Common use of Conduct of Business by Company Clause in Contracts

Conduct of Business by Company. Pending the Closing Company agrees that, between the date of this Agreement and the Effective Time, unless Parent shall otherwise agree in writing, and except as a result of entering into this Agreement (x) the respective businesses of Company and the Company Subsidiaries shall be conducted only in, and Company and the Company Subsidiaries shall not take any action except in, the ordinary course of business consistent with past practice and (y) Company shall use all reasonable efforts to keep available the services of such of the current officers, significant employees and consultants of Company and the Company Subsidiaries and to preserve the current relationships of Company and the Company Subsidiaries with such of the corporate partners, customers, suppliers and other persons with which Company or any Company Subsidiary has significant business relations in order to preserve substantially intact its business organization. By way of amplification and not limitation, neither Company nor any Company Subsidiary shall, between the date of this Agreement and the Effective Time, directly or indirectly, do, or agree to do, any of the following without the prior written consent of Parent and except as a result of entering into this Agreement: (a) amend or otherwise change its certificate of incorporation or bylaws or equivalent organizational documents; (b) issue, sell, pledge, dispose of, grant, transfer, lease, license, guarantee or encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license or encumbrance of, (i) any shares of capital stock of Company or any Company Subsidiary of any class, or securities convertible into or exchangeable or exercisable for any shares of such capital stock, or any options, warrants or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of Company or any Company Subsidiary, other than (A) the issuance of shares of Company Common Stock pursuant to the exercise of stock options theretofore outstanding as of the date of this Agreement or (B) the issuance of options to purchase up to 250,000 shares of Company Common Stock under the Company's 1999 Stock Incentive Plan, 200,000 shares of which may be issued to newly hired management employees and 50,000 shares of which may be issued to existing non-executive employees, or (ii) any property or assets of Company or any Company Subsidiary except entering into alliance agreements or providing products and services in the ordinary course of business consistent with past practice; (i) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets) any interest in any corporation, partnership, other business organization or person or any division thereof; (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations of any person (other than Company and Company Subsidiaries) for borrowed money or make any loans or advances, other than routine employee loans to employees other than Company officers (not to exceed $1,000 to any individual), material to the business, assets, liabilities, financial condition or results of operations of Company and the Company Subsidiaries, taken as a whole, other than in the ordinary course of business consistent with past practice; (iii) terminate, cancel or request any material change in, or agree to any material change in, any Company Material Contract or other License Agreement; (iv) make or authorize any capital expenditure, other than capital expenditures in the ordinary course of business consistent with past practice that have been budgeted for fiscal year 1999 and disclosed in writing to Parent and that are not, in the aggregate, in excess of $3,000,000 for Company and the Company Subsidiaries taken as a whole; or (v) enter into or amend any contract, agreement, commitment or arrangement that, if fully performed, would not be permitted under this Section 6.01(c); (d) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock, except that any Company Subsidiary may pay dividends or make other distributions to Company or any other Company Subsidiary; (e) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; (f) amend or change the period (or permit any acceleration, amendment or change unless required pursuant to the terms of existing agreements of Company previously provided to Parent) of exercisability of options granted under the Company Stock Plans or authorize cash payments in exchange for any Company Stock Options granted under any of such plans; (g) amend the terms of, repurchase, redeem or otherwise acquire, or permit any Company Subsidiary to repurchase, redeem or otherwise acquire, any of its securities or any securities of any Company Subsidiary or propose to do any of the foregoing; (h) other than in the ordinary course of business consistent with past practices or pursuant to existing agreements of Company previously provided to Parent increase the compensation payable or to become payable to its directors, officers, consultants or employees, grant any rights to severance or termination pay to, or enter into any employment or severance agreement which provides benefits upon a change in control of Company that would be triggered by the Merger with, any director, officer, consultant or other employee of Company or any Company Subsidiary who is not currently entitled to such benefits from the Merger, establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer, consultant or employee of Company or any Company Subsidiary, except to the extent required by applicable Law or the terms of a collective bargaining agreement, or enter into or amend any contract, agreement, commitment or arrangement between Company or any Company Subsidiary and any of Company's directors, officers, consultants or employees; (i) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction in the ordinary course of business and consistent with past practice of liabilities reflected or reserved against on the consolidated balance sheet of Company and the consolidated the Company Subsidiaries dated as of March 31, 1999 included in Company's quarterly report on Form 10-Q for the period then ended (the "Company Balance Sheet") and only to the extent reflected or to the extent of such reserves or incurred in the ordinary course of business since March 31, 1999; (j) make any change with respect to Company's accounting policies, principles, methods or procedures, including, without limitation, revenue recognition policies, other than as required by U.S. GAAP; (k) make any material Tax election or settle or compromise any material Tax liability; or (l) authorize or enter into any formal or informal agreement or otherwise make any commitment to do any of the foregoing or to take any action which would make any of the representations or warranties of Company contained in this Agreement untrue or incorrect in any material respect or result in any of the conditions to the Merger set forth herein not being satisfied.

Conduct of Business by Company. Pending During the Closing Company agrees that, between period from the date of this Agreement and continuing until the earlier of the termination of this Agreement pursuant to its terms or the Effective Time, unless Company and each of its subsidiaries shall, except to the extent that Parent shall otherwise agree consent in writing, carry on its business, in the usual, regular and except ordinary course, in substantially the same manner as a result of entering into this Agreement (x) the respective businesses of Company heretofore conducted and the Company Subsidiaries shall be conducted only inin compliance with all applicable laws and regulations, pay its debts and taxes when due subject to good faith disputes over such debts or taxes, pay or perform other material obligations when due, and Company and the Company Subsidiaries shall not take any action except in, the ordinary course of business use its commercially reasonable efforts consistent with past practice practices and policies to (yi) Company shall use all reasonable efforts to preserve intact its present business organization, (ii) keep available the services of such of the current officers, significant its present officers and employees and consultants of Company and the Company Subsidiaries and to (iii) preserve the current its relationships of Company and the Company Subsidiaries with such of the corporate partners, customers, suppliers suppliers, distributors, licensors, licensees, and other persons others with which Company or any Company Subsidiary it has significant business relations dealings. In addition, except as permitted by the terms of this Agreement, and except as provided in order to preserve substantially intact its business organization. By way Section 4.1 of amplification and not limitationthe Company Schedule, neither Company nor any Company Subsidiary shallwithout the prior written consent of Parent, between during the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement pursuant to its terms or the Effective Time, directly or indirectly, do, or agree to do, Company shall not do any of the following without and shall not permit its subsidiaries to do any of the prior written consent of Parent and except as a result of entering into this Agreementfollowing: (a) amend or otherwise change its certificate of incorporation or bylaws or equivalent organizational documents; (b) issue, sell, pledge, dispose of, grant, transfer, lease, license, guarantee or encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license or encumbrance of, (i) any shares of capital stock of Company or any Company Subsidiary of any class, or securities convertible into or exchangeable or exercisable for any shares of such capital stock, or any options, warrants or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of Company or any Company Subsidiary, other Other than (A) the issuance of shares of Company Common Stock pursuant to the exercise terms of stock options theretofore outstanding agreements or policies in existence as of the date of this Agreement as they apply to the transactions contemplated by this Agreement, waive any stock repurchase rights, accelerate, amend or (B) change the issuance period of exercisability of options to purchase up to 250,000 shares of Company Common Stock under the Company's 1999 Stock Incentive Plan, 200,000 shares of which may be issued to newly hired management employees and 50,000 shares of which may be issued to existing non-executive employeesor restricted stock, or (ii) reprice options granted under any property employee, consultant, director or assets other stock plans or authorize cash payments in exchange for any options granted under any of Company or any Company Subsidiary except entering into alliance agreements or providing products and services in the ordinary course of business consistent with past practicesuch plans; (ib) acquire (including, without limitation, by merger, consolidationGrant any severance or termination pay to any officer or employee except pursuant to written agreements outstanding, or acquisition of stock policies existing, on the date hereof and as previously disclosed in writing or assets) made available to Parent, or adopt any interest new severance plan, or amend or modify or alter in any corporationmanner any severance plan, partnership, other business organization agreement or arrangement existing on the date hereof; (c) Transfer or license to any person or entity or otherwise extend, amend or modify any division thereof; (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorserights to the Company Intellectual Property, or otherwise as an accommodation become responsible for, the obligations of enter into grants to transfer or license to any person (other than Company and Company Subsidiaries) for borrowed money or make any loans or advances, other than routine employee loans to employees other than Company officers (not to exceed $1,000 to any individual), material to the business, assets, liabilities, financial condition or results of operations of Company and the Company Subsidiaries, taken as a wholefuture patent rights, other than in the ordinary course of business consistent with past practice; practices, provided that in no event shall Company license on an exclusive basis or sell any Company Intellectual Property; (iiid) terminateDeclare, cancel set aside or request pay any material change individends on or make any other distributions (whether in cash, stock, equity securities or property) in respect of any capital stock or split, combine or reclassify any capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for any capital stock; (e) Except as set forth in Section 4.1(h) of the Company Schedule with respect to mergers among Company and any of its direct or indirect subsidiaries, acquire or purchase, redeem or otherwise acquire, directly or indirectly, any shares of capital stock of Company or its subsidiaries, except repurchases of unvested shares at cost in connection with the termination of the employment relationship with any employee pursuant to stock option or purchase agreements in effect on the date hereof; (f) Issue, deliver, sell, authorize, pledge or otherwise encumber or propose any of the foregoing with respect to, any shares of capital stock or any securities convertible into shares of capital stock, or subscriptions, rights, warrants or options to acquire any shares of capital stock or any securities convertible into shares of capital stock, or enter into other agreements or commitments of any character obligating it to issue any such shares or convertible securities, other than (x) the issuance delivery and/or sale of (i) shares of Company Common Stock pursuant to the exercise of the Warrants or stock options outstanding as of the date of this Agreement, and (ii) shares of Company Common Stock issuable to participants in the ESPP consistent with the terms thereof and (y) the granting of stock options to employees (excluding directors and executive officers), in the ordinary course of business and consistent with past practices, in an amount not to exceed options to purchase (and the issuance of Company Common Stock upon exercise thereof) 600,000 shares in the aggregate; (g) Cause, permit or propose any amendments to the Company Charter Documents (or similar governing instruments of any of its subsidiaries); (h) Except as set forth in Section 4.1(h) of the Company Schedule with respect to mergers among Company and any of its direct or indirect subsidiaries, acquire or agree to acquire by merging or consolidating with, or by purchasing any material change inequity interest in or a portion of the assets of, or by any other manner, any Company Material Contract business or any corporation, partnership, association or other License Agreement; business organization or division thereof, or otherwise acquire or agree to enter into any joint ventures, strategic partnerships or alliances; (ivi) make Sell, lease, license, encumber or authorize otherwise dispose of any capital expenditureproperties or assets except sales of inventory in the ordinary course of business consistent with past practice, except for the sale, lease or disposition (other than capital expenditures through licensing) of property or assets which are not material, individually or in the aggregate, to the business of Company and its subsidiaries; (j) Incur any indebtedness for borrowed money or guarantee any such indebtedness of another person, issue or sell any debt securities or options, warrants, calls or other rights to acquire any debt securities of Company, enter into any "keep well" or other agreement to maintain any financial statement condition or enter into any arrangement having the economic effect of any of the foregoing other than in connection with the financing of ordinary course trade payables consistent with past practice; (k) Adopt or amend any employee benefit plan, policy or arrangement, any employee stock purchase or employee stock option plan, or enter into any employment contract or collective bargaining agreement (other than offer letters and letter agreements entered into in the ordinary course of business consistent with past practice that have been budgeted for fiscal year 1999 and disclosed in writing to Parent and that with employees who are notterminable "at will"), in the aggregate, in excess of $3,000,000 for Company and the Company Subsidiaries taken as a whole; or (v) enter into or amend any contract, agreement, commitment or arrangement that, if fully performed, would not be permitted under this Section 6.01(c); (d) declare, set aside, make or pay any dividend special bonus or other distribution, payable in cash, stock, property or otherwise, with respect special remuneration to any of its capital stockdirector or employee, except that any Company Subsidiary may pay dividends or make other distributions increase the salaries or wage rates or fringe benefits (including rights to Company severance or any other Company Subsidiary; (e) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; (f) amend or change the period (or permit any acceleration, amendment or change unless required pursuant to the terms of existing agreements of Company previously provided to Parentindemnification) of exercisability of options granted under the Company Stock Plans or authorize cash payments in exchange for any Company Stock Options granted under any of such plans; (g) amend the terms of, repurchase, redeem or otherwise acquire, or permit any Company Subsidiary to repurchase, redeem or otherwise acquire, any of its securities or any securities of any Company Subsidiary or propose to do any of the foregoing; (h) other than in the ordinary course of business consistent with past practices or pursuant to existing agreements of Company previously provided to Parent increase the compensation payable or to become payable to its directors, officers, consultants employees or employees, grant any rights to severance or termination pay to, or enter into any employment or severance agreement which provides benefits upon a change in control of Company that would be triggered by the Merger with, any director, officer, consultant or other employee of Company or any Company Subsidiary who is not currently entitled to such benefits from the Merger, establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer, consultant or employee of Company or any Company Subsidiary, except to the extent required by applicable Law or the terms of a collective bargaining agreement, or enter into or amend any contract, agreement, commitment or arrangement between Company or any Company Subsidiary and any of Company's directors, officers, consultants or employeesconsultants; (i) pay, discharge discharge, settle or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), or litigation (whether or not commenced prior to the date of this Agreement) other than the payment, discharge discharge, settlement or satisfaction satisfaction, in the ordinary course of business and consistent with past practice of or in accordance with their terms, or liabilities reflected recognized or reserved against on disclosed in the most recent consolidated balance sheet financial statements (or the notes thereto) of Company and the consolidated included in the Company Subsidiaries dated as of March 31, 1999 included in Company's quarterly report on Form 10-Q for SEC Reports or incurred since the period then ended (the "Company Balance Sheet") and only to the extent reflected or to the extent date of such reserves financial statements, or incurred (ii) waive the benefits of, agree to modify in any manner, terminate, release any person from or knowingly fail to enforce any confidentiality or similar agreement to which Company or any of its subsidiaries is a party or of which Company or any of its subsidiaries is a beneficiary; (m) Make any individual or series of related payments outside of the ordinary course of business in excess of $100,000; (n) Except as set forth in Section 4.1(h) of the Company Schedule or except in the ordinary course of business since March 31consistent with past practice, 1999modify, amend or terminate any material contract or agreement, to which Company or any subsidiary thereof is a party or waive, delay the exercise of, release or assign any material rights or claims thereunder; (jo) Enter into, renew or materially modify any contracts, agreements, or obligations relating to the distribution, sale, license or marketing by third parties of Company's products or products licensed by Company other than new (or material modifications of existing) non-exclusive contracts, agreements or obligations entered into in the usual, regular and ordinary course, in substantially the same manner as heretofor conducted, and renewals of existing nonexclusive contracts, agreements or obligations; (p) Except as required by GAAP, revalue any of its assets or make any change with respect to Company's in accounting policiesmethods, principles, methods principles or procedures, including, without limitation, revenue recognition policies, other than as required by U.S. GAAPpractices; (kq) make Incur or enter into any agreement, contract or commitment requiring Company or any of its subsidiaries to pay in excess of $250,000; (r) Engage in any action that could reasonably be expected to (i) cause the Merger to fail to qualify as a "reorganization" under Section 368(a) of the Code or (ii) interfere with Parent's ability to account for the Merger as a pooling of interests, whether or not (in each case) otherwise permitted by the provisions of this Article IV; (s) Settle any litigation; (t) Make any tax election that, individually or in the aggregate, is reasonably likely to adversely affect in any material Tax election respect the tax liability or tax attributes of Company or any of its subsidiaries or settle or compromise any material Tax income tax liability; or; (lu) authorize or enter into any formal or informal agreement Agree in writing or otherwise make any commitment to do take any of the foregoing or to take any action which would make any of the representations or warranties of Company contained actions described in this Agreement untrue or incorrect in any material respect or result in any of the conditions to the Merger set forth herein not being satisfiedSection 4.1(a) through (t) above.

Conduct of Business by Company. Pending During the Closing Company agrees that, between period from the date of this Agreement and continuing until the Effective earlier of the termination of this Agreement pursuant to its terms or the Appointment Time, unless Company and each of its subsidiaries shall, except to the extent that Parent shall otherwise agree consent in writingwriting (which consent, or refusal to grant consent, shall not unreasonably be delayed), carry on its business in the ordinary course in substantially the same manner as heretofore conducted and in substantial compliance with all applicable laws and regulations, pay its debts and taxes when due subject to good faith disputes over such debts or taxes, pay or perform other material obligations when due subject to good faith disputes over such obligations, and use its commercially reasonable efforts consistent with past practices and policies to (i) preserve intact its present business organization, (ii) keep available the services of its present officers and employees, and (iii) preserve its relationships with customers, suppliers, distributors, licensors, licensees and others with which it has significant business dealings. In addition, Company will promptly notify Parent of any material event involving its business or operations occurring outside the ordinary course of business. In addition, without the prior written consent of Parent (which consent, or refusal to grant consent, shall not unreasonably be delayed), except as permitted or required by this Agreement and except as a result provided in Section 4.01 of entering into the Company Schedule, during the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement pursuant to its terms or the Appointment Time, Company shall not do any of the following and shall not permit its subsidiaries to do any of the following: (xa) Waive any stock repurchase rights, accelerate, amend or change the respective businesses period of Company exercisability of options or restricted stock, or reprice options granted under any employee, consultant, director or other stock plans or authorize cash payments in exchange for any options granted under any of such plans; (b) Grant any severance or termination pay to any officer or employee except pursuant to written agreements outstanding, or policies existing, on the date hereof and as previously disclosed in writing or made available to Parent, or adopt any new severance plan, or amend or modify or alter in any manner any severance plan, agreement or arrangement existing on the date hereof, or grant any equity-based compensation (except as permitted by Section 4.01(f) hereof), whether payable in cash or stock; (c) Except as contemplated by this Agreement, transfer or license to any person or entity or otherwise extend, amend or modify any rights to the Company Subsidiaries shall be conducted only inIntellectual Property, or enter into grants to transfer or license to any person future patent rights, other than non-exclusive licenses granted to end-users in the ordinary course of business and Company consistent with past practice and the Company Subsidiaries shall not take any action except innonexclusive distribution, value added reseller and other commercial agreements entered into in the ordinary course of business consistent with past practice and practices; provided that in no event shall Company (i) license on an exclusive basis or sell any Company Intellectual Property, or (ii) enter into any agreement (w) containing pricing or discounting terms or provisions other than in the ordinary course of business consistent with past practices, (x) requiring Company to use its "best efforts", (y) requiring Company shall use to purchase or provide a minimum amount of products or services with aggregate commitments over the life of all reasonable efforts to keep available such contracts in excess of $2,500,000, or (z) limiting the services of such of the current officers, significant employees and consultants right of Company and to engage in any line of business or to compete with any person; (d) Declare, set aside or pay any dividends on or make any other distributions (whether in cash, stock, equity securities or property) in respect of any capital stock or split, combine or reclassify any capital stock or issue or authorize the Company Subsidiaries and to preserve the current relationships issuance of Company and the Company Subsidiaries with such any other securities in respect of, in lieu of the corporate partnersor in substitution for any capital stock; (e) Purchase, customers, suppliers and other persons with which Company redeem or any Company Subsidiary has significant business relations in order to preserve substantially intact its business organization. By way of amplification and not limitation, neither Company nor any Company Subsidiary shall, between the date of this Agreement and the Effective Timeotherwise acquire, directly or indirectly, do, or agree to do, any of the following without the prior written consent of Parent and except as a result of entering into this Agreement: (a) amend or otherwise change its certificate of incorporation or bylaws or equivalent organizational documents; (b) issue, sell, pledge, dispose of, grant, transfer, lease, license, guarantee or encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license or encumbrance of, (i) any shares of capital stock of Company or its subsidiaries, except repurchases of unvested shares at cost in connection with the termination of the employment relationship with any employee pursuant to stock option or purchase agreements in effect on the date hereof (or any such agreements entered into in the ordinary course consistent with past practice by Company Subsidiary with employees hired after the date hereof); (f) Issue, deliver, sell, authorize, pledge or otherwise encumber or propose any of the foregoing with respect to any class, shares of capital stock or any securities convertible into or exchangeable or exercisable for any shares of such capital stock, or any optionssubscriptions, rights, warrants or other rights of any kind options to acquire any shares of such capital stock or any securities convertible into shares of capital stock, or enter into other agreements or commitments of any other ownership interest (including, without limitation, character obligating it to issue any phantom interest), of Company such shares or any Company Subsidiaryconvertible securities, other than (Ax) the issuance issuance, delivery and/or sale of (i) shares of Company Common Stock pursuant to the exercise of stock options theretofore or warrants outstanding as of the date of this Agreement or Agreement, and (Bii) the issuance of options to purchase up to 250,000 shares of Company Common Stock under issuable to participants in the Company's 1999 Stock Incentive PlanESPP consistent with the terms thereof, 200,000 shares and (y) the granting of which may be issued stock options in the ordinary course of business to newly hired management employees who are not officers in amounts and 50,000 shares with vesting schedules (except that no such option grant shall provide for acceleration upon the consummation of which may be issued to existing non-executive employeesthe Offer, the Merger or (ii) any property or assets other change in control of Company or Parent) which are consistent with past practices in an amount not to exceed 100,000 shares in the aggregate. (g) Cause, permit or submit to a vote of Company's stockholders any amendments to the Company Subsidiary Charter Documents (or similar governing instruments of any of its subsidiaries); (h) Acquire or agree to acquire by merging or consolidating with, or by purchasing any equity interest in or a portion of the assets of, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof, or otherwise acquire or agree to acquire all or substantially all of the assets of any of the foregoing, or purchase any equity interest in any of the foregoing or enter into any joint ventures; (i) Sell, lease, license, encumber or otherwise dispose of any properties or assets except entering into alliance agreements or providing products and services sales of inventory in the ordinary course of business consistent with past practice, and except for the sale, lease, licensing, encumbering or disposition (other than through licensing unless permitted by Section 4.01(c)) of property or assets which are not material, individually or in the aggregate, to the business of Company and its subsidiaries; (ij) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets) any interest in any corporation, partnership, other business organization or person or any division thereof; (ii) incur Incur any indebtedness for borrowed money or guarantee any such indebtedness of another person, issue or sell any debt securities or assumeoptions, guarantee warrants, calls or endorseother rights to acquire any debt securities of Company, enter into any "keep well" or otherwise as an accommodation become responsible for, other agreement to maintain any financial statement condition or enter into any arrangement having the obligations economic effect of any person (of the foregoing other than Company and Company Subsidiaries) for borrowed money or make any loans or advances, other than routine employee loans to employees other than Company officers (not to exceed $1,000 to any individual), material to in connection with the business, assets, liabilities, financial condition or results financing of operations of Company and the Company Subsidiaries, taken as a whole, other than working capital in the ordinary course of business consistent with past practice, provided, that Company may enter into or undertake any of the foregoing transactions to the extent that the aggregate amount of all such liabilities, commitments or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise) shall not exceed $100,000; (k) Adopt or amend any Plan or any employee stock purchase or employee stock option plan; or enter into any employment contract or collective bargaining agreement (iii) terminate, cancel or request any material change in, or agree to any material change in, any Company Material Contract or other License Agreement; (iv) make or authorize any capital expenditure, other than capital expenditures offer letters and letter agreements entered into in the ordinary course of business consistent with past practice that have been budgeted for fiscal year 1999 with newly hired employees who are not officers and disclosed in writing who are terminable "at will"); pay any special bonus or special remuneration to Parent and that are notany director or employee (cash, in the aggregate, in excess of $3,000,000 for Company and the Company Subsidiaries taken as a wholeequity or otherwise); or increase the salaries or wage rates or fringe benefits (v) enter into including rights to severance or amend any contract, agreement, commitment or arrangement that, if fully performed, would not be permitted under this Section 6.01(c); (d) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock, except that any Company Subsidiary may pay dividends or make other distributions to Company or any other Company Subsidiary; (e) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; (f) amend or change the period (or permit any acceleration, amendment or change unless required pursuant to the terms of existing agreements of Company previously provided to Parentindemnification) of exercisability of options granted under the Company Stock Plans or authorize cash payments in exchange for any Company Stock Options granted under any of such plans; (g) amend the terms of, repurchase, redeem or otherwise acquire, or permit any Company Subsidiary to repurchase, redeem or otherwise acquire, any of its securities or any securities of any Company Subsidiary or propose to do any of the foregoing; (h) other than in the ordinary course of business consistent with past practices or pursuant to existing agreements of Company previously provided to Parent increase the compensation payable or to become payable to its directors, officers, consultants employees or employees, grant any rights to severance or termination pay to, or enter into any employment or severance agreement which provides benefits upon a change in control of Company that would be triggered by the Merger with, any director, officer, consultant or other employee of Company or any Company Subsidiary who is not currently entitled to such benefits from the Merger, establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer, consultant or employee of Company or any Company Subsidiary, except to the extent required by applicable Law or the terms of a collective bargaining agreement, or enter into or amend any contract, agreement, commitment or arrangement between Company or any Company Subsidiary and any of Company's directors, officers, consultants or employeesconsultants; (i) payPay, discharge discharge, settle or satisfy any material litigation (whether or not commenced prior to the date of this Agreement) or any material claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge discharge, settlement or satisfaction satisfaction, in the ordinary course of business and consistent or in accordance with past practice their terms, of liabilities reflected recognized or reserved against on disclosed in the consolidated balance sheet most recent financial statements (or the notes thereto) of Company and the consolidated included in the Company Subsidiaries dated as of March 31, 1999 included in Company's quarterly report on Form 10-Q for SEC Reports or incurred since the period then ended (the "Company Balance Sheet") and only to the extent reflected or to the extent date of such reserves or incurred financial statements in the ordinary course of business since March 31consistent with past practices, 1999or (ii) knowingly or intentionally waive the benefits of, agree to modify in any manner, terminate, release any person from or knowingly fail to enforce the confidentiality or nondisclosure provisions of any agreement to which Company or any of its subsidiaries is a party or of which Company or any of its subsidiaries is a beneficiary; (jm) Modify, amend or terminate any Company Contract (except expirations or failures to renew such contracts in accordance with their terms and except for those modifications, amendments or terminations of Company Contracts in the ordinary course and that, in the case of any such amendments or modifications, that would otherwise be permitted under this Section 4.01 if entered into as a new contract) or waive, delay the exercise of, release or assign any material rights or claims thereunder; (n) Except as required by GAAP, revalue any of its assets or make any change in accounting methods, principles or practices; (o) Incur or enter into any agreement, contract, commitment or arrangement or series of related agreements, contracts, commitments or arrangements requiring Company or any of its subsidiaries to pay in excess of $250,000 outside of the ordinary course of business consistent with respect past practices, which payments shall not exceed $1,000,000 in the aggregate; (p) Except as set forth in Section 4.01(p) of the Company Schedule or as permitted by Section 4.01(t) or as required pursuant to Company's the terms of any Company Contract, make any individual or series of related payment outside of the ordinary course of business consistent with past practices in excess of $250,000, which payments shall not exceed $1,000,000 in the aggregate. (q) Make any Tax election or accounting policies, principles, methods or procedures, including, without limitation, revenue recognition policies, other than method change (except as required by U.S. GAAP; (k) make inconsistent with past practice that, individually or in the aggregate, is reasonably likely to adversely affect in any material respect the Tax election liability or Tax attributes of Company or any of its subsidiaries, settle or compromise any material Tax liabilityliability or consent to any extension or waiver of any limitation period with respect to Taxes; (r) engage in any action with the intent to, directly or indirectly, adversely impact or materially delay the consummation of the Offer or the Merger or any of the other transactions contemplated by this Agreement other than to the extent permitted by Section 5.03(b); (s) hire any employee except for employees who are not officers and are hired on an "at-will" basis in the ordinary course of business consistent with past practices and have an annual compensation not in excess of $100,000; (t) other than fees payable to Credit Suisse First Boston Corporation pursuant to the engagement letter referred to in Section 2.17 hereof, make any individual or series of related payments outside of the ordinary course of business (including payments to legal, accounting or other professional service advisors) in excess of $250,000 in the aggregate; or (lu) authorize or enter into any formal or informal agreement Agree in writing or otherwise make any commitment to do take any of the foregoing or to take any action which would make any of the representations or warranties of Company contained actions described in this Agreement untrue or incorrect in any material respect or result in any of the conditions to the Merger set forth herein not being satisfiedSection 4.01(a) through (t) above.

