary in the ordinary
course of business (Section 2.14(j) of the Company Disclosure Schedule lists the
parties to any such agreement and the duration of and amount of such royalties
or other payment);
(k) any fidelity or surety bond or completion bond;
(l) any agreement, contract or commitment relating to capital
expenditures in excess of $10,000;
(m) any agreement, contract or commitment relating to the
disposition or acquisition of assets or any interest in any business enterprise
outside the ordinary course of business consistent with past practice;
(n) any purchase order or contract for the purchase of materials
in excess of $10,000;
(o) any construction contracts;
(p) any distribution, joint marketing or development agreement; or
(q) any other agreement, contract or commitment that involves in
excess of $10,000 (in any one case) or is not cancelable without penalty within
thirty (30) days.
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<PAGE>
The Company has delivered to Buyer a correct and complete copy of each
written contract listed on Section 2.12(a), Section 2.13(g), Section 2.13(i) and
Section 2.14 of the Company Disclosure Schedule and a written summary setting
forth the terms and conditions of each oral agreement referred to on Section
2.12(a), Section 2.13(g), Section 2.13(i) and Section 2.14 of the Company
Disclosure Schedule. Each of the Company and the Subsidiary is in compliance
with and has not breached, violated or defaulted under, or received notice that
it has breached, violated or defaulted under, any of the terms or conditions of
any agreement, contract, covenant, instrument, lease, license or commitment to
which the Company is a party or by which it is bound (collectively a
"Contract"), nor is either Parent, Seller or the Company aware of any event that
--------
would constitute such a breach, violation or default with the lapse of time,
giving of notice or both. Each Contract is in full force and effect and, to the
Company's knowledge, is not subject to any default thereunder by any party
obligated to the Company or the Subsidiary pursuant thereto. The Company has
obtained, or will obtain prior to the Closing Date, all necessary consents,
waivers and approvals of parties to any Contract as are required thereunder in
connection with the Acquisition, and for such Contracts to remain in effect
without modification after the Closing. Following the Closing, Buyer will be
permitted to exercise all of the Company's and the Subsidiary's rights under the
Contracts without the payment of any additional amounts or consideration other
than ongoing fees, royalties or payments which the Company and the Subsidiary
would otherwise be required to pay had the transactions contemplated by this
Agreement not occurred.
2.15 Governmental Authorization. Section 2.15 of the Company Disclosure
--------------------------
Schedule lists each consent, license, permit, grant or other authorization
issued to the Company and/or the Subsidiary by a Governmental Entity (i)
pursuant to which the Company currently operates its business or holds any
interest in any of its properties or assets or (ii) which is required for the
operation of its business or the holding of any such interest (herein
collectively called the "Company Authorizations"). The Company Authorizations
----------------------
are in full force and effect and constitute all the Company Authorizations
required to permit the Company to operate or conduct its business or hold any
interest in its properties or assets.
2.16 Litigation. There is no action, suit or proceeding of any nature
----------
pending, or, to either Parent's, Seller's or the Company's knowledge,
threatened, against the Company, the Subsidiary, their respective properties or
any of their officers or directors that involves liability to the Company and/or
the Subsidiary exceeding $25,000 in the aggregate. There is no investigation
pending or, to either Parent's, Seller's or the Company's knowledge threatened,
against the Company, the Subsidiary, their respective properties or any of their
officers or directors by or before any Governmental Entity. To the knowledge of
the Company, no Governmental Entity has at any time challenged or questioned the
legal right of the Company or the Subsidiary to conduct its operations as
presently or previously conducted.
2.17 No Liquidation, Insolvency, Winding-Up.
--------------------------------------
(a) No order has been made, or petition presented, or resolution
passed for the winding-up of the Company and there is not outstanding:
(i) any petition or order for the winding-up of the Company;
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<PAGE>
(ii) any appointment of a receiver over the whole or part of
the undertaking of assets of the Company;
(iii) to either Seller's or the Company's knowledge, any
petition or order for administration of the Company;
(iv) any voluntary arrangement between the Company and any of
its creditors;
(v) any distress or execution or other process levied in
respect of the Company which remains undischarged; or
(vi) any unfulfilled or unsatisfied judgment or court order
against the Company.
(b) To the knowledge of the Company, there are no circumstances that
would entitle any person to present a petition for the winding-up or
administration of the Company or to appoint a receiver over the whole or any
part of the undertaking or assets of the Company.
2.18 Accounts Receivable.
-------------------
(a) The Company has made available to Buyer a list of all accounts
receivable of the Company as of the date of the Most Recent Balance Sheet,
together with a range of days elapsed since invoice.
(b) All of the Company's accounts receivable arose in the ordinary
course of business, are carried at values determined in accordance with GAAP
consistently applied, and to the Company's knowledge, are collectible except to
the extent of reserves set forth in the Most Recent Balance Sheet or, for
receivables arising subsequent to the date of the Most Recent Balance Sheet, as
reflected on the books and records of the Company. No person has any Lien on any
of the Company's accounts receivable and no request or agreement for deduction
or discount has been made with respect to any of the Company's accounts
receivable.
2.19 Books and Records. The minutes of the Company have been made
-----------------
available to counsel for Buyer and are the only minutes of the Company and
contain a reasonably accurate summary of all meetings of the Board of Directors
(or committees thereof) of the Company and its stockholders, or actions by
written consent, since the time of incorporation or formation of the Company, as
the case may be, and have been maintained in accordance with applicable sound
business practices, laws and other requirements. The stock ledger of the Company
has been made available to counsel for Buyer and reflects all issuances,
transfers, repurchases and cancellations of shares of Company Capital Stock.
2.20 Environmental Matters.
---------------------
-23-
<PAGE>
(a) Hazardous Material. Neither the Company nor the Subsidiary
------------------
has: (i) operated any underground storage tanks at any property that the Company
or the Subsidiary has at any time owned, operated, occupied or leased; or (ii)
illegally released any substance that has been designated by any Governmental
Entity or by applicable federal, state or local law to be radioactive, toxic,
hazardous or otherwise a danger to health or the environment, including, without
limitation, PCBs, asbestos, petroleum, and urea-formaldehyde and all substances
listed as hazardous substances pursuant to the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended, or defined as a
hazardous waste pursuant to the United States Resource Conservation and Recovery
Act of 1976, as amended, and the regulations promulgated pursuant to said laws
(a "Hazardous Material"), but excluding office and janitorial supplies properly
------------------
and safely maintained. No Hazardous Materials are present as a result of the
actions of either Parent, Seller the Company or the Subsidiary or, to either
Parent's, Seller's or the Company's knowledge, as a result of any actions of any
other person or otherwise, in, on or under any property, including the land and
the improvements, ground water and surface water thereof, that the Company has
at any time owned, operated, occupied or leased.
(b) Hazardous Materials Activities. Neither the Company nor the
------------------------------
Subsidiary has transported, stored, used, manufactured, disposed of, released or
exposed its employees or others to Hazardous Materials in violation of any law
in effect on or before the Closing, nor has the Company or the Subsidiary
disposed of, transported, sold, used or manufactured any product containing a
Hazardous Material (any or all of the foregoing being collectively referred to
as "Hazardous Materials Activities") in violation of any rule, regulation,
------------------------------
treaty or statute promulgated by any Governmental Entity in effect prior to or
as of the date hereof to prohibit, regulate or control Hazardous Materials or
any Hazardous Material Activities.
(c) Permits. Each of the Company and the Subsidiary currently
-------
holds all environmental approvals, permits, licenses, clearances and consents
(the "Environmental Permits") necessary for the conduct of its Hazardous
---------------------
Material Activities, respectively, and other businesses of the Company as such
activities and businesses are currently being conducted.
(d) Environmental Liabilities. No action, proceeding, revocation
-------------------------
proceeding, amendment procedure, writ, injunction or claim is pending, or to the
Company's knowledge, threatened concerning any Environmental Permit, Hazardous
Material or any Hazardous Materials Activities of the Company or the Subsidiary.
Neither Parent, Seller nor the Company is aware of any fact or circumstance that
could involve the Company or the Subsidiary in any environmental litigation or
impose upon the Company or the Subsidiary any environmental liability.
2.21 Brokers' and Finders' Fees. Neither the Company nor the Subsidiary
--------------------------
has incurred, nor will they incur, directly or indirectly, any liability for
brokerage or finders' fees or agents' commissions or any similar charges in
connection with the Agreement or any transaction contemplated hereby.
2.22 Employee Matters and Benefit Plans.
----------------------------------
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<PAGE>
(a) Definitions. With the exception of the definition of
-----------
"Affiliate" set forth in Section 2.22(a)(i) below (which definition shall apply
only to this Section 2.22), for purposes of this Agreement, the following terms
shall have the meanings set forth below:
(i) "Affiliate" shall mean any other person or entity
---------
under common control with Parent, Seller or Company within the meaning of
Section 414(b), (c), (m) or (o) of the Code and the regulations issued
thereunder;
(ii) "Code" shall mean the Internal Revenue Code of 1986,
----
as amended;
(iii) "Parent Employee Plan" shall mean any plan, program,
--------------------
policy, practice, contract, agreement or other arrangement providing for
compensation, severance, termination pay, deferred compensation, performance
awards, stock or stock-related awards, fringe benefits or other employee
benefits or remuneration of any kind, whether written or unwritten or otherwise,
funded or unfunded, including without limitation, each "employee benefit plan,"
within the meaning of Section 3(3) of ERISA which is or has been maintained,
contributed to, or required to be contributed to, by Parent, Seller, the Company
or any Affiliate for the benefit of any Employee, or with respect to which the
Company has or may have any liability or obligation;
(iv) "COBRA" shall mean the Consolidated Omnibus Budget
-----
Reconciliation Act of 1985, as amended;
(v) "DOL" shall mean the Department of Labor;
---
(vi) "Employee" shall mean any current or former employee,
--------
consultant or director of the Company;
(vii) "Employee Agreement" shall mean each management,
------------------
employment, severance, consulting, relocation, repatriation, expatriation,
visas, work permit or other agreement, contract or understanding between Parent,
Seller, the Company or any Affiliate and any Employee;
(viii) "ERISA" shall mean the Employee Retirement Income
-----
Security Act of 1974, as amended;
(ix) "FMLA" shall mean the Family Medical Leave Act of
----
1993, as amended;
(x) "IRS" shall mean the Internal Revenue Service;
---
(xi) "Multiemployer Plan" shall mean any "Pension Plan"
------------------
(as defined below) which is a "multiemployer plan," as defined in Section 3(37)
of ERISA;
(xii) "PBGC" shall mean the Pension Benefit Guaranty
----
Corporation; and
(xiii) "Pension Plan" shall mean each Parent, Seller or
------------
Company Employee Plan which is an "employee pension benefit plan," within the
meaning of Section 3(2) of ERISA.
-25-
<PAGE>
(b) Schedule. Section 2.22(b) of the Company Disclosure Schedule
--------
contains an accurate and complete list of each Parent Employee Plan and each
Employee Agreement under each Parent Employee Plan or Employee Agreement.
Neither Parent, Seller, nor the Company have any plan or commitment to establish
any new Parent Employee Plan or Employee Agreement, to modify any Parent
Employee Plan or Employee Agreement (except to the extent required by law or to
conform any such Parent Employee Plan or Employee Agreement to the requirements
of any applicable law, in each case as previously disclosed to Buyer in writing,
or as required by this Agreement), or to enter into any Parent Employee Plan or
Employee Agreement.
