AGREEMENT AND PLAN OF MERGER

Exhibit 2.1
EXECUTION VERSION

AGREEMENT AND PLAN OF MERGER

dated as of

October 8, 2004

by and among

ALLIANCE DATA SYSTEMS CORPORATION,

ADS ALLIANCE DATA SYSTEMS, INC.,

EVEREST NIVOLE, INC.,

THE RELIZON e-CRM COMPANY

and

RELIZON HOLDINGS, L.L.C.

TABLE OF CONTENTS

i

ii

iii

Schedules

Schedule A — Excluded Employees
Schedule 1.1 – Certain Definitions
Schedule 2.5 – Escrow Participating Holders
Schedule 3.2 — Subsidiaries of the Company
Schedule 3.3 — Capitalization of the Company
Schedule 3.6 — Exceptions to No Conflict Representation
Schedule 3.7 – Financial Statements
Schedule 3.8 — Subsequent Events
Schedule 3.9 — Undisclosed Liabilities
Schedule 3.10 — Contracts
Schedule 3.11 — Exceptions to Title to Machinery, Equipment, and Other Property
Schedule 3.12(a) — Intellectual Property
Schedule 3.12(b) — Intellectual Property
Schedule 3.12(e) — Intellectual Property
Schedule 3.12(f) — Intellectual Property
Schedule 3.12(g) — Intellectual Property
Schedule 3.13 — Real Property
Schedule 3.14 — Litigation and Proceedings
Schedule 3.15(b) — Employee Plans
Schedule 3.15(c) — Pension Plans
Schedule 3.16 — Labor Relations
Schedule 3.17 — Legal Compliance
Schedule 3.18 — Environmental Matters
Schedule 3.19 — Tax Matters
Schedule 3.20 — Governmental Authorities; Consents
Schedule 3.21 — Licenses, Permits, and Authorizations
Schedule 3.22 — Insurance
Schedule 3.24 — Customers and Suppliers
Schedule 3.26 — Certain Business Relationships
Schedule 4.3 — Exceptions to Acquiror No Conflict Representation
Schedule 4.5 — Governmental Authorities; Consents (Acquiror)
Schedule 4.7 — Brokers’ Fees
Schedule 5.7 — Affiliate Transactions
Schedule 6.4(a) — Relizon Guarantees
Schedule 6.4(b) — Replaced Letter of Credit
Schedule 7.6 – Certain Employment Agreements
Schedule 7.9 – Shared Agreements
Schedule 9.2(j) — Copies of Notices and Consents
Schedule 12.2 – Indemnified Consents

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Annexes

Annex A — Certificate of Merger
Annex B — Form of Letter of Transmittal
Annex C — Contribution and Transfer Agreement
Annex D – Form of Escrow Agreement
Annex E — Holder Acknowledgement
Annex F – Form of Transition Services Agreement
Annex G — Form of Sourcing Agreement (No. 1)
Annex H — Form of Sourcing Agreement (No. 2)
Annex I — Form of Software License and Purchase Agreement
Annex J — Form of Employee Lease Agreement

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AGREEMENT AND PLAN OF MERGER

     This Agreement and Plan of Merger (this “ Agreement ”), dated as of October 8, 2004, is entered into by and among ADS ALLIANCE DATA SYSTEMS, INC., a Delaware corporation (“ Acquiror ”), EVEREST NIVOLE, INC., a Delaware corporation and a wholly-owned subsidiary of Acquiror (“ Merger Sub ”), THE RELIZON e-CRM COMPANY, a Delaware corporation (the “ Company ”), RELIZON HOLDINGS, L.L.C., a Delaware limited liability company (“ Holdings ”) and ALLIANCE DATA SYSTEMS CORPORATION, a Delaware corporation (“ Parent ”), solely in its capacity as guarantor of the obligations of Acquiror and Merger Sub pursuant to Section 13.14 hereof.

PLAN OF MERGER

     A. Parent, Acquiror, Merger Sub, Holdings and the Company (Merger Sub and the Company sometimes being referred to herein as the “ Constituent Corporations ”) are hereby adopting a plan of merger, providing for the merger of Merger Sub with and into the Company, with the Company being the surviving corporation. This merger (the “ Merger ”) will be consummated in accordance with this Agreement and evidenced by a Certificate of Merger between Merger Sub and the Company in substantially the form of Annex A hereto (the “ Certificate of Merger ”), such Merger to be consummated as of the Effective Time of the Merger (as defined below).

     B. Upon consummation of the Merger, the separate corporate existence of Merger Sub shall cease and the Company, as the surviving corporation in the Merger (hereinafter referred to for the periods on and after the Effective Time of the Merger as the “ Surviving Corporation ”), shall continue its corporate existence under the Delaware General Corporation Law (the “ DGCL ”) as a wholly-owned subsidiary of Acquiror.

     C. On and after the Effective Time of the Merger, the Surviving Corporation shall thereupon and thereafter possess all of the rights, privileges, powers and franchises, of a public as well as a private nature, of the Constituent Corporations, and shall become subject to all the restrictions, disabilities and duties of each of the Constituent Corporations; and all rights, privileges, powers and franchises of each Constituent Corporation, and all property, real, personal and mixed, and all debts due to each such Constituent Corporation, on whatever account, and all chooses in action belonging to each such corporation, shall become vested in the Surviving Corporation; and all property, rights, privileges, powers and franchises, and all and every other interest shall become thereafter the property of the Surviving Corporation as they are of the Constituent Corporations; and the title to any real property vested by deed or otherwise or any other interest in real estate vested by any instrument or otherwise in either of such Constituent Corporations shall not revert or become in any way impaired by reason of the Merger; but all Liens upon any property of either Constituent Corporation shall thereafter attach to the Surviving Corporation and shall be enforceable against it to the same extent as if said debts, liabilities and duties had been incurred or contracted by it; all of the foregoing in accordance with the applicable provisions of the DGCL.

     D. Immediately prior to the Effective Time of the Merger, the Company shall (i) transfer to The Relizon Company, a Delaware corporation (collectively with its subsidiaries, “ Relizon ”), certain assets and liabilities relating to the operation of the billing solutions business of the Company and its Subsidiaries (such business, the “ Excluded Business ”), (ii) transfer the employment of all of the employees listed on Schedule A attached hereto (the “ Excluded Employees ”) to Relizon, (iii) assign all of the Contracts included in the Excluded Assets (the “ Excluded Contracts ”) to Relizon, and (iv) transfer all of the licenses, franchises and other permits included in the Excluded Assets (the “ Excluded Permits ”) (to the extent transferable) to Relizon, pursuant to the Contribution and Transfer Agreement in the form attached hereto as Annex C (the “ Contribution and Transfer Agreement ”), it being the intention of the

parties hereto that the Excluded Business, the Excluded Assets, the Excluded Liabilities, the Excluded Employees, the Excluded Contracts and the Excluded Permits be excluded from the transactions contemplated hereby.

     E. At the Effective Time of the Merger, the Certificate of Incorporation and Bylaws of the Surviving Corporation shall be the Certificate of Incorporation and Bylaws of the Company, until thereafter amended as provided therein and under the DGCL, and the directors and officers of the Surviving Corporation shall be the directors and officers of Merger Sub immediately prior to the Effective Time of the Merger.

     F. The stockholders of the Company holding a number of shares of Company Common Stock entitling the holders thereof to cast votes in excess of that number of votes necessary for the adoption and approval of this Agreement have approved this Agreement, the Merger and the other transactions contemplated hereby, acting by written consent pursuant to Section 228 of the DGCL.

     G. For certain limited purposes, and subject to the terms set forth herein, Holdings shall serve as a representative of the holders of Company Common Stock and Options.

     H. The parties hereto intend that the Merger be treated as a “qualified stock purchase” within the meaning of Section 338(d)(3) of the Code.

     I. Certain capitalized terms used herein have the meanings ascribed to such terms in Article I hereof.

AGREEMENT

     In order to consummate the Merger, and in consideration of the mutual agreements hereinafter contained, Acquiror, Merger Sub and the Company agree as follows:

ARTICLE I.
CERTAIN DEFINITIONS

     As used herein, the following terms shall have the following meanings:

“ 2004 Annual Bonuses ” has the meaning specified in Section 6.3(f).