Conduct of Business by Company. Pending Except as contemplated by this Agreement, disclosed in Section 4.1 of the Closing Company agrees thatDisclosure Letter or consented to by Parent in writing, between during the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement pursuant to its terms or the Effective Time, unless Company and each of its subsidiaries shall, carry on its business in the usual, regular and ordinary course in substantially the same manner as heretofore conducted and in material compliance with all applicable laws and regulations, pay its debts and Taxes when due subject to good faith disputes over such debts or Taxes, pay or perform other material obligations when due, commence and diligently pursue the preparation of (together with its independent public accountants) the audit of its financial statements as of and for the year ended December 31, 2000, and use its commercially reasonable efforts consistent with past practices and policies to (i) preserve intact its present business organization, (ii) keep available the services of its present officers and employees and (iii) preserve its relationships with customers, suppliers, distributors, licensors, licensees and others with which it has significant business dealings. In addition, Company will promptly notify Parent shall otherwise agree in writingof any material event involving its business or operations. In addition, except as permitted by the terms of this Agreement and except as a result provided in Section 4.1 of entering into the Company Disclosure Letter, without the prior written consent of Parent, (which consent, or refusal thereof, shall not be unreasonably delayed and, in the case of subsections (m), (r) and (t), which consent shall not be unreasonably withheld) during the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement pursuant to its terms or the Effective Time, Company shall not do any of the following and shall not permit its subsidiaries to do any of the following: (xa) Waive any stock repurchase rights, accelerate, amend or change the respective businesses period of Company exercisability of options or restricted stock, or reprice options granted under any employee, consultant, director or other stock plans or authorize cash payments in exchange for any options granted under any of such plans; (b) Grant any severance or termination pay to any officer or employee except pursuant to written agreements outstanding, or written policies existing, on the date hereof and as previously disclosed in writing or made available to Parent, or adopt any new severance plan, or amend or modify or alter in any manner any severance plan, agreement or arrangement existing on the date hereof, or, except as permitted by Section 4.1(f), grant any equity-based compensation, whether payable in cash or stock; (c) Transfer or license to any person or entity or otherwise extend, amend or modify any rights to the Company Subsidiaries shall be conducted only inIntellectual Property, or enter into any agreements or make other commitments or arrangements to grant, transfer or license to any person future patent rights, other than non-exclusive licenses granted to resellers and Company and the Company Subsidiaries shall not take any action except in, end users in the ordinary course of business consistent with past practice and practices; (yd) Company shall use all reasonable efforts to keep available Declare, set aside or pay any dividends on or make any other distributions (whether in cash, stock, equity securities or property) in respect of any capital stock or split, combine or reclassify any capital stock or issue or authorize the services issuance of such any other securities in respect of, in lieu of the current officersor in substitution for any capital stock; (e) Purchase, significant employees and consultants of Company and the Company Subsidiaries and to preserve the current relationships of Company and the Company Subsidiaries with such of the corporate partners, customers, suppliers and other persons with which Company redeem or any Company Subsidiary has significant business relations in order to preserve substantially intact its business organization. By way of amplification and not limitation, neither Company nor any Company Subsidiary shall, between the date of this Agreement and the Effective Timeotherwise acquire, directly or indirectly, do, or agree to do, any of the following without the prior written consent of Parent and except as a result of entering into this Agreement: (a) amend or otherwise change its certificate of incorporation or bylaws or equivalent organizational documents; (b) issue, sell, pledge, dispose of, grant, transfer, lease, license, guarantee or encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license or encumbrance of, (i) any shares of capital stock of Company or its subsidiaries, except repurchases of unvested shares at cost in connection with the termination of the employment relationship with any employee pursuant to stock option or purchase agreements in effect on the date hereof (or any such agreements entered into in the ordinary course consistent with past practice by Company Subsidiary with employees hired after the date hereof); (f) Issue, deliver, sell, authorize, pledge or otherwise encumber or propose any of the foregoing with respect to any class, shares of capital stock or any securities convertible into or exercisable or exchangeable for shares of capital stock, or exercisable for subscriptions, rights, warrants or options to acquire any shares of such capital stock or any securities convertible into shares of such capital stock, or any options, warrants enter into other agreements or other rights commitments of any kind character obligating it to acquire issue any such shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of Company or any Company Subsidiaryconvertible securities, other than (Ax) the issuance delivery and/or sale of (i) shares of Company Common Stock Shares pursuant to the exercise of stock options theretofore and warrants outstanding as of the date of this Agreement or and (By) the issuance granting of stock options to purchase up to 250,000 shares newly hired non-officer level employees, in the ordinary course of Company Common Stock under business and consistent with the Company's 1999 Stock Incentive Planpast practices after the closing of its initial public offering, 200,000 shares including as to vesting schedules. (g) Cause, permit or propose any amendments to the Company Charter Documents (or similar governing instruments of which may be issued any of its subsidiaries); (h) Acquire or agree to newly hired management employees and 50,000 shares of which may be issued to existing non-executive employeesacquire by merging or consolidating with, or by purchasing any equity interest in or a portion of the assets of, or by any other manner, any business or any corporation, limited liability company, general or limited partnership, business trust, unincorporated association or other business organization, entity or division thereof, or otherwise acquire or agree to acquire all or substantially all of the assets of any of the foregoing, enter into any joint ventures, strategic partnerships or alliances; (iii) Sell, lease, license, encumber, convey, assign, sublicense or otherwise dispose of or transfer any property properties or assets of Company or any Company Subsidiary except entering into alliance agreements or providing products interest therein other than sales and services licenses in the ordinary course of business consistent with past practice, except for the sale, lease or disposition (other than through licensing permitted by clause (c)) of property or assets which are not material, individually or in the aggregate, to the business of Company and its subsidiaries, taken as a whole; modify, amend or terminate any existing material lease, license or contract affecting the use, possession or operation of any such properties or assets; grant or otherwise create or consent to the creation of any material easement, covenant, restriction, assessment or charge affecting any owned property or leased property or any material part thereof; commit any waste or nuisance on any such property; or make any material changes in the construction or condition of any such property; (ij) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets) any interest in any corporation, partnership, other business organization or person or any division thereof; (ii) incur Incur any indebtedness for borrowed money or guarantee any such indebtedness of another person, issue or sell any debt securities or assumeoptions, guarantee warrants, calls or endorseother rights to acquire any debt securities of Company, enter into any "keep well" or otherwise as an accommodation become responsible for, other agreement to maintain any financial statement condition or enter into any arrangement having the obligations economic effect of any person (other than Company and Company Subsidiaries) for borrowed money or make any loans or advancesof the foregoing, other than routine employee loans to employees other than Company officers (not to exceed $1,000 to any individual), material to the business, assets, liabilities, financial condition or results of operations of Company and the Company Subsidiaries, taken as a whole, in each case other than in connection with the financing of ordinary course trade payables, or the collection of business accounts receivable, notes or commercial paper, consistent with past practice; ; (iiik) terminate, cancel Adopt or request any material change in, or agree to any material change in, amend any Company Material Contract Employee Plan; or other License Agreement; enter into any employment contract or collective bargaining agreement (iv) make or authorize any capital expenditure, other than capital expenditures offer letters and letter agreements entered into in the ordinary course of business consistent with past practice that have been budgeted for fiscal year 1999 with employees who are terminable "at will" and disclosed in writing who are not officers of the Company); pay any special bonus or special remuneration to Parent and that are notany director or employee; or increase the salaries or wage rates or fringe benefits (including rights to severance or indemnification) of its directors, officers, employees or consultants except, in the aggregateeach case, in excess of $3,000,000 for Company and as may be required by law, provided, that the Company Subsidiaries taken as a whole; may increase the salaries or (v) enter into or amend any contract, agreement, commitment or arrangement that, if fully performed, would not be permitted under this Section 6.01(c); (d) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any wage rates of its capital stock, except that any Company Subsidiary may pay dividends or make other distributions to Company or any other Company Subsidiary; (e) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; (f) amend or change the period (or permit any acceleration, amendment or change unless required pursuant to the terms of existing agreements of Company previously provided to Parent) of exercisability of options granted under the Company Stock Plans or authorize cash payments in exchange for any Company Stock Options granted under any of such plans; (g) amend the terms of, repurchase, redeem or otherwise acquire, or permit any Company Subsidiary to repurchase, redeem or otherwise acquire, any of its securities or any securities of any Company Subsidiary or propose to do any of the foregoing; (h) other than non-officer level employees in the ordinary course of business consistent with past practices or pursuant to existing agreements of Company previously provided to Parent increase the compensation payable or to become payable to its directors, officers, consultants or employees, grant any rights to severance or termination pay to, or enter into any employment or severance agreement which provides benefits upon a change in control of Company that would be triggered by the Merger with, any director, officer, consultant or other employee of Company or any Company Subsidiary who is not currently entitled to such benefits from the Merger, establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer, consultant or employee of Company or any Company Subsidiary, except to the extent required by applicable Law or the terms of a collective bargaining agreement, or enter into or amend any contract, agreement, commitment or arrangement between Company or any Company Subsidiary and any of Company's directors, officers, consultants or employeespractices; (i) payPay, discharge discharge, settle or satisfy any litigation (whether or not commenced prior to the date of this Agreement) or any material claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge discharge, settlement or satisfaction satisfaction, in the ordinary course of business and consistent with past practice or in accordance with their terms in existence as of liabilities reflected the date hereof, or reserved against on (ii) waive the consolidated balance sheet benefits of, agree to modify in any manner, terminate, release any person from or knowingly fail to enforce any confidentiality or similar agreement to which Company or any of its subsidiaries is a party or of which Company and or any of its subsidiaries is a beneficiary; (m) Make any individual or series of related payments outside of the consolidated ordinary course of business in excess of $100,000; (n) Modify, amend or terminate any material contract or agreement to which Company or any subsidiary thereof is a party or waive, delay the exercise of, release or assign any material rights or claims thereunder; (o) Except as required by GAAP, revalue any of its assets or make any change in accounting methods, principles or practices; (p) Enter into, renew or modify any contracts, agreements or obligations relating to the distribution, sale, license or marketing by third parties of the products of the Company Subsidiaries dated as or any of March 31its subsidiaries, 1999 included in Company's quarterly report on Form 10-Q for or products licensed by the period then ended (the "Company Balance Sheet") and only to the extent reflected or to the extent any of such reserves its subsidiaries, other than nonexclusive contracts, agreements or incurred arrangements entered into in the ordinary course of business since March 31, 1999that can be terminated or cancelled by the Company without penalty or further payment and without more than 60 days' notice; (jq) Engage in any action with the intent to, directly or indirectly, adversely impact or materially delay the consummation of the Merger or any of the other transactions contemplated by this Agreement; or (r) Hire any officer, or hire any non-officer level employee with an annual compensation level in excess of $250,000; (s) Other than (i) fees payable to pursuant to the engagement letter referred to in Section 2.16 hereof and (ii) fees payable to legal, accounting and other professional service advisors as disclosed in Section 4.1(s) of the Company Disclosure Letter, make any change with respect individual or series of related payments outside of the ordinary course of business (including payments to Company's legal, accounting policiesor other professional service advisors) in excess of $250,000 in the aggregate; (t) Incur or enter into any agreement, principlescontract or commitment requiring Company or any of its subsidiaries to pay in excess of $500,000 over the term of such agreement, methods contract or procedures, including, without limitation, revenue recognition policiescommitment, other than as required by U.S. GAAPfor the purchase of inventory or raw materials in the ordinary course of business; (ku) make Engage in any material action that could reasonably be expected to (i) cause the Merger to fail to qualify as a "reorganization" under Section 368(a) of the Code or (ii) interfere with Parent's ability to account for the Merger as a pooling of interests, whether or not (in each case) otherwise permitted by the provisions of this Article IV; (v) Make any Tax election or accounting method change inconsistent with past practice that, individually or in the aggregate, is reasonably likely to adversely affect in any material respect the Tax liability or Tax attributes of Company or any of its subsidiaries, settle or compromise any material Tax liability; orliability or consent to any extension or waiver of any limitation period with respect to Taxes; (lw) authorize or enter into any formal or informal agreement Agree in writing or otherwise make any commitment to do take any of the foregoing or to take any action which would make any of the representations or warranties of Company contained actions described in this Agreement untrue or incorrect in any material respect or result in any of the conditions to the Merger set forth herein not being satisfiedSection 4.1(a) through (v) above.

Conduct of Business by Company. Pending the Closing Company agrees that, between the date of this Agreement and the Effective Time, except as contemplated by this Agreement, unless Parent shall otherwise agree in writing, and except as a result of entering into this Agreement (x) the respective businesses business of Company and the Company Subsidiaries shall be conducted only in, and Company and the Company Subsidiaries shall not take any action except in, the ordinary course of business consistent with past practice and (y) Company shall use all reasonable best efforts to keep available the services of such of the current officers, significant employees and consultants of Company and the Company Subsidiaries and to preserve the current relationships of Company and the Company Subsidiaries with such of the corporate partners, customers, suppliers and other persons with which Company or any Company Subsidiary has significant business relations in order to preserve substantially intact its business organization. By way of amplification and not limitation, neither Company nor any Company Subsidiary shallshall not, between the date of this Agreement and the Effective Time, except as contemplated by this Agreement, directly or indirectly, do, or agree to do, any of the following without the prior written consent of Parent and except as a result of entering into this AgreementParent: (a) amend or otherwise change its certificate of incorporation or bylaws or equivalent organizational documents; (b) issue, sell, pledge, dispose of, grant, transfer, lease, license, guarantee or encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license or encumbrance of, (i) any shares of capital stock of Company or any Company Subsidiary of any class, or securities convertible into or exchangeable or exercisable for any shares of such capital stock, or any options, warrants or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of Company or any Company SubsidiaryCompany, other than (A) the issuance of shares of Company Common Stock pursuant to the exercise of stock options theretofore therefor outstanding as of the date of this Agreement or (B) pursuant to the issuance of options to purchase up to 250,000 shares of Company Common Stock under the Company's 1999 Stock Incentive Plan, 200,000 shares of which may be issued to newly hired management employees and 50,000 shares of which may be issued to existing non-executive employees, Purchase Plan or (ii) any material property or assets of Company or any Company Subsidiary except entering into alliance agreements or providing products and services sales of inventory in the ordinary course of business consistent with past practicepractice and the providing of opt-in e-mail addresses to direct marketers and brokers by Company in the ordinary course of business; (i) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets) any interest in any corporation, partnership, other business organization or person Person or any division thereof; (ii) incur any indebtedness for borrowed money (other than in de minimus amounts) or issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations of any person (other than Company and Company Subsidiaries) for borrowed money or make any loans or advances, other than routine employee loans to employees other than Company officers (not to exceed $1,000 to any individual), advances material to the business, assets, liabilities, financial condition or results of operations of Company and the Company Subsidiaries, taken as a whole, other than in the ordinary course of business consistent with past practiceCompany; (iii) terminate, cancel or request any material change in, or agree to any material change in, any Company Material Listed Contract or other License Agreement; (iv) make or authorize any capital expenditure, other than capital expenditures in the ordinary course of business consistent with past practice that have been budgeted for fiscal year 1999 and disclosed described in writing to Parent the Disclosure Schedule and that are not, in the aggregate, in excess of $3,000,000 250,000 for Company and the Company Subsidiaries taken as a wholeCompany; or (v) enter into or amend any contract, agreement, commitment or arrangement that, if fully performed, would not be permitted under this Section 6.01(c); (d) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock, except that any Company Subsidiary may pay dividends or make other distributions to Company or any other Company Subsidiary; (e) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stockstock except repurchases of unvested shares at cost in connection with the termination of the employment relationship with any employee pursuant to stock option or purchase agreements in effect on the date hereof; (f) amend or change the period (or permit any acceleration, amendment or change unless required pursuant to the terms of existing agreements of Company previously provided to Parentchange) of exercisability of options granted under the Company Stock Plans Plan or authorize cash payments in exchange for any Company Stock Options granted under any of such plansthe Company Stock Plan; (g) amend the terms of, repurchase, redeem or otherwise acquire, or permit any Company Subsidiary to repurchase, redeem or otherwise acquire, acquire any of its securities or any securities of any Company Subsidiary or propose to do any of the foregoing; (h) other than in the ordinary course of business consistent with past practices or pursuant to existing agreements of Company previously provided to Parent increase the compensation payable or to become payable to its directors, officers, consultants or employees, grant any rights to severance or termination pay to, or enter into any employment or severance agreement which provides benefits upon a change in control of Company that would be triggered by the Merger with, any director, officer, consultant or other employee of Company or any Company Subsidiary who is not currently entitled to such benefits from the Merger, establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer, consultant or employee of Company or any Company SubsidiaryCompany, except to the extent required by applicable Law or the terms of a collective bargaining agreement, or enter into or amend any contract, agreement, commitment or arrangement between Company or any Company Subsidiary and any of Company's directors, officers, consultants or employees; (i) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction in the ordinary course of business and consistent with past practice of liabilities (A) reflected or reserved against on the consolidated balance sheet of Company and the consolidated the Company Subsidiaries dated as of March 31June 30, 1999 2000 included in Company's quarterly report on Form 10-Q for the period then ended (the "Company Balance Sheet") and only to the extent reflected or to the extent of such reserves or incurred in the ordinary course of business since March 31, 1999ended; (j) except as required by any Governmental Entity, make any change with respect to Company's accounting policies, principles, methods or procedures, including, without limitation, revenue recognition policies, other than as required by U.S. GAAP; (k) make any material Tax election or settle or compromise any material Tax liability; or (l) authorize or enter into any formal or informal agreement or otherwise make any commitment to do any of the foregoing or to take any action which would make any of the representations or warranties of Company contained in this Agreement untrue or incorrect or prevent Company from performing or cause Company not to perform its covenants hereunder in any material respect or result in any of the conditions to the Merger set forth herein not being satisfiedsatisfied or prevent Company from performing or cause Company not to perform its covenants hereunder.