(c) Documents. Parent, Seller and the Company have provided to
---------
Buyer: (i) correct and complete copies of all documents embodying each Employee
Plan and each Employee Agreement including (without limitation) all amendments
thereto and all related trust documents; (ii) the most recent annual actuarial
valuations, if any, prepared for each Employee Plan; (iii) the three (3) most
recent annual reports (Form Series 5500 and all schedules and financial
statements attached thereto), if any, required under ERISA or the Code in
connection with each Employee Plan; (iv) if the Employee Plan is funded, the
most recent annual and periodic accounting of Employee Plan assets; (v) the most
recent summary plan description together with the summary(ies) of material
modifications thereto, if any, required under ERISA with respect to each
Employee Plan; (vi) all IRS determination, opinion, notification and advisory
letters, and all applications and correspondence to or from the IRS or the DOL
with respect to any such application or letter; (vii) all material written
agreements and contracts relating to each Employee Plan, including, but not
limited to, administrative service agreements, group annuity contracts and group
insurance contracts; (viii) all communications material to any Employee or
Employees relating to any Employee Plan and any proposed Employee Plans, in each
case, relating to any amendments, terminations, establishments, increases or
decreases in benefits, acceleration of payments or vesting schedules or other
events which would result in any material liability to the Company; (ix) all
correspondence to or from any governmental agency relating to any Employee Plan;
(x) all COBRA forms and related notices; (xi) all policies pertaining to
fiduciary liability insurance covering the fiduciaries for each Employee Plan;
(xii) all discrimination tests for each Employee Plan for the most recent plan
year; and (xiii) all registration statements, annual reports (Form 11-K and all
attachments thereto) and prospectuses prepared in connection with each Employee
Plan.
(d) Employee Plan Compliance. Except as set forth on Section
------------------------
2.22(d) of the Company Disclosure Schedule, (i) Parent, Seller and the Company
have performed in all material respects all obligations required to be performed
by them under, are not in default or violation of, and have no knowledge of any
default or violation by any other party to each Employee Plan, and each Employee
Plan has been established and maintained in all material respects in accordance
with its terms and in compliance with all applicable laws, statutes, orders,
rules and regulations, including but not limited to ERISA or the Code; (ii) each
Employee Plan intended to qualify under Section 401(a) of the Code and each
trust intended to qualify under Section 501(a) of the Code has either received a
favorable determination, opinion, notification or advisory letter from the IRS
with respect to each such Plan as to its qualified status under the Code,
including all amendments to the Code effected by the Tax Reform Act of 1986 and
subsequent legislation, or has remaining a period of time under applicable
Treasury regulations or IRS pronouncements in which to apply for such a
-26-
<PAGE>
letter and make any amendments necessary to obtain a favorable determination as
to the qualified status of each such Employee Plan; (iii) no "prohibited
transaction," within the meaning of Section 4975 of the Code or Sections 406 and
407 of ERISA, and not otherwise exempt under Section 408 of ERISA, has occurred
with respect to any Employee Plan; (iv) there are no actions, suits or claims
pending, or, to Parent's, Seller's or the Company's knowledge, threatened or
reasonably anticipated (other than routine claims for benefits) against any
Employee Plan or against the assets of any Employee Plan; (v) each Employee Plan
can be amended, terminated or otherwise discontinued after the Closing in
accordance with its terms, without liability to Buyer, Company or any of its
Affiliates (other than ordinary administration expenses); (vi) there are no
audits, inquiries or proceedings pending or, to the knowledge of Parent, Seller,
the Company or any Affiliates, threatened by the IRS or DOL with respect to any
Employee Plan; and (vii) neither Parent, Seller nor the Company nor any
Affiliate is subject to any penalty or tax with respect to any Employee Plan
under Section 502(i) of ERISA or Sections 4975 through 4980 of the Code.
(e) Pension Plan. Parent, the Seller, the Company or an Affiliate
------------
has previously or currently maintains, sponsors, participates in or contributes
to one or more Pension Plans which are subject to Title IV of ERISA or Section
412 of the Code. As of Closing: (i) no legal or administrative action has been
taken by the PBGC to terminate or to appoint a trustee to administer any Pension
Plan; (ii) no liability to the PBGC under Title IV of ERISA has been incurred by
Parent, the Seller, the Company or an Affiliate that has not been satisfied in
full as of Closing; (iii) each Pension Plan that has been terminated was or is,
if assets remain in the Pension Plan, currently fully-funded on a termination
basis; (iv) each Pension Plan which is still maintained is fully-funded on a
termination basis and will continue to be fully funded on a termination basis at
Closing; (v) each Pension Plan has been maintained in compliance with the
minimum funding standards of ERISA and the Code where applicable and has not
incurred any "accumulated funding deficiency," as defined in Section 302 of
ERISA and Section 412 of the Code, whether or not waived; (vi) no Pension Plan
has a reportable event within the meaning of Section 4043 of ERISA and the
regulations thereunder; and (vii) no Pension Plan has incurred any event
described in Section 4041 (other than the standard termination contemplated
herein), 4062 or 4063 of ERISA.
(f) Multiemployer Plans. At no time has Parent, Seller, the
-------------------
Company or any Affiliate contributed to or been obligated to contribute to any
Multiemployer Plan.
(g) No Post-Employment Obligations. Except as set forth in Section
------------------------------
2.22(g) of the Company Disclosure Schedule, no Employee Plan provides, or
reflects or represents any liability to provide, retiree life insurance, retiree
health or other retiree employee welfare benefits to any person for any reason,
except as may be required by COBRA or other applicable statute, and neither
Parent, Seller nor the Company have ever represented, promised or contracted
(whether in oral or written form) to any Employee (either individually or to
Employees as a group) or any other person that such Employee(s) or other person
would be provided with retiree life insurance, retiree health or other retiree
employee welfare benefit, except to the extent required by statute.
-27-
<PAGE>
(h) COBRA. Neither the Company nor any Affiliate has, prior to the
-----
Closing and in any material respect, violated any of the health care
continuation requirements of COBRA, the requirements of FMLA or any similar
provisions of state law applicable to its Employees.
(i) Effect of Transaction.
---------------------
(i) Except as set forth on Section 2.22(i) of the Company
Disclosure Schedule, the execution of this Agreement and the consummation of the
transactions contemplated hereby will not (either alone or upon the occurrence
of any additional or subsequent events) constitute an event under any Employee
Plan, Employee Agreement, trust or loan that will or may result in any payment
(whether of severance pay or otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits or obligation to fund
benefits with respect to any Employee.
(ii) Except as set forth on Section 2.22(i) of the Company
Disclosure Schedule, no payment or benefit which will or may be made by Parent,
Seller, the Company or its Affiliates with respect to any Employee as a result
of the transactions contemplated by this Agreement or otherwise will be
characterized as a "parachute payment," within the meaning of Section 280G(b)(2)
of the Code (but without regard to clause (ii) thereof).
(j) Employment Matters. Parent, Seller and the Company: (i) are in
------------------
compliance in all respects with all applicable foreign, federal, state and local
laws, rules and regulations respecting employment, employment practices, terms
and conditions of employment and wages and hours, in each case, with respect to
Employees; (ii) have withheld and reported all amounts required by law or by
agreement to be withheld and reported with respect to wages, salaries and other
payments to Employees; (iii) are not liable for any arrears of wages or any
taxes or any penalty for failure to comply with any of the foregoing; and (iv)
are not liable for any payment to any trust or other fund governed by or
maintained by or on behalf of any governmental authority, with respect to
unemployment compensation benefits, social security or other benefits or
obligations for Employees (other than routine payments to be made in the normal
course of business and consistent with past practice). There are no pending,
threatened or reasonably anticipated claims or actions against Parent, Seller or
the Company under any worker's compensation policy or long-term disability
policy.
(k) Labor. No work stoppage or labor strike against Parent, Seller
-----
or the Company is pending, threatened or reasonably anticipated. Neither Seller
nor the Company knows of any activities or proceedings of any labor union to
organize any Employees. Except as set forth in Section 2.22(k) of the Company
Disclosure Schedule, there are no actions, suits, claims, labor disputes or
grievances pending, or, to Seller's or the Company's knowledge, threatened or
reasonably anticipated relating to any labor, safety or discrimination matters
involving any Employee, including, without limitation, charges of unfair labor
practices or discrimination complaints, which, if adversely determined, would,
individually or in the aggregate, result in any material liability to the
Company or Buyer. Neither the Company nor any of its subsidiaries has engaged in
any unfair labor practices within the meaning of the National Labor Relations
Act. Except as set forth in Section 2.22(k) of the Company Disclosure Schedule,
neither Parent, Seller nor
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<PAGE>
the Company is presently, nor have they been in the past, parties to, or bound
by, any collective bargaining agreement or union contract with respect to
Employees and no collective bargaining agreement is being negotiated by Parent,
Seller or the Company.
2.23 Interested Party Transactions. To the knowledge of the Company and
-----------------------------
except as set forth in Section 2.23 of the Disclosure Schedule, no officer,
director or stockholder of the Company (nor any ancestor, sibling, descendant or
spouse of any of such persons, or any trust, partnership or corporation in which
any of such persons has or has had an interest), has or has had, directly or
indirectly, (i) an interest in any entity which furnished or sold, or furnishes
or sells, services, products or technology that the Company furnishes or sells,
or proposes to furnish or sell, or (ii) any interest in any entity that
purchases from or sells or furnishes to the Company any goods or services or
(iii) a beneficial interest in any Contract; provided, that ownership of no
--------
more than one percent (1%) of the outstanding voting stock of a publicly traded
corporation shall not be deemed an "interest in any entity" for purposes of this
Section 2.23.
2.24 Suppliers. Section 2.24 of the Company Disclosure Schedule sets
---------
forth a complete and accurate list of all suppliers of significant materials or
services to the Company. There exists no actual or, to the knowledge of the
Company, threatened termination, cancellation or limitation of, or any material
modification or change in, the business relationship of the Company with any
supplier or group of suppliers listed on Section 2.24 of the Company Disclosure
Schedule.
2.25 No Illegal Payments, Etc. Neither the Company nor any of its
------------------------
officers, employees, agents or affiliates has: (a) directly or indirectly given
or agreed to give any illegal gift, contribution, payment or similar benefit to
any supplier, customer, governmental official or employee or other person who
was or is in a position to help or hinder the Company's business (or assist in
connection with any actual transaction) or made or agreed to make any illegal
contribution, or reimbursed any illegal political gift or contribution made by
any other person, to any candidate for federal, state, local or foreign public
office (i) which may subject the Company to any damage or penalty in any civil,
criminal or governmental litigation or proceeding or (ii) the noncontinuation of
which has had or might have, individually or in the aggregate, an adverse impact
on the Company, or (b) established or maintained any unrecorded fund or asset or
made any false entries on any books or records for any purpose.
2.26 Insurance. Section 2.26 of the Company Disclosure Schedule lists all
---------
insurance policies and fidelity bonds covering the assets, business, equipment,
properties, operations, employees, officers and directors of the Company. There
is no claim by the Company pending under any of such policies or bonds as to
which coverage has been questioned, denied or disputed by the underwriters of
such policies or bonds. All premiums due and payable under all such policies and
bonds have been paid, and the Company are otherwise in compliance with the terms
of such policies and bonds (or other policies and bonds providing substantially
similar insurance coverage). Neither Seller nor the Company has any knowledge of
any threatened termination of, or premium increase with respect to, any of such
policies.
-29-
<PAGE>
2.27 Compliance with Laws. Each of the Company and the Subsidiary has
--------------------
complied with, is not in violation of, and has not received any notices of
violation with respect to, any foreign, federal, state or local statute, law or
regulation.