“ Acquiror ” has the meaning specified in the Preamble hereto.

“ Acquiror Cure Period ” has the meaning specified in Section 10.1(c).

“ Acquiror Indemnified Parties ” has the meaning specified in Section 12.2(a).

“ Acquiror Transaction Documents ” has the meaning specified in Section 4.2.

“ Action ” means any claim, action, suit, audit, assessment, appeal, mediation, arbitration or inquiry, or any proceeding or investigation, by or before any Governmental Authority.

“ Adjustment Amount ” has the meaning specified in Section 2.5(c).

“ Affected Employees ” means all employees (other than Excluded Employees) of the Company and its Subsidiaries as of the Closing Date, including any employee who is or may be eligible for short-term disability or long-term disability benefits as of the Closing Date.

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“ Affiliate ” means, with respect to any specified Person, any Person that, directly or indirectly, controls, is controlled by, or is under common control with, such specified Person, through one or more intermediaries or otherwise.

“ Aggregate Fully-Diluted Common Shares ” has the meaning specified in Section 2.1(d).

“ Aggregate Option Exercise Price ” has the meaning specified in Section 2.1(d).

“ Agreement ” has the meaning specified in the Preamble hereto.

“ Antitrust Authorities ” means the Antitrust Division of the United Stated Department of Justice, the United States Federal Trade Commission or the antitrust or competition law authorities of any other jurisdiction (whether United States, foreign or multinational).

“ Applicable Percentage ” means with respect to any Escrow Participating Holder, a ratio equal to the number of Common Shares held by such Escrow Participating Holder (including any shares of Company Common Stock issuable to such holder upon exercise of any Options held by such Escrow Participating Holder) divided by the number of Common Shares held by all Escrow Participating Holders (including any shares of Company Common Stock issuable to such holders upon exercise of all outstanding Options held by such Escrow Participating Holders), expressed as a percentage.

“ Audited Financial Statements ” has the meaning specified in Section 3.7.

“ Auditor ” has the meaning specified in Section 2.5(b).

“ Basket Amount ” has the meaning specified in Section 12.4(b).

“ Benefit Arrangement ” has the meaning specified in Section 3.15(a)(i).

“ Bonus Side Letter ” has the meaning specified in Section 5.9.

“ Business Day ” means any day other than Saturday, Sunday or a day on which banks in New York City are required to be closed.

“ Carlyle ” has the meaning specified in Section 5.8(a).

“ Cash Per Fully-Diluted Common Share ” has the meaning specified in Section 2.1(d).

“ Certificate of Merger ” has the meaning specified in the Section entitled “Plan of Merger.”

“ Certificates ” has the meaning specified in Section 2.2(b).

“ Closing ” has the meaning specified in Section 8.2.

“ Closing Balance Sheet ” has the meaning specified in Section 2.5(a).

“ Closing Date ” has the meaning specified in Section 2.3.

“ Closing Date Cash and Cash Equivalents ” has the meaning specified in Section 2.5(a).

“ Closing Date Funded Debt ” has the meaning specified in Section 2.5(a).

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“ Closing Date Net Working Capital ” has the meaning specified in Section 2.5(a).

“ Code ” means the Internal Revenue Code of 1986, as amended.

“ Common Shares ” has the meaning specified in Section 2.1(a).

“ Company ” has the meaning specified in the Preamble hereto.

“ Company Common Stock ” means the common stock, par value $.01 per share, of the Company.

“ Company Cure Period ” has the meaning specified in Section 10.1(b).

“ Company Material Adverse Effect ” means any material adverse effect on the business, operations or financial condition of the Company and its Subsidiaries, taken as a whole.

“ Company Transaction Documents ” has the meaning specified in Section 3.5(a).

“ Confidentiality Agreement ” has the meaning specified in Section 13.8.

“ Constituent Corporations ” has the meaning specified in the Section entitled “Plan of Merger.”

“ Contracts ” means any contracts, agreements, subcontracts, leases, and purchase orders.

“ Contribution and Transfer Agreement ” has the meaning specified in the Section entitled “Plan of Merger.”

“ Controlled Group Member ” has the meaning specified in Section 3.15(a)(ii).

“ Damages ” means all losses (including diminution in value), damages and other costs and expenses of any kind or nature whatsoever, whether known or unknown, contingent or vested, matured or unmatured, and whether or not resulting from third-party claims, including costs (including reasonable fees and expenses of attorneys, other professional advisors and expert witnesses and the allocable portion of the relevant person’s internal costs) of investigation, preparation and litigation in connection with any Action or threatened Action.

“ DGCL ” has the meaning specified in the Section entitled “Plan of Merger.”

“ Determination Date ” has the meaning specified in Section 2.5(b).

“ Disclosing Party ” has the meaning specified in Section 7.1(b).

“ Dissenting Common Stockholders ” has the meaning specified in Section 2.1(a).

“ Effective Time of the Merger ” has the meaning specified in Section 2.3.

“ Employee Lease Agreement ” has the meaning specified in Section 6.3(d).

“ Employee Lease Period ” has the meaning specified in Section 6.3(c).

“ Employee Options ” has the meaning specified in Section 2.2(b).

“ Employee Plans ” has the meaning specified in Section 3.15(a)(iii).

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“ Employee Transfer Time ” has the meaning specified in Section 6.3(c).

“ Environmental Laws ” means all applicable foreign, U.S. federal, state or local laws, statutes, ordinances, rules, or regulations relating to pollution or protection of the environment and health and human safety, as in effect as of the date hereof (including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act, as amended, the Resource Conservation and Recovery Act, as amended, the Clean Air Act, as amended, and the California Hazardous Waste Control Act, as amended).

“ ERISA ” has the meaning specified in Section 3.15(a)(iv).

“ Escrow Agent ” has the meaning specified in Section 2.5(d).

“ Escrow Agreement ” has the meaning specified in Section 2.5(d).

“ Escrow Amount ” has the meaning specified in Section 2.5(e).

“ Escrow Participating Holders ” has the meaning specified in Section 2.5(d).

“ Estimated Adjustment Amount ” has the meaning specified in Section 2.4(b).

“ Estimated Cash and Cash Equivalents ” has the meaning specified in Section 2.1(c).

“ Estimated Closing Date Net Working Capital ” has the meaning specified in Section 2.4(a).

“ Estimated Funded Debt ” has the meaning specified in Section 2.1(c).

“ Evaluation Materials ” means this Agreement (together with the Schedules and Annexes hereto) and, as to any party hereto, means all other non-public information furnished to such party by the other parties hereto in connection with the transactions contemplated hereby relating to the disclosing party or the disclosing party’s Affiliates, whether furnished orally or in writing or gathered by inspection, together with analyses, compilations, studies or other documents prepared by any party, or by such party’s agents, representatives (including attorneys, accountants and financial advisors) or employees, which contain or otherwise reflect such information, provided that the term Evaluation Materials shall not include information that (i) is or becomes generally available to the public other than as a result of a disclosure in violation of the terms hereof or the Confidentiality Agreement, (ii) was or becomes available to a party hereto on a non-confidential basis from a source other than any other party hereto or their representatives and affiliates, provided that such source is not prohibited from disclosing such information by a contractual, legal or fiduciary obligation to any party hereto or any of their respective representatives, or (iii) has been or is independently developed by the party to which such information was furnished and not derived from the Evaluation Materials.

“ Exchange Agent ” has the meaning specified in Section 2.2(a).

“ Excluded Assets ” has the meaning specified in the Contribution and Transfer Agreement.

“ Excluded Business ” has the meaning specified in the Section entitled “Plan of Merger.”

“ Excluded Business Transfer ” has the meaning specified in Section 5.5.

“ Excluded Contracts ” has the meaning specified in the Section entitled “Plan of Merger.”

“ Excluded Employees ” has the meaning specified in the Section entitled “Plan of Merger.”

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“ Excluded Contracts ” has the meaning specified in the Section entitled “Plan of Merger.”

“ Excluded Liabilities ” has the meaning specified in the Contribution and Transfer Agreement.

“ Financial Statements ” has the meaning specified in Section 3.7.