Conduct of Business by Company. Pending During the Closing Company agrees that, between period from the date of this Agreement and continuing until the earlier of the termination of this Agreement pursuant to its terms or the Effective Time, unless Company and each of its subsidiaries shall, except to the extent that Parent shall otherwise agree consent in writing, carry on its business in the usual, regular and except ordinary course, in substantially the same manner as a result of entering into this Agreement (x) the respective businesses of Company heretofore conducted and the Company Subsidiaries shall be conducted only inin compliance in all material respects with all applicable Legal Requirements, pay its debts and Taxes when due subject to good faith disputes over such debts or Taxes, pay or perform other material obligations when due, and Company and the Company Subsidiaries shall not take any action except in, the ordinary course of business consistent with past practice and (y) Company shall use all reasonable efforts consistent with past practices and policies to (i) keep intact its present business organization, (ii) keep available the services of such its present officers and employees and (iii) maintain its relationships with customers, suppliers, licensors, licensees, and others with which it has business dealings. In addition, Company will promptly notify Parent of any material event involving its business, operations or financial condition. In addition, without limiting the generality of the current officersforegoing, significant employees and consultants except as expressly contemplated by this Agreement or as set forth in Part 4.1 of Company and the Company Subsidiaries and to preserve Disclosure Letter, during the current relationships of Company and the Company Subsidiaries with such of the corporate partners, customers, suppliers and other persons with which Company or any Company Subsidiary has significant business relations in order to preserve substantially intact its business organization. By way of amplification and not limitation, neither Company nor any Company Subsidiary shall, between period from the date of this Agreement and continuing until the earlier of the termination of this Agreement pursuant to its terms or the Effective Time, directly or indirectly, do, or agree to do, any of the following without the prior written consent of Parent Parent, Company shall not do any of the following and except as a result shall not permit its subsidiaries to do any of entering into this Agreementthe following: (a) Waive any stock repurchase rights, accelerate, amend or otherwise change its certificate the period of incorporation exercisability of Company Options or bylaws Company Restricted Stock, or equivalent organizational documentsreprice any Company Options or authorize cash payments in exchange for any Company Options or grant any stock appreciation right, phantom stock award, stock-related award or performance award (in each case payable in shares) to any person (including any Company employee); (b) issueGrant any severance or termination pay to any employee, selldirector or consultant of Company or any of its subsidiaries except pursuant to written agreements in effect, pledgeor policies existing, dispose ofon the date hereof and as previously disclosed in writing to Parent, grantor adopt any new severance plan or enter into any employment, transferseverance, leasetermination or indemnification agreement with any person or enter into any collective bargaining agreement; (c) Transfer or license to any person or entity or otherwise extend, licenseamend or modify in any material respect any rights to the Company Intellectual Property, guarantee other than non-exclusive licenses in the ordinary course of business and consistent with past practice; (d) Declare, set aside or encumberpay any dividends on or make any other distributions (whether in cash, stock, equity securities or property) in respect of any capital stock or split, combine or reclassify any capital stock or issue or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license or encumbrance issuance of any other securities in respect of, in lieu of or in substitution for any capital stock; (ie) Purchase, redeem or otherwise acquire, directly or indirectly, any shares of capital stock of Company or its subsidiaries, except repurchases of unvested shares at cost in connection with the termination of the employment relationship with any Company Subsidiary employee pursuant to stock option or purchase agreements in effect on the date hereof; (f) Issue, deliver, sell, authorize, pledge or otherwise encumber any shares of capital stock or Voting Debt or any class, or securities convertible into or exchangeable or exercisable for any shares of such capital stockstock or Voting Debt, or any optionssubscriptions, rights, warrants or other rights of any kind options to acquire any shares of such capital stock or any securities convertible into shares of capital stock, or enter into other agreements or commitments of any other ownership interest (including, without limitation, character obligating it to issue any phantom interest), of Company such shares or any Company Subsidiaryconvertible securities, other than the issuance, delivery and/or sale of (Ai) the issuance of shares of Company Common Stock pursuant to the exercise of stock options theretofore outstanding as of the date of this Agreement or Company Options, and (Bii) the issuance of options to purchase up to 250,000 shares of Company Common Stock under issuable to participants in the Company's 1999 Stock Incentive PlanCompany ESPP consistent with the terms thereof; (g) Cause, 200,000 shares permit or propose any amendments to the Company Charter Documents; (h) Acquire or agree to acquire by merging or consolidating with, or by purchasing any equity interest in or a material portion of the assets of, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof; or otherwise acquire or agree to acquire any assets which may be issued are material, individually or in the aggregate, to newly hired management employees the business of Company and 50,000 shares its subsidiaries or enter into any joint ventures, strategic relationships or alliances; (i) Other than in the conduct of its business in the ordinary course consistent with past practice after good faith prior consultation with Parent, sell, lease, license, encumber or otherwise dispose of any properties or assets which may be issued are material, individually or in the aggregate, to existing the business of Company and its subsidiaries, other than non-executive employeesexclusive software licenses for less than $25,000 in the ordinary course of business and consistent with past practice; (j) Incur any indebtedness for borrowed money or guarantee any such indebtedness of another person, issue or (ii) sell any property debt securities or assets options, warrants, calls or other rights to acquire any debt securities of Company or any of its subsidiaries, enter into any “keep well” or other Contract to maintain any financial statement condition or enter into any arrangement having the economic effect of any of the foregoing other than (i) in connection with the financing of ordinary course trade payables consistent with past practice; (ii) pursuant to existing credit facilities in the ordinary course of business and consistent with past practice; or (iii) loans, investments or guarantees by Company Subsidiary except entering or any of its subsidiaries to, in or of it or any of its subsidiaries; (k) Make any increase in or commitment to increase any Company Employee Plan (including any severance plan), adopt or amend or make any commitment to adopt or amend (other than any amendment required by law or regulation) any Company Employee Plan other than any adoption, amendment or commitment that will not confer any additional material benefit on any employee or make any contribution, other than regularly scheduled contributions, to any Company Employee Plan or make any material oral or written representation or commitment with respect to any material aspect of any Company Employee Plan that is not materially in accordance with the existing written terms and provision of such Company Employee Plan; (l) Increase in any manner the amount of compensation (including equity compensation, whether payable in cash or otherwise) or employee benefits of (including rights to indemnification), pay any bonus (including any cash performance award) to any employee, director or consultant of Company or any subsidiary of Company other than in the ordinary course of business, consistent with past practice or enter into alliance agreements any agreement with any Company employee the benefits of which are (in whole or providing products and services in part) contingent or the terms of which are materially altered in favor of the Company employee upon the occurrence of a transaction involving Company of the nature contemplated hereby; (m) Change in any material respect any management policies or procedures; (n) Make any material capital expenditures outside of the ordinary course of business in excess of $100,000 individually or $300,000 in the aggregate; (o) Materially modify, amend or terminate any Company Contract (including any Key Customer Contract) or waive, release or assign any material rights or claims thereunder without the prior written consent of Parent which shall not be unreasonably withheld; (p) Enter into any Contract with regard to the acquisition or licensing of any Intellectual Property (as defined in Section 2.9) other than licenses, distribution Contracts, or other similar Contracts entered into in the ordinary course of business consistent with past practice; (iq) acquire Revalue any of its assets or, except as required by GAAP, make any change in accounting methods, principles or practices; (including, without limitation, by merger, consolidation, or acquisition of stock or assetsr) any interest Engage in any corporationaction with the intent to adversely impact any of the transactions contemplated by this Agreement, partnership, other business organization or person or including with respect to any division thereof; Takeover Statute; (iiA) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations of any person (other than Company and Company Subsidiaries) for borrowed money or make Make any loans or advances, other than routine employee loans extensions of credit to employees other than Company officers (not to exceed $1,000 to any individual)customers, material to the businessdistributors, assets, liabilities, financial condition or results of operations of Company OEMs and the Company Subsidiaries, taken as a whole, other than in the ordinary course of business consistent with past practice; (iii) terminate, cancel or request any material change in, or agree to any material change in, any Company Material Contract or other License Agreement; (iv) make or authorize any capital expenditure, other than capital expenditures resellers in the ordinary course of business consistent with past practice that have been budgeted or employee advances for fiscal year 1999 travel, entertainment and disclosed in writing to Parent and that are not, in the aggregate, in excess of $3,000,000 for Company and the Company Subsidiaries taken as a whole; or (v) enter into or amend any contract, agreement, commitment or arrangement that, if fully performed, would not be permitted under this Section 6.01(c); (d) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock, except that any Company Subsidiary may pay dividends or make other distributions to Company or any other Company Subsidiary; (e) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; (f) amend or change the period (or permit any acceleration, amendment or change unless required pursuant to the terms of existing agreements of Company previously provided to Parent) of exercisability of options granted under the Company Stock Plans or authorize cash payments in exchange for any Company Stock Options granted under any of such plans; (g) amend the terms of, repurchase, redeem or otherwise acquire, or permit any Company Subsidiary to repurchase, redeem or otherwise acquire, any of its securities or any securities of any Company Subsidiary or propose to do any of the foregoing; (h) other than relocation expenses made in the ordinary course of business consistent with past practices provided such employee loans are in compliance with applicable law, or pursuant to existing agreements of Company previously provided to Parent increase the compensation payable or to become payable to its directors, officers, consultants or employees, grant (B) make any rights to severance or termination pay capital contributions to, or investments in, any other person; (t) Make or change any Tax election or adopt or change any accounting method, enter into any employment or severance agreement which provides benefits upon a change in control of Company that would be triggered by the Merger with, any director, officer, consultant or other employee of Company or any Company Subsidiary who is not currently entitled to such benefits from the Merger, establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, closing agreement, trust, fund, policy settle or arrangement for the benefit compromise any claim or assessment in respect of material Taxes or consent to any extension or waiver of any director, officer, consultant limitation period with respect to any claim or employee of Company or any Company Subsidiary, except to the extent required by applicable Law or the terms of a collective bargaining agreement, or enter into or amend any contract, agreement, commitment or arrangement between Company or any Company Subsidiary and any of Company's directors, officers, consultants or employeesassessment for material Taxes; (iu) pay(A) Pay, discharge discharge, settle or satisfy any claimsclaims (including any Tax claim), liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), or litigation (whether or not commenced prior to the date of this Agreement) other than the payment, discharge discharge, settlement or satisfaction for money, of claims, liabilities, obligations or litigation (x) in the ordinary course of business and consistent with past practice or in accordance with their terms, of liabilities reflected claims not in excess of $50,000 individually or reserved against on $150,000 in the consolidated balance sheet of Company and the consolidated the Company Subsidiaries dated as of March 31, 1999 included in Company's quarterly report on Form 10-Q for the period then ended aggregate or (the "Company Balance Sheet"y) and only to the extent reflected subject to reserves on the Company Financials existing as of the date hereof in accordance with GAAP, or (B) waive the benefits of, agree to the extent modify in any manner, terminate, release any person from or knowingly fail to enforce any confidentiality or similar agreement to which Company or any of such reserves its subsidiaries is a party or incurred in the ordinary course of business since March 31, 1999which Company or any of its subsidiaries is a beneficiary; (jv) make Grant any change exclusive rights with respect to Company's accounting policies, principles, methods or procedures, including, without limitation, revenue recognition policies, other than as required by U.S. GAAPany Intellectual Property; (kw) make Enter into or renew any Contracts containing, or otherwise subject the Surviving Corporation or Parent to, any non-competition, exclusivity or other material Tax election restrictions on Company or settle the Surviving Corporation or compromise Parent, or any material Tax liabilityof their respective businesses, following the Closing; (x) Engage in any action that would reasonably be expected to cause the Merger to fail to qualify as a “reorganization” under Section 368(a) of the Code; (y) Hire or offer to hire any new employee, except that Company may, after giving notice to Parent, hire or offer to hire (at salaries substantially similar to the previous employee) new employees to replace employees whose employment ends after the date hereof; (z) Enter into any Contract requiring Company or any of its subsidiaries to pay in excess of an aggregate of $200,000; or (laa) authorize or enter into any formal or informal agreement Agree in writing or otherwise make any commitment commit to do take any of the foregoing or to take any action which would make any of the representations or warranties of Company contained actions described in this Agreement untrue or incorrect in any material respect or result in any of the conditions to the Merger set forth herein not being satisfiedSections 4.1(a) through (z) above.

Conduct of Business by Company. Pending During the Closing Company agrees that, between period from the date of this Agreement and continuing until the earlier of the termination of this Agreement pursuant to its terms or the Effective Time, unless Company and each of its subsidiaries shall, except to the extent that Parent shall otherwise agree consent in writing, carry on its business, in the usual, regular and except ordinary course, in substantially the same manner as a result of entering into this Agreement (x) the respective businesses of Company heretofore conducted and the Company Subsidiaries shall be conducted only inin compliance with all applicable laws and regulations, pay its debts and taxes when due subject to good faith disputes over such debts or taxes, pay or perform other material obligations when due, and Company and the Company Subsidiaries shall not take any action except in, the ordinary course of business use its commercially reasonable efforts consistent with past practice practices and policies to (yi) Company shall use all reasonable efforts to preserve intact its present business organization, (ii) keep available the services of such of the current officers, significant its present officers and employees and consultants of Company and the Company Subsidiaries and to (iii) preserve the current its relationships of Company and the Company Subsidiaries with such of the corporate partners, customers, suppliers suppliers, distributors, licensors, licensees, and other persons others with which Company or any Company Subsidiary it has significant business relations dealings. In addition, except as permitted by the terms of this Agreement, and except as provided in order to preserve substantially intact its business organization. By way Section 4.1 of amplification and not limitationthe Company Schedule, neither Company nor any Company Subsidiary shallwithout the prior written consent of Parent, between during the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement pursuant to its terms or the Effective Time, directly or indirectly, do, or agree to do, Company shall not do any of the following without and shall not permit its subsidiaries to do any of the prior written consent of Parent and except as a result of entering into this Agreementfollowing: (a) Waive any shares repurchase rights, accelerate, amend or otherwise change its certificate the period of incorporation exercisability of options or bylaws restricted shares, or equivalent organizational documentsreprice options granted under any employee, consultant, director or other stock plans or authorize cash payments in exchange for any options granted under any of such plans; (b) issue, sell, pledge, dispose of, grant, transfer, lease, license, guarantee Grant any severance or encumbertermination pay to any officer or employee except pursuant to written agreements outstanding, or authorize policies existing, on the issuance, sale, pledge, disposition, grant, transfer, lease, license date hereof and as previously disclosed in writing or encumbrance of, (i) any shares of capital stock of Company or any Company Subsidiary of any classmade available to Parent, or securities convertible into or exchangeable or exercisable for adopt any shares of such capital stocknew severance plan, or amend or modify or alter in any optionsmanner any severance plan, warrants agreement or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of Company or any Company Subsidiary, other than (A) the issuance of shares of Company Common Stock pursuant to the exercise of stock options theretofore outstanding as of arrangement existing on the date of this Agreement or (B) the issuance of options to purchase up to 250,000 shares of Company Common Stock under the Company's 1999 Stock Incentive Plan, 200,000 shares of which may be issued to newly hired management employees and 50,000 shares of which may be issued to existing non-executive employees, or (ii) any property or assets of Company or any Company Subsidiary except entering into alliance agreements or providing products and services in the ordinary course of business consistent with past practicehereof; (ic) acquire (includingTransfer or license to any person or entity or otherwise extend, without limitation, by merger, consolidationamend or modify any rights to the Company Intellectual Property, or acquisition of stock enter into grants to transfer or assets) any interest in any corporation, partnership, other business organization or person or any division thereof; (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations of license to any person (other than Company and Company Subsidiaries) for borrowed money or make any loans or advances, other than routine employee loans to employees other than Company officers (not to exceed $1,000 to any individual), material to the business, assets, liabilities, financial condition or results of operations of Company and the Company Subsidiaries, taken as a wholefuture patent rights, other than in the ordinary course of business consistent with past practice; practices, provided that in no event shall Company license on an exclusive basis or sell any Company Intellectual Property; (iiid) terminateDeclare, cancel set aside or request pay any material change individends on or make any other distributions (whether in cash, shares, equity securities or property) in respect of any capital stock or split, combine or reclassify any capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for any capital stock; (e) Purchase, redeem or otherwise acquire, directly or indirectly, any shares of capital stock or other securities of Company or its subsidiaries, except repurchases of unvested shares at cost in connection with the termination of the employment relationship with any employee pursuant to stock option or purchase agreements in effect on the date hereof; (f) Issue, deliver, sell, authorize, pledge or otherwise encumber or propose any of the foregoing with respect to, any shares of capital stock or any securities convertible into shares of capital stock, or subscriptions, rights, warrants or options to acquire any shares of capital stock or any securities convertible into shares of capital stock, or enter into other agreements or commitments of any character obligating it to issue any such shares or convertible securities, other than (x) the issuance delivery and/or sale of Company Common Shares pursuant to the exercise of the Warrants and the exercise of Company Stock Options outstanding as of the date of this Agreement, and (y) the granting of stock options (and the issuance of Common Shares upon exercise thereof), in the ordinary course of business and consistent with past practices; (g) Cause, permit or propose any amendments to the Company Charter Documents (or similar governing instruments of any of its subsidiaries); (h) Acquire or agree to acquire by merging or consolidating with, or by purchasing any material change inequity interest in or a portion of the assets of, or by any other manner, any Company Material Contract business or any corporation, partnership, association or other License Agreement; business organization or division thereof, or otherwise acquire or agree to enter into any joint ventures, strategic partnerships or alliances; (ivi) make Sell, lease, license, encumber or authorize otherwise dispose of any capital expenditureproperties or assets except sales of inventory in the ordinary course of business consistent with past practice, except for the sale, lease or disposition (other than capital expenditures through licensing) of property or assets which are not material, individually or in the aggregate, to the business of Company and its subsidiaries; (j) Incur any indebtedness for borrowed money or guarantee any such indebtedness of another person, issue or sell any debt securities or options, warrants, calls or other rights to acquire any debt securities of Company, enter into any "keep well" or other agreement to maintain any financial statement condition or enter into any arrangement having the economic effect of any of the foregoing other than in connection with the financing of ordinary course trade payables consistent with past practice; (k) Adopt or amend any employee benefit plan, policy or arrangement, any employee stock purchase or employee stock option plan, or enter into any employment contract or collective bargaining agreement (other than offer letters and letter agreements entered into in the ordinary course of business consistent with past practice that have been budgeted for fiscal year 1999 and disclosed in writing to Parent and that with employees who are notterminable "at will"), in the aggregate, in excess of $3,000,000 for Company and the Company Subsidiaries taken as a whole; or (v) enter into or amend any contract, agreement, commitment or arrangement that, if fully performed, would not be permitted under this Section 6.01(c); (d) declare, set aside, make or pay any dividend special bonus or other distribution, payable in cash, stock, property or otherwise, with respect special remuneration to any of its capital stockdirector or employee, except that any Company Subsidiary may pay dividends or make other distributions increase the salaries or wage rates or fringe benefits (including rights to Company severance or any other Company Subsidiary; (e) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; (f) amend or change the period (or permit any acceleration, amendment or change unless required pursuant to the terms of existing agreements of Company previously provided to Parentindemnification) of exercisability of options granted under the Company Stock Plans or authorize cash payments in exchange for any Company Stock Options granted under any of such plans; (g) amend the terms of, repurchase, redeem or otherwise acquire, or permit any Company Subsidiary to repurchase, redeem or otherwise acquire, any of its securities or any securities of any Company Subsidiary or propose to do any of the foregoing; (h) other than in the ordinary course of business consistent with past practices or pursuant to existing agreements of Company previously provided to Parent increase the compensation payable or to become payable to its directors, officers, consultants employees or employees, grant any rights to severance or termination pay to, or enter into any employment or severance agreement which provides benefits upon a change in control of Company that would be triggered by the Merger with, any director, officer, consultant or other employee of Company or any Company Subsidiary who is not currently entitled to such benefits from the Merger, establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer, consultant or employee of Company or any Company Subsidiary, except to the extent required by applicable Law or the terms of a collective bargaining agreement, or enter into or amend any contract, agreement, commitment or arrangement between Company or any Company Subsidiary and any of Company's directors, officers, consultants or employeesconsultants; (i) pay, discharge discharge, settle or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), or litigation (whether or not commenced prior to the date of this Agreement) other than the payment, discharge discharge, settlement or satisfaction satisfaction, in the ordinary course of business and consistent with past practice of or in accordance with their terms, or liabilities reflected recognized or reserved against on disclosed in the most recent consolidated balance sheet financial statements (or the notes thereto) of Company and the consolidated included in the Company Subsidiaries dated as of March 31, 1999 included in Company's quarterly report on Form 10-Q for Regulatory Reports or incurred since the period then ended (the "Company Balance Sheet") and only to the extent reflected or to the extent date of such reserves financial statements, or incurred (ii) waive the benefits of, agree to modify in any manner, terminate, release any person from or knowingly fail to enforce any confidentiality or similar agreement to which Company or any of its subsidiaries is a party or of which Company or any of its subsidiaries is a beneficiary; (m) Make any individual or series of related payments outside of the ordinary course of business in excess of (U.S.) $50,000; (n) Except in the ordinary course of business since March 31consistent with past practice, 1999modify, amend or terminate any material contract or agreement to which Company or any subsidiary thereof is a party or waive, delay the exercise of, release or assign any material rights or claims thereunder; (jo) Enter into, renew or materially modify any contracts, agreements, or obligations relating to the distribution, sale, license or marketing by third parties of Company's products or products licensed by Company other than renewals of existing nonexclusive contracts, agreements or obligations; (p) Except as required by Canadian gaap, revalue any of its assets or make any change with respect to Company's in accounting policiesmethods, principles, methods principles or procedures, including, without limitation, revenue recognition policies, other than as required by U.S. GAAPpractices; (kq) make Incur or enter into any agreement, contract or commitment requiring Company or any of its subsidiaries to pay in excess of (U.S.) $50,000; (r) Engage in any action that could reasonably be expected to cause the Arrangement to fail to qualify as a "reorganization" under Section 368(a) of the United States Code; (s) Settle any litigation; (t) Make any tax election that, individually or in the aggregate, is reasonably likely to adversely affect in any material Tax election respect the tax liability or tax attributes of Company or any of its subsidiaries or settle or compromise any material Tax income tax liability; or; (lu) authorize or enter into any formal or informal agreement Agree in writing or otherwise make any commitment to do take any of the foregoing or to take any action which would make any of the representations or warranties of Company contained actions described in this Agreement untrue or incorrect in any material respect or result in any of the conditions to the Merger set forth herein not being satisfiedSection 4.1 (a) through (t) above.