2.28 Warranties; Indemnities. Except for the warranties and indemnities
-----------------------
contained in those contracts and agreements set forth in Section 2.14(i) of the
Company Disclosure Schedule, neither the Company nor the Subsidiary has given
any express warranties or indemnities relating to products or technology sold or
licensed or services rendered by the Company or the Subsidiary.
2.29 Complete Copies of Materials. Each of Seller and the Company has
----------------------------
delivered or made available true and complete copies of each document (or
summaries of same) that has been requested by Buyer or its counsel.
2.30 Representations Complete. None of the representations or warranties
------------------------
made by Parent, Seller or the Company in this Agreement (as modified by the
Company Disclosure Schedule), nor any statement made in any Schedule or
certificate furnished by Parent, Seller or the Company pursuant to this
Agreement contains or will contain at the Closing, any untrue statement of a
material fact, or to the knowledge of Parent, Seller or the Company, omits or
will omit at the Closing, to state any material fact necessary in order to make
the statements contained herein or therein, in the light of the circumstances
under which made, not misleading with respect to the business of the Company
taken as a whole.
ARTICLE IIIA
ADDITIONAL REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and represents and warrants to Buyer that on the
date hereof and as of the Closing as though made at the Closing as follows:
3A.1 Ownership. Seller is the sole record and beneficial owner of the
---------
Company Shares and the Company Shares are to be sold pursuant to this Agreement.
The Company Shares are not subject to any Liens or to any rights of first
refusal of any kind, and Seller has not granted any rights to purchase the
Company Shares to any other person or entity. Seller has the sole right to
transfer the Company Shares to Buyer. The Company Shares constitute all of the
Company Capital Stock owned, beneficially or of record, by Seller, and Seller
has no other rights to acquire Company Capital Stock. Upon the Closing, Buyer
will receive good title to such Company Shares, subject to no Liens retained,
granted or permitted by Seller or the Company.
3A.2 Authority. Seller has all requisite power and authority to enter
---------
into this Agreement and any Related Agreements to which it is a party and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and any Related Agreements to which it is a party and
the consummation of the transactions contemplated hereby and thereby have been
duly authorized by all necessary corporate action on the part of Seller and no
further action is required on the part of the Seller or its stockholders to
authorize the Agreement, any Related
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<PAGE>
Agreements to which it is a party or the transactions contemplated hereby and
thereby. The Board of Directors of Seller has unanimously approved this
Agreement, the Acquisition and any Related Agreements. This Agreement has been,
and any Related Agreements to which Seller is a party have been or will have
been prior to the Closing, duly executed and delivered by the Seller and,
assuming the due authorization, execution and delivery by the other parties
hereto and thereto, constitute the valid and binding obligation of the Seller,
enforceable in accordance with their respective terms, except as such
enforceability may be limited by principles of public policy and subject to the
laws of general application relating to bankruptcy, insolvency and the relief of
debtors and to rules of law governing specific performance, injunctive relief or
other equitable remedies.
3A.3 Noncontravention.
----------------
(a) The execution and delivery of this Agreement and any Related
Agreements to which it is a party by Seller do not, and, the consummation of the
transactions contemplated hereby and thereby will not conflict with, or result
in any violation of, or default under (with or without notice or lapse of time,
or both), or give rise to a right of termination, cancellation, modification or
acceleration of any obligation or loss of any benefit under (i) any provision of
the charter documents or bylaws (or like document) of Seller, (ii) any mortgage,
indenture, lease, contract or other agreement or instrument, permit, concession,
franchise or license to which Seller is a party or any of its properties or
assets are subject, or (iii) any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Seller; and
(b) The execution and delivery of this Agreement and any Related
Agreements to which Seller is a party by Seller do not, and the consummation of
the transactions contemplated hereby and thereby will not require any notice
under any agreements, contract, lease, license, instrument or other arrangement
to which Seller is a party or by which Seller is bound or to which any of its
assets are subject (or result in the imposition of a Lien upon Seller or any of
its assets or properties).
3A.4 Consents. No consent, waiver, approval, order or authorization of,
or registration, declaration or filing with, any Governmental Entity or any
third party, including a party to any agreement with the Company (so as not to
trigger any Conflict), is required by or with respect to Seller in connection
with the execution and delivery of this Agreement and any Related Agreements to
which Seller is a party or the consummation of the transactions contemplated
hereby and thereby, except for those consents and approvals set forth on Section
2.6 of the Company Disclosure Schedule (which sets forth a true, correct and
complete list of the identities of any person whose consent or approval is so
required and the matter, agreement or contract to which such consent relates).
3A.5 Investment Representations.
--------------------------
(a) Seller understands that neither the Stock Consideration nor,
if applicable, the Additional Stock Consideration (together, the
"Consideration") has been registered under the Securities Act of 1933, as
-------------
amended ("Securities Act"). Seller also understands that the Consideration is
--------------
being offered and sold pursuant to an exemption from registration contained in
the
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<PAGE>
Securities Act based in part upon Seller's representations contained in this
Agreement, and that Buyer is relying upon the truth and accuracy of Seller's
representations, warranties, acknowledgements and understandings set forth
herein.
(b) Seller is acquiring the Consideration for Seller's own account
for investment only, and not with the current intention of making a public
distribution thereof.
(c) Seller has substantial experience in evaluating and investing
in private placement transactions of securities in companies similar to Buyer so
that it is capable of evaluating the merits and risks of its investment in Buyer
and has the capacity to protect its own interests. Seller, by reason of its
business or financial experience, has the capacity to protect its own interests
in connection with the Acquisition. Seller is an "accredited investor" as that
term is defined in Rule 501(a) of Regulation D promulgated by the Securities and
Exchange Commission under the Securities Act of 1933, as amended.
(d) Seller understands that Buyer has no present intention of
registering the shares representing the Consideration. Seller also understands
that there is no assurance that any exemption from registration under the
Securities Act will be available.
(e) Seller has been advised or is aware of the provisions of Rule
144 under the Securities Act ("Rule 144"), which permit limited resale of shares
--------
Buyer in a private placement subject to the satisfaction of certain conditions,
including, among other things: (i) the availability of certain current public
information about Buyer, (ii) the resale occurring not less than one year after
a party has paid for the security to be sold, (iii) the sale being through an
unsolicited "broker's transaction" or in transactions directly with a market
maker (as said term is defined under the Securities Exchange Act of 1934, as
amended ("Exchange Act") and (iv) the number of shares being sold during any
------------
three-month period not exceeding specified limitations, if applicable.
(f) Seller did not receive any information regarding such purchase
and sale through any general solicitation or general advertising within the
meaning of Rule 502(c) under the Securities Act.
3A.6 Buyer Disclosure Documents. Seller has been furnished with materials
--------------------------
relating to Buyer and its proposed activities. Without limiting Buyer's
obligations with respect to any representations or warranties made by Buyer in
this Agreement, Seller has been afforded the opportunity to obtain any
additional information deemed necessary by Seller to verify the accuracy of any
representations made or information conveyed to Seller. Seller confirms that all
documents, records and books pertaining to its investment in Buyer Common Stock
and requested by Seller have been made available or delivered to Seller. Seller
has had an opportunity to ask questions of and receive answers from Buyer, or
from a person or persons acting on Buyer's behalf, concerning the terms and
conditions of this investment.
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<PAGE>
ARTICLE IIIB
ADDITIONAL REPRESENTATIONS AND WARRANTIES OF PARENT
Parent hereby represents and represents and warrants to Buyer that on the
date hereof and as of the Closing as though made at the Closing as follows:
3B.1 Authority. Parent has all requisite power and authority to enter
---------
into this Agreement and any Related Agreements to which it is a party and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and any Related Agreements to which it is a party and
the consummation of the transactions contemplated hereby and thereby have been
duly authorized by all necessary corporate action on the part of Parent and no
further action is required on the part of the Parent or its stockholders to
authorize the Agreement, any Related Agreements to which it is a party or the
transactions contemplated hereby and thereby. This Agreement has been, and any
Related Agreements to which Parent is a party have been or will have been prior
to the Closing, duly executed and delivered by Parent and, assuming the due
authorization, execution and delivery by the other parties hereto and thereto,
constitute the valid and binding obligation of Parent, enforceable in accordance
with their respective terms, except as such enforceability may be limited by
principles of public policy and subject to the laws of general application
relating to bankruptcy, insolvency and the relief of debtors and to rules of law
governing specific performance, injunctive relief or other equitable remedies.
3B.2 Noncontravention.
----------------
(i) The execution and delivery of this Agreement and any Related
Agreements to which it is a party by Parent do not, and, the consummation of the
transactions contemplated hereby and thereby will not conflict with, or result
in any violation of, or default under (with or without notice or lapse of time,
or both), or give rise to a right of termination, cancellation, modification or
acceleration of any obligation or loss of any benefit under (i) any provision of
the charter documents or bylaws (or like document) of Parent, (ii) any mortgage,
indenture, lease, contract or other agreement or instrument, permit, concession,
franchise or license to which Parent is a party or any of its properties or
assets are subject, or (iii) any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Parent; and
(ii) The execution and delivery of this Agreement and any Related
Agreements to which Parent is a party by Parent do not, and the consummation of
the transactions contemplated hereby and thereby will not require any notice
under any agreements, contract, lease, license, instrument or other arrangement
to which Parent is a party or by which Parent is bound or to which any of its
assets are subject (or result in the imposition of a Lien upon Parent or any of
its assets or properties).
3B.3 Consents. No consent, waiver, approval, order or authorization of,
--------
or registration, declaration or filing with, any Governmental Entity or any
third party, including a party to any agreement with the Company (so as not to
trigger any Conflict), is required by or with respect to Parent in connection
with the execution and delivery of this Agreement and any Related Agreements
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<PAGE>
to which Parent is a party or the consummation of the transactions contemplated
hereby and thereby, except for those consents and approvals set forth on Section
2.6 of the Company Disclosure Schedule (which sets forth a true, correct and
complete list of the identities of any person whose consent or approval is so
required and the matter, agreement or contract to which such consent relates).
3B.4 Buyer Disclosure Documents. Parent has been furnished with
--------------------------
materials relating to Buyer and its proposed activities. Without limiting
Buyer's obligations with respect to any representations or warranties made by
Buyer in this Agreement, Parent has been afforded the opportunity to obtain any
additional information deemed necessary by Parent to verify the accuracy of any
representations made or information conveyed to Parent. Parent confirms that
all documents, records and books pertaining to its investment in Buyer Common
Stock and requested by Parent have been made available or delivered to Parent.
Parent has had an opportunity to ask questions of and receive answers from
Buyer, or from a person or persons acting on Buyer's behalf, concerning the
terms and conditions of this investment.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller and the Company that on the
date hereof and as of the Closing as though made as of the Closing as follows:
4.1 Organization, Standing and Power. Buyer is a corporation duly
--------------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware. Buyer has the corporate power to own its properties and to carry on
its business as now being conducted and is duly qualified to do business and is
in good standing in each jurisdiction in which the failure to be so qualified
would have a material adverse effect on the ability of Buyer to consummate the
transactions contemplated hereby or a material adverse effect on the business of
Buyer. Buyer is not in violation of any provision of its Certificate of
Incorporation or bylaws.