“ Funded Debt ” of any Person, means all obligations of such Person for borrowed money and any accrued and unpaid interest thereon, including any obligations to Affiliates of such Person for borrowed money and any accrued and unpaid interest thereon; provided , however , that Funded Debt of the Company and its Subsidiaries shall not include (i) any liabilities or obligations under the capitalized lease described on Schedule 1.1 and (ii) any indebtedness of the Company to any of its Subsidiaries or any indebtedness of any Subsidiary of the Company to the Company or any other Subsidiary of the Company. For avoidance of doubt, Funded Debt of the Company and its Subsidiaries as of the Closing Date shall include any Relizon Debt outstanding on the Closing Date.

“ Funding Amount ” has the meaning specified in Section 2.2(a).

“ GAAP ” has the meaning specified in Section 2.5(a).

“ Governmental Authority ” means any Federal, state, municipal, local or foreign government, governmental authority, regulatory or administrative agency, governmental commission, department, board, bureau, agency or instrumentality, court, tribunal, arbitrator or arbitral body.

“ Governmental Order ” means any order, writ, rule, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority.

“ Gross Merger Consideration ” has the meaning specified in Section 2.1(c).

“ Guaranteed Obligations ” has the meaning specified in Section 13.14.

“ Holder Acknowledgment ” means an agreement or certificate signed by a holder of Options acknowledging cancellation of all options to purchase Common Shares held by such holder in a form attached as Annex E hereto.

“ Holder Allocable Expenses ” has the meaning specified in Section 2.6.

“ Holder Representative ” has the meaning specified in Section 11.1.

“ Holdings ” has the meaning specified in the Preamble hereto.

“ HSR Act ” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.

“ Indemnification Claim ” has the meaning specified in Section 12.3.

“ Indemnification Escrow Amount ” has the meaning specified in Section 2.5(e).

“ Indemnified Party ” has the meaning specified in Section 12.3.

“ Indemnitor ” has the meaning specified in Section 12.3.

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“ Intellectual Property ” means any patent, trademark, service mark, trade name, copyright, mask work, invention, know how, trade secret or similar proprietary intellectual property right (including any registrations or applications for registration of any of the foregoing).

“ Interim Financial Statements ” has the meaning specified in Section 3.7.

“ Leased Real Property ” means all real property leased by the Company or any of its Subsidiaries, the lease of which may not be terminated at will, or by giving notice of ninety (90) days or less, without cost or penalty and provides for annual rental payments in excess of $150,000, excluding leased real property included within the Excluded Assets.

“ Letter of Transmittal ” has the meaning specified in Section 2.2(b).

“ Lien ” means any mortgage, deed of trust, pledge, hypothecation, encumbrance, security interest or other lien of any kind.

“ Majority Holders ” has the meaning specified in Section 11.1.

“ Maximum Amount ” has the meaning specified in Section 6.2(b).

“ Merger ” has the meaning specified in the Section entitled “Plan of Merger.”

“ Merger Consideration ” has the meaning specified in Section 2.1(c).

“ Merger Sub ” has the meaning specified in the Preamble hereto.

“ Multiemployer Plan ” has the meaning specified in Section 3.15(a)(v).

“ Net Working Capital ” has the meaning specified in Section 2.5(a).

“ Options ” has the meaning specified in Section 2.1(a).

“ Owned Real Property ” means all real property owned by the Company or any of its Subsidiaries, excluding real property included within the Excluded Assets.

“ Parent ” has the meaning specified in the Preamble hereto.

“ PBGC ” has the meaning specified in Section 3.15(a)(vi).

“ Pension Plan ” has the meaning specified in Section 3.15(a)(vii).

“ Permitted Liens ” means (i) mechanics, materialmen’s and similar Liens with respect to any amounts not yet due and payable or which are being contested in good faith through appropriate proceedings, (ii) Liens for Taxes not yet due and payable or which are being contested in good faith through appropriate proceedings, (iii) Liens securing rental payments under capital lease agreements, (iv) encumbrances and restrictions on real property (including easements, covenants, rights of way and similar restrictions of record) that do not materially interfere with the present uses of such real property, (v) Liens securing the Company’s and its Subsidiaries’ obligations under its senior secured credit facility, (vi) other Liens arising in the ordinary course of business and not incurred in connection with the borrowing of money and (vii) Liens described on Schedule 1.1 ).

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“ Person ” means any individual, firm, corporation, partnership, limited liability company, incorporated or unincorporated association, joint venture, joint stock company, governmental agency or instrumentality or other entity of any kind.

“ Pre-Closing Tax Return ” has the meaning specified in Section 7.5(c).

“ Privacy Laws ” means the Gramm-Leach-Bliley Act of 1999, the Health Insurance Portability and Accountability Act of 1996, the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 and other applicable federal and state statutes and regulations governing the maintenance, security and use of information containing consumer personal private information.

“ Relizon ” has the meaning specified in Section entitled “Plan of Merger.”

“ Relizon Debt ” means any Funded Debt owed or owing by the Company or any of its Subsidiaries to Relizon or any of its Subsidiaries.

“ Relizon Pension Plans ” shall mean The Relizon Company Retirement Plan, effective, as amended, January 1, 2001 and frozen effective June 20, 2002, and The Relizon Company 401(k) Savings Plan, effective as of August 1, 2000, as amended through February 11, 2004.

“ Relizon Plans ” shall mean all Employee Plans maintained or sponsored by Relizon in which the Company or any Company Subsidiary was a participating employer or sponsor, or which otherwise covered current or former employees of the Company or any Company Subsidiary prior to the Closing Date.

“ Relizon Trade Payables ” means any accounts payable or other amounts payable (other than obligations in respect of Relizon Debt) owed or owing by the Company or any of its Subsidiaries to Relizon or any of its Subsidiaries in respect of goods, services or products provided by Relizon or one of its Subsidiaries to the Company or one of its Subsidiaries on or before the Closing Date.

“ Relizon Trade Receivables ” means any accounts receivable or other amounts due or owing by Relizon or any of its Subsidiaries to the Company or any of its Subsidiaries in respect of goods, services or products provided by the Company or one of its Subsidiaries to Relizon or one of its Subsidiaries on or before the Closing Date.

“ Relizon Welfare Plans ” shall mean the following Relizon Plans: (i) Relizon Choice Benefit Plan, effective, as amended, January 1, 2001; (ii) Relizon Section 125 Flexible Benefits Plan including the Relizon Choice Flexible Spending Accounts Plan (Health and Dependent Care), effective, as amended January 1, 2001; (iii) Relizon Group Term Life Insurance Plan, effective, as amended, January 1, 2001; (iv) The Relizon Company Group Disability Plan, effective as amended, January 1, 2001; and (v) Relizon Choice Benefit Plan Employee Assistance Program (EAP) Benefits.

“ Replaced Letter of Credit ” has the meaning specified in Section 6.4(b).

“ Representation and Warranty Policy ” has the meaning specified in Section 7.8.

“ Seller Indemnified Parties ” has the meaning specified in Section 12.2(b).

“ Seller Parties ” has the meaning specified in Section 5.8.

“ Seller’s Tax Contest ” has the meaning specified in Section 7.5(f).

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“ Severance and Non-Compete Agreements ” has the meaning specified in Section 7.6.

“ Shared Agreements ” has the meaning specified in Section 7.9.

“ Shared Company Agreements ” has the meaning specified in Section 7.9.

“ Shared Relizon Agreements ” has the meaning specified in Section 7.9.

“ Sourcing Agreements ” has the meaning specified in Section 7.7.

“ Straddle Period ” has the meaning specified in Section 7.5(c).

“ Subsidiary ” means, with respect to any Person, a corporation or other entity of which 50% or more of the voting power of the equity securities or equity interests is owned, directly or indirectly, by such Person.

“ Surviving Corporation ” has the meaning specified in the Section entitled “Plan of Merger.”

“ Tax ” or “ Taxes ” means (i) all taxes, levies or other like assessments, charges or fees (including estimated taxes, charges and fees), including, without limitation, income, franchise, profits, corporations, advance corporation, gross receipts, transfer, excise, property, sales, use, value-added, ad valorem, license, capital, wage, employment, payroll, withholding, social security, severance, occupation, import, custom, stamp, alternative, add-on minimum, environmental or other governmental taxes or charges, imposed by the United States or any state, county, local or foreign government or subdivision or agency thereof, including any interest, penalties or additions to tax applicable or related thereto, (ii) all liability for the payment of any amounts of the type described in clause (i) as the result of being a member of an affiliated, consolidated, combined or unitary group and (iii) all liability for the payment of sales tax as a result of the failure to collect and remit sales tax in accordance with applicable sales tax requirements.