Conduct of Business by Company. Pending the Closing Company agrees that, between (a) From and after the date of this Agreement and until the earlier of the Effective Time, unless Parent shall otherwise agree in writingTime or the Termination Date, and except (i) as a result of entering into this Agreement may be required by applicable Law, (xii) the respective businesses of Company and the Company Subsidiaries shall be conducted only in, and Company and the Company Subsidiaries shall not take any action except in, the ordinary course of business consistent with past practice and (y) Company shall use all reasonable efforts to keep available the services of such of the current officers, significant employees and consultants of Company and the Company Subsidiaries and to preserve the current relationships of Company and the Company Subsidiaries with such of the corporate partners, customers, suppliers and other persons with which Company or any Company Subsidiary has significant business relations in order to preserve substantially intact its business organization. By way of amplification and not limitation, neither Company nor any Company Subsidiary shall, between the date of this Agreement and the Effective Time, directly or indirectly, do, or agree to do, any of the following without the prior written consent of Parent Acquiror, (iii) as may be expressly contemplated or required by this Agreement or (iv) as set forth on Section 4.2 of the Company Disclosure Schedule, Company covenants and agrees that the business of Company and its Subsidiaries shall be conducted in the ordinary course of business, and shall use commercially reasonable efforts to preserve intact their present lines of business, maintain their rights, franchises and Company Permits and preserve their relationships with customers, suppliers and service providers; provided, however, that no action by Company or its Subsidiaries with respect to matters specifically addressed by any provision of Section 4.2(b) shall be deemed a breach of this sentence unless such action would constitute a breach of such other provision. (b) Company agrees with Acquiror, on behalf of itself and its Subsidiaries, that from the date hereof and prior to the earlier of the Effective Time and the Termination Date, except (i) as a result may be required by applicable Law, (ii) with the prior written consent of entering into Acquiror, (iii) as may be expressly contemplated or required by this AgreementAgreement or (iv) as set forth on Section 4.2 of the Company Disclosure Schedule, Company: (ai) amend shall not adopt any amendments to its certificate of continuation or otherwise change incorporation or bylaws or similar applicable organizational documents, and shall not permit any of its Subsidiaries to adopt any amendments to its certificate of incorporation or bylaws or equivalent similar applicable organizational documents; (bii) issueshall not, and shall not permit any of its Subsidiaries to, 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 its capital stock, except for any such transaction by a wholly owned Subsidiary of Company which remains a wholly owned Subsidiary after consummation of such transaction; (iii) shall not, and shall not permit any of its Subsidiaries that is not wholly owned by Company or wholly owned Subsidiaries of any such Subsidiaries to, authorize or pay any dividends on or make any distribution with respect to its outstanding shares of capital stock (whether in cash, assets, stock or other securities of Company or its Subsidiaries), except dividends or distributions by any Subsidiaries only to Company or to any Subsidiary of Company in the ordinary course of business; (iv) shall not, and shall not permit any of its material Subsidiaries to, adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization, other than the Arrangement and other than any mergers, consolidations, restructurings or reorganizations solely among Company and its Subsidiaries or among Company’s Subsidiaries, or take any action with respect to any securities owned by such person that would reasonably be expected to prevent, materially impede or materially delay the consummation of the Arrangement, or any other transaction by Acquiror; (v) shall not, and shall not permit any of its Subsidiaries to, make any acquisition of any other person or business or make any loans, advances or capital contributions to, or investments in, any other person except (A) as contemplated by Company’s fiscal 2014 budget and capital expenditure plan previously provided to Acquiror (the “Company Budget”) or (B) as made in connection with any transaction among Company and its wholly owned Subsidiaries or among Company’s wholly owned Subsidiaries; provided, however, that Company shall not, and shall not permit any of its Subsidiaries to, make any acquisition of any other person or business or make loans, advances or capital contributions to, or investments in, any other person that would reasonably be expected to prevent, materially impede or materially delay the consummation of the Arrangement; (vi) shall not, and shall not permit any of its Subsidiaries to, sell, pledge, dispose of, grant, transfer, lease, license, guarantee transfer, exchange or encumberswap, or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license otherwise dispose of or encumbrance of, (i) encumber any shares of capital stock of Company properties or any Company Subsidiary of any class, or securities convertible into or exchangeable or exercisable for any shares of such capital stock, or any options, warrants or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of Company or any Company Subsidiary, other than non-cash assets except (A) the issuance sales, transfers and dispositions of shares of Company Common Stock pursuant to the exercise of stock options theretofore outstanding as of the date of this Agreement obsolete or worthless equipment, (B) the issuance sales, transfers and dispositions of options to purchase up to 250,000 shares of Company Common Stock under the Company's 1999 Stock Incentive Planinventory, 200,000 shares of which may be issued to newly hired management employees commodities and 50,000 shares of which may be issued to existing non-executive employeesproduced Hydrocarbons, or (ii) any property or assets of Company or any Company Subsidiary except entering into alliance agreements or providing crude oil and refined products and services in the ordinary course of business consistent with past practice; (i) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets) any interest in any corporation, partnership, other business organization or person or any division thereof; (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations of any person (other than Company and Company Subsidiaries) for borrowed money or make any loans or advances, other than routine employee loans to employees other than Company officers (not to exceed $1,000 to any individual), material to the business, assets, liabilities, financial condition or results of operations of Company and the Company Subsidiaries, taken as a whole, other than in the ordinary course of business consistent with past practice; (iii) terminate, cancel or request any material change in, or agree to any material change in, any Company Material Contract or other License Agreement; (iv) make or authorize any capital expenditure, other than capital expenditures in the ordinary course of business consistent with past practice that have been budgeted for fiscal year 1999 and disclosed in writing to Parent and that are not, in the aggregate, in excess of $3,000,000 for Company and the Company Subsidiaries taken as a whole; or (v) enter into or amend any contract, agreement, commitment or arrangement that, if fully performed, would not be permitted under this Section 6.01(c); (d) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock, except that any Company Subsidiary may pay dividends or make other distributions to Company or any other Company Subsidiary; (e) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; (f) amend or change the period (or permit any acceleration, amendment or change unless required pursuant to the terms of existing agreements of Company previously provided to Parent) of exercisability of options granted under the Company Stock Plans or authorize cash payments in exchange for any Company Stock Options granted under any of such plans; (g) amend the terms of, repurchase, redeem or otherwise acquire, or permit any Company Subsidiary to repurchase, redeem or otherwise acquire, any of its securities or any securities of any Company Subsidiary or propose to do any of the foregoing; (h) other than in the ordinary course of business consistent with past practices or pursuant to existing agreements of Company previously provided to Parent increase the compensation payable or to become payable to its directors, officers, consultants or employees, grant any rights to severance or termination pay to, or enter into any employment or severance agreement which provides benefits upon a change in control of Company that would be triggered by the Merger with, any director, officer, consultant or other employee of Company or any Company Subsidiary who is not currently entitled to such benefits from the Merger, establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer, consultant or employee of Company or any Company Subsidiary, except to the extent required by applicable Law or the terms of a collective bargaining agreement, or enter into or amend any contract, agreement, commitment or arrangement between Company or any Company Subsidiary and any of Company's directors, officers, consultants or employees; (i) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction in the ordinary course of business and consistent with past practice of liabilities reflected or reserved against on the consolidated balance sheet of Company and the consolidated the Company Subsidiaries dated as of March 31, 1999 included in Company's quarterly report on Form 10-Q for the period then ended (the "Company Balance Sheet") and only to the extent reflected or to the extent of such reserves or incurred in the ordinary course of business since March 31, 1999; (j) make any change with respect to Company's accounting policies, principles, methods or procedures, including, without limitation, revenue recognition policies, other than as required by U.S. GAAP; (k) make any material Tax election or settle or compromise any material Tax liability; or (l) authorize or enter into any formal or informal agreement or otherwise make any commitment to do any of the foregoing or to take any action which would make any of the representations or warranties of Company contained in this Agreement untrue or incorrect in any material respect or result in any of the conditions to the Merger set forth herein not being satisfied.

Conduct of Business by Company. Pending the Closing Closing. Company agrees that, between the date of this Agreement and the Effective Time, unless Parent shall otherwise agree in writing, and except as a result of entering into this Agreement (x) the respective businesses of Company and the Company Subsidiaries shall be conducted only in, and Company and the Company Subsidiaries shall not take any action except in, the ordinary course of business consistent with past practice and (y) Company shall use all reasonable efforts to keep available the services of such of the current officers, significant employees and consultants of Company and the Company Subsidiaries and to preserve the current relationships of Company and the Company Subsidiaries with such of the corporate partners, customers, suppliers and other persons with which Company or any Company Subsidiary has significant business relations in order to preserve substantially intact its business organization. By way of amplification and not Without limitation, neither Company nor any Company Subsidiary shall, between the date of this Agreement and the Effective Time, directly or indirectly, do, or agree to do, any of the following without the prior written consent of Parent and except as a result of entering into this AgreementParent: (a) amend or otherwise change its certificate of incorporation or bylaws or equivalent organizational documents; (b) issue, sell, pledge, dispose of, grant, transfer, lease, license, guarantee or encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license or encumbrance of, (i) any shares of capital stock of Company or any Company Subsidiary of any class, or securities convertible into or exchangeable or exercisable for any shares of such capital stock, or any options, warrants or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of Company or any Company Subsidiary, other than (A) the issuance of shares of Company Common Stock pursuant to the exercise of stock options theretofore therefor outstanding as of the date of this Agreement or (B) the issuance of options to purchase up to 250,000 shares of Company Common Stock under the Company's 1999 Stock Incentive Plan, 200,000 shares of which may be issued to newly hired management employees and 50,000 shares of which may be issued to existing non-executive employees, or (ii) any material property or assets of Company or any Company Subsidiary except entering into alliance agreements (A) transactions pursuant to existing contracts, (B) dispositions, leases or providing products licenses of inventory in the ordinary course of business consistent with past practice and services (C) shares of Company Common Stock issued pursuant to the Company ESPP in the ordinary course of business consistent with past practice; (i) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets) any interest in any corporation, partnership, other business organization or person or any division thereof, other than the purchase of assets in the ordinary course of business consistent with past practice; (ii) incur any indebtedness for borrowed money (other than indebtedness with respect to working capital in amounts consistent with past practice) or issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations of any person (other than a Company and Company SubsidiariesSubsidiary) for borrowed money or make any loans or advances, other than routine employee loans to employees other than Company officers (not to exceed $1,000 to any individual), advances material to the business, assets, liabilities, financial condition or results of operations of Company and the Company Subsidiaries, taken as a whole, other than in the ordinary course of business consistent with past practice; (iii) terminate, cancel or request any material change in, or agree to any material change in, any Company Material Contract or other License Agreement, in each case other than in the ordinary course of business consistent with past practice; (iv) make or authorize any capital expenditure, other than capital expenditures in the ordinary course of business consistent with past practice that have been budgeted for fiscal year 1999 2000 and disclosed in writing to Parent and that are not, in the aggregate, in excess of $3,000,000 625,000 for Company and the Company Subsidiaries taken as a whole; or (v) enter into or amend any contract, agreement, commitment or arrangement that, if fully performed, would not be permitted under this Section 6.01(c); (d) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock, except that any Company Subsidiary may pay dividends or make other distributions to Company or any other Company Subsidiary; (e) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stockstock except repurchases of unvested shares at cost in connection with the termination of the employment relationship with any employee pursuant to stock option or purchase agreements in effect on the date hereof; (f) amend or change the period (or permit any acceleration, amendment or change unless required pursuant to the terms of existing agreements of Company previously provided to Parentchange) of exercisability of options granted under the Company Stock Plans or authorize cash payments in exchange for any Company Stock Options granted under any of such plans; (g) amend the terms of, repurchase, redeem or otherwise acquire, or permit any Company Subsidiary to repurchase, redeem or otherwise acquire, any of its securities or any securities of any Company Subsidiary or propose to do any of the foregoingSubsidiary; (h) other than in the ordinary course of business consistent with past practices or pursuant to existing agreements of Company previously provided to Parent increase the compensation payable or to become payable to its directors, officers, consultants or employees, grant any rights to severance or termination pay to, or enter into any employment or severance agreement which provides benefits upon a change in control of Company that would be triggered by the Merger with, any director, officer, consultant or other employee of Company or any Company Subsidiary who is not currently entitled to such benefits from the Merger, establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer, consultant or employee of Company or any Company Subsidiary, except to the extent required by applicable Law or the terms of a collective bargaining agreement, or enter into or amend any contract, agreement, commitment or arrangement between Company or any Company Subsidiary and any of Company's directors, officers, consultants or employees, except for increases in compensation paid to persons who are not directors or officers of Company in the ordinary course of business consistent with past practice; (i) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction of claims, liabilities or obligations (A) in the ordinary course of business and consistent with past practice of or (B) claims, liabilities or obligations reflected or reserved against on the consolidated balance sheet February 1999 Balance Sheet or (C) as otherwise set forth on Schedule 6.01 of Company and the consolidated the Company Subsidiaries dated as of March 31, 1999 included in Company's quarterly report on Form 10-Q for the period then ended (the "Company Balance Sheet") and only to the extent reflected or to the extent of such reserves or incurred in the ordinary course of business since March 31, 1999Disclosure Schedule; (j) except as required by any Governmental Entity, make any material change with respect to Company's accounting policies, principles, methods or procedures, including, without limitation, revenue recognition policies, other than as required by U.S. GAAP; (k) make any material Tax election or settle or compromise any material Tax liability; or (l) authorize or enter into any formal or informal agreement or otherwise make any commitment to do any of the foregoing or to take any action which would make any of the representations or warranties of Company contained in this Agreement untrue or incorrect in any material respect or prevent Company from performing or cause Company not to perform its covenants hereunder or result in any of the conditions to the Merger set forth herein not being satisfied.

Conduct of Business by Company. Pending (a) Except for matters set forth in Section 5.01 of the Closing Company agrees thatDisclosure Letter, between otherwise expressly required, permitted or contemplated by this Agreement, any other Transaction Document, the Separation Agreement or the Employee Matters Agreement, required by applicable Law or consented to in writing by Parent (such consent not to be unreasonably withheld, delayed or conditioned), from the date hereof until the earlier of the Effective Time or the termination of this Agreement in accordance with its terms, each of Vista Outdoor and the Effective Time, unless Parent shall otherwise agree in writingCompany shall, and except as a result of entering into this Agreement (x) the shall cause their respective businesses of Company and Subsidiaries to, use reasonable best efforts to conduct the Company Subsidiaries shall be conducted only in, and Company and the Company Subsidiaries shall not take any action except in, the ordinary course of business consistent with past practice and (y) Company shall use Business in all reasonable efforts to keep available the services of such of the current officers, significant employees and consultants of Company and the Company Subsidiaries and to preserve the current relationships of Company and the Company Subsidiaries with such of the corporate partners, customers, suppliers and other persons with which Company or any Company Subsidiary has significant business relations in order to preserve substantially intact its business organization. By way of amplification and not limitation, neither Company nor any Company Subsidiary shall, between the date of this Agreement and the Effective Time, directly or indirectly, do, or agree to do, any of the following without the prior written consent of Parent and except as a result of entering into this Agreement: (a) amend or otherwise change its certificate of incorporation or bylaws or equivalent organizational documents; (b) issue, sell, pledge, dispose of, grant, transfer, lease, license, guarantee or encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license or encumbrance of, (i) any shares of capital stock of Company or any Company Subsidiary of any class, or securities convertible into or exchangeable or exercisable for any shares of such capital stock, or any options, warrants or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of Company or any Company Subsidiary, other than (A) the issuance of shares of Company Common Stock pursuant to the exercise of stock options theretofore outstanding as of the date of this Agreement or (B) the issuance of options to purchase up to 250,000 shares of Company Common Stock under the Company's 1999 Stock Incentive Plan, 200,000 shares of which may be issued to newly hired management employees and 50,000 shares of which may be issued to existing non-executive employees, or (ii) any property or assets of Company or any Company Subsidiary except entering into alliance agreements or providing products and services in the ordinary course of business consistent with past practice; (i) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets) any interest in any corporation, partnership, other business organization or person or any division thereof; (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations of any person (other than Company and Company Subsidiaries) for borrowed money or make any loans or advances, other than routine employee loans to employees other than Company officers (not to exceed $1,000 to any individual), material to the business, assets, liabilities, financial condition or results of operations of Company and the Company Subsidiaries, taken as a whole, other than in the ordinary course of business consistent with past practice; (iii) terminate, cancel or request any material change in, or agree to any material change in, any Company Material Contract or other License Agreement; (iv) make or authorize any capital expenditure, other than capital expenditures respects in the ordinary course of business consistent with past practice that have been budgeted and, to the extent consistent therewith, use reasonable best efforts to preserve the Company Business substantially intact, including using reasonable best efforts to maintain existing relationships with customers and suppliers. (b) In addition, and without limiting the generality of the foregoing, except for fiscal year 1999 and disclosed matters set forth in Section 5.01 of the Company Disclosure Letter, otherwise expressly required, permitted or contemplated by this Agreement, any other Transaction Document, the Separation Agreement or the Employee Matters Agreement, required by applicable Law or consented to in writing by Parent (such consent not to Parent be unreasonably withheld, delayed or conditioned), from the date hereof until the earlier of the Effective Time or the termination of this Agreement in accordance with its terms, Vista Outdoor and that are Company shall not, and shall not permit any of their Subsidiaries to, do any of the following: (i) in the aggregate, in excess case of $3,000,000 for Company and the Company Subsidiaries taken (A) issue or sell any shares of its capital stock or other equity or voting interests, or any securities convertible into, or exchangeable or exercisable for, any shares of its capital stock or other equity or voting interests (including any rights, warrants, puts, calls or options to purchase any shares of its capital stock or other equity or voting interests), other than, following the effective time of the CSG-Vista Outdoor Merger, pursuant to Company Equity Awards outstanding as of the date of this Agreement (in the form of Vista Outdoor Equity Awards) in accordance with their terms or granted following the date of this Agreement as permitted by this Agreement, (B) establish a whole; or (v) enter into or amend any contractrecord date for, agreementapprove, commitment or arrangement that, if fully performed, would not be permitted under this Section 6.01(c); (d) declare, set aside, make aside for payment or pay any dividend dividends or make any other distributions in respect of its shares of capital stock or other distributionequity interests, payable in cashother than dividends and distributions by any wholly owned Subsidiary to its parent, stock(C) split, property combine or otherwise, with respect to reclassify any of its capital stockstock or other equity interests, except or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for its shares of capital stock or other equity interests, other than any such transaction by a wholly owned Subsidiary that remains a wholly owned Subsidiary after consummation of such transaction or (D) purchase, redeem or otherwise acquire or amend the terms of any Company Subsidiary may pay dividends shares of its capital stock or make other distributions to Company equity interests or any rights, warrants, options or other Company Subsidiary; (e) reclassify, combine, split, subdivide or redeem, purchase or otherwise equity awards to acquire, directly or indirectly, any such shares of its capital stockstock or other equity interests other than, in each case, following the effective time of the CSG-Vista Outdoor Merger, pursuant to the cashless exercise of Company Options or the forfeiture of, or withholding of taxes with respect to, Company Equity Awards; (fii) in the case of Company and the Company Subsidiaries, amend its certificate or articles of incorporation or bylaws or comparable organizational documents, other than to change the period (or permit any acceleration, amendment or change unless required pursuant to its name in accordance with the terms of existing agreements of Company previously provided to Parent) of exercisability of options granted under the Company Stock Plans or authorize cash payments in exchange for any Company Stock Options granted under any of such plansTransaction Document; (giii) amend the terms sell, transfer, acquire or dispose of, repurchaseincluding by entering or terminating any lease with respect to, redeem in a single transaction or otherwise acquirea series of related transactions, direct or permit indirectly any interests in real property owned or leased by Company Subsidiary to repurchase, redeem or otherwise acquire, any of its securities or any securities of any Company Subsidiary or propose to do any otherwise used in the conduct of the foregoingCompany Business (including, any Company Owned Real Property or any Company Leased Real Property), except for the expiration or renewal of any lease, in each case, in accordance with its terms; (hiv) create any Company Subsidiary that is not, directly or indirectly, wholly owned by the Company; (v) with respect to Company or any Company Subsidiary, acquire, in a single transaction or a series of related transactions, whether by merging or consolidating with, or by purchasing a substantial equity interest in or a substantial portion of the assets of, or by any other manner, any business or any partnership, corporation, joint venture, limited liability entity or other business organization or division thereof or any other Person, in each case that would be owned by Company or any Company Subsidiary after giving effect to the Separation and with a value or purchase price that, individually or in the aggregate, exceeds $10,300,000; (vi) sell, transfer or otherwise dispose of, including by entering any license with respect to, in a single transaction or a series of related transactions, any tangible property or asset (other than, for the avoidance of doubt, sales, transfers or dispositions of Inventory in the ordinary course of business) of the Company Business with a value or purchase price that, individually or in the aggregate, exceeds $7,200,000, except for dispositions of obsolete or worn-out assets that are no longer used or useful in the operation or conduct of the Company Business; (vii) transfer, sell, assign, lease, exclusively license, cancel, abandon, fail to maintain or enforce, or allow to lapse or expire, or otherwise dispose of any material Company Business Intellectual Property owned by Company or a Company Subsidiary, or take any action or fail to take any action, if such action or failure to take any such action would reasonably be likely to result in the loss, lapse, abandonment, invalidity or unenforceability of any material Company Business Intellectual Property, in each case, except for the disposal of any Company Business Registered Intellectual Property at the end of its statutory life or non-exclusive licenses or sublicenses granted in the ordinary course of business; (viii) modify in any material respect any of its policies related to Privacy and Data Security Requirements, or any administrative, technical or physical safeguards related to privacy or data security, of the Company or the Company Subsidiaries, except (A) to remediate any security issue, (B) to enhance data security or integrity, (C) to comply with Privacy and Data Security Requirements, or (D) as otherwise directed or required by a Governmental Authority; (ix) in the case of Company and the Company Subsidiaries (A) with respect to the Company Employees, adopt, enter into, terminate, materially amend or modify, extend or renew any Labor Agreement or Company Benefit Plan, (B) increase the compensation (i.e., base salary and annual target bonus opportunity) or benefits of, or pay any bonus to, any former or current Company Employee, other than with respect to increases made in the ordinary course of business consistent with past practices or pursuant practice for employees whose annual base salary would not exceed $200,000; provided, however, that subject to existing agreements of Company previously provided to Parent increase clause (I) below, the compensation payable or to become payable to its directors, officers, consultants or employees, grant any rights to severance or termination pay to, or enter into any employment or severance agreement which provides benefits upon a change in control of Company that would be triggered by the Merger with, any director, officer, consultant or other employee of foregoing shall not restrict Company or any of the Company Subsidiary who is not currently entitled to such benefits Subsidiaries from the Merger, establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer, consultant or employee of Company or any Company Subsidiary, except to the extent required by applicable Law or the terms of a collective bargaining agreementproviding, or enter into or amend any contractmaking available to, agreement, commitment or arrangement between Company or any Company Subsidiary and any of Company's directors, officers, consultants or employees; (i) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction employees who are newly hired in the ordinary course of business compensation and benefit arrangements and Benefit Plans that are substantially consistent with past practice the compensation and benefit arrangements and Benefit Plans previously provided or made available by Company or the applicable Company Subsidiary to newly hired employees in similar positions, (C) with respect to former or current Company Employees, take any action to fund or in any other way secure the payment of liabilities reflected compensation or reserved against benefits under any Company Benefit Plan, (D) with respect to any former or current Company Employees, take any action to accelerate the vesting or payment of any compensation or benefits, (E) with respect to any former or current Company Employees, make any material determination under any Company Benefit Plan that is not in the ordinary course of business, (F) transfer the sponsorship of any Company Benefit Plan to any member of the Vista Outdoor Group or accept the transfer of or retain (as applicable) the sponsorship or Liabilities relating to any Vista Outdoor Benefit Plan, (G) grant any Vista Outdoor Equity Award or any Company Equity Award, (H) grant to any Company Employee any new change in control, transaction, retention or other payments or benefits that could be triggered in connection with the consummation of the transactions contemplated hereunder, (I) hire or engage any Company Employee whose annual base salary would exceed $200,000 or (J) terminate any Company Employee (other than for cause as reasonably determined by Company) whose annual base salary exceeds $200,000, except in each case, (I) as required to ensure that any Benefit Plan in effect on the consolidated balance sheet date hereof is not then out of Company and compliance with applicable Law, (II) as expressly required pursuant to the consolidated terms of any Benefit Plan or applicable Law, (III) as expressly required by Article VI or the Company Subsidiaries dated as of March 31, 1999 included in Company's quarterly report on Form 10-Q for the period then ended Employee Matters Agreement or (the "Company Balance Sheet"IV) and only to the extent reflected all Liability for such action will, after the Separation, be assumed or retained by Vista Outdoor or the Vista Outdoor Subsidiaries; (x) other than in the ordinary course of business, incur any Indebtedness, guarantee or otherwise become contingently liable for any Indebtedness of another Person, or enter into any “keep well” or other agreement to maintain any financial statement condition of another Person, except for (A) Indebtedness solely (i) between or among members of the extent Company Group or (ii) between or among members of such reserves the Vista Outdoor Group, (B) Indebtedness incurred under or incurred in respect of the Existing ABL Credit Agreement, the Existing Notes, any other agreement or instrument existing as of the date of this Agreement, (C) foreign currency hedging arrangements on customary arms’ length commercial terms entered into in the ordinary course of business since March 31for bona fide commercial purposes and not for speculative purposes and which would not have fees or costs to unwind that would reasonably be expected to exceed $2,000,000 in the aggregate, 1999(D) Indebtedness (i) that, following the Closing, will be an obligation of Vista Outdoor or a Vista Outdoor Subsidiary and (ii) with respect to which, following the Closing, neither Company nor any Company Subsidiary shall have any Liability and (E) any Indebtedness that is incurred to refinance any Indebtedness outstanding as of the date of this Agreement or any of the foregoing, to the extent the amount of such refinancing Indebtedness is not greater than the amount of Indebtedness being refinanced; (jxi) encumber or subject material Company Assets to any Liens other than Company Permitted Liens; (xii) (A) make any change with respect to Company's accounting policiesloan, principlesadvance or capital contribution to, methods or proceduresinvestment in, includingany Person that, without limitationindividually or in the aggregate, revenue recognition policies, exceeds $6,200,000 (other than as required by U.S. GAAP; Contracts relating to acquisitions or Indebtedness, which are the subject of clauses (kv) make any material Tax election and (x) above, respectively) or settle or compromise any material Tax liability; or (lB) authorize or enter into any formal or informal agreement or otherwise make any commitment to do any capital expenditure in an amount, individually or in the aggregate, in excess of the foregoing or to take any action which would make any of the representations or warranties of Company contained in this Agreement untrue or incorrect $6,200,000 in any material respect fiscal year, in the case of each of clauses (A) and (B), except as (1) in response to any bona fide casualty loss or result in any of the conditions property damage or (2) to the Merger set forth herein not being satisfied.extent that any Liability for such action will, after the Separation, be assumed or retained in full by Vista Outdoor or the Vista Outdoor Subsidiaries;