4.2 Authority. Buyer has all requisite power and authority to enter into
---------
this Agreement and any Related Agreements to which it is a party and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and any Related Agreements to which it is a party and
the consummation of the transactions contemplated hereby and thereby have been
duly authorized by all necessary corporate action on the part of Buyer, and no
further action is required on the part of Buyer to authorize this Agreement, any
Related Agreements to which it is a party and the transactions contemplated
hereby and thereby. This Agreement has been, and any Related Agreements to which
Buyer is a party have been or will have been prior to Closing, duly executed and
delivered by Buyer and, assuming the due authorization, execution and delivery
by the other parties hereto, constitute the valid and binding obligations of
Buyer, enforceable in accordance with their respective terms, except as such
enforceability may be limited by principles of public policy and subject to the
laws of general application relating to bankruptcy, insolvency and the relief
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<PAGE>
of debtors and rules of law governing specific performance, injunctive relief or
other equitable remedies.
4.3 Capital Structure. The authorized capital stock of Buyer consists of
-----------------
150,000,000 shares of Common Stock, $0.0001 par value per share, of which there
were 33,459,058 shares outstanding as of June 30, 2000, and 10,000,000 shares of
Preferred Stock, $0.0001 par value per share, of which no shares are issued or
outstanding. All outstanding shares of Buyer Common Stock are duly authorized,
validly issued, fully paid and nonassessable and are not subject to preemptive
rights created by statute, the Certificate of Incorporation or Bylaws of Buyer
or any agreement or documents to which Buyer is a party or by which it is bound.
4.4 Issuance of Buyer Common Stock. The shares of Buyer Common Stock
------------------------------
representing the Stock Consideration and, if applicable, the Additional Stock
Consideration, to be issued pursuant to the Acquisition will be duly authorized,
validly issued, fully paid, non-assessable and issued in compliance with
applicable federal and state securities laws subject to the truth and accuracy
of Seller's representations in Section 3A.5 of this Agreement.
4.5 Capital Resources. Buyer has sufficient liquidity and capital
-----------------
resources to pay the Cash Consideration.
4.6 SEC Documents; Buyer Financial Statements. Buyer has made available
-----------------------------------------
to the Seller a true and complete copy of all of its filings with the Securities
and Exchange Commission (the "SEC") and prior to the Closing, Buyer will have
---
made available to the Seller true and complete copies of any additional
documents filed by Buyer with the SEC after the date hereof but before the
Closing (the "SEC Documents"). As of their respective filing dates, the SEC
-------------
Documents complied in all material respects with the Securities Act, as amended,
and the Exchange Act, as amended, and none of the SEC Documents contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements made therein, in light
of the circumstances in which they were made, not misleading, except to the
extent corrected prior to the date hereof by a subsequently filed SEC Document.
The SEC Documents contain an audited balance sheet of Buyer as of December 31,
1999 and the related audited statements of operations and cash flow for the year
then ended, an unaudited consolidated balance sheet of Buyer as of March 31,
2000 (the "Buyer Balance Sheet") and the related unaudited consolidated
-------------------
statements of operations and cash flow for the quarter then ended (collectively,
the "Buyer Financials"). The Buyer Financials have been prepared in accordance
----------------
with GAAP applied on a basis consistent throughout the periods indicated and
consistent with each other. The Buyer Financials present fairly the financial
condition and operating results and cash flows of Buyer as of the dates and
during the periods indicated therein (subject, in the case of unaudited
financial statements, to normal year-end adjustments).
4.7 Accredited Investor. Buyer is an accredited investor as that term is
-------------------
defined in Rule 501(a) of Regulation D promulgated by the Securities and
Exchange Commission under the Securities Act of 1933, as amended.
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<PAGE>
4.8 No Conflict. The execution and delivery of this Agreement and any
-----------
Related Agreement to which Buyer is a party by Buyer do not, and the
consummation of the transactions contemplated hereby and thereby will not,
conflict with, or result in any violation of, or default under (with or without
notice or lapse of time, or both), or give rise to a Conflict under (i) any
provision of the Certificate of Incorporation and bylaws of Buyer, (ii) any
mortgage, indenture, lease, contract or other agreement or instrument, permit,
concession, franchise or license to which Buyer or any of its properties or
assets are subject and that has been filed as an exhibit to any of the SEC
Documents, or (iii) any judgment, order, decree, statute, law, ordinance, rule
or regulation applicable to Buyer or its respective properties or assets, except
where such conflict will not have a material adverse effect on the business,
assets (including intangible assets), financial condition or results of
operations of Buyer.
4.9 Consents. No consent, waiver, approval, order or authorization of, or
--------
registration, declaration or filing with any Governmental Entity or any third
party is required by or with respect to Buyer in connection with the execution
and delivery of this Agreement and any Related Agreements to which Buyer is a
party or the consummation of the transactions contemplated hereby and thereby,
except for (i) such consents, waivers, approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable
securities laws thereby, and (ii) the expiration or termination of the waiting
period (and any extension thereof) applicable to the consummation of the
Acquisition under the HSR Act.
4.10 Absence of Certain Changes or Events. Since the date of the Buyer
------------------------------------
Balance Sheet, there has not occurred any change, event or effect that is or
that would reasonably be expected to be materially adverse to the business,
assets, results of operations or financial condition of Buyer; provided, however
that a material adverse change for purposes of this Section 4.10 shall not be
deemed to have occurred solely as a result of any of the following (or any
combination of the following): (i) any effect or change occurring as a result of
(A) general economic conditions or (B) other developments that are not unique to
Buyer but also affect other persons who participate or are engaged in the line
of business in which Buyer engages; and (ii) a decline in itself, but not any
cause thereof, in the trading price of Buyer common stock, whether occurring at
any time or from time to time, as reported on the Nasdaq National Market or
other automated quotation system or exchange.
4.11 Brokers' and Finders' Fees. Buyer has not incurred, nor will it
--------------------------
incur, directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or any similar charges in connection with this Agreement or
any transaction contemplated hereby.
ARTICLE V
CONDUCT PRIOR TO THE CLOSING
5.1 Conduct of Business of the Company. During the period from June 30,
----------------------------------
2000 and continuing until the earlier of the termination of this Agreement or
the Closing, the Company agrees and Parent and Seller agree to cause the Company
(except to the extent that Buyer shall otherwise consent in writing, which
consent shall not be unreasonably withheld or delayed), to carry on the
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<PAGE>
Company's business in the usual, regular and ordinary course in substantially
the same manner as heretofore conducted, to pay the debts and Taxes of the
Company when due, to pay or perform other obligations when due, and, to the
extent consistent with such business, use their commercially reasonable efforts
consistent with past practice and policies to preserve intact the Company's
present business organizations, keep available the services of the Company's
present key employees and preserve the Company's relationships with customers,
suppliers, distributors, licensors, licensees, and others having business
dealings with it, all with the goal of preserving unimpaired the Company's
goodwill and ongoing businesses as of June 30, 2000 for the benefit of Buyer.
Except as expressly contemplated by this Agreement or as set forth in Section
5.1 of the Company Disclosure Schedule, the Company shall not and Parent and
Seller shall not permit the Company to, without the prior written consent of
Buyer, which consent shall not be unreasonably withheld or delayed:
(a) Enter into any license agreement with respect to the Company
Intellectual Property with any person or entity or with respect to the
Intellectual Property of any person or entity;
(b) Transfer to any person or entity any rights to the Company
Intellectual Property;
(c) Enter into or amend any Contract pursuant to which any other
party is granted marketing, distribution or similar rights of any type or scope
with respect to any products or technology of the Company;
(d) Amend or otherwise modify (or agree to do so), except in the
ordinary course of business, or violate the terms of, any of the Contracts set
forth or described in the Company Disclosure Schedule;
(e) Commence or settle any litigation;
(f) Declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock or property) in respect of any of its
capital stock, or split, combine or reclassify any of its capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu of or
in substitution for shares of Company Capital Stock or shares of capital stock
of the Subsidiary, or repurchase, redeem or otherwise acquire, directly or
indirectly, any shares of the Company Capital Stock or any shares of capital
stock of the Subsidiary;
(g) Issue, grant, deliver or sell or authorize or propose the
issuance, grant, delivery or sale of, or purchase or propose the purchase of,
any shares of Company Capital Stock or securities convertible into, or
subscriptions, rights, warrants or options to acquire, or other agreements or
commitments of any character obligating it, with or without the passage of time
or satisfaction of other conditions, to issue or purchase any such shares or
other convertible securities;
(h) Cause or permit any amendments to its Articles of
Incorporation or Bylaws;
(i) Acquire or agree to acquire by merging or consolidating with,
or by purchasing any assets or equity securities of, or by any other manner, any
business or any
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<PAGE>
corporation, partnership, association or other business organization or division
thereof, or otherwise acquire or agree to acquire any assets which are material,
individually or in the aggregate, to the Company's business;
(j) Sell, lease, license or otherwise dispose of any of its
properties or assets, except in the ordinary course of business and consistent
with past practices;
(k) Incur any indebtedness for borrowed money or guarantee any
such indebtedness or issue or sell any debt securities or guarantee any debt
securities of others;
(l) Grant any loans to others or purchase debt securities of
others or amend the terms of any outstanding loan agreement, except in the
ordinary course of business and consistent with past practices.
(m) Grant any severance or termination pay (i) to any director or
officer or (ii) to any other employee except payments made pursuant to standard
written agreements outstanding on the date hereof;
(n) Adopt or amend any employee benefit plan, or enter into any
employment contract, pay or agree to pay any special bonus or special
remuneration to any director or employee, or increase the salaries or wage rates
of its employees.
(o) Revalue any of its assets, including without limitation
writing down the value of inventory or writing off notes or accounts receivable
other than in the ordinary course of business;
(p) Pay, discharge or satisfy, in an amount in excess of $10,000
(in any one case) or $25,000 (in the aggregate), any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or otherwise),
other than the payment, discharge or satisfaction in the ordinary course of
business of liabilities reflected or reserved against in the Most Recent Balance
Sheet;
(q) Make or change any material election in respect of Taxes,
adopt or change any accounting method in respect of Taxes, enter into any
closing agreement, settle any claim or assessment in respect of Taxes, or
consent to any extension or waiver of the limitation period applicable to any
claim or assessment in respect of Taxes;
(r) Enter into any strategic alliance or joint marketing
arrangement or agreement;
(s) Hire employees;
(t) Terminate employees without obtaining a full written release
of the Company satisfactory to Buyer from such employee or encourage employees
to resign;
(u) Enter into any commitment or transaction not in the ordinary
course of business or any commitment or transaction of the type described in
Section 2.9 hereof; or
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<PAGE>
(v) Take, or agree in writing or otherwise to take, any of the
actions described in Sections 5.1(a) through (u) above, or any other action that
would prevent the Company from performing or cause the Company not to perform
its covenants hereunder.
5.2 No Solicitation. Until the earlier of (i) the Closing or (ii) the
---------------
date of termination of this Agreement pursuant to the provisions of Section 9.1
hereof, neither Parent, Seller nor the Company will (nor will Parent, Seller or
the Company permit any of their officers, directors, agents, representatives or
affiliates to) directly or indirectly, take any of the following actions with
any party other than Buyer and its designees: (a) solicit, conduct discussions
with or engage in negotiations with any person, relating to the possible
acquisition of the Company (whether by way of merger, purchase of capital stock,
purchase of assets or otherwise) or any portion of the Company Capital Stock
(whether or not currently outstanding) or the Company's assets, (b) provide
information with respect to any person, other than Buyer, relating to the
possible acquisition of the Company (whether by way of merger, purchase of
capital stock, purchase of assets or otherwise) or any portion of the Company
Capital Stock (whether or not currently outstanding) or the Company's assets, or
which is not provided in the ordinary course of business consistent with past
practices, (c) enter into an agreement with any person, other than Buyer,
providing for the acquisition of the Company (whether by way of merger, purchase
of capital stock, purchase of assets or otherwise) or any portion of the Company
Capital Stock (whether or not currently outstanding) or the Company's assets or
(d) make or authorize any statement, recommendation or solicitation in support
of any possible acquisition of the Company (whether by way of merger, purchase
of capital stock, purchase of assets or otherwise) or any portion of the Company
Capital Stock (whether or not currently outstanding) or the Company's assets by
any person, other than by Buyer. In addition to the foregoing, if Parent, Seller
or the Company receives, prior to the Closing or the termination of this
Agreement, any offer, proposal, or request relating to any of the above, Parent,
Seller or the Company, as applicable, shall immediately notify Buyer thereof.