“ Tax Action ” has the meaning specified in Section 7.5(f).

“ Tax Returns ” means any report, return, statement or declaration required to be supplied to a taxing or other Governmental Authority in connection with Taxes.

“ Terminating Acquiror Breach ” has the meaning specified in Section 10.1(c).

“ Terminating Company Breach ” has the meaning specified in Section 10.1(b).

“ Termination Date ” has the meaning specified in Section 10.1(b).

“ Transactions ” has the meaning specified in Section 7.5(e).

“ Transferred Employees ” has the meaning specified in Section 6.3(c).

“ Transition Services Agreement ” has the meaning specified in Section 7.5(a).

“ WARN ” has the meaning specified in Section 3.15(a)(viii).

“ Welfare Plan ” has the meaning specified in Section 3.15(a)(ix).

“ Working Capital Escrow Amount ” has the meaning specified in Section 2.5(d).

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     As used herein, the phrase “to the knowledge” of any Person as of any date shall mean the actual knowledge of a Person’s officers and other personnel designated herein as of such date. For the purposes of defining such phrase, (i) the Company’s officers and other personnel are Mike Iaccarino, Bryan Kennedy, David McRae, Billy Sewell, Thomas Gaffny, Chris Harrison, Bob Fabrizio, Paul Dundon, Donna Gerolamo, Steve Trevor, Kelly Henrici, Sarah Burton, Nate Milliken, Sherry Jacques, Tom Ording and Sharyl Gardner and (ii) Acquiror’s officers and other personnel are Denise Parent, Michael Kline and Jeanette Fitzgerald.

ARTICLE II.

THE MERGER

      Section 2.1 Conversion of Common Shares and Options.

          (a) At the Effective Time of the Merger, by virtue of the Merger and without any action on the part of any holder of Company Common Stock, (i) each share (a “ Common Share ”) of Company Common Stock that is then issued and outstanding (other than shares of Company Common Stock, if any, held in the treasury of the Company, which treasury shares shall be canceled as part of the Merger, and other than shares of Company Common Stock held by Persons who object to the Merger and comply with the provisions of the DGCL concerning the rights of holders of Company Common Stock to dissent from the Merger and require appraisal of their shares of Company Common Stock (“ Dissenting Common Stockholders ”), which shares of Dissenting Common Stockholders will not constitute “Common Shares” hereunder) and (ii) each unexercised and outstanding option to purchase Common Shares (whether or not vested) that is then outstanding as of immediately prior to the Effective Time of the Merger (such options collectively being referred to as the “ Options ”), shall thereupon be converted into and become the right to receive the applicable portion of the Merger Consideration, without interest, as determined pursuant to Section 2.1(d).

          (b) At the Effective Time of the Merger, by virtue of the Merger and without any action on the part of Acquiror or Merger Sub, each share of common stock, par value $0.01 per share, of Merger Sub shall be converted into one share of common stock, par value $0.01 per share, of the Surviving Corporation.

          (c) Subject to the adjustments set forth in Sections 2.4 and 2.5, the “ Merger Consideration ” shall consist of Three Hundred Ten Million Dollars ($310,000,000) (the “ Gross Merger Consideration ”) in cash, less (i) the Estimated Funded Debt (as defined below), plus (ii) the Estimated Cash and Cash Equivalents (as defined below), less (iii) the amount of Holder Allocable Expenses paid by Acquiror to Holdings at Closing in accordance with Section 2.6. Within ten (10) Business Days of the Closing Date, and in no event less than two (2) Business Days before the Closing Date, the Company shall deliver to Acquiror a written notice setting forth (A) the Company’s estimate of the aggregate amount of the Funded Debt of the Company and its Subsidiaries, if any, that remains unpaid as of the Closing (the “ Estimated Funded Debt ”) and (B) the Company’s estimate of the amount of cash and cash equivalents of the Company and its Subsidiaries as of the Closing (the “ Estimated Cash and Cash Equivalents ”).

          (d) The Merger Consideration shall be allocated among the holders of the Common Shares and the Options as set forth below in this Section 2.1(d). Each holder of Common Shares shall be entitled to receive a portion of the Merger Consideration equal to (x) the Cash Per Fully-Diluted Common Share (as defined below), multiplied by (y) the number of Common Shares held by such holder as of the Effective Time of the Merger (but not including any Common Shares issuable upon the exercise of any Options held by such holder at the Effective Time of the Merger). Each holder of Options shall be entitled to receive a portion of the Merger Consideration equal to (i) the Cash Per Fully-Diluted Common

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Share, multiplied by the aggregate number of Common Shares issuable upon exercise in full of all Options held by such holder as of the Effective Time of the Merger, minus (ii) the aggregate cash exercise price payable upon exercise of all Options held by such holder. For purposes of the foregoing, the “ Cash Per Fully-Diluted Common Share ” shall mean (1) the sum of (A) the Merger Consideration, plus (B) the Aggregate Option Exercise Price (defined below), divided by (2) the Aggregate Fully-Diluted Common Shares. The “ Aggregate Fully-Diluted Common Shares ” shall be (i) the sum of the Common Shares held by all holders immediately prior to the Effective Time of the Merger, plus (ii) the aggregate number of Common Shares issuable upon the exercise in full of all Options held by all holders immediately prior to the Effective Time of the Merger, plus (iii) the aggregate number of shares of Company Common Stock held by Dissenting Common Stockholders. The “ Aggregate Option Exercise Price ” shall mean the sum of the cash exercise prices that would be payable upon exercise in full of all Options held by all holders of Options immediately prior to the Effective Time of the Merger.

      Section 2.2 Payment and Exchange of Certificates.

          (a) Immediately prior to the Effective Time of the Merger, Acquiror will pay to an exchange agent (the “ Exchange Agent ”) selected by the Company and reasonably acceptable to Acquiror, by wire transfer of immediately available funds, an amount (the “ Funding Amount ”) equal to (i) the Merger Consideration, as adjusted by the Estimated Adjustment Amount in accordance with Section 2.4, minus (ii) the product of (x) the number of shares of Company Common Stock held by all Dissenting Common Stockholders and (y) the Cash Per Fully-Diluted Common Share (determined after giving effect to the adjustments to the Merger Consideration provided for in Section 2.4 but before giving effect to the adjustments provided for in Section 2.5). Upon (1) payment by Acquiror to the Exchange Agent of the Funding Amount and (2) payment by Acquiror to Holdings of the estimated Holder Allocable Expenses pursuant to Section 2.6, Acquiror shall be deemed to have satisfied its obligations to make payments in respect of the Merger Consideration other than (A) Acquiror’s obligation to make payments required by Section 2.5 and (B) the obligation of Acquiror or the Surviving Corporation to make payments to Dissenting Common Stockholders, if any, following the Effective Time of the Merger.