Conduct of Business by Company. Pending During the Closing Company agrees that, between period from the date ------------------------------ of this Agreement and continuing until the earlier of the termination of this Agreement pursuant to its terms or the Effective Time, unless Company and each of its subsidiaries shall, except to the extent that Parent shall otherwise agree consent in writing, carry on its business in the usual, regular and except ordinary course, in substantially the same manner as a result of entering into this Agreement (x) the respective businesses of Company heretofore conducted and the Company Subsidiaries shall be conducted only inin compliance in all material respects with all applicable laws and regulations, pay its debts and Taxes when due subject to good faith disputes over such debts or Taxes, pay or perform other material obligations when due, and Company and the Company Subsidiaries shall not take any action except in, the ordinary course of business consistent with past practice and (y) Company shall use all reasonable efforts to keep available preserve its relationships with customers, suppliers, licensors, licensees, and others with which it has business dealings, except as contemplated by the services Company Interim Plan and except in each case where the failure to do so would not have a Material Adverse Effect with respect to Company. In addition, during that period Company will promptly notify Parent of such any material event involving its business or operations consistent with the agreements contained herein. In addition, except as permitted by the terms of this Agreement, and except as contemplated by this Agreement or provided in Part 4.1 of the current officersCompany Disclosure Letter, significant employees and consultants of Company and the Company Subsidiaries and to preserve the current relationships of Company and the Company Subsidiaries with such of the corporate partners, customers, suppliers and other persons with which Company or any Company Subsidiary has significant business relations in order to preserve substantially intact its business organization. By way of amplification and not limitation, neither Company nor any Company Subsidiary shall, between the date of this Agreement and the Effective Time, directly or indirectly, do, or agree to do, any of the following without the prior written consent of Parent (which shall not be unreasonably withheld or delayed), during the period from the date of this Agreement and except as a result continuing until the earlier of entering into the termination of this AgreementAgreement pursuant to its terms or the Effective Time, Company shall not do any of the following and shall not permit its subsidiaries to do any of the following: (a) Waive any stock repurchase rights, accelerate, amend or otherwise change its certificate the period of incorporation exercisability of options or bylaws restricted stock, or equivalent organizational documentsreprice options granted under any employee, consultant, director or other stock plans or authorize cash payments in exchange for any options granted under any of such plans; (b) issueGrant any severance or termination pay to, sellor any additional notice of termination, pledgeor extension or acceleration of the exercisability or vesting of any equity securities held by any officer or employee except (i) pursuant to written agreements in effect, dispose ofor policies existing, granton the date hereof and as previously disclosed to Parent, transferconsistent with the terms of the Company Interim Plan or (ii) pursuant to written agreements entered into after the date hereof that are consistent with the terms of the Company Interim Plan or Part 4.1(b) of the Company Disclosure Letter; (c) Transfer or license to any person or entity or otherwise extend, leaseamend or modify in any material respect any rights to the material Company Intellectual Property, licenseother than non-exclusive licenses in the ordinary course of business; (d) Declare, guarantee set aside or encumberpay any dividends on or make any other distributions (whether in cash, stock, equity securities or property) in respect of any capital stock of Company or split, combine or reclassify any capital stock of Company or issue or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license or encumbrance issuance of any other securities in respect of, in lieu of or in substitution for any capital stock of Company (iexcept for a reverse stock split of outstanding Company Common Stock); (e) Purchase, redeem or otherwise acquire, directly or indirectly, any shares of capital stock of Company or its subsidiaries, except repurchases of unvested shares at cost in connection with the termination of the employment relationship with any Company Subsidiary employee pursuant to stock option or purchase agreements in effect on the date hereof; (f) Issue, deliver, sell, authorize, pledge or otherwise encumber any shares of capital stock or any class, or securities convertible into or exchangeable or exercisable for any shares of such capital stock, or any optionssubscriptions, rights, warrants or other rights of any kind options to acquire any shares of such capital stock or any securities convertible into shares of capital stock, or enter into other agreements or commitments of any other ownership interest (including, without limitation, character obligating it to issue any phantom interest), of Company such shares or any Company Subsidiaryconvertible securities, other than the issuance, delivery and/or sale of (Ai) the issuance of shares of Company Common Stock pursuant to the exercise of stock Company Options and Company Warrants, (ii) shares of Company Common Stock issuable to participants in the Company ESPP, (iii) shares of Company Common Stock issuable to participants in the Company's 401(k) Plan, in the case of (i), (ii) and (iii), consistent with the terms thereof, and (iv) pursuant to grants of Company Options to newly hired employees, upon promotions of existing employees, as retention grants to existing employees, or as part of Company's annual option grant program, in each case, in the ordinary course of business, consistent with past practice, and not to exceed in the aggregate pursuant to this clause (iv), the balance of the options theretofore outstanding as of the date of this Agreement or (B) the issuance of options to purchase up to 250,000 shares of Company Common Stock under in the Company's 1999 Stock Incentive Planexisting stock option pool (net of cancellations) and which will not be entitled to acceleration as a result of the Merger and which shall vest in a manner as otherwise mutually agreed to by the parties in writing or as set forth in Part 4.1(f) of the Company Disclosure Letter; (g) Cause, 200,000 shares permit or propose any amendments to its Certificate of which may be issued Incorporation, Bylaws or other charter documents (or similar governing instruments of any of its subsidiaries); (h) Acquire or agree to newly hired management employees and 50,000 shares of which may be issued to existing non-executive employeesacquire by merging or consolidating with, or (ii) by purchasing any property equity interest in or a portion of the assets of, or by any other manner, any business or any 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 business of Company or enter into any material joint ventures, strategic relationships or alliances that would have a Material Adverse Effect on Company; (i) Sell, lease, license, encumber or otherwise dispose of any properties or assets which are material, individually or in the aggregate, to the business of Company, except other sales, leases, encumbrances or dispositions or non-exclusive licenses in the ordinary course; (j) Incur any indebtedness for borrowed money (excluding for the avoidance of doubt, trade debt) or guarantee any such indebtedness of another person (other than a subsidiary), extend or enter into any commitment to make an extension of any indebtedness (excluding trade credits) except immaterial transactions in each case in the ordinary course of business consistent with past practice, issue or sell any debt securities or options, warrants, calls or other rights to acquire any debt securities of Company, enter into any "keep well" or other agreement to maintain any financial statement condition or enter into any arrangement having the economic effect of any of the foregoing other than pursuant to existing credit facilities, in the ordinary course of business; (k) Except as required to comply with any Legal Requirement, adopt or amend any employee benefit plan or employee stock purchase or employee stock option plan, or enter into any employment contract (other than offer letters and letter agreements entered into in the ordinary course of business consistent with past practice providing for compensation and other benefits generally commensurate with similarly situated employees) or collective bargaining agreement, pay any special bonus or special remuneration to any director or employee (other than pursuant to the Company Subsidiary except entering into alliance agreements Interim Plan), or providing products and services increase the salaries or wage rates or fringe benefits (including rights to severance or indemnification) of its directors, officers, employees or consultants, other than bonuses, increases in salary or wage rates for non-directors or non- executive officers in the ordinary course of business consistent with past practice; (il) acquire Make any material capital expenditures other than as consistent with the Company Interim Plan; (includingm) Modify, without limitation, by merger, consolidation, amend or acquisition of stock or assets) terminate any interest in any corporation, partnership, other business organization or person Company Contract to which Company or any division thereof; subsidiary thereof is a party or waive, release or assign any material rights or claims thereunder, in each case, in a manner that could reasonably be expected to have a Material Adverse Effect on the Company; (iin) incur Enter into any indebtedness for borrowed money licensing or issue any debt securities other agreement with regard to the acquisition, distribution or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations licensing of any person (material Company Intellectual Property other than Company and Company Subsidiaries) for borrowed money licenses, distribution or make any loans or advances, other than routine employee loans to employees other than Company officers (not to exceed $1,000 to any individual), material to the business, assets, liabilities, financial condition or results of operations of Company and the Company Subsidiaries, taken as a whole, other than similar agreements entered into in the ordinary course of business consistent business, and other than in connection with past practice; (iii) terminate, cancel or request any material change in, or agree to any material change in, any Company Material Contract or other the License Agreement; (iv) make or authorize any capital expenditure, other than capital expenditures in the ordinary course of business consistent with past practice that have been budgeted for fiscal year 1999 and disclosed in writing to Parent and that are not, in the aggregate, in excess of $3,000,000 for Company and the Company Subsidiaries taken as a whole; or (v) enter into or amend any contract, agreement, commitment or arrangement that, if fully performed, would not be permitted under this Section 6.01(c); (do) declareInitiate any litigation or arbitration proceeding, set asidewhere the initiation of such proceedings, make or pay any dividend or other distributionif determined adversely, payable in cash, stock, property or otherwise, with respect to any of its capital stock, except that any Company Subsidiary may pay dividends or make other distributions to Company or any other Company Subsidiarywould have a Material Adverse Effect on Company; (ep) reclassifyPay, combinedischarge, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; (f) amend or change the period (or permit any acceleration, amendment or change unless required pursuant to the terms of existing agreements of Company previously provided to Parent) of exercisability of options granted under the Company Stock Plans or authorize cash payments in exchange for any Company Stock Options granted under any of such plans; (g) amend the terms of, repurchase, redeem or otherwise acquire, or permit any Company Subsidiary to repurchase, redeem or otherwise acquire, any of its securities or any securities of any Company Subsidiary or propose to do any of the foregoing; (h) other than in the ordinary course of business consistent with past practices or pursuant to existing agreements of Company previously provided to Parent increase the compensation payable or to become payable to its directors, officers, consultants or employees, grant any rights to severance or termination pay to, or enter into any employment or severance agreement which provides benefits upon a change in control of Company that would be triggered by the Merger with, any director, officer, consultant or other employee of Company or any Company Subsidiary who is not currently entitled to such benefits from the Merger, establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer, consultant or employee of Company or any Company Subsidiary, except to the extent required by applicable Law or the terms of a collective bargaining agreement, or enter into or amend any contract, agreement, commitment or arrangement between Company or any Company Subsidiary and any of Company's directors, officers, consultants or employees; (i) pay, discharge settle or satisfy any material claims, liabilities liabilities, obligations or obligations litigation (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction in the ordinary course of business and consistent with past practice of liabilities reflected where such action would not have a Material Adverse Effect on Company, provided, that no such settlement would create a material liability or reserved against on the consolidated balance sheet of Company and the consolidated the Company Subsidiaries dated as of March 31, 1999 included in Company's quarterly report on Form 10-Q for the period then ended (the "Company Balance Sheet") and only to the extent reflected or to the extent of such reserves or incurred in the ordinary course of business since March 31, 1999require a material payment; (jq) Materially revalue any of its assets or, except as required by GAAP, make any change with respect to Company's in accounting policiesmethods, principles, methods principles or procedures, including, without limitation, revenue recognition policies, other than as required by U.S. GAAP; (k) make any material Tax election or settle or compromise any material Tax liabilitypractices; or (lr) authorize or enter into any formal or informal agreement Agree in writing or otherwise make any commitment to do take any of the foregoing or to take any action which would make any of the representations or warranties of Company contained actions described in this Agreement untrue or incorrect in any material respect or result in any of the conditions to the Merger set forth herein not being satisfiedSection 4.1 (a) through (q) above.

Conduct of Business by Company. Pending the Closing Company agrees that, between (a) From and after the date hereof until the earlier of the Effective Time or the date, if any, on which this Agreement and is terminated pursuant to Section 7.1 (the Effective Time, unless Parent shall otherwise agree in writing"Termination Date"), and except (i) as a result may be required by applicable Law or the regulations or requirements of entering into any stock exchange or regulatory organization applicable to Parent or any of its Subsidiaries, (ii) with the prior written consent of Parent, (iii) as may be contemplated or required by this Agreement Agreement, or (xiv) as set forth in Section 5.1 of the respective businesses Company Disclosure Schedule, Company covenants and agrees that the business of Company and the Company its Subsidiaries shall be conducted only inin the ordinary course of business, and shall use commercially reasonable efforts to preserve intact their present lines of business, maintain their rights, franchises and Permits and preserve their relationships with customers and suppliers; provided, however, that no action by Company or its Subsidiaries with respect to matters specifically addressed by any provision of Section 5.1(b) shall be deemed a breach of this sentence unless such action would constitute a breach of such other provision of Section 5.1(b). (b) Company agrees with the Parent Entities, on behalf of itself and its Subsidiaries, that from the date hereof and prior to the earlier of the Effective Time and the Termination Date, except (i) as may be required by applicable Law or the regulations or requirements of any stock exchange or regulatory organization applicable to Company Subsidiaries or any of its Subsidiaries, (ii) as may be consented to by Parent, or (iii) as may be contemplated or required by this Agreement, Company: (i) shall not adopt any amendments to its certificate of incorporation or bylaws or similar applicable organizational documents, and shall not permit any of its Subsidiaries to adopt any amendments to its articles of incorporation or bylaws or similar applicable organizational documents; (ii) shall not, and shall not permit any of its Subsidiaries to, 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 its capital stock, except for any such transaction by a wholly owned Subsidiary of Company which remains a wholly owned Subsidiary after consummation of such transaction; (iii) shall not, and shall not permit any of its Subsidiaries that is not wholly owned by Company or wholly owned Subsidiaries of any such Subsidiaries to, authorize or pay any dividends on or make any distribution with respect to its outstanding shares of capital stock (whether in cash, assets, stock or other securities), except dividends or distributions by any direct or indirect wholly owned Subsidiary only to Company or to another wholly owned Subsidiary of Company in the ordinary course of business; (iv) shall not, and shall not permit any of its Subsidiaries to, adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization, other than the Merger or take any action except with respect to any securities owned by such person that would reasonably be expected to prevent, materially impede or materially delay the consummation of the Merger or any other transaction contemplated by this Agreement; (v) shall not, and shall not permit any of its Subsidiaries to, make any acquisition of any other person or business or make any loans, advances or capital contributions to, or investments in, any other person; (vi) except for authorized expenditures made with the proceeds of the Parent Loan, shall not, and shall not permit any of its Subsidiaries to, to the extent any expenditures exceed, in the aggregate, $25,000: (A) sell, lease, license, transfer, exchange or swap, or otherwise dispose of or encumber any properties or non-cash assets, except (1) sales, transfers and dispositions of obsolete or worthless equipment, (2) sales, transfers and dispositions of inventory, commodities and produced Hydrocarbons, crude oil and refined products in the ordinary course of business, or (3) sales, leases, transfers or other dispositions made in connection with any transaction among Parent and its wholly owned Subsidiaries or among its wholly owned Subsidiaries; (B) authorize any capital expenditures, except for (1) expenditures contemplated by Company Reserve Report provided to Parent (whether or not such capital expenditure is made during the 2014 fiscal year), but only to the extent Company has sufficient cash on hand to make such expenditures without incurring additional debt other than the Parent Loan, (2) expenditures made in response to any emergency, whether caused by war, terrorism, weather events, public health events, outages or otherwise, and (3) expenditures made to acquire or re-lease oil and gas leases owned by Company that will be expiring in 2014; (vii) shall not, and shall not permit any of its Subsidiaries to, enter into any new Contract to sell Hydrocarbons other than in the ordinary course of business consistent with past practice and practice, but in no event having a duration longer than 30 days; (yviii) Company shall use all reasonable efforts to keep available except as required by applicable Law or the services terms of such of the current officers, significant employees and consultants of Company and the Company Subsidiaries and to preserve the current relationships of Company and the Company Subsidiaries with such of the corporate partners, customers, suppliers and other persons with which Company or any Company Subsidiary has significant business relations Benefit Plan existing and as in order to preserve substantially intact its business organization. By way of amplification and not limitation, neither Company nor any Company Subsidiary shall, between effect on the date of this Agreement Agreement, shall not, and shall not permit any of its Subsidiaries to, (1) establish, adopt, amend, modify, commence participation in or terminate (or commit to establish, adopt, amend, modify, commence participation in or terminate) any Collective Bargaining Agreement, bonus, profit-sharing, thrift, pension, retirement, deferred compensation, stock option, restricted stock agreement, plan or arrangement covering any current or former directors, officers, employees, consultants, independent contractors or other service providers of Company or any of its Subsidiaries or other existing Company Benefit Plan (other than amendments or modifications to broad-based Company Benefit Plans in the Effective Timeordinary course of business that do not materially increase the cost or expense to Company of providing or administering such benefits), directly (2) increase in any manner the compensation, severance or indirectly, do, or agree to do, benefits of any of the following without current or former directors, officers, employees, consultants, independent contractors or other service providers of Company or its Subsidiaries, (3) pay or award, or commit to pay or award, any bonuses or incentive compensation, (4) enter into any new or modify any existing employment, severance, termination, retention or consulting agreement with any current or former directors, officers, employees, consultants, independent contractors or other service providers of Company or any of its Subsidiaries, (5) accelerate any rights or benefits, (6) fund any rabbi trust or similar arrangement, (7) change any actuarial assumptions used to calculate funding obligations with respect to any Company Benefit Plan or change the prior written consent of Parent and manner in which contributions to such plans are made or the basis on which such contributions are determined, except as a result may be required by GAAP or applicable Law, or (8) hire or terminate the employment or services of entering into this Agreement: (aother than for cause) amend any officer, employee, independent contractor or otherwise change its certificate of incorporation or bylaws or equivalent organizational documentsconsultant; (bix) shall not, and shall not permit any of its Subsidiaries to, materially change financial accounting policies or procedures or any of its methods of reporting income, deductions or other material items for financial accounting purposes, except as required by GAAP, SEC rule or policy or applicable Law; (x) shall not, and shall not permit any of its Subsidiaries to, issue, sell, pledge, dispose of, grant, transfer, lease, license, guarantee of or encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license disposition or encumbrance of, (i) any shares of its capital stock of or other ownership interest in Company or any Company Subsidiary of its Subsidiaries or any class, or securities convertible into or exchangeable or exercisable for any such shares or ownership interest, or any rights, warrants or options to acquire any such shares of such capital stock, ownership interest or convertible or exchangeable securities or take any options, warrants action to cause to be exercisable any otherwise unexercisable option under any existing Company Benefit Plans (except as otherwise provided by the terms of this Agreement or other rights the express terms of any kind to Company Warrant, or Company Convertible Note identified in Section 3.2(a) of the Company’s Disclosure Schedule); (xi) shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, purchase, redeem or otherwise acquire any shares of such the capital stock, stock of any of them or any other ownership interest (includingrights, without limitation, any phantom interest), of Company warrants or any Company Subsidiary, other than (A) the issuance of shares of Company Common Stock pursuant to the exercise of stock options theretofore outstanding as of the date of this Agreement or (B) the issuance of options to purchase up to 250,000 shares of acquire any such shares, except for transactions among Company Common Stock under the Company's 1999 Stock Incentive Plan, 200,000 shares of which may be issued to newly hired management employees and 50,000 shares of which may be issued to existing non-executive employees, its Subsidiaries or (ii) any property or assets of Company or any Company Subsidiary except entering into alliance agreements or providing products and services in the ordinary course of business consistent with past practiceamong its Subsidiaries; (ixii) acquire (includingshall not, without limitationand shall not permit any of its Subsidiaries to, by mergerincur, consolidationassume, guarantee or acquisition of stock or assets) any interest in any corporation, partnership, other business organization or person or any division thereof; (ii) incur otherwise become liable for any indebtedness for borrowed money or issue any debt securities or assumeguarantee of such indebtedness, guarantee or endorseexcept for (1) indebtedness under the Parent Loan, or otherwise as an accommodation become responsible for, the obligations of (2) any person (other than indebtedness among Company and Company its wholly owned Subsidiaries or among its wholly owned Subsidiaries, (3) for borrowed money any indebtedness incurred to replace, renew, extend, refinance or make refund any loans existing indebtedness on substantially the same or advancesmore favorable terms to Company than such existing indebtedness, and (4) for any guarantees by Company of indebtedness of Subsidiaries of Company or guarantees by its Subsidiaries of indebtedness of Company or any Subsidiary of Company, which indebtedness is incurred in compliance with this Section 5.1(b); provided, however, that in the case of each of clauses (2) through (4) such indebtedness does not impose or result in any additional restrictions or limitations that would be material to Company and its Subsidiaries, or, following the Closing, Parent and its Subsidiaries, other than routine employee loans any obligation to employees make payments on such indebtedness and other than any restrictions or limitations to which Company officers (not to exceed $1,000 to or any individual), material to Subsidiary is currently subject under the business, assets, liabilities, financial condition or results terms of operations any indebtedness outstanding as of Company and the Company Subsidiaries, taken as a whole, other than in the ordinary course of business consistent with past practice; (iii) terminate, cancel or request any material change in, or agree to any material change in, any Company Material Contract or other License Agreement; (iv) make or authorize any capital expenditure, other than capital expenditures in the ordinary course of business consistent with past practice that have been budgeted for fiscal year 1999 and disclosed in writing to Parent and that are not, in the aggregate, in excess of $3,000,000 for Company and the Company Subsidiaries taken as a whole; or (v) enter into or amend any contract, agreement, commitment or arrangement that, if fully performed, would not be permitted under this Section 6.01(c)date hereof; (d) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock, except that any Company Subsidiary may pay dividends or make other distributions to Company or any other Company Subsidiary; (e) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; (f) amend or change the period (or permit any acceleration, amendment or change unless required pursuant to the terms of existing agreements of Company previously provided to Parent) of exercisability of options granted under the Company Stock Plans or authorize cash payments in exchange for any Company Stock Options granted under any of such plans; (g) amend the terms of, repurchase, redeem or otherwise acquire, or permit any Company Subsidiary to repurchase, redeem or otherwise acquire, any of its securities or any securities of any Company Subsidiary or propose to do any of the foregoing; (hxiii) other than in the ordinary course of business consistent with past practices business, shall not, and shall not permit any of its Subsidiaries to, modify, amend or pursuant to existing agreements of Company previously provided to Parent increase the compensation payable terminate, or to become payable to its directors, officers, consultants or employees, grant waive any rights to severance under any Company Material Contract or termination pay tounder any Company Permit, or enter into any employment or severance agreement new Contract which provides benefits upon a change in control of Company that would be triggered by a Company Material Contract, in each case in a manner or with an effect that is adverse to Company and its Subsidiaries, taken as a whole, or which would reasonably be expected to, after the Merger withEffective Time, restrict or limit in any directormaterial respect any Parent Entity, officer, consultant or other employee of the Surviving Company or any Company Subsidiary who is not currently entitled to such benefits of their respective affiliates from the Merger, establish, adopt, enter into engaging in any business or amend competing in any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of geographic location with any director, officer, consultant or employee of Company or any Company Subsidiary, except to the extent required by applicable Law or the terms of a collective bargaining agreement, or enter into or amend any contract, agreement, commitment or arrangement between Company or any Company Subsidiary and any of Company's directors, officers, consultants or employeesperson; (ixiv) payshall not, discharge and shall not permit any of its Subsidiaries to, waive, release, assign, settle or satisfy compromise any claimsclaim, liabilities action or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise)proceeding, other than waivers, releases, assignments, settlements or compromises equal to or lesser than the payment, discharge or satisfaction in the ordinary course of business and consistent amounts reserved with past practice of liabilities reflected or reserved against respect thereto on the most recent consolidated balance sheet of Company and the consolidated the Company Subsidiaries dated as of March 31its Subsidiaries; (xv) shall not make, 1999 included in Company's quarterly report on Form 10-Q for the period then ended (the "Company Balance Sheet") and only to the extent reflected change or to the extent of such reserves or incurred in revoke any Tax election outside the ordinary course of business since March 31business, 1999; (j) make change any change with respect to Company's Tax accounting policiesmethod, principlesfile any amended Tax Return, methods or proceduresenter into any closing agreement, includingrequest any Tax ruling, without limitation, revenue recognition policies, other than as required by U.S. GAAP; (k) make any material Tax election or settle or compromise any Tax proceeding, or surrender any claim for a refund of Taxes, in each case, if such action would reasonably be expected to increase by a material Tax liability; oramount the Taxes of Company or Parent; (lxvi) authorize except as otherwise permitted by this Agreement, any refinancing permitted by clauses (xii)(3) and (4) above or enter into for transactions between Company and its Subsidiaries or among its Subsidiaries, shall not, and shall not permit any formal or informal agreement of its Subsidiaries, to prepay, redeem, repurchase, defease, cancel or otherwise make acquire any commitment indebtedness or guarantees thereof of Company or any Subsidiary, other than (1) at stated maturity and (2) any required amortization payments and mandatory prepayments (including mandatory prepayments arising from any change of control put rights to do which holders of such indebtedness or guarantees thereof may be entitled), in each case in accordance with the terms of the instrument governing such indebtedness as in effect on the date hereof; and (xvii) shall not, and shall not permit any of its Subsidiaries to, agree, in writing or otherwise, to take any of the foregoing or actions that are prohibited pursuant to take any action which would make any clauses (i)) through (xvi) of the representations or warranties of Company contained in this Agreement untrue or incorrect in any material respect or result in any of the conditions to the Merger set forth herein not being satisfiedSection 5.1(b).