The parties hereto agree that irreparable damage would occur in the event that
the provisions of this Section 5.2 were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed by the
parties hereto that Buyer shall be entitled to seek an injunction or injunctions
to prevent breaches of the provisions of this Section 5.2 and to enforce
specifically the terms and provisions hereof in any court of the United States
or any state having jurisdiction, this being in addition to any other remedy to
which Buyer may be entitled at law or in equity.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Ownership of Company Shares. Neither Parent nor Seller shall take any
---------------------------
action or suffer any condition that would cause any of the representations or
warranties set forth in Section 3A.1 (Ownership) at any time through the Closing
to be untrue except in connection with the Acquisition contemplated by this
Agreement.
6.2 Access to Information. Each of Parent, Seller and the Company shall
---------------------
afford Buyer and its accountants, counsel and other representatives, reasonable
access upon reasonable notice
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<PAGE>
during normal business hours during the period prior to the Closing to (a) all
of the Company's properties, books, contracts, commitments and records, (b) all
other information concerning the business, properties and personnel (subject to
restrictions imposed by applicable law) of the Company as Buyer may reasonably
request and (c) all key employees of the Company as identified by Buyer. Each of
Parent, Seller and the Company agrees to provide to Buyer and its accountants,
counsel and other representatives copies of the Company's internal financial
statements (including tax returns and supporting documentation) promptly upon
request. Buyer shall provide Parent, Seller and the Company with copies of such
publicly available information about Buyer as Parent, Seller or the Company may
request. No information or knowledge obtained in any investigation pursuant to
this Section 6.2 shall affect or be deemed to modify any representation or
warranty contained herein or the conditions to the obligations of the parties to
consummate the Acquisition.
6.3 Confidentiality. Each of the parties hereto hereby agrees that the
---------------
information obtained in any investigation pursuant to Section 6.2, or pursuant
to the negotiation and execution of this Agreement or the effectuation of the
transaction contemplated hereby shall be governed by the terms of that certain
letter agreement dated June 14, 2000 by and between Parent, the Company and
Buyer, which agreement shall continue in effect in accordance with its terms.
6.4 Expenses. Whether or not the Acquisition is consummated, all fees and
--------
expenses incurred in connection with the Acquisition or the negotiation and
effectuation of this Agreement, including, without limitation, all legal,
accounting, financial advisory, consulting and all other fees and expenses of
third parties incurred by a party in connection with the negotiation and
effectuation of the terms and conditions of this Agreement and the transactions
contemplated hereby ("Third Party Expenses"), shall be the obligation of the
--------------------
respective party incurring such fees and expenses; provided, that if the
--------
Acquisition is consummated, Parent agrees to pay (i) all the Third Party
Expenses of the Company incurred prior to the Closing (which, for avoidance of
doubt, shall not include Third Party Expenses of Buyer) and (ii) the costs, fees
and expenses of the audit of the Company's financial statements for the fiscal
years ended December 31, 1998 and December 31, 1999 in an aggregate amount not
to exceed $75,000.
6.5 Public Disclosure. Unless otherwise required by law (including
-----------------
federal and state securities laws), prior to the Closing, no disclosure (whether
or not in response to an inquiry) or press release of the subject matter of this
Agreement shall be made by any party hereto unless approved by the other parties
hereto prior to release, provided that such approval shall not be unreasonably
--------
withheld.
6.6 Consents. The Company shall use commercially reasonable efforts to
--------
obtain the consents, waivers and approvals under any of the Contracts as may be
required in connection with the Acquisition (all of such consents, waivers and
approvals are set forth in Sections 2.5 and 2.6 of the Company Disclosure
Schedule so as to preserve all rights of, and benefits to, the Company
thereunder. Each of Parent and Seller agrees to cause any Parent Affiliate and
any Seller Affiliate whose consent, waiver or approval under any of the
Contracts may be so required to execute and deliver such consent, waiver or
approval.
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6.7 Reasonable Efforts. Subject to the terms and conditions provided in
------------------
this Agreement, each of the parties hereto shall use commercially reasonable
efforts to take promptly, or cause to be taken, all actions, and to do promptly,
or cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated hereby, to obtain all necessary waivers, consents and approvals and
to effect all necessary registrations and filings and to remove any injunctions
or other impediments or delays, legal or otherwise, in order to consummate and
make effective the transactions contemplated by this Agreement for the purpose
of securing to the parties hereto the benefits contemplated by this Agreement;
provided that Buyer shall not be required to agree to any divestiture by Buyer
--------
or the Company or any of Buyer's subsidiaries or affiliates of shares of capital
stock or of any business, assets or property of Buyer or its subsidiaries or
affiliates or of the Company, its affiliates, or the imposition of any material
limitation on the ability of any of them to conduct their businesses or to own
or exercise control of such assets, properties and stock.
6.8 Notification of Certain Matters. Each of Parent, Seller and the
-------------------------------
Company shall give prompt notice to Buyer of (i) the occurrence or non-
occurrence of any event, the occurrence or non-occurrence of which is likely to
cause any representation or warranty of Parent, Seller or the Company,
respectively, contained in this Agreement to be untrue or inaccurate at or prior
to the Closing and (ii) any failure of Parent, Seller or the Company, as the
case may be, to comply with or satisfy any covenant, condition or agreement to
be complied with or satisfied by it hereunder; provided, however, that the
-------- -------
delivery of any notice pursuant to this Section 6.8 shall not limit or otherwise
affect any remedies available to the party receiving such notice. No disclosure
by Parent, Seller or the Company pursuant to this Section 6.8, however, shall be
deemed to amend or supplement the Company Disclosure Schedule or the Seller
Disclosure Schedule or prevent or cure any misrepresentations, breach of
warranty or breach of covenant unless expressly agreed to by Buyer, Parent,
Seller, and the Company in writing.
6.9 Financial Statements.
--------------------
(a) Parent, Seller and the Company will use commercially reasonable
efforts to cause its management and its independent auditors to facilitate on a
timely basis (i) the preparation of financial statements (including pro forma
financial statements if required) as required by Buyer to comply with applicable
rules and regulations of the Securities and Exchange Commission, (ii) the review
of any Company audit or review work papers for up to the past three (3) complete
fiscal years, including the examination of selected interim financial statements
and data and (iii) the delivery of such representations from Parent's, Seller's
and the Company's independent accountants as may be reasonably requested by
Buyer or its accountants.
(b) Parent, Seller and the Company shall deliver to Buyer no later
than July 21, 2000 an unaudited balance sheet of the Company as of June 30, 2000
and the related unaudited statements of income and cash flow for the six month
period then ended.
6.10 Services Agreements. Each of Parent, Seller, the Company and Buyer
-------------------
agrees to use its commercially reasonable efforts to negotiate and finalize one
or more service agreements to have
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<PAGE>
a duration of not less than five years from the Closing Date (the "Services
Agreements"), between Buyer, Company and Seller, substantially in the form
attached as Exhibit B hereto.
---------
6.11 Parent Employee Plans.
---------------------------
(a) No Parent Employee Plan Will Be Maintained or Sponsored By Buyer
----------------------------------------------------------------
or Company. (i) Neither the Buyer nor the Company will maintain, sponsor,
----------
participate in, or be obligated to contribute to any Parent Employee Plan,
effective upon the Closing Date; and (ii) neither Buyer nor the Company shall
have any obligations or liabilities relating to, arising out of or resulting
from Company's participation in the Parent Employee Plans.
(b) Distribution of 401(k) Plan Accounts. Parent, Seller and the
------------------------------------
Company agree that the Acquisition will result in, and constitute, a
distribution event for the Company Employees under any Code Section 401(k) plan
maintained by Parent pursuant to Code Section 401(k)(10)(A)(iii).
(c) Distribution of The Interpublic Retirement Account Plan and
-----------------------------------------------------------
Supplemental Compensation Plan Accounts. Parent, Seller and the Company agree
---------------------------------------
that the Acquisition will result in, and constitute, a distribution event for
the Company Employees under The Interpublic Retirement Account Plan and
Supplemental Compensation Plan, as applicable.
(d) COBRA. Parent assumes any and all liability relating to, arising
out of, or resulting from COBRA (or similar state statute) attributable to
employees who have terminated their employment with Parent, Seller or the
Company on or prior to Closing, and any and all related Qualified Beneficiaries
(as such term is defined in COBRA).
6.12 Non-Competition Agreement. Parent and Seller shall deliver or cause
-------------------------
to be delivered to Buyer, concurrently with the execution and delivery of this
Agreement, a duly executed Non-Competition Agreement (the "Non-Competition
---------------
Agreement") from Parent and Seller.
---------
6.13 Tax Matters. Liability for Taxes.
-----------
(i) Parent shall be liable for (A) all Taxes imposed on the
Company and the Subsidiary for any taxable year or period that ends on or before
the Closing Date (including any Taxes attributable to the Section 338 Election
described in subsection (f) of this Section 6.13), (B) all taxes for which the
Company or the Subsidiary may otherwise be liable under Treasury Regulation
Section 1.1502-6 (or any similar provision of state or foreign law) and (C) with
respect to any period beginning before and ending after the Closing Date (a
"Straddle Period"), the portion of such Straddle Period ending on and including
the Closing Date. Parent shall be entitled to any refund of Taxes for which they
are liable pursuant to this paragraph (a)(i).
(ii) Buyer shall be liable for all Taxes imposed on the Company
and the Subsidiary or for which the Company may otherwise be liable, for any
taxable year or period that begins after the Closing Date and, with respect to
any Straddle Period, the portion of such Straddle
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Period beginning after the Closing Date. Subject to the following sentence,
Buyer shall be entitled to any refund of Taxes for which it is liable pursuant
to this paragraph (a) (ii).
(iii) For purposes of paragraphs (a)(i) and (a)(ii) of this
Section 6.13, whenever it is necessary to determine the liability for Taxes of
the Company and/or the Subsidiary for a portion of any Straddle Period, the
determination of the Taxes of the Company and/or the Subsidiary for the portion
of the Straddle Period ending on and including, and the portion of the Straddle
Period beginning after, the Closing Date shall be determined by assuming that
the Straddle Period consisted of two taxable years or periods, one which ended
at the close of the Closing Date and the other which began at the beginning of
the day following the Closing Date, and items of income, gain, deduction, loss
or credit of the Company and/or the Subsidiary for the Straddle Period shall be
allocated between such two taxable years or periods on a "closing of the books
basis" by assuming that the books of the Company were closed at the close of the
Closing Date; provided, however, that exemptions, allowances or deductions that
are calculated on an annual basis, such as the deduction for depreciation, shall
be apportioned between such two taxable years or periods on a daily basis.
(iv) For purposes of this Agreement, "Transfer Taxes" means all
stamp, documentary, recordation, registration, sales, use, non-recoverable VAT,
real property transfer or gains or similar transfer Taxes attributable to the
actual or deemed transfer of property or stock by Parent, the Seller or the
Company, together with any penalties or interest with respect to such taxes.