          (b) As soon as reasonably practicable after the Effective Time of the Merger but in any event not later than three Business Days thereafter, the Exchange Agent shall mail to (i) each holder of record of a certificate or certificates which immediately prior to the Effective Time of the Merger represented outstanding Common Shares (the “ Certificates ”) and (ii) each holder of Options, in each case whose Common Shares and/or Options, as applicable, were converted into the right to receive the Merger Consideration pursuant to Section 2.1, (A) a letter of transmittal in the form attached hereto as Annex B (the “ Letter of Transmittal ”) and (B) instructions for use in surrendering the Certificates (or, in the case of a holder of Options, a Holder Acknowledgement) in exchange for the Merger Consideration. After the Effective Time of the Merger, each holder of any Certificates and/or Options, upon surrender of such Certificates together with a duly executed Letter of Transmittal to the Exchange Agent (or, in the case of a holder of Options, upon delivery of a Holder Acknowledgment to the Exchange Agent), shall be entitled to receive from the Exchange Agent in exchange therefor (subject to the provisions of Section 2.5) such portion of the Merger Consideration into which such holder’s Common Shares and/or Options shall have been converted as a result of the Merger; provided , however , that any payment with respect to Options held by employees of the Company or its Affiliates (“ Employee Options ”) shall be reduced by the amount of any taxes required to be withheld under applicable law with respect to such payments and amounts so withheld shall be paid by the Exchange Agent to the Company for disbursement to the applicable taxing authority; and provided , further , (x) a portion of the Merger Consideration otherwise payable to each holder of Common Shares and/or Options equal to the Working Capital Escrow Amount multiplied by such holder’s Applicable Percentage shall be held in escrow in accordance with Section 2.5(d) and the Escrow Agreement and (y) a portion of the Merger Consideration otherwise payable to holders of Common Shares and Options equal to the Indemnification Escrow Amount shall be held in escrow in

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accordance with Section 2.5(e) and the Escrow Agreement. Notwithstanding the forgoing, in the event that any holder of Common Shares or Options delivers the Certificates representing such Common Shares (together with a duly executed Letter of Transmittal) and/or a Holder Acknowledgement with respect to such Options to Acquiror at the Closing, Acquiror shall pay the amount which such holder is entitled in consideration therefor directly to such holder at the Closing by wire transfer of immediately available funds (pursuant to written wire transfer instructions delivered by such holder to Acquiror not fewer than three (3) Business Days prior to the Closing Date) and the Funding Amount payable to the Exchange Agent shall be reduced by such amounts (subject, in the case of any Employee Options to withholding for taxes, which amounts shall be paid to the Company for disbursement to the applicable taxing authority, and reduction for any amounts required to be placed in escrow in accordance with Sections 2.5(d) and 2.5(e)). Pending such surrender and exchange (or, in the case of a holder of Options, upon such delivery of a Holder Acknowledgment), a holder’s Certificates and/or Options shall be deemed for all purposes to evidence only the right to receive such holder’s portion of the Merger Consideration into which such Common Shares and/or Options shall have been converted by the Merger. Subject to Section 2.2(f), under no circumstances will the holder of any Certificates and/or Options be entitled to receive any portion of the Merger Consideration until such holder has surrendered such Certificates (together with a duly executed Letter of Transmittal) and/or Holder Acknowledgement, as applicable, in accordance with the procedures set forth in this Article II. No dividend or other distributions with respect to any common stock of the Surviving Corporation with a record date after the Effective Time of the Merger shall be paid with respect to any unsurrendered Certificate, and no holder of any unsurrendered Certificate or Options shall be entitled to any interest with respect to any portion of the Merger Consideration.

          (c)  No Further Ownership Rights in Company Common Stock . All Merger Consideration paid upon the surrender of Certificates or delivery of a Holder Acknowledgment in accordance with the terms of this Article II shall be deemed to have been paid in full satisfaction of all rights pertaining to the shares of Company Common Stock theretofore represented by such Certificates or subject to such Options (other than the rights of such holders of Common Shares and Options to receive distributions of the Escrow Amount as provided in this Agreement and the Escrow Agreement), and there shall be no further registration of transfers on the stock transfer books of the Surviving Corporation of the shares of Company Common Stock which were outstanding immediately prior to the Effective Time of the Merger. If, after the Effective Time of the Merger, Certificates or Options are presented to the Surviving Corporation or the Exchange Agent for any reason, they shall be canceled and exchanged as provided in this Article II, except as otherwise provided by applicable law.

          (d)  Undistributed Funding Amount . Any portion of the Funding Amount which remains undistributed to the holders of the Certificates or Options for six (6) months after the Effective Time of the Merger shall be delivered to Acquiror, upon demand, and any holders of the Certificates or Options who have not theretofore complied with this Article II shall thereafter look only to Acquiror for payment of their claim for the Merger Consideration.

          (e)  No Liability . None of Acquiror, Merger Sub, the Company or the Exchange Agent shall be liable to any Person in respect of any shares of Company Common Stock, any dividends or distributions with respect thereto or any cash from the Exchange Fund, in each case delivered to a public official pursuant to any applicable abandoned property, escheat or similar law.

          (f)  Lost Certificate . If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if required by Acquiror, the posting by such Person of a bond in such reasonable amount as Acquiror may direct as indemnity against any claim that may be made against it with respect to such Certificate, the Exchange Agent shall issue in exchange for such lost, stolen or destroyed Certificate, the applicable Merger Consideration with respect thereto pursuant to this Agreement.

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      Section 2.3 Effective Time of Merger; Closing Date. As soon as practicable following the satisfaction (or, to the extent permitted, the waiver) of all conditions to the Merger set forth in this Agreement, and provided that this Agreement has not been terminated pursuant to the provisions hereof, Merger Sub and the Company shall cause the Certificate of Merger to be executed and filed with the Secretary of State of Delaware as provided in Section 251 of the DGCL. For purposes of this Agreement, the “ Effective Time of the Merger ” shall mean the time at which the Certificate of Merger has been duly filed in the Office of the Secretary of State of Delaware and has become effective in accordance with the DGCL; and the term “ Closing Date ” shall mean the date on which the Effective Time of the Merger occurs.

      Section 2.4 Estimated Net Working Capital Adjustment.

          (a) Within ten (10) Business Days of the Closing Date, and in no event less than two (2) Business Days before the Closing Date, the Company shall deliver to Acquiror an estimate of the Net Working Capital (as defined below) of the Company and its Subsidiaries as of the Closing Date (the “ Estimated Closing Date Net Working Capital ”).

          (b) The “ Estimated Adjustment Amount ,” which may be positive or negative, shall mean (i) the Estimated Closing Date Net Working Capital, minus (ii) $2,000,000. If the Estimated Adjustment Amount is a positive number, then the Merger Consideration will be increased by the Estimated Adjustment Amount, and if the Estimated Adjustment Amount is a negative number, the Merger Consideration will be decreased by the absolute value of the Estimated Adjustment Amount.

      Section 2.5 Adjustment Amount.

          (a) As soon as reasonably practicable following the Closing Date, and in any event within ninety (90) calendar days thereof, Acquiror shall prepare and deliver to Holdings (i) a consolidated balance sheet of the Company and its Subsidiaries as of the Closing (the “ Closing Balance Sheet ”) and (ii) a calculation of (A) the Net Working Capital of the Company and its Subsidiaries as set forth on the Closing Balance Sheet (“ Closing Date Net Working Capital ”) and (B) the aggregate amount of the Funded Debt of the Company and its Subsidiaries, if any, that remains unpaid as of the Closing as reflected on the Closing Balance Sheet (the “ Closing Date Funded Debt ”) and (iii) the amount of cash and cash equivalents of the Company and its Subsidiaries as of the Closing as reflected on the Closing Balance Sheet (the “ Closing Date Cash and Cash Equivalents ”). The Closing Balance Sheet shall be prepared in accordance with United States generally accepted accounting principles (“ GAAP ”) consistent with the preparation of the Audited Financial Statements. The Closing Balance Sheet shall be prepared using the same accounting practices, policies and methodologies used in the preparation of the Audited Financial Statements. For the purpose of determining the Closing Date Net Working Capital, the consolidated current assets and current liabilities of the Company and its Subsidiaries shall reflect the value of all tax deductions and other tax benefits resulting from the transactions contemplated hereby (including, without limitation, tax deductions and other tax benefits arising in connection with (A) the vesting, conversion, cancellation and/or exercise of all options to purchase Common Shares (whether or not vested) pursuant to the terms hereof or in connection with the transactions contemplated hereby, (B) any bonuses paid or payable by the Company or its Subsidiaries as a result of the consummation of the transactions contemplated hereby or (C) any fees and expenses that are deductible by the Company or any of its Subsidiaries for income tax purposes and that are payable by the Company or its Subsidiaries in connection with or related to the transactions contemplated hereby (for purposes of this Section 2.5, the parties agree that the fees payable to CIBC World Markets Corp. or its Affiliates and Carlyle or its Affiliates in connection with or related to the transactions contemplated hereby shall not be tax affected)), and the value of such deductions shall be deemed to equal (x) the aggregate amount of such deductions, multiplied by (y) 40%. “ Net Working Capital ” as of any date shall mean (1) the current assets (including

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any Relizon Trade Receivables outstanding as of the Closing Date) of the Company and its Subsidiaries as of such date (excluding cash and cash equivalents and the current assets included in the Excluded Assets), minus (2) the consolidated current liabilities (including any Relizon Trade Payables outstanding as of the Closing Date) of the Company and its Subsidiaries as of such date (excluding (x) the current portion of Funded Debt, (y) any obligations in respect of the capitalized lease listed on Schedule 1.1 and (z) the current liabilities included in the Excluded Liabilities). For avoidance of doubt, the Net Working Capital shall not include or reflect any Excluded Assets, any Excluded Liabilities or any liabilities or obligations assumed by Relizon pursuant to Section 6.3.