Conduct of Business by Company. Pending During the Closing Company agrees that, between period from the date of this Agreement and to the Effective Time, unless Parent shall except as consented to in writing in advance by Parent, such consent not to be unreasonably withheld, conditioned or delayed, or as otherwise agree specifically required by this Agreement, or by any Law to which Company or any of its Subsidiaries is subject, or as set forth in writingSection 5.1 of the Company Disclosure Letter, Company shall, and except as a result shall cause each of entering into this Agreement (x) the respective businesses of Company and the Company its Subsidiaries shall be conducted only into, and Company and the Company Subsidiaries shall not take any action except in, carry on its business in the ordinary course of business consistent with past practice and (y) Company shall use all commercially reasonable efforts to preserve intact its business organization and operations, maintain in effect all existing Permits, preserve its assets, rights and properties in good repair and condition, preserve its relationships with customers, suppliers, licensors, licensees, distributors and others having business dealings with it and, subject to Section 5.1(o), keep available the present services of such its employees. In addition to and without limiting the generality of the current officersforegoing, significant employees and consultants of Company and during the Company Subsidiaries and to preserve the current relationships of Company and the Company Subsidiaries with such of the corporate partners, customers, suppliers and other persons with which Company or any Company Subsidiary has significant business relations in order to preserve substantially intact its business organization. By way of amplification and not limitation, neither Company nor any Company Subsidiary shall, between period from the date of this Agreement and to the Effective Time, directly except as consented to in writing in advance by Parent, such consent not to be unreasonably withheld, conditioned or indirectly, dodelayed, or agree as otherwise specifically required by this Agreement or by any Law or the terms of any Material Contract to do, which Company or any of its Subsidiaries is subject (so long as compliance with such terms shall not cause Company or any of its Subsidiaries to be in material non-compliance with this Section 5.1), or as set forth in Section 5.1 of the following Company Disclosure Letter, Company shall not, and shall not permit any of its Subsidiaries, without the Parent’s prior written consent, such consent of Parent and except as a result of entering into this Agreementnot to be unreasonably withheld, conditioned or delayed, to: (a) amend or otherwise change its certificate of incorporation or bylaws or equivalent organizational documents; (b) issue, sell, pledge, dispose of, grant, transfer, lease, license, guarantee or encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license or encumbrance of, (i) any shares of capital stock of Company or any Company Subsidiary of any class, or securities convertible into or exchangeable or exercisable for any shares of such capital stock, or any options, warrants or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of Company or any Company Subsidiary, other than (A) the issuance of shares of Company Common Stock pursuant to the exercise of stock options theretofore outstanding as of the date of this Agreement or (B) the issuance of options to purchase up to 250,000 shares of Company Common Stock under the Company's 1999 Stock Incentive Plan, 200,000 shares of which may be issued to newly hired management employees and 50,000 shares of which may be issued to existing non-executive employees, or (ii) any property or assets of Company or any Company Subsidiary except entering into alliance agreements or providing products and services in the ordinary course of business consistent with past practice; (i) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets) any interest in any corporation, partnership, other business organization or person or any division thereof; (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations of any person (other than Company and Company Subsidiaries) for borrowed money or make any loans or advances, other than routine employee loans to employees other than Company officers (not to exceed $1,000 to any individual), material to the business, assets, liabilities, financial condition or results of operations of Company and the Company Subsidiaries, taken as a whole, other than in the ordinary course of business consistent with past practice; (iii) terminate, cancel or request any material change in, or agree to any material change in, any Company Material Contract or other License Agreement; (iv) make or authorize any capital expenditure, other than capital expenditures in the ordinary course of business consistent with past practice that have been budgeted for fiscal year 1999 and disclosed in writing to Parent and that are not, in the aggregate, in excess of $3,000,000 for Company and the Company Subsidiaries taken as a whole; or (v) enter into or amend any contract, agreement, commitment or arrangement that, if fully performed, would not be permitted under this Section 6.01(c); (d) declare, set aside, make aside or pay any dividend dividends on, or make any other distribution, payable distributions (whether in cash, stock, property stock or otherwise, with property) in respect to any of its capital stock, except that any Company Subsidiary may pay dividends or make other distributions to Company or any other Company Subsidiary; (e) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectlyof, any of its capital stock; (f) amend stock or change the period (other equity interests, except for dividends by any direct or permit any acceleration, amendment or change unless required pursuant to the terms of existing agreements indirect wholly owned Subsidiary of Company previously provided to Parentits parent, (ii) of exercisability of options granted under the Company Stock Plans or authorize cash payments in exchange for any Company Stock Options granted under any of such plans; (g) amend the terms of, repurchasepurchase, redeem or otherwise acquireacquire shares of capital stock or other securities of Company or its Subsidiaries or any options, warrants, or permit rights to acquire any Company Subsidiary to repurchasesuch shares or other securities, redeem or (iii) split, combine, reclassify or otherwise acquire, amend the terms of any of its securities capital stock or any securities other equity interests or issue or authorize the issuance of any Company Subsidiary other securities in respect of, in lieu of or propose to do any in substitution for shares of the foregoing; (h) other than in the ordinary course of business consistent with past practices or pursuant to existing agreements of Company previously provided to Parent increase the compensation payable or to become payable to its directors, officers, consultants or employees, grant any rights to severance or termination pay to, or enter into any employment or severance agreement which provides benefits upon a change in control of Company that would be triggered by the Merger with, any director, officer, consultant capital stock or other employee of Company or any Company Subsidiary who is not currently entitled to such benefits from the Mergerequity interests, establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement except for the benefit issuance of any directorShares upon the exercise, officerconversion or settlement of Stock Options outstanding on the date hereof, consultant or employee of Company or any Company Subsidiarythe Convertible Debt, except to the extent required by applicable Law Convertible Note Hedge or the Warrant in each case in accordance with their terms of a collective bargaining agreement, or enter into or amend any contract, agreement, commitment or arrangement between Company or any Company Subsidiary and any of Company's directors, officers, consultants or employeesas in effect on such date; (i) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction in the ordinary course of business and consistent with past practice of liabilities reflected or reserved against on the consolidated balance sheet of Company and the consolidated the Company Subsidiaries dated as of March 31, 1999 included in Company's quarterly report on Form 10-Q for the period then ended (the "Company Balance Sheet") and only to the extent reflected or to the extent of such reserves or incurred in the ordinary course of business since March 31, 1999; (j) make any change with respect to Company's accounting policies, principles, methods or procedures, including, without limitation, revenue recognition policies, other than as required by U.S. GAAP; (k) make any material Tax election or settle or compromise any material Tax liability; or (l) authorize or enter into any formal or informal agreement or otherwise make any commitment to do any of the foregoing or to take any action which would make any of the representations or warranties of Company contained in this Agreement untrue or incorrect in any material respect or result in any of the conditions to the Merger set forth herein not being satisfied.

Conduct of Business by Company. Pending During the Closing Company agrees that, between period from the date of this Agreement and continuing until the earlier of the termination of this Agreement pursuant to its terms or the Effective Time, unless Company and each of its subsidiaries shall, except to the extent that Parent shall otherwise agree consent in writing, carry on its business, in all material respects, in the ordinary course, in substantially the same manner as heretofore conducted and except as a result of entering into this Agreement (x) the respective businesses of Company in compliance with all applicable laws and the Company Subsidiaries shall be conducted only inregulations, pay its debts and taxes when due subject to good faith disputes over such debts or taxes, pay or perform other material obligations when due, and Company and the Company Subsidiaries shall not take any action except in, the ordinary course of business use its commercially reasonable efforts consistent with past practice practices and policies to (yi) Company shall use all reasonable efforts to preserve intact its present business organization, (ii) keep available the services of such its present officers and employees and (iii) preserve its relationships with customers, suppliers, distributors, licensors, licensees, and others with which it has business dealings. In addition, Company will promptly notify Parent of any material event involving its business or operations. In addition, except as permitted by the terms of this Agreement, and except as provided in Article 4 of the current officersCompany Schedules, significant employees and consultants without the prior written consent of Company and Parent, during the Company Subsidiaries and to preserve the current relationships of Company and the Company Subsidiaries with such of the corporate partners, customers, suppliers and other persons with which Company or any Company Subsidiary has significant business relations in order to preserve substantially intact its business organization. By way of amplification and not limitation, neither Company nor any Company Subsidiary shall, between period from the date of this Agreement and continuing until the earlier of the termination of this Agreement pursuant to its terms or the Effective Time, Company shall not do any of the following and shall not permit its subsidiaries to do any of the following: (a) Waive any stock repurchase rights, accelerate, amend or change the period of exercisability of options or restricted stock, or reprice options granted under any employee, consultant, director or other stock plans or authorize cash payments in exchange for any options granted under any of such plans; (b) Grant any severance or termination pay to any officer or employee except pursuant to written agreements outstanding, or policies existing, on the date hereof and as previously disclosed in writing or made available to Parent, or adopt any new severance plan; (c) Transfer or license to any person or entity or otherwise extend, amend or modify in any material respect any rights to the Company Intellectual Property, or enter into grants to future patent rights, other than non-exclusive licenses in the ordinary course of business and consistent with past practice; (d) Declare, set aside or pay any dividends on or make any other distributions (whether in cash, stock, equity securities or property) in respect of any capital stock or split, combine or reclassify any capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for any capital stock; (e) Purchase, redeem or otherwise acquire, directly or indirectly, do, or agree to do, any of the following without the prior written consent of Parent and except as a result of entering into this Agreement: (a) amend or otherwise change its certificate of incorporation or bylaws or equivalent organizational documents; (b) issue, sell, pledge, dispose of, grant, transfer, lease, license, guarantee or encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license or encumbrance of, (i) any shares of capital stock of Company or its subsidiaries, except repurchases of unvested shares at cost in connection with the termination of the employment relationship with any Company Subsidiary employee pursuant to stock option or purchase agreements in effect on the date hereof; (f) Issue, deliver, sell, authorize, pledge or otherwise encumber or propose any of the foregoing of, any class, shares of capital stock or any securities convertible into or exchangeable or exercisable for any shares of such capital stock, or any optionssubscriptions, rights, warrants or other rights of any kind options to acquire any shares of such capital stock or any securities convertible into shares of capital stock, or enter into other agreements or commitments of any other ownership interest (including, without limitation, character obligating it to issue any phantom interest), of Company such shares or any Company Subsidiaryconvertible securities, other than (A) the issuance delivery and/or sale of shares of Company Common Stock pursuant to the exercise of stock options theretofore therefor outstanding as of the date of this Agreement Agreement. (g) Cause, permit or propose any amendments to its Certificate of Incorporation, Bylaws or other charter documents (Bor similar governing instruments of any of its subsidiaries); (h) the issuance of options Acquire or agree to purchase up to 250,000 shares of Company Common Stock under the Company's 1999 Stock Incentive Plan, 200,000 shares of which may be issued to newly hired management employees and 50,000 shares of which may be issued to existing non-executive employeesacquire by merging or consolidating with, or (ii) by purchasing any property equity interest in or a portion of the assets of, or by any other manner, any business or any 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 business of Company or enter into any Company Subsidiary material joint ventures, strategic partnerships or alliances; (i) Sell, lease, license, encumber or otherwise dispose of any properties or assets which are material, individually or in the aggregate, to the business of Company, except entering into alliance agreements or providing products and services sales of inventory in the ordinary course of business consistent with past practice; (ij) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets) any interest in any corporation, partnership, other business organization or person or any division thereof; (ii) incur Incur any indebtedness for borrowed money or guarantee any such indebtedness of another person, issue or sell any debt securities or assumeoptions, guarantee warrants, calls or endorseother rights to acquire any debt securities of Company, enter into any "keep well" or other agreement to maintain any financial statement condition or enter into any arrangement having the economic effect of any of the foregoing other than (i) in connection with the financing of ordinary course trade payables consistent with past practice or (ii) pursuant to existing credit facilities in the ordinary course of business; (k) Adopt or amend any employee benefit plan or employee stock purchase or employee stock option plan, or otherwise as an accommodation become responsible for, the obligations of enter into any person employment contract or collective bargaining agreement (other than Company offer letters and Company Subsidiariesletter agreements entered into in the ordinary course of business consistent with past practice with employees who are terminable "at will,"), pay any special bonus or special remuneration to any director or employee, or increase the salaries or wage rates or fringe benefits (including rights to severance or indemnification) for borrowed money of its directors, officers, employees or make any loans or advances, consultants other than routine employee loans in the ordinary course of business, consistent with past practice, or change in any material respect any management policies or procedures; (l) Make any payments outside of the ordinary course of business in excess of $50,000; (m) Except in the ordinary course of business, materially modify, amend or terminate any material contract or agreement to employees other than which Company officers or any subsidiary thereof is a party or waive, release or assign any material rights or claims thereunder; (not to exceed $1,000 to n) Enter into any individual)material contracts, material agreements, or obligations relating to the businessdistribution, assetssale, liabilities, financial condition license or results marketing by third parties of operations of Company's products or products licensed by Company and the Company Subsidiaries, taken as a whole, other than in the ordinary course of business consistent with past practice; (iii) terminate, cancel or request any material change in, or agree to any material change in, any Company Material Contract or other License Agreement; (iv) make or authorize any capital expenditure, other than capital expenditures in the ordinary course of business consistent with past practice that have been budgeted for fiscal year 1999 and disclosed in writing to Parent and that are not, in the aggregate, in excess of $3,000,000 for Company and the Company Subsidiaries taken as a whole; or (v) enter into or amend any contract, agreement, commitment or arrangement that, if fully performed, would not be permitted under this Section 6.01(c); (do) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to Materially revalue any of its capital stockassets or, except that as required by GAAP, make any Company Subsidiary may pay dividends change in accounting methods, principles or make other distributions to Company or any other Company Subsidiarypractices; (ep) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, Engage in any of its capital stock; (f) amend or change action that could reasonably be expected to cause the period (or permit any acceleration, amendment or change unless required pursuant Merger to the terms of existing agreements of Company previously provided fail to Parentqualify as a "reorganization" under Section 368(a) of exercisability of options granted under the Company Stock Plans or authorize cash payments in exchange for any Company Stock Options granted under any of such plans; (g) amend the terms of, repurchase, redeem or otherwise acquire, or permit any Company Subsidiary to repurchase, redeem or otherwise acquire, any of its securities or any securities of any Company Subsidiary or propose to do any of the foregoing; (h) other than in the ordinary course of business consistent with past practices or pursuant to existing agreements of Company previously provided to Parent increase the compensation payable or to become payable to its directors, officers, consultants or employees, grant any rights to severance or termination pay to, or enter into any employment or severance agreement which provides benefits upon a change in control of Company that would be triggered by the Merger with, any director, officer, consultant or other employee of Company or any Company Subsidiary who is not currently entitled to such benefits from the Merger, establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer, consultant or employee of Company or any Company Subsidiary, except to the extent required by applicable Law or the terms of a collective bargaining agreement, or enter into or amend any contract, agreement, commitment or arrangement between Company or any Company Subsidiary and any of Company's directors, officers, consultants or employees; (i) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction in the ordinary course of business and consistent with past practice of liabilities reflected or reserved against on the consolidated balance sheet of Company and the consolidated the Company Subsidiaries dated as of March 31, 1999 included in Company's quarterly report on Form 10-Q for the period then ended (the "Company Balance Sheet") and only to the extent reflected or to the extent of such reserves or incurred in the ordinary course of business since March 31, 1999; (j) make any change with respect to Company's accounting policies, principles, methods or procedures, including, without limitation, revenue recognition policies, other than as required by U.S. GAAP; (k) make any material Tax election or settle or compromise any material Tax liabilityCode; or (lq) authorize or enter into any formal or informal agreement Agree in writing or otherwise make any commitment to do take any of the foregoing or to take any action which would make any of the representations or warranties of Company contained actions described in this Agreement untrue or incorrect in any material respect or result in any of the conditions to the Merger set forth herein not being satisfiedArticle 4 (a) through (p) above.