(v) On or prior to the Closing Date, all Tax Sharing
Arrangements (other than this Agreement) between the Company or the Subsidiary,
on one hand, and the Parent, Seller or any member of the Seller' Tax Group, on
the other hand, shall terminate and the Company and the Subsidiary shall not
have any further rights or obligations thereunder. For purposes of this
paragraph, (A) a "Tax Sharing Arrangement" shall mean any agreement or
arrangement for the allocation or payment of Tax liabilities or payment for Tax
benefits with respect to a group of corporations which files a consolidated,
combined or unitary Tax Return which includes the Company, and (B) the Seller'
Tax Group shall mean any group of corporations which includes the Company and
which files as a fiscal unity or files a consolidated, combined or unitary Tax
Return.
(b) Tax Returns. Parent shall file or cause to be filed when due all
-----------
Tax Returns that are required to be filed by or with respect to the Company for
taxable years or periods ending on or before the Closing Date and shall remit
any Taxes due in respect of such Tax Returns, and Buyer shall file or cause to
be filed when due all Tax Returns that are required to be filed by or with
respect to the Company for taxable years or periods ending after the Closing
Date, and shall remit any Taxes due in respect of such Tax Returns. Any Tax
Returns required to be filed by Buyer pursuant to this Section 6.13(b) relating
in whole or in part to Taxes for which Parent is liable pursuant to paragraph
(a) of this Section 6.13 shall be submitted to Parent for Parent's approval
(which approval shall not be unreasonably withheld) prior to Buyer filing such
Tax Returns. Parent or Buyer shall reimburse the other party for the Taxes for
which Parent or Buyer are liable pursuant to paragraph (a) of this Section 6.13
but which are payable with Tax Returns to be filed by the other party pursuant
to the second preceding sentence upon the written request of the party entitled
to
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<PAGE>
reimbursement, setting forth in detail the computation of the amount owed by
Parent or Buyer, as the case may be, but in no event earlier than 10 days prior
to the due date for the payment of such Taxes.
(c) Contest Provisions.
------------------
(i) Buyer shall promptly notify Parent in writing upon receipt
by Buyer, or the Company of notice of any pending or threatened federal, state,
local or foreign Tax audits, examinations or assessments which may affect any
Tax liability for which Parent is liable pursuant to paragraph (a) of this
Section 6.13, provided that failure to comply with this provision shall not
affect Buyer's right to indemnification hereunder except to the extent such
failure impairs Parent's ability to contest any such Tax liabilities.
(ii) Parent shall have the right to represent the Company'
interests in any Tax audit or administrative or court proceeding relating to any
Tax liability for which Parent is liable pursuant to paragraph (a) of this
Section 6.13 and to conduct such audits at a location designated by Parent;
provided, however, that Buyer shall have the right to take part in any such
proceeding to the extent that the outcome of such proceeding may reasonably be
considered to have an adverse impact on Buyer or the Company. Buyer and Parent
each agree not to agree to settle any Tax claim which may be the subject of
indemnification by the other party or which would otherwise result in additional
tax liability to the other party pursuant to Section 6.13 without the prior
written consent of the other party (which consent shall not be unreasonably
withheld).
(d) Assistance and Cooperation. After the Closing Date, each of
--------------------------
Parent, Seller and Buyer shall (and cause their respective affiliates to):
(i) assist the other party in preparing any Tax Returns which
such other party is responsible for preparing and filing in accordance with
paragraph (b) of this Section 6.13;
(ii) cooperate fully in preparing for any audits of, or disputes
with taxing authorities regarding, any Tax Returns of the Company;
(iii) make available to the other and to any taxing authority as
reasonably requested all information, records, and documents relating to Taxes
of the Company, including all pertinent records for conduct of any tax audit
including, but not limited to, copies of all Company' tax returns, copies of
financial records and customers' invoices supporting such tax returns, and
copies of all sales and use tax exemption certificates obtained from customers;
(iv) provide timely notice to the other in writing of any
pending or threatened Tax audits or assessments of the Company for taxable
periods for which the other may have a liability under this Section 6.13; and
(v) furnish the other with copies of all correspondence
received from any taxing authority in connection with any Tax audit with respect
to any taxable period for which the other may have a liability under this
Section 6.13.
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<PAGE>
(e) FIRPTA Certificate. At or prior to the Closing, the Seller shall
------------------
provide Buyer with a certificate described in Treas. Reg. (S) 1.1445-2(b) (2) to
the effect that, as contemplated by such certificate, the Seller is not a
foreign corporation, foreign partnership, foreign trust or foreign estate (as
those terms are defined in the Code and Treasury Regulations).
(f) Code Section 338 Election.
-------------------------
(i) Parent, Seller and Buyer agree that, for federal Tax
purposes, the purchase and sale of the shares of the Company pursuant to this
Agreement shall be treated as a purchase and sale of the assets of the Company
in accordance with the provisions of Code Sections 338(g) and 338(h)(10) and any
similar provision of state law. Parent, Seller and Buyer agree to make timely
elections pursuant to Code Sections 338(g) and 338(h)(10) in accordance with all
applicable law and regulations and in accordance with the provisions of this
Section 6.13(f).
(ii) The Seller shall pay any and all Taxes attributable to the
recognition of income or loss by Seller and the Company from the treatment,
pursuant to the elections described in Section 6.13(f)(i), of the purchase and
sale of the shares of the Company pursuant to this Agreement as a purchase and
sale of the assets of the Company.
(iii) Buyer, Parent and the Seller shall cooperate in the
preparation of Internal Revenue Service Form 8023A, the required schedules
thereto, and all requisite State forms and schedules (the "Forms") providing for
the elections described in Section 6.15(f)(i)(A) and/or (B) with respect to the
Company.
(iv) Within 90 days of the Closing, Buyer shall provide to
Seller and Parent a written schedule (the "Allocation Schedule") allocating the
-------------------
Modified Adjusted Deemed Sales Price (as defined in Treas. Reg. (S) 1.338(h)
(10)-1(f)) among the assets of the Company transferred by Seller hereunder. The
Allocation Schedule shall be prepared in a manner consistent with the applicable
Treasury Regulations. Parent and Seller shall have 10 days to object to the
Allocation Schedule and Buyer, Parent and Seller agree to negotiate in good
faith and jointly agree on a final allocation (the "Final Allocation Schedule").
-------------------------
Buyer, Parent and Seller each agrees to file (and to cause their respective
affiliates to file) all federal, state, local and foreign Tax Returns and the
Forms in a manner consistent with the Final Allocation Schedule.
6.14 Transfer of Assets.
------------------
Each of Parent and Seller shall transfer and assign (and shall cause each
Parent Affiliate and Seller Affiliate) to the Company as soon as practicable all
tangible, intangible, real and personal property assets that Parent, Seller, or
any Parent Affiliate or Seller Affiliate owns, licenses or has a leasehold
interest in and that are exclusively or primarily used in and/or necessary
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<PAGE>
to the conduct of the business of the Company as it currently is conducted,
including, without limitation, the design, development, manufacture, use, import
and sale of products, technology and performances of services (collectively, the
"Transferred Assets"), including without limiting the generality of the
------------------
foregoing (i) any Technology or Intellectual Property Rights owned by or
licensed to Parent, Seller, any Parent Affiliate or any Seller Affiliate that
are exclusively or primarily used in and/or necessary to the conduct of the
business of the Company as it currently is conducted, (any such Technology or
Intellectual Property Rights are referred to as "Transferred Intellectual
------------------------
Property") and (ii) all leasehold interests of Seller set forth in Section 2.12
--------
of the Company Disclosure Schedule (such leasehold interests are referred to as
the "Transferred Leases"); provided, however, Seller shall not be required to
------------------
transfer to the Company its leasehold interest in that portion of leased real
property premises currently occupied exclusively by Seller and used for purposes
unrelated to the Company. Seller shall pay all costs, expenses and fees
associated with effecting the transfer and assignment of the Transferred Assets
to the Company. Parent, Seller and Buyer shall use their commercially
reasonable efforts to obtain the consents, waivers or approvals of any third
parties necessary to effect the transfer and assignment of the Transferred
Assets to the Company. In the event that the lessor for any Transferred Lease
is unwilling to grant any consent necessary to permit the transfer of the
leasehold interest in any Transferred Lease to the Company, Parent and/or
Seller, as applicable, shall sublease their interest in any such Transferred
Lease to the Company to the extent permitted under the terms of the lease.
6.15 Trade Secrets, Know-how and Confidential Information. With respect
----------------------------------------------------
to all trade secrets, know how and confidential information used in and/or
necessary to the conduct of the Company's business as it is conducted, planned
or is contemplated to be conducted, Parent and Seller shall take (and shall
cause their respective affiliates to take) all steps that are reasonably
required to protect the Company's rights in such trade secrets, know-how and
confidential information. Without limiting the generality of the foregoing,
Parent and Seller shall keep (and shall cause their respective affiliates to
keep) all such trade secrets, know-how and confidential information confidential
and shall not disclose any such trade secrets, know-how or confidential
information to any third party.
6.16 Equitable Remedy. Each of Seller and Parent agree that it would be
----------------
impossible or inadequate to measure and calculate Buyer's damages from any
breach of the covenants set forth in Sections 6.14 and 6.15. Accordingly, each
of Seller and Parent agrees that if it breaches any provision of Sections 6.14
or 6.15, Buyer will have available, in addition to any right or remedy otherwise
available, the right to obtain an injunction from a court of competent
jurisdiction restraining such breach or threatened breach and to specific
performance of any such provision of this Agreement.
6.17 Additional Documents and Further Assurances. Each party hereto, at
-------------------------------------------
the request of another party hereto, shall execute and deliver such other
instruments and do and perform such other acts and things as may be necessary or
desirable for effecting completely the consummation of the Closing and the
transactions contemplated hereby.
ARTICLE VII
CONDITIONS TO THE CLOSING
7.1 Conditions to Obligations of Each Party to Effect the Acquisition.
-----------------------------------------------------------------
The respective obligations of each party to this Agreement to consummate and
effect the Acquisition and the
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<PAGE>
transactions contemplated hereby shall be subject to the satisfaction at or
prior to the Closing of each of the following conditions:
(a) No Injunctions or Restraints; Illegality. No temporary restraining
----------------------------------------
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Acquisition shall be in effect, nor shall any proceeding
brought by an administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign, seeking any of the foregoing
be pending; nor shall there be any action taken, or any statute, rule,
regulation or order enacted, entered, enforced or deemed applicable to the
Acquisition, which makes the consummation of the Acquisition illegal.
7.2 Additional Conditions to Obligations of Seller and the Company. The
--------------------------------------------------------------
obligations of Seller and the Company to consummate and effect the Acquisition
and the transactions contemplated hereby shall be subject to the satisfaction at
or prior to the Closing of each of the following conditions, any of which may be
waived, in writing, exclusively by the Seller:
(a) Representations and Warranties. The representations and warranties
------------------------------
of Buyer in this Agreement shall be true and correct in all material respects
(if not qualified by materiality) and in all respects (if qualified by
materiality) on and as of the Closing as though such representations and
warranties were made on and as of the Closing (except for changes contemplated
by this Agreement and except for those representations and warranties which
address matters as of a particular date which shall remain true and correct as
of such date).
(b) Covenants. Buyer shall have performed and complied in all material
---------
respects with all covenants and obligations of this Agreement required to be
performed and complied with by it as of the Closing.