          (b) If Holdings shall disagree with the calculation of the Closing Date Net Working Capital, the Closing Date Funded Debt and the Closing Date Cash and Cash Equivalents, it shall notify Acquiror of such disagreement in writing, setting forth in reasonable detail the particulars of such disagreement, within thirty (30) days after its receipt of the Closing Balance Sheet. In the event that Holdings does not provide such a notice of disagreement within such thirty (30) day period, Holdings shall be deemed to have accepted the Closing Balance Sheet and the calculation of the Closing Date Net Working Capital, the Closing Date Funded Debt and the Closing Date Cash and Cash Equivalents delivered by Acquiror, which shall be final, binding and conclusive for all purposes hereunder. In the event any such notice of disagreement is timely provided, Acquiror and Holdings shall use commercially reasonable efforts for a period of thirty (30) days (or such longer period as they may mutually agree) to resolve any disagreements with respect to the calculation of the Closing Date Net Working Capital, the Closing Date Funded Debt and the Closing Date Cash and Cash Equivalents. If, at the end of such period, they are unable to resolve such disagreements, then KPMG LLP (or such other independent accounting firm of recognized national standing as may be mutually selected by Acquiror and Holdings) (the “ Auditor ”) shall resolve any remaining disagreements. The Auditor shall determine as promptly as practicable, but in any event within thirty (30) days of the date on which such dispute is referred to the Auditor, whether the Closing Balance Sheet was prepared in accordance with the standards set forth in Section 2.5(a) and (only with respect to the remaining disagreements submitted to the Auditor) whether and to what extent (if any) the Closing Date Net Working Capital, the Closing Date Funded Debt and the Closing Date Cash and Cash Equivalents requires adjustment. The fees and expenses of the Auditor shall be paid one-half by Acquiror and one-half by Holdings as a Holder Allocable Expense pursuant to Section 2.6. The determination of the Auditor shall be final, conclusive and binding on the parties. The date on which the Closing Date Net Working Capital, the Closing Date Funded Debt and the Closing Date Cash and Cash Equivalents is finally determined in accordance with this Section 2.5(b) is hereinafter referred as to the “ Determination Date .”

          (c) The “ Adjustment Amount ,” which may be positive or negative, shall mean (i) the Closing Date Net Working Capital minus the Estimated Closing Date Net Working Capital, plus (ii) the Estimated Funded Debt minus the Closing Date Funded Debt, plus (iii) the Closing Date Cash and Cash Equivalents minus the Estimated Cash and Cash Equivalents. If the Adjustment Amount is a positive number, then the Merger Consideration will be increased by the Adjustment Amount, and if the Adjustment Amount is a negative number, the Merger Consideration will be decreased by the absolute value of the Adjustment Amount.

          (d)  Working Capital Escrow . Notwithstanding the foregoing provisions of this Article II, on the Closing Date, Two Million Dollars ($2,000,000) of the Merger Consideration (the “ Working Capital Escrow Amount ”) otherwise payable to the holders of Common Shares and Options listed on Schedule 2.5 (the “ Escrow Participating Holders ”) shall be paid by Acquiror to Deutsche Bank AG, as escrow agent of the parties hereto (the “ Escrow Agent ”) to be held in escrow pending determination of the Adjustment Amount. The Working Capital Escrow Amount shall be held and invested by the Escrow Agent in accordance with the terms of an escrow agreement in the form attached hereto as Annex D hereto (the “ Escrow Agreement ”). Upon final determination of the Adjustment

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Amount in accordance with Section 2.5(b) hereof, each of Acquiror and Holdings shall execute joint written instructions to the Escrow Agent instructing the Escrow Agent to disburse the Working Capital Escrow Amount as set forth in this Section 2.5(d). If the Adjustment Amount is a positive number, then, promptly following the Determination Date, and in any event within five (5) Business Days of the Determination Date, (i) the Escrow Agent shall pay to the Escrow Participating Holders (pro rata, in accordance with their respective Applicable Percentages) the Working Capital Escrow Amount, together with all interest earned thereon, and (ii) Acquiror shall pay to the Escrow Participating Holders (pro rata, in accordance with their respective Applicable Percentages) the Adjustment Amount, as finally determined, together with interest thereon from the Closing Date to the date of payment at the rate of interest published in the “Money Rates” column of the Eastern Edition of The Wall Street Journal (or the average of such rates if more than one rate is indicated) on the Closing Date. If the Adjustment Amount is a negative number, then, promptly following the Determination Date, and in any event within five (5) Business Days of the Determination Date, (A) the Escrow Agent shall pay to Acquiror out of the Working Capital Escrow Amount an amount equal to the absolute value of the Adjustment Amount, together with all interest earned on the absolute value of the Adjustment Amount, and (B) if the absolute value of the Adjustment Amount is less than the Working Capital Escrow Amount, the Escrow Agent shall pay to the Escrow Participating Holders (pro rata, in accordance with their respective Applicable Percentages) the balance of the Working Capital Escrow Amount, together with any interest earned thereon. In no event shall Holdings or any holder of Common Shares and/or Options have any liability under this Section 2.5 in excess of such holders’ allocable share of the Working Capital Escrow Amount. Notwithstanding the foregoing, any distributions to the holders of Options pursuant to this Section 2.5(d) shall be net of the amount of any taxes required to be withheld from such distributions under applicable law, and the amounts so withheld shall be paid over to the Company for payment by the Company to the applicable Governmental Authority as required by law. In no event shall Acquiror be entitled to payment pursuant to this Section 2.5(d) of any amount in excess of the Working Capital Escrow Amount, plus all interest earned thereon.

          (e)  Indemnification Escrow . Notwithstanding the foregoing provisions of this Article II, on the Closing Date, Ten Million Dollars ($10,000,000) of the Merger Consideration (the “ Indemnification Escrow Amount ” and, together with the Working Capital Escrow Amount, the “ Escrow Amount ”) otherwise payable to the Escrow Participating Holders shall be paid by Acquiror to the Escrow Agent to be held in escrow to serve as the sole source of payment of claims for indemnification pursuant to Section 12.2(a). The Indemnification Escrow Amount shall be held and invested by the Escrow Agent in accordance with the terms of the Escrow Agreement, which shall specify that the funds held therein (if any) shall be released to the Escrow Participating Holders on the first Business Day following the date that is eighteen (18) months after the Closing Date; provided , however , that if any claim by an Indemnified Party for reimbursement pursuant to Article XII shall have been asserted pursuant to this Agreement and at that time remain pending, the funds on deposit released to Escrow Participating Holders shall be the amount of funds then on deposit minus the aggregate amount of claims that have been so asserted and remain pending.

      Section 2.6 Holder Allocable Expenses. On or prior to the Closing Date, Holdings will provide to Acquiror an estimate (which estimate shall include such reserves as Holdings determines in good faith to be appropriate for any Holder Allocable Expenses that are not then known or determinable) of the following fees and expenses that may be incurred by Holdings on behalf of the Company and the holders of the Common Shares and/or Options in connection with the preparation, negotiation and execution of this Agreement and the consummation of the transactions contemplated hereby: (a) the fees and disbursements of special outside counsel to the Company and/or Holdings incurred in connection with the transactions contemplated hereby, (b) the fees and expenses of any other agents, advisors, consultants and experts employed by the Company and/or Holdings in connection with the Merger, (c) if necessary, one-half of the fees and expenses of the Auditor and (d) the expenses of Holdings incurred in

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its capacity as Holder Representative (the “ Holder Allocable Expenses ”). On the Closing Date, Acquiror shall pay to Holdings cash in the amount of such estimated Holder Allocable Expenses and Holdings shall use such cash to pay the Holder Allocable Expenses. In no event will Holdings (or, following the Effective Time of the Merger, the Surviving Corporation and its Affiliates) be responsible for payment of Holder Allocable Expenses in excess of the cash amounts paid to Holdings by Acquiror under this Section 2.6.

ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     The Company represents and warrants to Acquiror and Merger Sub as of the date of this Agreement as follows:

      Section 3.1 Corporate Organization of the Company. The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware and has the corporate power and authority to own or lease its properties and to conduct its business as it is now being conducted. The copies of the Certificate of Incorporation and Bylaws of the Company previously made available by the Company to Acquiror are true, correct and complete. The Company is duly licensed or qualified and in good standing as a foreign corporation in each jurisdiction in which the ownership of its property or the character of its activities is such as to require it to be so licensed or qualified, except where the failure to be so licensed or qualified, individually or in the aggregate, has not had and would not be reasonably expected to have either (i) a material adverse effect on the ability of the Company to enter into this Agreement or consummate the transactions contemplated hereby or (ii) a Company Material Adverse Effect.

      Section 3.2 Subsidiaries. The Subsidiaries of the Company are set forth on Schedule 3.2 attached hereto. The Subsidiaries have been duly incorporated, formed or organized and are validly existing in good standing under the laws of their state of incorporation, formation or organization and have the power and authority to own or lease their properties and to conduct their business as it is now being conducted. The Company has previously provided to Acquiror copies of the organizational documents of its Subsidiaries. Such copies are true, correct and complete. Each Subsidiary is duly licensed or qualified and in good standing as a foreign corporation (or other entity, if applicable) in each jurisdiction in which its ownership of property or the character of its activities is such as to require it to be so licensed or qualified, except where the failure to be so licensed or qualified has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

      Section 3.3 Capitalization of the Company.

          (a) The authorized capital stock of the Company consists of 78,300,000 shares of Company Common Stock, of which 63,914,812 are issued and outstanding. All of the issued and outstanding shares of Company Common Stock have been duly authorized and validly issued and are fully paid and nonassessable. There are no shares of Company Common Stock held in the treasury of the Company. Other than the Company Common Stock, there are no outstanding bonds, debentures, notes or other indebtedness or securities of the Company having the right to vote on any matter on which the stockholders of the Company may vote.

          (b) Except for the options to purchase Common Shares held by the persons set forth on Schedule 3.3 , the Company has not granted any, and there are no, outstanding options, warrants, rights or other securities convertible into or exchangeable or exercisable for shares of the Company’s capital stock, any other commitments or agreements providing for the issuance of additional shares, the sale of treasury shares, or for the repurchase or redemption of shares of Company Common Stock, and there are

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no agreements of any kind which may obligate the Company to issue, purchase, redeem or otherwise acquire any of its capital stock. There are no stock appreciation rights attached to any Options.

      Section 3.4 Capitalization of Subsidiaries. The outstanding shares of capital stock of each of the Company’s Subsidiaries have been duly authorized and validly issued and are fully paid and nonassessable. The Company or one or more of its Subsidiaries own of record and beneficially all the issued and outstanding shares of capital stock or other equity securities of or other ownership interests in the Company’s Subsidiaries free and clear of any Liens other than Permitted Liens. There are no outstanding options, warrants, rights or other securities exercisable or exchangeable for any capital stock or other equity securities of or other ownership interests in the Company’s Subsidiaries, any other commitments or agreements providing for the issuance of additional shares, the sale of treasury shares, or for the repurchase or redemption of shares of such Subsidiaries’ capital stock or other equity securities or ownership interests, or any agreements of any kind which may obligate any Subsidiary of the Company to issue, purchase, register for sale, redeem or otherwise acquire any of its capital stock or other equity securities or ownership interests.

      Section 3.5 Due Authorization.

          (a) The Company has all requisite corporate power and authority to execute and deliver this Agreement and each other agreement and document contemplated hereby to which the Company is or will be a party (such other agreements and documents, collectively, the “ Company Transaction Documents ”) and to perform all obligations to be performed by it hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and the Company Transaction Documents, the performance by the Company of its obligations hereunder and thereunder and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized and approved by the Board of Directors of the Company, and no other corporate proceeding on the part of the Company is necessary to authorize this Agreement or the Company Transaction Documents, the performance by the Company of its obligations hereunder and thereunder or the consummation of the transactions contemplated hereby and thereby. This Agreement has been duly and validly executed and delivered by the Company and constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors’ rights generally and subject, as to enforceability, to general principles of equity.

          (b) The affirmative vote of the holders of a majority of the shares of Company Common Stock outstanding on the record date of such vote is the only vote of the holders of any class or series of the capital stock of the Company necessary (under applicable law or otherwise) to approve this Agreement and the Merger.

      Section 3.6 No Conflict. Except as set forth in Schedule 3.6 , the execution and delivery of this Agreement and the Company Transaction Documents by the Company, the performance of its obligations hereunder and thereunder and the consummation of the transactions contemplated hereby and thereby does not and will not conflict with, violate any provision of, or result in the breach of, (i) the Certificate of Incorporation, Bylaws or other organizational documents of the Company or any of its Subsidiaries or (ii) any applicable law, rule or regulation of any governmental body, or any agreement, indenture or other instrument to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries may be bound, or of any order, judgment or decree applicable to any of them, or result in a breach or default under or terminate or result in the termination of any such agreement, indenture or instrument, or result in the creation of any Lien upon any of the properties or assets of the Company or any of its Subsidiaries, or constitute an event which, after notice or lapse of time

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or both, would result in any such violation, breach, default acceleration, termination or creation of a Lien or result in a violation or revocation of any required license, permit or approval from any Governmental Authority or other Person, except, with respect to clause (ii), to the extent that the occurrence of any of the foregoing would not have or be reasonably expected to have either (a) a material adverse effect on the ability of the Company to enter into and perform its obligations under this Agreement or the Company Transaction Documents, or (b) a Company Material Adverse Effect.

      Section 3.7 Financial Statements. Attached as Schedule 3.7 hereto are (a) the audited consolidated balance sheet and statements of operations, cash flow and stockholders’ equity of the Company and its consolidated Subsidiaries (excluding the Excluded Business) as of, and for the period ended, December 31, 2003, together with the auditor’s report thereon (the “ Audited Financial Statements ”), (b) an unaudited consolidated balance sheet and statements of operations, cash flow and stockholders’ equity of the Company and its consolidated Subsidiaries (excluding the Excluded Business) as of, and for the period ended, June 30, 2004 (the “ Interim Financial Statements ” and together with the Audited Financial Statements, the “ Financial Statements ”). Each of the Financial Statements has been prepared based on the books and records of the Company and its Subsidiaries in accordance with GAAP applied on a consistent basis throughout the periods covered thereby (except as otherwise stated in the footnotes or the audit opinion related thereto), and presents fairly, in all material respects, the consolidated financial position and results of operations of the Company and its consolidated Subsidiaries (other than the Excluded Business) at and as of the dates stated in such financial statements (except in the case of Interim Financial Statements for the absence of footnotes and other presentation items and for normal year-end adjustments).

      Section 3.8 Subsequent Events. Except as set forth in Schedule 3.8 , since June 30, 2004 the Company and its Subsidiaries have operated in the ordinary course of business, consistent with past practice, and there has not been any Company Material Adverse Effect. Without limiting the foregoing, and except as set forth in Schedule 3.8 , between June 30, 2004 and the date of this Agreement, none of the following has occurred:

          (a) neither the Company nor any of its Subsidiaries has sold, leased, transferred, or assigned any material assets other than in the ordinary course of business nor has any such entity sold assets (other than assets consisting of inventory or similar assets typically sold in the ordinary course of business of the Company and its Subsidiaries) in an amount exceeding $200,000 individually or $400,000 in the aggregate;

          (b) no Lien (other than a Permitted Lien) has been imposed upon any of the assets of the Company or any of its Subsidiaries;

          (c) neither the Company nor any of its Subsidiaries has made any capital expenditure (or series of related capital expenditures) outside the ordinary course of business involving more than $50,000 individually or $100,000 in the aggregate;

          (d) neither the Company nor any of its Subsidiaries has made any capital investment in, any loan to, or any acquisition of the securities or assets of, any other Person (other than the Company or any of its Subsidiaries) involving more than $50,000 individually or outside the ordinary course of business;