Conduct of Business by Company. Pending the Closing Company agrees that, between the date of this Agreement and the Effective Time, except as contemplated by this Agreement, unless Parent shall otherwise agree in writing, and except as a result of entering into this Agreement (x) the respective businesses business of Company and the Company Subsidiaries shall be conducted only in, and Company and the Company Subsidiaries shall not take any action except in, the ordinary course of business consistent with past practice and (y) Company shall use all reasonable its best efforts to keep available the services of such of the current officers, significant employees and consultants of Company and the Company Subsidiaries and to preserve the current relationships of Company and the Company Subsidiaries with such of the corporate partners, customers, suppliers and other persons with which Company or any Company Subsidiary has significant business relations in order to preserve substantially intact its business organization. By way of amplification and not limitation, neither Company nor any Company Subsidiary shallshall not, between the date of this Agreement and the Effective Time, except as contemplated by this Agreement, directly or indirectly, do, or agree to do, any of the following without the prior written consent of Parent and except as a result of entering into this AgreementParent: (a) amend or otherwise change its certificate of incorporation or bylaws or equivalent organizational documents; (b) issue, sell, pledge, dispose of, grant, transfer, lease, license, guarantee or encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license or encumbrance of, (i) any shares of capital stock of Company or any Company Subsidiary of any class, or securities convertible into or exchangeable or exercisable for any shares of such capital stock, or any options, warrants or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of Company or any Company SubsidiaryCompany, other than (A) the issuance of shares of Company Common Stock pursuant to the exercise of stock options theretofore therefor outstanding as of the date of this Agreement or (B) pursuant to the issuance of options to purchase up to 250,000 shares of Company Common Stock under the Company's 1999 Stock Incentive Plan, 200,000 shares of which may be issued to newly hired management employees and 50,000 shares of which may be issued to existing non-executive employees, Purchase Plan or (ii) any material property or assets of Company or any Company Subsidiary except entering into alliance agreements or providing products and services sales of inventory in the ordinary course of business consistent with past practicepractice and the providing of opt-in e-mail addresses to direct marketers and brokers by Company in the ordinary course of business; (i) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets) any interest in any corporation, partnership, other business organization or person or any division thereof; (ii) incur any indebtedness for borrowed money (other than in de minimis amounts) or issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations of any person (other than Company and Company Subsidiaries) for borrowed money or make any loans or advances, other than routine employee loans to employees other than Company officers (not to exceed $1,000 to any individual), advances material to the business, assets, liabilities, financial condition or results of operations of Company and the Company Subsidiaries, taken as a whole, other than in the ordinary course of business consistent with past practiceCompany; (iii) terminate, cancel or request any material change in, or agree to any material change in, any Company Material Listed Contract or other License Agreement; (iv) make or authorize any capital expenditure, other than capital expenditures in the ordinary course of business consistent with past practice that have been budgeted for fiscal year 1999 and disclosed described in writing to Parent the Company Disclosure Schedule and that are not, in the aggregate, in excess of $3,000,000 250,000 for Company and the Company Subsidiaries taken as a wholeCompany; or (v) enter into or amend any contract, agreement, commitment or arrangement that, if fully performed, would not be permitted under this Section 6.01(c); (d) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock, except that any Company Subsidiary may pay dividends or make other distributions to Company or any other Company Subsidiary; (e) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stockstock except repurchases of unvested shares at cost in connection with the termination of the employment relationship with any employee pursuant to stock option or purchase agreements in effect on the date hereof; (f) amend or change the period (or permit any acceleration, amendment or change unless required pursuant to the terms of existing agreements of Company previously provided to Parentchange) of exercisability of options granted under the Company Stock Plans Plan or authorize cash payments in exchange for any Company Stock Options granted under any of such plansthe Company Stock Plan; (g) amend the terms of, repurchase, redeem or otherwise acquire, or permit any Company Subsidiary to repurchase, redeem or otherwise acquire, acquire any of its securities or any securities of any Company Subsidiary or propose to do any of the foregoing; (h) other than in the ordinary course of business consistent with past practices or pursuant to existing agreements of Company previously provided to Parent increase the compensation payable or to become payable to its directors, officers, consultants or employees, grant any rights to severance or termination pay to, or enter into any employment or severance agreement which provides benefits upon a change in control of Company that would be triggered by the Merger with, any director, officer, consultant or other employee of Company or any Company Subsidiary who is not currently entitled to such benefits from the Merger, establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer, consultant or employee of Company or any Company SubsidiaryCompany, except to the extent required by applicable Law or the terms of a collective bargaining agreement, or enter into or amend any contract, agreement, commitment or arrangement between Company or any Company Subsidiary and any of Company's directors, officers, consultants or employees; (i) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction in the ordinary course of business and consistent with past practice of liabilities reflected or reserved against on the consolidated balance sheet of Company and the consolidated the Company Subsidiaries dated as of March 31June 30, 1999 2000 included in Company's quarterly report on Form 10-Q for the period then ended (the "Company Balance Sheet") and only to the extent reflected or to the extent of such reserves or incurred in the ordinary course of business since March 31, 1999ended; (j) except as required by any Governmental Entity, make any change with respect to Company's accounting policies, principles, methods or procedures, including, without limitation, revenue recognition policies, other than as required by U.S. GAAP; (k) make any material Tax election or settle or compromise any material Tax liability; or (l) authorize or enter into any formal or informal agreement or otherwise make any commitment to do any of the foregoing or to take any action which would make any of the representations or warranties of Company contained in this Agreement untrue or incorrect or prevent Company from performing or cause Company not to perform its covenants hereunder in any material maternal respect or result in any of the conditions to the Merger set forth herein not being satisfiedsatisfied or prevent Company from performing or cause Company not to perform its covenants hereunder.

Conduct of Business by Company. Pending During the Closing Company agrees that, between period from the date of this Agreement and continuing until the earlier of the termination of this Agreement pursuant to its terms or the Effective Time, unless the Company and each of its subsidiaries shall, except to the extent that Parent shall otherwise agree consent in writingwriting (which consent or refusal to grant consent shall not be unreasonably delayed), carry on its business in the usual, regular and ordinary course in substantially the same manner as heretofore conducted and in compliance with all applicable laws and regulations, pay its Liabilities and Taxes when due (subject to good faith disputes over such Liabilities or Taxes), pay or perform other obligations when due, and except as a result of entering into this Agreement (x) the respective businesses of Company and the Company Subsidiaries shall be conducted only in, and Company and the Company Subsidiaries shall not take any action except in, the ordinary course of business use its commercially reasonable efforts consistent with past practice practices and policies to (yi) Company shall use all reasonable efforts to preserve intact its present business organization, (ii) keep available the services of such of the current officersits present officers and employees, significant employees and consultants of Company and the Company Subsidiaries and to (iii) preserve the current its relationships of Company and the Company Subsidiaries with such of the corporate partners, customers, suppliers suppliers, distributors, consultants, licensors, licensees and other persons others with which Company or any Company Subsidiary it has significant business relations in order to preserve substantially intact dealings. In addition, the Company shall promptly notify Parent of any material event involving its business organizationor operations occurring outside the ordinary course of business. By way of amplification and not limitationIn addition, neither Company nor any Company Subsidiary shall, between the date of this Agreement and the Effective Time, directly or indirectly, do, or agree to do, any of the following without the prior written consent of Parent (which consent or refusal to grant consent shall not be unreasonably delayed), except as permitted or required by this Agreement and except as a result provided in Section 4.1 of entering into the Company Schedule, during the period from the date of this AgreementAgreement and continuing until the earlier of the termination of this Agreement pursuant to its terms or the Effective Time, Company shall not do any of the following and shall not permit its subsidiaries to do any of the following: (a) Waive any stock repurchase rights, accelerate, amend or otherwise change its certificate the period of incorporation exercisability of options or bylaws restricted stock, or equivalent organizational documentsreprice options granted under any employee, consultant, director or other stock plans or authorize cash payments in exchange for any options granted under any of such plans; (b) issueGrant any severance or termination pay (whether in cash, sellstock, pledge, dispose of, grant, transfer, lease, license, guarantee or encumberequity securities, or authorize property) to any officer or employee except pursuant to written agreements outstanding on the issuance, sale, pledge, disposition, grant, transfer, lease, license or encumbrance of, (i) any shares of capital stock of Company or any Company Subsidiary of any classdate hereof and as previously disclosed in writing to Parent, or securities convertible into or exchangeable or exercisable for adopt any shares of such capital stocknew severance plan, or amend or modify or alter in any optionsmanner any severance plan, warrants agreement or other rights arrangement existing on the date hereof (including without limitation any retention, change of any kind to acquire any shares of such capital stockcontrol or similar agreement), or grant any other ownership interest equity-based compensation, whether payable in cash or stock; (includingc) Transfer or license to any person or entity or otherwise extend, without limitationamend or modify any rights to the Company Intellectual Property, or enter into grants to transfer or license to any phantom interest), of person future rights to the Company or any Company Subsidiary, Intellectual Property other than (A) the issuance of shares of Company Common Stock pursuant to the exercise of stock options theretofore outstanding as of the date of this Agreement or (B) the issuance of options to purchase up to 250,000 shares of Company Common Stock under the Company's 1999 Stock Incentive Plan, 200,000 shares of which may be issued to newly hired management employees and 50,000 shares of which may be issued to existing non-executive employeesexclusive licenses granted to end-users and non-exclusive distribution, or (ii) any property or assets of Company or any Company Subsidiary except entering reseller and similar commercial agreements entered into alliance agreements or providing products and services in the ordinary course of business and consistent with past practice; ; provided that in no event shall the Company (i) acquire (including, without limitation, by merger, consolidationlicense, or acquisition of stock enter into a distribution, reseller or assets) similar arrangement, on an exclusive basis, or sell, any interest in any corporation, partnership, other business organization Company Intellectual Property; or person or any division thereof; (ii) incur enter into any indebtedness Contract (v) providing for borrowed money any site licenses, (w) containing pricing or issue any debt securities discounting terms or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations of any person (other than Company and Company Subsidiaries) for borrowed money or make any loans or advances, other than routine employee loans to employees other than Company officers (not to exceed $1,000 to any individual), material to the business, assets, liabilities, financial condition or results of operations of Company and the Company Subsidiaries, taken as a whole, provisions other than in the ordinary course of business consistent with past practice; , (iiix) terminaterequiring the Company to use its "best efforts", cancel (y) limiting the right of the Company to engage in any line of business or request to compete with any material change inperson, or agree to any material change in, any Company Material Contract or other License Agreement; (ivz) make or authorize any capital expenditure, other than capital expenditures not otherwise in the ordinary course of business consistent compliance with past practice that have been budgeted for fiscal year 1999 and disclosed in writing to Parent and that are not, in the aggregate, in excess of $3,000,000 for Company and the Company Subsidiaries taken as a whole; or (vSection 4.1(d) enter into or amend any contract, agreement, commitment or arrangement that, if fully performed, would not be permitted under this Section 6.01(c)hereof; (d) declareEnter into any Contract (i) requiring the Company to purchase a minimum amount of products or services with aggregate commitments over the life of all such Contracts in excess of $50,000 individually or $200,000 in the aggregate on a monthly basis, or (ii) requiring the Company to (x) provide a minimum amount of products or services with aggregate commitments over the life of such Contract in excess of $150,000, or (y) provide products or services at a later date at a fixed price (except as set forth on Schedule 4.1(d)(ii)(y) hereof); (e) Declare, set aside, make aside or pay any dividend dividends on or make any other distribution, payable distributions (whether in cash, stock, property equity securities or otherwiseproperty) in respect of any capital stock or split, with combine or reclassify any capital stock or issue or authorize the issuance of any other securities in respect to of, in lieu of or in substitution for any of its capital stock, except that any Company Subsidiary may pay dividends or make other distributions to Company or any other Company Subsidiary; (ef) reclassifyPurchase, combine, split, subdivide or redeem, purchase redeem or otherwise acquire, directly or indirectly, any shares of capital stock of the Company or its capital stock; (f) amend subsidiaries, except repurchases of unvested shares at or change below cost in connection with the period (or permit termination of the employment relationship with any acceleration, amendment or change unless required employee pursuant to stock option or purchase agreements in effect on the terms date of existing agreements of Company previously this Agreement, provided to Parent) of exercisability of options granted under that no such repurchase shall be permitted in the Company Stock Plans or authorize cash payments in exchange for any Company Stock Options granted under any of such plansevent the per share repurchase price is greater than the Merger Consideration; (g) amend the terms ofIssue, repurchasedeliver, redeem sell, authorize or designate (including by certificate of designation) or pledge or otherwise acquireencumber, or permit any Company Subsidiary to repurchase, redeem or otherwise acquire, propose any of its securities the foregoing with respect to any shares of capital stock or any securities convertible into shares of capital stock, or subscriptions, rights, warrants or options to acquire any shares of capital stock or any securities convertible into shares of capital stock, or enter into other agreements or commitments of any character obligating it to issue any such shares or convertible securities, other than the issuance, delivery and/or sale of (i) shares of Company Subsidiary Common Stock pursuant to the exercise of Company Stock Options or propose to do any Company Warrants outstanding as of the foregoingdate of this Agreement, or (ii) shares of Company Common Stock issuable to participants in the ESPP consistent with the terms thereof and subject to Section 1.6(e) hereof; (h) other than in Cause, permit or submit to a vote of the ordinary course of business consistent with past practices Company's stockholders any amendments to the Company Charter Documents (or pursuant to existing agreements of Company previously provided to Parent increase the compensation payable or to become payable to its directors, officers, consultants or employees, grant any rights to severance or termination pay to, or enter into any employment or severance agreement which provides benefits upon a change in control of Company that would be triggered by the Merger with, any director, officer, consultant or other employee of Company or any Company Subsidiary who is not currently entitled to such benefits from the Merger, establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit similar governing instruments of any director, officer, consultant or employee of Company or any Company Subsidiary, except to the extent required by applicable Law or the terms of a collective bargaining agreement, or enter into or amend any contract, agreement, commitment or arrangement between Company or any Company Subsidiary and any of Company's directors, officers, consultants or employeesits subsidiaries); (i) payAcquire or agree to acquire by merging or consolidating with, discharge or satisfy by purchasing any claimsequity interest in or a portion of the assets of, liabilities or obligations (absoluteby any other manner, accruedany business or any corporation, asserted partnership, association or unassertedother business organization or division thereof, contingent or otherwise), other than the payment, discharge otherwise acquire or satisfaction in the ordinary course of business and consistent with past practice of liabilities reflected or reserved against on the consolidated balance sheet of Company and the consolidated the Company Subsidiaries dated as of March 31, 1999 included in Company's quarterly report on Form 10-Q for the period then ended (the "Company Balance Sheet") and only agree to the extent reflected or to the extent of such reserves or incurred in the ordinary course of business since March 31, 1999; (j) make any change with respect to Company's accounting policies, principles, methods or procedures, including, without limitation, revenue recognition policies, other than as required by U.S. GAAP; (k) make any material Tax election or settle or compromise any material Tax liability; or (l) authorize or enter into any formal joint ventures, strategic partnerships or informal agreement or otherwise make any commitment to do any of the foregoing or to take any action which would make any of the representations or warranties of Company contained in this Agreement untrue or incorrect in any material respect or result in any of the conditions to the Merger set forth herein not being satisfied.similar alliances;

Conduct of Business by Company. Pending the Closing Company agrees that, between From the date of this Agreement and hereof to the Effective TimeDate, unless Parent shall otherwise agree in writingthe Company will, and will cause each Company Subsidiary to, except as a result of entering into (i) contemplated by this Agreement Agreement, (xii) the respective businesses of Company and the Company Subsidiaries shall be conducted only in, and Company and the Company Subsidiaries shall not take any action except in, the ordinary course of business consistent with past practice and (y) Company shall use all reasonable efforts to keep available the services of such of the current officers, significant employees and consultants of Company and the Company Subsidiaries and to preserve the current relationships of Company and the Company Subsidiaries with such of the corporate partners, customers, suppliers and other persons with which Company or any Company Subsidiary has significant business relations in order to preserve substantially intact its business organization. By way of amplification and not limitation, neither Company nor any Company Subsidiary shall, between the date of this Agreement and the Effective Time, directly or indirectly, doset forth on Schedule 5.1, or agree (iii) otherwise consented to do, any of the following without the prior written consent of Parent and except as a result of entering into this Agreementin writing by Purchaser: (a) amend carry on its business in the ordinary and regular course in substantially the same manner as heretofore conducted and not engage in any new line of business or enter into any material agreement, transaction or activity or make any material commitment except those in the ordinary and regular course of business and not otherwise change its certificate of incorporation or bylaws or equivalent organizational documentsprohibited under this Section 5.1; (b) neither change nor amend its Certificate of Incorporation or Bylaws; (c) other than pursuant to the exercise of the Options outstanding on the date hereof, not issue, sellsell or grant options, pledge, dispose of, grant, transfer, lease, license, guarantee warrants or encumberrights to purchase or subscribe to, or authorize enter into any arrangement or contract with respect to the issuance, sale, pledge, disposition, grant, transfer, lease, license issuance or encumbrance of, (i) sale of any shares of the capital stock of the Company or any Company Subsidiary of any class, Company’s Subsidiaries or securities rights or obligations convertible into or exchangeable or exercisable for any shares of such the capital stockstock of any Company Entity and not alter the terms of any presently outstanding Options or the Stock Option Plans or make any changes (by split-up, combination, reorganization or otherwise) in the capital structure of any Company Entity; (d) not (x) declare, pay or set aside for payment any dividend or other distribution in respect of the capital stock or other equity securities of any Company Entity, (y) redeem, purchase or otherwise acquire any shares of the capital stock or other securities of any Company Entity or rights or obligations convertible into or exchangeable for any shares of the capital stock or other securities of any Company Entity or obligations convertible into such, or any options, warrants or other rights to purchase or subscribe to any of the foregoing or (z) issue, sell, transfer, pledge or dispose of any shares of, or securities convertible into or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire any shares of, capital stock of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), class of Company or any Company Subsidiary, Entity other than (A) the issuance of shares of Company Common Stock reserved for issuance pursuant to the exercise of stock options theretofore Options outstanding as of on the date of this Agreement or (B) the issuance of options to purchase up to 250,000 shares of Company Common Stock under the Company's 1999 Stock Incentive Plan, 200,000 shares of which may be issued to newly hired management employees and 50,000 shares of which may be issued to existing non-executive employees, or (ii) any property or assets of Company or any Company Subsidiary except entering into alliance agreements or providing products and services in the ordinary course of business consistent with past practicehereof; (ie) not acquire (including, without limitationor enter into any agreement to acquire, by merger, consolidation, consolidation or acquisition purchase of stock or assets, any business or entity; (f) any interest in any corporationpreserve intact the corporate existence, partnership, other goodwill and business organization of each of the Company Entities, to keep the officers and employees of each of the Company Entities available to the applicable Company Entity and to preserve the relationships of each of the Company Entities with suppliers, customers and others having business relations with any of them; (g) (i) create, incur or person or assume any division thereof; Indebtedness, (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorseguarantee, endorse or otherwise as an accommodation become liable or responsible for(whether directly, contingently or otherwise) for the obligations of any person (other Person other than Company and the Company Subsidiaries, (iii) for borrowed money or make any loans or advances, advances to any other Person other than routine employee loans to employees other than Company officers (not to exceed $1,000 to any individual), material to the business, assets, liabilities, financial condition or results of operations of Company and the Company Subsidiaries, taken as or (iv) make any capital contributions to, or investments in, any Person other than the Company Subsidiaries, other than any advance or expenditure not exceeding $250,000 made by a wholeCompany Entity on behalf of its customers; (h) not transfer, lease, license, sell, mortgage, pledge, dispose of, or encumber any assets other than in the ordinary course of business consistent business; (i) not enter into any lease, agreement or arrangement with past practice; respect to any real property; (j) not (i) enter into, modify or extend in any manner the terms of any employment, severance or similar agreements with officers and directors, (ii) grant any increase in the compensation of officers or directors, (iii) terminate, cancel grant any Option or request increase in the compensation of any material change in, or agree to any material change in, any Company Material Contract or other License Agreement; (iv) make or authorize any capital expenditure, other than capital expenditures employees except for salary increases in the ordinary course of business consistent with past practice that have been budgeted for fiscal year 1999 and disclosed in writing to Parent and that are notbusiness, in the aggregate, in excess of $3,000,000 for Company and the Company Subsidiaries taken as a whole; or (viv) enter into amend or amend otherwise increase, or accelerate the payment or vesting of any benefit or amount payable or to become payable under any bonus, incentive, compensation, deferred compensation, severance, profit sharing, stock option, stock purchase, insurance, pension, retirement or other employee benefit plan or other contract, agreement, commitment commitment, arrangement, plan, trust fund or arrangement that, if fully performed, would not be permitted under this Section 6.01(c)policy maintained or contributed to or entered into by the Company or its Subsidiaries; (dk) declare, set aside, not make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock, except that any Company Subsidiary may pay dividends or make other distributions to Company or any other Company Subsidiary; incur (e) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; (f) amend or change the period (or permit any acceleration, amendment or change unless required pursuant to the terms of existing agreements of Company previously provided to Parent) of exercisability of options granted under the Company Stock Plans or authorize cash payments in exchange for any Company Stock Options granted under any of such plans; (g) amend the terms of, repurchase, redeem or otherwise acquire, or permit any Company Subsidiary to repurchase, redeem or otherwise acquire, any of its securities or any securities of any Company Subsidiary or propose to do any of the foregoing; (h) other than in the ordinary course of business consistent business) capital expenditures that, when added to all capital expenditures previously made during fiscal 2007, exceed by more than $50,000 the Company’s 2007 capital expenditure budget previously furnished to the Purchaser (as used herein, “capital expenditure” shall mean all payments in respect of the cost of any fixed asset or improvement or replacement, substitution or addition thereto which has a useful life of more than one year, including those costs arising in connection with past practices the acquisition of such assets by way of increased product or pursuant to existing agreements of Company previously service charges or offset items or in connection with capital leases); (l) except as provided to Parent increase the compensation payable or to become payable to its directorsin this Section 5.1, officers, consultants or employees, grant any rights to severance or termination pay to, or not enter into any employment agreement or severance agreement contract the performance of which provides benefits upon a change in control of Company that would be triggered involve payment by the Merger with, any director, officer, consultant or other employee Company after the date of Company or any Company Subsidiary who is not currently entitled to such benefits from the Merger, establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit this Agreement of any director, officer, consultant or employee consideration in excess of Company or any Company Subsidiary, except to the extent required by applicable Law or the terms of a collective bargaining agreement, or enter into or amend any contract, agreement, commitment or arrangement between Company or any Company Subsidiary and any of Company's directors, officers, consultants or employees$150,000; (im) not pay, discharge discharge, settle or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the (x) payment, discharge or satisfaction of obligations arising in the ordinary course of business properly reflected and reserved against in the Most Recent Balance Sheet or incurred since October 31, 2006, in the ordinary course of business and consistent with past practice (z) the repayment of liabilities reflected or reserved against on the consolidated balance sheet any Indebtedness; (n) perform all of Company and the consolidated the Company Subsidiaries dated as of March 31, 1999 included its obligations under all Material Contracts (except those being contested in Company's quarterly report on Form 10-Q for the period then ended (the "Company Balance Sheet"good faith) and only not enter into, assume or amend any contract or commitment that would be a Material Contract other than contracts to the extent reflected provide software or to the extent of such reserves or incurred services entered into in the ordinary course of business since March 31, 1999business; (jo) make not change any change with respect to Company's of the accounting policiespolicies used by it, principles, methods or procedures, including, without limitation, revenue recognition policies, other than except as required by U.S. Law, rule, regulation or GAAP; (kp) make any material Tax election or settle or compromise any material Tax liability; orprepare and file all federal, state, local and foreign returns for taxes and other tax reports, filings and amendments thereto required to be filed by it, and allow Purchaser, at its request, to review all such returns, reports, filings and amendments at the Company’s offices prior to the filing thereof, which review shall not interfere with the timely filing of such returns; (lq) authorize or enter into any formal or informal agreement or otherwise make any commitment to not do any of the foregoing following: make or change any tax election, change an annual accounting period, adopt or change any accounting method, file any amended Tax Return, change any entity classification election under Treasury Regulation §301.7701-3, enter into any closing agreement, settle any Tax claim or assessment, surrender any right to claim a refund of Taxes, consent to any extension or waiver of the limitation period applicable to any Tax claim or assessment, or take any other similar action, or omit to take any action relating to the filing of any Tax Return or the payment of any Tax; (r) not effect or declare, any split, combination or reclassification of any Company Entity’s equity securities or voting interests or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for equity securities or voting interests in any Company Entity; (s) not fail to maintain any insurance coverage of any Company Entity in a manner consistent with past practices; (t) not pay any material commissions to sales employees in a manner that differs from the ordinary course of business; (u) not enter into or amend any agreement or arrangement that provides customers or any other third parties with enhanced rights or refunds of any nature upon a change of control or consummation of the transactions contemplated herein; (v) except in the ordinary course of business, not enter into any exclusive arrangements with any Person or any arrangements that include a “most-favored nation” or “equally-favored nation” provision; (w) not enter into any new line of business or relocate or terminate the operations of any office of a Company Entity; (x) not adopt a plan or agreement of, or resolutions providing for or authorizing, complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of a Company Entity; (y) not engage in any transaction with any Related Party except for compensation and expense reimbursement practices in the ordinary course of business; (aa) not enter into any settlement, conciliation or similar agreement, the performance of which would make will (i) involve payment of consideration of more than $50,000 in excess of reserves established prior to the date of this Agreement or (ii) requires any Company Entity to limit the function or feature of a product that is currently licensed to third parties by any Company Entity; (bb) not enter into any contract, license, agreement or arrangement or any series of related contracts, licenses, agreements or arrangements with any Person that is not terminable without liability within 30 days, except in the ordinary course of business; (cc) enter into any employment, severance or similar agreements (other than “at will” employment agreements) with any Person; (dd) not enter into any agreement which prohibits any Company Entity from competing with any Person; and (ee) agree or commit to take or refrain from taking or not to do, as applicable, any of the representations or warranties actions described in Section 5.1(a) through Section 5.1(dd). In connection with the continued operation of the business of the Company contained in Entities between the date of this Agreement untrue and the Effective Date, the Company shall confer in good faith and on a regular and frequent basis with one or incorrect more representatives of Purchaser designated in any material respect or result in any writing to report operational matters of materiality and the general status of ongoing operations. In addition, the Company will allow Purchaser employees and agents to be present at the Company’s business locations to observe the business and operations of the conditions Company Entities. The Company acknowledges that Purchaser does not and will not waive any rights it may have under this Agreement as a result of such consultations nor shall Purchaser be responsible for any decisions made by the Company’s officers and directors with respect to matters which are the Merger set forth herein not being satisfiedsubject of such consultation.