(c) Certificate of Buyer. Seller shall have been provided with a
--------------------
certificate executed on behalf of Buyer by a duly authorized officer of Buyer to
the effect that, as of the Closing:
(i) all representations and warranties made by Buyer in this
Agreement are true and correct in all material respects (if not qualified by
materiality) and in all respects (if qualified by materiality) on and as of the
Closing as though such representations and warranties were made on and as of
such time (except for changes contemplated by this Agreement and except for
those representations and warranties which address matters as of a particular
date which shall remain true and correct as of such date);
(ii) all covenants and obligations of this Agreement to be
performed by Buyer on or before the Closing have been so performed in all
material respects; and
(iii) the conditions to closing set forth in this Section 7.2
have been satisfied in full (unless otherwise waived by the Seller in accordance
with the terms hereof).
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(d) Secretary's Certificate. Seller shall have received from the
-----------------------
Company a certificate, executed by the Secretary or Assistant Secretary of
Buyer, certifying as to (i) the terms and effectiveness of the Certificate of
Incorporation and Bylaws of the Company, in each case as amended, and (ii) the
accuracy and completeness of the resolutions of the Board of Directors of Buyer
approving this Agreement, the Acquisition and the other transactions
contemplated hereby.
(e) Certificate of Good Standing. Seller shall have received a
----------------------------
certificate of good standing of Buyer from the Secretary of State of the State
of Delaware within a reasonable period prior to the Closing Date.
(f) No Material Adverse Change. There shall not have occurred any
--------------------------
material adverse change in the business, assets, results of operations or
financial condition of Buyer since the date of this Agreement.
(g) Escrow Agreement. The Escrow Agreement shall have been executed
----------------
and delivered by Buyer and the Escrow Agent.
(h) Legal Opinion. Seller shall have received a legal opinion from
-------------
Wilson Sonsini Goodrich & Rosati, Professional Corporation, legal counsel to
Buyer, substantially in the form of Exhibit C hereto.
---------
(i) Letter Agreement. That certain side letter agreement between
----------------
Seller and Company regarding certain development points shall have been executed
and delivered by the Company.
7.3 Additional Conditions to the Obligations of Buyer. The obligation of
Buyer to consummate the Closing shall be subject to the satisfaction at or prior
to the Closing of each of the following conditions, any of which may be waived,
in writing, exclusively by Buyer:
(a) Representations and Warranties. The representations and warranties
------------------------------
of Seller and the Company in this Agreement shall be true and correct in all
material respects (if not qualified by materiality) and in all respects (if
qualified by materiality) on and as of the Closing as though such
representations and warranties were made on and as of the Closing (except for
changes contemplated by this Agreement and except for those representations and
warranties which address matters as of a particular date which shall remain true
and correct as of such date).
(b) Covenants. Seller and the Company shall have performed and
---------
complied in all material respects with all covenants and obligations of this
Agreement required to be performed and complied with by them as of the Closing.
(c) Litigation. There shall be no bona fide action, suit, claim or
----------
proceeding pending against Parent, Buyer, Seller or the Company, their
respective properties or any of their officers or directors, arising out of, or
in any way connected with, the Acquisition or the other transactions
contemplated by the terms of this Agreement.
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<PAGE>
(d) No Material Adverse Change. There shall not have occurred any
--------------------------
material adverse change in the business, assets (including intangible assets),
financial condition, results of operations of the Company since the date of this
Agreement.
(e) Third Party Consents. Buyer shall have received all consents,
--------------------
waivers, approvals, and assignments listed on Schedule 7.3(e) hereto.
(f) Services Agreements. The Services Agreements, substantially in the
form set forth in Exhibit C hereto, having a duration of not less than five
---------
years from the Closing Date, and in form and substance satisfactory to Buyer,
shall have been executed and delivered by McCann-Erickson.
(g) Key Employee Employment Agreements. Each of Don Fitzpatrick, Minna
----------------------------------
Valentine and Bill Hewitt (the "Key Employees") shall have executed and
-------------
delivered to Buyer an Employment and Non-competition Agreement, and all such
Employment and Non-competition Agreements shall be in full force and effect.
(h) Additional Employment Arrangements. At least ninety percent (90%)
----------------------------------
of the persons listed on Schedule 7.3(h) hereto that were offered regular "at-
will" employment with Buyer (or the Company following the Closing) shall have
accepted such regular "at will" employment with Buyer (or the Company following
the Closing) on terms reasonably satisfactory to Buyer.
(i) Escrow Agreement. The Escrow Agreement shall have been executed
----------------
and delivered by Parent, Seller and the Escrow Agent.
(j) Non-Competition Agreement. Parent and Seller shall have executed
-------------------------
and delivered to Buyer the Non-Competition Agreement.
(k) Resignations of Directors. The directors of the Company shall have
-------------------------
signed and tendered their resignation from their positions as directors of the
Company, in each case effective as of the Closing Date.
(l) Legal Opinion. Buyer shall have received a legal opinion from in-
-------------
house legal counsel to Seller and the Company, substantially in the form of
Exhibit D hereto.
---------
(m) Certificate of Parent, Seller and the Company. Buyer shall have
---------------------------------------------
been provided with a certificate executed on behalf of Parent by a duly
authorized officer of Parent, executed on behalf of Seller by a duly authorized
officer of Seller and executed on behalf of the Company by its President and
Treasurer to the effect that, as of the Closing:
(i) all representations and warranties made by Parent, Seller
and the Company in this Agreement are true and correct in all material respects
(if not qualified by materiality) and in all respects (if qualified by
materiality) as of the Closing as though such representations and warranties
were made on and as of the Closing except for changes contemplated
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by this Agreement and except for those representations and warranties which
address matters as of a particular date which remain true and correct as of such
date;
(ii) all covenants and obligations of this Agreement to be
performed by Parent, Seller and the Company on or before such date have been so
performed in all material respects; and
(iii) the conditions set forth in Section 7.3 have been satisfied
in full (unless otherwise waived by Buyer in accordance with the terms hereof).
(n) Secretary's Certificate. Buyer shall have received from the
-----------------------
Company a certificate, executed by the Secretary of the Company, certifying as
to (i) the terms and effectiveness of the Articles of Incorporation and Bylaws
of the Company, in each case as amended, and (ii) the accuracy and completeness
of the resolutions of the Board of Directors of the Company and its sole
stockholder approving this Agreement, the Acquisition and the other transactions
contemplated hereby.
(o) Certificate of Good Standing. Buyer shall have received a
----------------------------
certificate of good standing of the Company from the Secretary of State of the
State of Kentucky, dated within a reasonable period prior to the Closing Date.
(p) Certified Articles of Incorporation. Buyer shall have received a
-----------------------------------
copy of the Articles of Incorporation of the Company, as amended, certified by
the Secretary of State of the State of Kentucky within a reasonable period prior
to the Closing.
(q) Letter Agreement. That certain side letter agreement between
----------------
Seller and Company regarding certain development points shall have been executed
and delivered by Seller.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
8.1 Survival of Representations and Warranties. All of Parent's, Buyer's,
------------------------------------------
Seller's and the Company's representations and warranties in this Agreement
shall survive the Closing and continue until the date which is one year
following the Closing Date (the "Expiration Date"); provided, however that (i)
the representations and warranties set forth in Section 2.3 (Company Capital
Structure), Section 2.20 (Environmental Matters) and Section 3.1 (Ownership) and
Parent and Seller's covenants in Section 6.14 (Transfer of Assets) shall not
terminate, (ii) the representations and warranties relating or pertaining to any
Tax or Returns related to such Tax set forth in Section 2.10 (Tax Matters) and
the covenants set forth in Section 6.13 (Tax Matters) shall survive until the
expiration of all applicable statutes of limitation, or extensions thereof,
governing each Tax or Return related to such Tax, and (iii) Parent's and
Seller's covenant in Section 6.15 (Trade Secrets, Know-how and Confidential
Information) shall survive until the date which is five years following the
Closing Date.
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8.2 Indemnification by Parent and Seller. Parent and Seller agree,
------------------------------------
jointly and severally, to indemnify and hold Buyer and its officers, directors
and affiliates (the "Buyer Indemnified Parties") harmless against all claims,
-------------------------
losses, liabilities, damages, deficiencies, cost and expenses, including
reasonable attorneys' fees and expenses of investigation (hereinafter
individually a "Loss" and collectively "Losses") incurred by Buyer, its
---- ------
officers, directors or affiliates (including the Company) directly or indirectly
as a result of (i) any breach or inaccuracy of a representation or warranty of
the Company, Seller or Parent contained in this Agreement, or (ii) any failure
by the Company, Seller or Parent to perform or comply with any covenant
contained in this Agreement, including without limitation any failure by Seller
to deliver to Buyer the Stock Consideration Reduction, if applicable, in
accordance with the terms of Section 1.6 of this Agreement or to pay the Taxes
which are the responsibility of Parent and/or Seller under Section 6.13. Neither
Parent nor Seller shall have any right of contribution from the Company with
respect to any Loss claimed by a Buyer Indemnified Party.
8.3 Claims Against the Escrow Fund. The procedure for satisfaction of
------------------------------
claims with respect to any Loss claimed by a Buyer Indemnified Party for which
such Buyer Indemnified Party seeks recourse against the Escrow Fund established
as partial security for the indemnity provided in Section 8.2 is set forth in
the Escrow Agreement.
8.4 Limitations on Parent and Seller Indemnification.
------------------------------------------------
(a) No claim for indemnification may be made by the Buyer under
Article VIII until the amount of all Losses suffered by the Buyer exceeds five
hundred thousand dollars ($500,000) (in which event the Buyer shall be entitled
to claim the whole of the amount thereof and not merely the excess).
(b) In no event shall the aggregate indemnity obligations of Parent
and Seller under this Article VIII exceed an amount equal to the Purchase Price.
(c) In case any event shall occur which would otherwise entitle Buyer
to assert a claim for indemnification hereunder, no Loss shall be deemed to have
been sustained by Buyer to the extent of any proceeds received by Buyer from any
insurance policy with respect thereto.
8.5 Indemnification by Buyer. Buyer agrees to indemnify and hold Parent,
------------------------
Seller and their respective officers, directors and affiliates (the "Seller
------
Indemnified Parties") harmless against all Losses incurred by Parent, Seller,
-------------------
their respective officers, directors and affiliates directly or indirectly as a
result of (i) any breach or inaccuracy of a representation or warranty of Buyer
contained in this Agreement, or (ii) the operation of the business of the
Company after the Closing with respect to facts and circumstances that arise
after the Closing; provided, however that notwithstanding the foregoing, the
Seller Indemnified Parties shall not be entitled to indemnification with respect
to any Loss to the extent attributable to (i) any breach or inaccuracy of a
representation or warrants of the Company, Seller or Parent contained in this
Agreement, or (ii) any failure by the Company, Seller or Parent to perform or
comply with any covenant contained in this Agreement.
8.6 Limitations on Buyer Indemnification.
------------------------------------
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(a) No claim may be made by Parent or Seller under this Article VIII
until the amount of all Losses suffered by Parent and/or Seller exceeds five
hundred thousand dollars ($500,000) (in which event Parent and Seller shall be
entitled to claim the whole of the amount thereof and not merely the excess).
(b) In no event shall the indemnity obligations of Buyer under this
Article VIII exceed the Purchase Price.
(c) In case any event shall occur which would otherwise entitle Parent
and Seller to assert a claim for indemnification hereunder, no Loss shall be
deemed to have been sustained by Parent or Seller to the extent of any proceeds
received by Parent and/or Seller from any insurance policy with respect thereto.