          (e) neither the Company nor any of its Subsidiaries has issued any note, bond, or other debt security or created, incurred, assumed, or guaranteed any Liability for borrowed money or capitalized lease Contract either involving more than $50,000 individually or $100,000 in the aggregate;

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          (f) neither the Company nor any of its Subsidiaries has delayed or postponed for more than thirty (30) days past its schedule due date the payment of accounts payable or other liabilities either involving more than $150,000 in the aggregate or outside the ordinary course of business (other than with respect to amounts disputed in good faith);

          (g) neither the Company nor any of its Subsidiaries has canceled, compromised or released any Action (or series of related Actions) either involving more than $50,000 or outside the ordinary course of business;

          (h) there has been no change made or authorized to the Certificate of Incorporation or Bylaws of the Company or to the comparable organizational documents of any of the Company’s Subsidiaries;

          (i) neither the Company nor any of its Subsidiaries has issued, sold, or otherwise disposed of any of its capital stock or other equity securities or ownership interests (other than the issuance of options to employees, officers, directors or consultants of the Company and its Subsidiaries or the issuance of shares of capital stock upon the exercise of such options);

          (j) neither the Company nor any of its Subsidiaries has declared, set aside, or paid any dividend or made any distribution with respect to its capital stock or other equity securities or ownership interests (whether in cash or in kind) or redeemed, purchased, or otherwise acquired any of its capital stock or other equity securities or ownership interests (other than any dividend by any Subsidiary of the Company paid to the Company or another Subsidiary of the Company);

          (k) neither the Company nor any of its Subsidiaries has (i) made any loan to any director, officer or employee, or (ii) entered into any other transaction with any of its directors, officers, or employees, other than the hiring of any employees or the payment or provision of compensation or benefits in the ordinary course of business;

          (l) neither the Company nor any of its Subsidiaries has entered into any employment, collective bargaining, or similar Contract or modified the terms of any existing such Contract;

          (m) except as required by applicable law or any Employee Plan, neither the Company nor any of its Subsidiaries has committed to pay any bonus or granted any increase in the base compensation made any other change in employment terms of any director, officer or employee thereof outside the ordinary course of business;

          (n) except as required by applicable law, any Employee Plan or otherwise in the ordinary course of business, neither the Company nor any of its Subsidiaries has adopted, amended, modified, or terminated any bonus, profit-sharing, incentive, severance, or similar Contract for the benefit of any of its directors, officers, or employees (or taken any such action with respect to any other Employee Plans (as hereinafter defined)); and

          (o) neither the Company nor any of its Subsidiaries has made or pledged to make any charitable contribution either involving more than $50,000 (individually or in the aggregate) or outside the ordinary course of business.

      Section 3.9 Undisclosed Liabilities. Except as set forth on Schedule 3.9 neither the Company nor any of its Subsidiaries has any liability, whether known or unknown, absolute or contingent, accrued or unaccrued, of the type that would be required to be reflected on a balance sheet of

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the Company prepared as of the date hereof in accordance with GAAP, except for (a) liabilities reflected in the Interim Financial Statements or any notes thereto, (b) liabilities which have arisen after June 30, 2004 in the ordinary course of business or (c) liabilities that will be accrued or reserved for on the Closing Balance Sheet.

      Section 3.10 Contracts; No Defaults.

          (a)  Schedule 3.10 contains a listing of all Contracts described in clauses (i) through (xi) below to which, as of the date hereof, the Company or any of its Subsidiaries is a party, excluding Excluded Contracts. True, correct and complete copies of Contracts referred to in clauses (i) through (xi) below have been delivered to or made available to Acquiror or its agents or representatives.

               (i) Each Contract that involves performance of services or delivery of goods and/or materials by the Company or any of its Subsidiaries of an amount or value in excess of (A) $250,000 in the case of any Contract for the provision of print production services or (B) $500,000 in the case of any Contract for the provision of data base hosting or marketing products or services;

               (ii) Each note, debenture, other evidence of indebtedness, guarantee, loan, credit or financing agreement or instrument or other contract for money borrowed, including any agreement or commitment for future loans, credit or financing;

               (iii) Each Contract for the acquisition of any Person or any business unit thereof or the disposition of any material assets of the Company or its subsidiaries, in each case involving payments in excess of $100,000 in any calendar year or $500,000 in the aggregate;

               (iv) Each lease, rental or occupancy agreement, license, installment and conditional sale agreement, and other Contract affecting the ownership of, leasing of, title to, use of, or any leasehold or other interest in any real or personal property and involving aggregate payments in excess of $250,000 in any calendar year or $500,000 in the aggregate;

               (v) Each material licensing agreement with respect to Intellectual Property (including any third party software or software reseller license or agreement);

               (vi) Each joint venture Contract, partnership agreement, or limited liability company agreement;

               (vii) Each Contract requiring capital expenditures after the date hereof in an amount in excess of $175,000 in any calendar year;

               (viii) Each Contract containing an express obligation of the Company or any Subsidiary not to compete with any business;

               (ix) Each Contract with any stockholder of the Company or any of their Affiliates (other than the Company and its Subsidiaries);

               (x) Each Contract for the employment of any individual on a full-time, part-time, consulting, or other basis providing annual compensation in excess of $150,000 or providing change in control benefits (other than oral understandings or agreements with employees at will concerning compensation and benefits and which do not include change of

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control benefits that differ materially from those offered generally to similarly situated at will employees of the Company or its Subsidiaries); and

               (xi) Each Contract under which the Company or any of its Subsidiaries has advanced or loaned any amount to any director, officer, employee or stockholder of the Company or any of its Subsidiaries.

          (b) Except as set forth on Schedule 3.10 , all the Contracts listed pursuant to Section 3.10(a) are (i) in full force and effect and (ii) represent the legal, valid and binding obligations of the Company or one of its Subsidiaries party thereto and, to the knowledge of the Company, represent the legal, valid and binding obligations of the other parties thereto. Except as set forth on Schedule 3.10 , neither the Company nor any of its Subsidiaries party thereto nor any other party thereto is in breach of or default under any such Contract.

      Section 3.11 Machinery, Equipment and Other Tangible Property. Except as set forth on Schedule 3.11 , the Company or its Subsidiaries own and have good title to, or a valid leasehold interest in, all material buildings, machinery, equipment, and other tangible assets (other than machinery, equipment and other tangible property included within the Excluded Assets) (a) shown on the Interim Financial Statements, or acquired after the date thereof and (b) necessary for the conduct of their business as currently conducted, in each case free and clear of all Liens other than Permitted Liens, except for properties and assets disposed of in the ordinary course of business since the date of the Interim Financial Statements. Each such material tangible asset is in good operating condition (subject to normal wear and tear) and is suitable for the purposes for which it is currently used, except as would not be reasonably expected to have a Company Material Adverse Effect.

      Section 3.12 Intellectual Property.

          (a)  Schedule 3.12(a) lists each patent, registered trademark, registered service mark or trade name, registered copyright or mask work (including any registrations or applications for registrations of any of the foregoing), excluding Intellectual Property included within the Excluded Assets, held by the Company or any of its Subsidiaries as of the date hereof.

          (b) Except as set forth on Schedule 3.12(b) , to the knowledge of the Company, (i) the Company or one of its Subsidiaries has good title to each material item of Intellectual Property owned by it, free and clear of any Lien other than Permitted Liens, and (ii) the Company or one of its Subsidiaries owns or has the right to use pursuant to license, sublicense, agreement or permission all material items of Intellectual Property used in the operation of the business of the Company and any of its Subsidiaries, as presently conducted.

          (c) All material Intellectual Property required to be listed on Schedule 3.12(a) are currently in compliance with all formal legal requirements (including the timely post-registration filing of affidavits of use and incontestability and renewal applications), are, to the knowledge of the Company, valid and enforceable, and are not subject to any maintenance fees or taxes or actions falling due within ninety (90) days after the Closing Date.

          (d) The Company has delivered or made available to Acquiror correct and complete copies of written documentation evidencing registration of each item of Intellectual Property required to be listed on Schedule 3.12(a) . With respect to each item of Intellectual Property required to be listed on Schedule 3.12(a) :

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               (i) the item is not currently, and since November 2, 2001 has not been, involved in any Action opposing or se