8.7 Claims Procedure. The procedure for satisfaction of claims with
----------------
respect to any Loss claimed by an Indemnified Party for which such Indemnified
Party seeks recourse against the indemnifying party for the indemnity provided
in Section 8.2 or for the indemnity provided in Section 8.5 is as follows:
(a) Procedure and Dispute Resolution. If an Indemnified Party shall
--------------------------------
have a claim of indemnification pursuant to this Section 8.7 (an "Indemnity
---------
Claim"), it will promptly give written notice thereof (the "Claim Notice") to
----- ------------
the indemnifying party, including therein a brief description of the facts upon
which such claim is based and the amount thereof, to the extent that it can be
ascertained but failure to do so shall not affect the rights or remedies of the
Indemnified Party (except to the extent of any actual prejudice caused thereby).
In the event that the indemnifying party disputes the validity or amount of any
Indemnity Claim, prior to taking any other action, the Indemnified Party and the
indemnifying party shall attempt in good faith to agree upon the rights of the
respective parties with respect to such Indemnity Claim. If any such dispute is
not settled within thirty (30) days from the delivery of the Claim Notice, the
Indemnified Party, on the one hand, the indemnifying party, on the other hand,
may demand arbitration of the matter in accordance with the procedures of
Section 8.7(c) unless the amount of the Loss is at issue in pending litigation
with a third party, in which event arbitration shall not be commenced until such
amount is ascertained or both parties agree to arbitration.
(b) Arbitration. Any dispute or claim arising under this Section 8.7
-----------
shall be finally settled by binding arbitration in Santa Clara County,
California under the rules then in effect of the American Arbitration
Association (the "AAA") by one arbitrator who is a member of the AAA and who is
---
selected in accordance with the rules then in effect of the AAA. At the request
of either party, the arbitrator will enter an appropriate protective order to
maintain the confidentiality of information produced or exchanged in the course
of the arbitration proceedings. The parties may apply to any court of competent
jurisdiction for a temporary restraining order, preliminary injunction, or other
interim or conservatory relief, as necessary, without breach of this arbitration
agreement and without any abridgement of the powers of the arbitrator. The
arbitrator shall also have the power to grant temporary or permanent injunctive
or other equitable relief, including any interim or conservatory relief, as
necessary. The parties hereto agree not to submit a dispute subject to this
Section 8.7 to any federal, state, local or foreign court except as may be
necessary to enforce
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<PAGE>
the arbitration procedures of this Section 8.7 or to enforce an arbitration
award. The arbitrator may award to the prevailing party, if any, as determined
by the arbitrators, its costs and fees incurred in connection with any
arbitration or related judicial proceeding hereunder. Cost and fees awarded may
include, without limitation, attorneys' fees, expert and other witness fees,
travel expenses, and out-of-pocket expenses (including, without limitation, such
expenses as copying, telephone, facsimile, postage and courier fees). Judgement
on the award rendered by the arbitrator may be entered in any court having
jurisdiction thereof.
(c) Third Party Claims. In the event an Indemnified Party becomes
------------------
aware of a third-party claim in respect of which such Indemnified Party believes
indemnity may be sought pursuant to this Section 8.7, such Indemnified Party
shall notify the indemnifying party of such claim and will give the indemnifying
party such information, records and materials with respect thereto as the
indemnifying party may reasonably request, but failure to give such notice shall
not relieve the indemnifying party of any liability hereunder (except to the
extent that the indemnifying party has suffered actual prejudice by such
failure). The indemnifying party shall have the right to participate in (but not
control), at its own expense, the defense of such claim. The Indemnified Party
shall have the right in its sole discretion to settle any such claim; provided,
however that except with the consent of the indemnifying party, no settlement of
any claim with third-party claimants shall be determinative of the amount of any
claim against the indemnifying party pursuant to this Section 8.7. In the event
that the indemnifying party has consented to any such settlement, the
indemnifying party shall have no power or authority to object under any
provision of this Article VIII to the amount of any claim by such Indemnified
Party against the indemnifying party with respect to such settlement.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.1 Termination. This Agreement may be terminated and the Acquisition
-----------
abandoned at any time prior to the Closing:
(a) by mutual written agreement of Parent, Seller and Buyer;
(b) by Buyer or Parent, if: (i) the Closing has not occurred by July
19, 2000; (ii) there shall be a final nonappealable order of a federal or state
court in effect preventing consummation of the Acquisition; or (iii) there shall
be any statute, rule, regulation or order enacted, promulgated or issued or
deemed applicable to the Closing by any Governmental Entity that would make
consummation of the Closing illegal;
(c) by Buyer if there shall be any action taken, or any statute, rule,
regulation or order enacted, promulgated or issued or deemed applicable to the
Acquisition by any Governmental Entity, which would: (i) prohibit Buyer's
ownership or operation of any portion of the business of the Company or (ii)
compel Buyer or the Company to dispose of or hold separate all or a portion of
the business or assets of the Company or Buyer as a result of the Acquisition;
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<PAGE>
(d) by Buyer if it is not in material breach of its obligations under
this Agreement and there has been a material breach of any representation,
warranty, covenant or agreement contained in this Agreement on the part of the
Company, Seller or Parent and such breach has not been cured within ten (10)
calendar days after written notice to the Company and Seller; provided, however,
-------- -------
that, no cure period shall be required for a breach which by its nature cannot
be cured;
(e) by Parent if neither Parent, Seller nor the Company is in material
breach of their respective obligations under this Agreement and there has been a
material breach of any representation, warranty, covenant or agreement contained
in this Agreement on the part of Buyer and such breach has not been cured within
ten (10) calendar days after written notice to Buyer; provided, however, that no
-------- -------
cure period shall be required for a breach which by its nature cannot be cured;
(f) by Buyer if an event having a Material Adverse Effect on the
Company shall have occurred after the date of this Agreement.
9.2 Effect of Termination. In the event of termination of this Agreement
as provided in Section 9.1, this Agreement shall forthwith become void and there
shall be no liability or obligation on the part of Buyer, Parent, Seller or the
Company or their respective officers, directors or stockholders, provided that
--------
each party shall remain liable for any breaches of this Agreement prior to its
termination; provided further that, the provisions of Sections 6.3, 6.4 and 6.5,
-------- -------
Article X and this Section 9.2 shall remain in full force and effect and survive
any termination of this Agreement.
9.3 Amendment. This Agreement may be amended by the parties hereto at any
---------
time by execution of an instrument in writing signed on behalf of each of the
parties hereto.
9.4 Extension; Waiver. At any time prior to the Closing, Buyer, on the
-----------------
one hand, and Parent, Seller, and the Company, on the other hand, may, to the
extent legally allowed, (i) extend the time for the performance of any of the
obligations of the other party hereto, (ii) waive any inaccuracies in the
representations and warranties made to such party contained herein or in any
document delivered pursuant hereto, and (iii) waive compliance with any of the
agreements or conditions for the benefit of such party contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
ARTICLE X
GENERAL PROVISIONS
10.1 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
messenger or courier service, or mailed by certified or express mail (return
receipt requested) or sent via facsimile (with acknowledgment of complete
transmission) to the parties at the following addresses (or at such other
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address for a party as shall be specified by like notice), provided, however,
-------- -------
that notices sent by mail will not be deemed given until received:
(a) if to Buyer at any time or to the Company after the Closing, to:
Mediaplex, Inc.
177 Steuart Street, Suite 200
San Francisco, CA 94105
Attention: Alan Raifman, General Counsel
Telephone: (415) 808-1900
Facsimile: (415) 808-1901
with a copy to:
Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304
Attention: Michelle L. Whipkey, Esq.
Telephone: (650) 493-9300
Facsimile: (650) 493-6811
(b) if to Parent, to:
The Interpublic Group of Companies, Inc.
1271 Avenue of the Americas, 44th Floor
New York, NY 10020
Telephone: (212) 399-8093
Facsimile: (212) 399-8086
Attention: Sean Orr, Chief Financial Officer
with a copy to:
The Interpublic Group of Companies, Inc.
1271 Avenue of the Americas, 44th Floor
New York, NY 10020
Telephone: (212) 399-8277
Facsimile: (212) 399-8280
Attention: Mitchell S. Gendel, Esq.
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<PAGE>
(c) If to Seller, to:
McCann-Erickson USA, Inc.
750 Third Avenue
New York, NY 10017
Attention: Sal LaGreca
Telephone: (212) 984-2052
Facsimile: (212) 984-2629
with a copy to:
The Interpublic Group of Companies, Inc.
1271 Avenue of the Americas, 44th Floor
New York, NY 10020
Telephone: (212) 399-8277
Facsimile: (212) 399-8280
Attention: Mitchell S. Gendel, Esq.
(d) If to the Company before the Closing, to:
AdWare Systems, Inc.
Waterside Building, Suite 1000
101 East Main Street
Louisville, KY 40202
Telephone: (502) 568-5000
Facsimile: (502) 568-5179
Attention: Don Fitzpatrick
with a copy to:
The Interpublic Group of Companies, Inc.
1271 Avenue of the Americas, 44th Floor
New York, NY 10020
Telephone: (212) 399-8277
Facsimile: (212) 399-8280
Attention: Mitchell S. Gendel, Esq.
10.2 Interpretation. The words "include," "includes" and "including" when
--------------
used herein shall be deemed in each case to be followed by the words "without
limitation." The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
10.3 Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more
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<PAGE>
counterparts have been signed by each of the parties and delivered to the other
party, it being understood that all parties need not sign the same counterpart.
10.4 Entire Agreement; Assignment. This Agreement, the Exhibits hereto,
----------------------------
the Nondisclosure Agreements, and the documents and instruments and other
agreements among the parties hereto referenced herein: (a) constitute the entire
agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings both written and oral, among
the parties with respect to the subject matter hereof; (b) are not intended to
confer upon any other person any rights or remedies hereunder; and (c) shall not
be assigned by operation of law or otherwise, except that Buyer may assign its
rights and delegate its obligations hereunder to its affiliates as long as Buyer
remains ultimately liable for all of Buyer's obligations hereunder.
10.5 Severability. In the event that any provision of this Agreement or
------------
the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.
10.6 Other Remedies. Except as otherwise provided herein and except for
--------------
any breach of a representation or warranty of Parent, Seller, the Company or
Buyer (the exclusive remedy for which shall be indemnification under Article
VIII), any and all remedies herein expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy conferred hereby,
or by law or equity upon such party, and the exercise by a party of any one
remedy will not preclude the exercise of any other remedy.
10.7 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of California, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
Each of the parties hereto irrevocably consents to the exclusive jurisdiction
and venue of any court within San Francisco County, State of California, in
connection with any matter based upon or arising out of this Agreement or the
matters contemplated herein, agrees that process may be served upon them in any
manner authorized by the laws of the State of California for such persons and
waives and covenants not to assert or plead any objection which they might
otherwise have to such jurisdiction, venue and such process.
10.8 Rules of Construction. The parties hereto agree that they have been
---------------------
represented by counsel during the negotiation and execution of this Agreement
and, therefor, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, Buyer, Parent, Seller and the Company have caused this
Agreement to be signed, all as of the date first written above.
MEDIAPLEX, INC. THE INTERPUBLIC GROUP OF
COMPANIES, INC.
By:____________________________ By:____________________________
Name: Name:
Title: Title:
ADWARE SYSTEMS, INC. McCANN-ERICKSON USA, INC.
By:____________________________ By:_____________________________
Name: Name:
Title: Title:
[SHARE ACQUISITION AGREEMENT]
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