Conduct of Business by Company. Pending (a) During the Closing Company agrees that, between period from the date of this Agreement and continuing until the earlier of termination of this Agreement or the Effective Time, unless Parent shall otherwise agree in writingCompany shall, and except shall cause each of its subsidiaries to, carry on its business in the usual, regular and ordinary course, in substantially the same manner as heretofore conducted and in compliance in all material respects with all applicable Legal Requirements, pay its debts and Taxes when due (subject to good faith disputes over such debts or Taxes for which adequate reserves have been established in accordance with GAAP), pay or perform its other liabilities and obligations when due, and use its commercially reasonable efforts to (i) preserve intact its present business organization, (ii) keep available the services of its present officers and current Employees, and (iii) preserve its relationships with customers, suppliers, distributors, licensors, licensees, and others with which it has contractual or business dealings. If Company becomes aware of a material deterioration in the relationship with any key customer, key advertiser, key supplier or key current Employee, it shall promptly bring such information to Acquiror’s attention in writing and, if requested by Acquiror, shall cooperate with Acquiror to promptly restore the relationship. At Acquiror’s request, such cooperation shall include joint customer calls and cooperation in setting post-closing sales, marketing and manufacturing strategies. (b) Company shall, and shall cause each of its subsidiaries to, use its diligent efforts to assure that each of its Contracts (other than with Acquiror and Merger Sub) entered into after the date of this Agreement and prior to the earlier of the termination of this Agreement pursuant to Section 8.1 or the Effective Time will not require the procurement of any consent, waiver or novation or provide for any material change in the obligations of any party in connection with, or terminate as a result of entering into the consummation of, the Merger. (c) During the period from the date of this Agreement and continuing until the earlier of termination of this Agreement or the Effective Time, except as expressly contemplated by this Agreement, Company shall not do any of the following and shall not permit its subsidiaries to do any of the following, in each case without Acquiror’s prior written consent: (xi) waive any stock repurchase rights, accelerate, amend or change the respective businesses period of Company and exercisability of options or restricted stock or preferred stock purchase rights, or re-price options granted under any employee, consultant, director or other stock plans or authorize cash payments in exchange for any options granted under any of such plans; (ii) (A) grant (or agree to grant, whether orally or in writing) any severance or termination pay (cash, equity or otherwise), special remuneration or other additional salary or compensation (including equity based compensation) to any director, officer or Employee, except pursuant to written agreements outstanding, or policies existing, on the date hereof (copies of which have been previously provided to Acquiror), except as forth in Section 5.1(c)(xi) of the Company Subsidiaries shall be conducted only inDisclosure Letter, and Company and or (B) adopt any new severance or termination pay plan, or other compensation plan (including equity based compensation) or amend, modify or alter in any respect any severance or termination pay plan, or other compensation plan (including equity based compensation), agreement or arrangement existing on the date hereof, unless expressly contemplated by this Agreement; (iii) transfer or license to any person or entity or otherwise extend, amend or modify any rights to the Company Subsidiaries shall not take Intellectual Property, or enter into grants to transfer or license to any action except inperson future patent or other Intellectual Property rights, other than granting licenses of the Company Products to end users in the ordinary course of business consistent with past practice and (y) practices; without limiting the foregoing, in no event shall Company shall use all reasonable efforts to keep available the services of such license, sell, assign or transfer any Company Intellectual Property other than non-exclusive licenses of the current officersCompany Products to end users in the ordinary course of business; (iv) declare, significant employees and consultants set aside or pay any dividends on or make any other distributions (whether in cash, stock, equity securities or property) in respect of Company and any of its capital stock or split, combine or reclassify any capital stock or issue or authorize the Company Subsidiaries and to preserve the current relationships issuance of Company and the Company Subsidiaries with such any other securities in respect of, in lieu of the corporate partnersor in substitution for any of its capital stock; (v) purchase, customers, suppliers and other persons with which Company redeem or any Company Subsidiary has significant business relations in order to preserve substantially intact its business organization. By way of amplification and not limitation, neither Company nor any Company Subsidiary shall, between the date of this Agreement and the Effective Timeotherwise acquire, directly or indirectly, do, or agree to do, any of the following without the prior written consent of Parent and except as a result of entering into this Agreement: (a) amend or otherwise change its certificate of incorporation or bylaws or equivalent organizational documents; (b) issue, sell, pledge, dispose of, grant, transfer, lease, license, guarantee or encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license or encumbrance of, (i) any shares of capital stock of Company or its subsidiaries; (vi) issue, deliver, sell, authorize, pledge or otherwise encumber or propose any Company Subsidiary of the foregoing with respect to any class, shares of capital stock or any securities convertible into or exchangeable or exercisable for any shares of such capital stock, or any optionssubscriptions, rights, warrants or other rights of any kind options to acquire any shares of such capital stock or any securities convertible into shares of capital stock, or enter into other agreements or commitments of any other ownership interest (including, without limitation, character obligating it to issue any phantom interest), of Company such shares or any Company Subsidiaryconvertible securities, other than the issuance, delivery and/or sale of (A) the issuance of shares of Company Common Stock pursuant to the exercise of stock options theretofore outstanding as of the date of this Agreement or and (B) the issuance of options to purchase up to 250,000 an aggregate of 33,214 shares of Company Common Stock under issuable to participants in the Company's 1999 Stock Incentive PlanCompany ESPP consistent with the terms thereof; (vii) cause, 200,000 shares permit or propose any amendments to the Company Charter Documents (or similar governing instruments of which may be issued any of its subsidiaries); (viii) acquire or agree to newly hired management employees and 50,000 shares of which may be issued to existing non-executive employeesacquire by merging or consolidating with, or (ii) by purchasing any property equity interest in or a portion of the assets of, or by any other manner, any business or any 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 business of Company or enter into any Company Subsidiary material joint ventures, strategic partnerships or alliances; (ix) sell, lease, license, encumber or otherwise dispose of any properties or assets except entering into alliance agreements (A) sales, leases or providing products and services licenses of product or of inventory in the ordinary course of business, or (B) sales, leases or dispositions of property or assets which are not material, individually or in the aggregate, to the business consistent with past practiceof Company; (i) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets) any interest in any corporation, partnership, other business organization or person or any division thereof; (iix) incur any indebtedness for borrowed money or guarantee any such indebtedness of another person, issue or sell any debt securities or assumeoptions, guarantee warrants, calls or endorseother rights to acquire any debt securities of Company, enter into any “keep well” or other agreement to maintain any financial statement condition or enter into any arrangement having the economic effect of any of the foregoing, except for indebtedness or guarantees to wholly-owned subsidiaries; (xi) adopt or amend any employee benefit plan, policy, employee stock purchase or employee stock option plan, or otherwise as an accommodation become responsible forenter into any employment contract or collective bargaining agreement, pay any special bonus or special remuneration (cash, equity or otherwise) to any stockholder or Employee, or increase the obligations salaries or wage rates or fringe benefits (including rights to severance or indemnification) of any person (its stockholders or Employees other than Company and Company Subsidiaries) for borrowed money as required by applicable Legal Requirements or make any loans or advancesthis Agreement, other than routine employee loans payments (A) made with respect to employees other than Company non-officers (not to exceed $1,000 to any individual), material to the business, assets, liabilities, financial condition or results of operations of Company and the Company Subsidiaries, taken as a whole, other than in the ordinary course of business consistent with past practice; (iii) terminate, cancel or request any material change in, or agree to any material change in, any Company Material Contract or other License Agreement; (iv) make or authorize any capital expenditure, other than capital expenditures non-directors in the ordinary course of business consistent with past practice that have been budgeted for fiscal year 1999 and disclosed in writing to Parent and that are notthat, in the aggregate, do not result in excess of $3,000,000 for Company and a material increase in benefits or compensation expense to the Company Subsidiaries taken as a whole; or (vB) enter into or amend any contract, agreement, commitment or arrangement that, if fully performed, would not be permitted under this as set forth on Section 6.01(c)5.1(c)(xi) of the Company Disclosure Letter; (dxii) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock, except that any Company Subsidiary may pay dividends or make other distributions to Company or any other Company Subsidiary; (e) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; (f) amend or change the period (or permit any acceleration, amendment or change unless required pursuant to the terms of existing agreements of Company previously provided to Parent) of exercisability of options granted under the Company Stock Plans or authorize cash payments in exchange for any Company Stock Options granted under any of such plans; (g) amend the terms of, repurchase, redeem or otherwise acquire, or permit any Company Subsidiary to repurchase, redeem or otherwise acquire, any of its securities or any securities of any Company Subsidiary or propose to do any of the foregoing; (h) other than in the ordinary course of business consistent with past practices or pursuant to existing agreements of Company previously provided to Parent increase the compensation payable or to become payable to its directors, officers, consultants or employees, grant any rights to severance or termination pay to, or enter into any employment or severance agreement which provides benefits upon a change in control of Company that would be triggered by the Merger with, any director, officer, consultant or other employee of Company or any Company Subsidiary who is not currently entitled to such benefits from the Merger, establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer, consultant or employee of Company or any Company Subsidiary, except to the extent required by applicable Law or the terms of a collective bargaining agreement, or enter into or amend any contract, agreement, commitment or arrangement between Company or any Company Subsidiary and any of Company's directors, officers, consultants or employees; (iA) pay, discharge discharge, settle or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), or litigation (whether or not commenced prior to the date of this Agreement) other than the payment, discharge discharge, settlement or satisfaction satisfaction, of liabilities recognized or disclosed in the most recent consolidated financial statements (or the notes thereto) of Company included in the Company SEC Documents or incurred since the date of such financial statements, or (B) amend, terminate, waive in writing or release any confidentiality or similar agreement to which Company or any of its subsidiaries is a party or of which Company or any of its subsidiaries is a beneficiary (and Company will use its good faith efforts to enforce any such agreements specifically requested to be enforced by Acquiror); (xiii) make any individual or series of related payments outside of the ordinary course of business (excluding payments to financial, legal, accounting or other professional service advisors incurred in connection with the transactions contemplated by this Agreement or otherwise) in excess of $50,000; (xiv) enter into, materially modify, amend or terminate any material Company Contract to which Company or any subsidiary thereof is a party or waive, delay the exercise of, release or assign any material rights or claims thereunder; (xv) other than the entry into Contracts providing for commercial sales of Company’s products and services in the ordinary course of business and consistent with past practice practice, enter into any material Contract, violate, terminate, amend or otherwise modify or waive any of liabilities reflected the material terms of any material Contract, or reserved against on enter into any material transaction; (xvi) revalue any of its assets or, except as required by GAAP, make any change in accounting methods, principles or practices; (xvii) incur or enter into any Contract outside of the consolidated balance sheet ordinary course of business providing for obligations of Company in excess of $50,000 individually; (xviii) make or change any Tax election or adopt or change any Tax accounting method that, individually or in the aggregate, is reasonably likely to adversely affect in any material respect the Tax liability or Tax attributes of Company or any of its subsidiaries, enter into any closing agreement, settle or compromise any material Tax liability, file any material amended Return or consent to any extension or waiver of the limitation period applicable to any material tax claim or assessment; (xix) (i) lend any money, other than reasonable and the consolidated the Company Subsidiaries dated as of March 31, 1999 included in Company's quarterly report on Form 10-Q normal advances to current employees or independent contractors for the period then ended (the "Company Balance Sheet") and only to the extent reflected or to the extent of such reserves or bona fide expenses that are incurred in the ordinary course of business since March 31consistent with its past practices (provided that no proceeds of any such advances are used directly or indirectly to purchase shares of Company Common Stock), 1999(ii) make any investments in or capital contributions to, any person, (iii) forgive or discharge in whole or in part any outstanding loans or advances, or (iv) prepay any indebtedness; (jxx) modify or amend in any manner that is adverse to Company any standstill or similar agreements to which Company or any of its subsidiaries is a party; (xxi) engage in any action or enter into any transaction or permit any action to be taken that could reasonably be expected to (A) directly or indirectly materially delay the consummation of any of the transactions contemplated by this Agreement or (B) increase the possibility that any Governmental Entity will seek to object to or challenge or take any action to interfere in any respect with or delay the consummation of any of the transactions contemplated by this Agreement; (xxii) hire or offer to hire directors, officers, employees or consultants; provided, however, that Company shall be permitted, after reasonable notice to and consultation (which consultation shall include performing director, officer, employee or consultant screening procedures consistent with Acquiror’s director, officer, employee or consultant screening procedures and providing Acquiror with the reasonable opportunity to interview such director, officer, employee or consultant) with Acquiror (A) to hire or offer to hire new employees solely to fill those vacancies listed on Schedule 5.1(c)(xxii) with salaries not to exceed the amounts as set forth on Schedule 5.1(c)(xxii) for such vacancies and with benefits (in aggregate) commensurate with similarly situated employees of Company performing similar functions and (B) to hire or offer to hire employees to fill any vacancies arising after the date of this Agreement due to the departure of any employees or consultants, with annual salaries not to exceed 120% of the amount of the annual salary of such departed employee at the time of departure and consulting fees not to exceed $250 per hour; (xxiii) (A) initiate any litigation or Action (other than for the routine collection of bills) or (B) settle or agree to settle any litigation or Action (except in either case where the amount in controversy does not exceed $50,000 and does not involve injunctive or other equitable relief); (xxiv) send any written communications (including electronic communications) to current Employees describing this Agreement or the transactions contemplated hereby; (xxv) make any change representations or issue any communications to employees that are inconsistent with respect to Company's accounting policiesthis Agreement or the transactions contemplated thereby, principles, methods or procedures, including, without limitation, revenue recognition policies, other than as required by U.S. GAAP; (k) make including any material Tax election or settle or compromise any material Tax liabilityrepresentations regarding offers of employment from Acquiror; or (lxxvi) authorize or enter into any formal or informal agreement agree in writing or otherwise make any commitment to do take any of the foregoing or actions described in Section 5.1(c)(i) through Section 5.1(c)(xxv) above, inclusive. For purposes of this Section 5.1 “Company Contract” includes any Company Contract existing on the date hereof and any Contract arising subsequent to take any action which would make any the date of the representations or warranties of Company contained in this Agreement untrue or incorrect in any material respect or result in any of the conditions and prior to the Merger set forth herein not being satisfiedEffective Time that would have been a Company Contract had such Contract been in effect on the date of this Agreement.

Conduct of Business by Company. Pending Except as contemplated by Section 8.16, the Closing Company covenants and agrees that, between the date of this Agreement and that prior to the Effective Time, unless Parent shall agrees in writing or as otherwise agree contemplated by this Agreement, it will conduct its business and day to day operations (including those of any Subsidiaries) in writingthe ordinary and usual course of business, consistent with its past custom and practice, and except as a result of entering into this Agreement (x) the respective businesses of Company and the Company Subsidiaries shall be conducted only in, and Company and the Company Subsidiaries shall not take any action except in, the ordinary course of business consistent with past practice and (y) Company shall will use all its reasonable best efforts to preserve intact its business organization and goodwill, keep in full force and effect all material rights, licenses, permits and franchises relating to such business, keep available the services of such its officers and key employees and maintain satisfactory relationships with suppliers, customers and others having business relationships with it, except with respect to dispositions of any of the current officersforegoing pursuant to the Company's limited right to engage in sale transactions, significant employees and consultants of as set forth in Section 8.3. The Company and the Company Subsidiaries and specifically agrees that, prior to preserve the current relationships of Company and the Company Subsidiaries with such of the corporate partners, customers, suppliers and other persons with which Company or any Company Subsidiary has significant business relations in order to preserve substantially intact its business organization. By way of amplification and not limitation, neither Company nor any Company Subsidiary shall, between the date of this Agreement and the Effective Time, directly unless the Parent otherwise agrees in writing or indirectlyas otherwise contemplated by this Agreement, doincluding the Permitted Restructuring and/or any Permitted Transactions, or agree to doneither the Company, nor any of the following without the prior written consent of Parent and except as a result of entering into this AgreementCompany's Subsidiaries, will: (a) amend except pursuant to the Option Plans or the other obligations set forth on Schedule 6.1 to the Company Disclosure Letter, issue, deliver, sell or dispose of, pledge or otherwise change its certificate encumber (i) any additional shares of incorporation capital stock of any class, or bylaws any securities or equivalent organizational documentsrights convertible into, exchangeable for or creating the right to subscribe for any share of capital stock, or any rights, warrants, options, calls, or any other agreement of any kind to purchase or acquire any share of capital stock or such securities, (ii) any securities convertible into exchangeable for, in respect of, or in substitution for Company Stock currently outstanding, or (iii) any Voting Debt; (b) issueexcept pursuant to existing employee benefit plans or the other obligations set forth on Schedule 6.1 to the Company Disclosure Letter, sellredeem, pledgepurchase or otherwise acquire any of its outstanding capital stock; (c) split, dispose ofcombine, grantsubdivide or reclassify any share of its capital stock, or declare, set aside or pay any dividend, or make any distribution, on its capital stock (except for dividends by a wholly owned Subsidiary); (d) amend its Certificate of Incorporation or Bylaws; (e) adopt a plan of liquidation, dissolution, merger (other than the Merger), consolidation, restructuring, or other reorganization of the Company, or any Subsidiary, or alter in any manner the corporate structure or ownership of any Subsidiary, except pursuant to the Permitted Restructuring, as set forth on Schedule 8.1(e); (f) make any acquisition of any corporation, partnership or business, through merger, consolidation, acquisition of stock or assets or otherwise; (i) except in the ordinary course of business, consistent with past practice, incur or modify or amend any debt for borrowed money or guarantee any such debt or encumber any asset in connection with any such debt, issue any debt securities, or (ii) make any loans, advances or capital contributions to, or investments in, any other Person, other than a wholly owned Subsidiary; (h) except as set forth on Schedule 8.1(h), (i) enter into any contract or commitment with respect to capital expenditures in excess of $200,000, individually, or $500,000, in the aggregate; or (ii) except in the ordinary course of business, enter into, amend, modify, supplement or cancel any other material contract; (i) take any action which would render, or which reasonably may be expected to render, any representation or warranty made by it in this Agreement untrue in any material respect at the Effective Time; (j) acquire a material amount of assets or securities or release or relinquish any material contract rights; (k) except as set forth on Schedule 8.1(h), transfer, lease, license, guarantee or encumberguarantee, or authorize the issuancesell, salemortgage, pledge, disposition, grant, transfer, lease, license or encumbrance dispose of, (i) encumber or subject to any shares of capital stock of Company or any Company Subsidiary of any class, or securities convertible into or exchangeable or exercisable for any shares of such capital stock, or any options, warrants or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitationlien, any phantom interest)assets, of Company or any Company Subsidiary, other than (A) the issuance of shares of Company Common Stock pursuant to the exercise of stock options theretofore outstanding as of the date of this Agreement or (B) the issuance of options to purchase up to 250,000 shares of Company Common Stock under the Company's 1999 Stock Incentive Plan, 200,000 shares of which may be issued to newly hired management employees and 50,000 shares of which may be issued to existing non-executive employees, or (ii) any property or assets of Company or any Company Subsidiary except entering into alliance agreements or providing products and services in the ordinary course of business consistent with past practice; (i) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets) any interest in any corporation, partnership, other business organization or person or any division thereof; (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations of any person (other than Company and Company Subsidiaries) for borrowed money or make any loans or advances, other than routine employee loans to employees other than Company officers (not to exceed $1,000 to any individual), that are material to the business, assets, liabilities, financial condition or results of operations of Company and the Company its Subsidiaries, taken as a whole, other than in the ordinary course of business consistent with past practice; ; (iiil) terminate, cancel or request any material change in, or agree to the settlement of any claim or litigation, that is material change in, any Company Material Contract or other License Agreement; (iv) make or authorize any capital expenditure, other than capital expenditures in to the ordinary course of business consistent with past practice that have been budgeted for fiscal year 1999 and disclosed in writing to Parent and that are not, in the aggregate, in excess of $3,000,000 for Company and the Company Subsidiaries its Subsidiaries, taken as a whole; or (v) enter into or amend any contract, agreement, commitment or arrangement that, if fully performed, would not be permitted under this Section 6.01(c); (d) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock, except that any Company Subsidiary may pay dividends or make other distributions to Company or any other Company Subsidiary; (e) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; (f) amend or change the period (or permit any acceleration, amendment or change unless required pursuant to the terms of existing agreements of Company previously provided to Parent) of exercisability of options granted under the Company Stock Plans or authorize cash payments in exchange for any Company Stock Options granted under any of such plans; (g) amend the terms of, repurchase, redeem or otherwise acquire, or permit any Company Subsidiary to repurchase, redeem or otherwise acquire, any of its securities or any securities of any Company Subsidiary or propose to do any of the foregoing; (h) other than in the ordinary course of business consistent with past practices or pursuant to existing agreements of Company previously provided to Parent increase the compensation payable or to become payable to its directors, officers, consultants or employees, grant any rights to severance or termination pay to, or enter into any employment or severance agreement which provides benefits upon a change in control of Company that would be triggered by the Merger with, any director, officer, consultant or other employee of Company or any Company Subsidiary who is not currently entitled to such benefits from the Merger, establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer, consultant or employee of Company or any Company Subsidiary, except to the extent required by applicable Law or the terms of a collective bargaining agreement, or enter into or amend any contract, agreement, commitment or arrangement between Company or any Company Subsidiary and any of Company's directors, officers, consultants or employees; (i) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction in the ordinary course of business and consistent with past practice of liabilities reflected or reserved against on the consolidated balance sheet of Company and the consolidated the Company Subsidiaries dated as of March 31, 1999 included in Company's quarterly report on Form 10-Q for the period then ended (the "Company Balance Sheet") and only to the extent reflected or to the extent of such reserves or incurred in the ordinary course of business since March 31, 1999; (jm) make any change with respect to Company's accounting policies, principles, methods or procedures, including, without limitation, revenue recognition policies, other than as required by U.S. GAAP; (k) make any material Tax election or settle or compromise any material Tax liability, that is material to the Company and its Subsidiaries, taken as a whole; or (ln) authorize authorize, propose or enter into any formal or informal agreement or otherwise make any commitment announce an intention to do any of the foregoing foregoing, or enter into any contract or agreement to take any action which would make do any of the representations or warranties of Company contained in this Agreement untrue or incorrect in any material respect or result in any of the conditions to the Merger set forth herein not being satisfiedforegoing.

Conduct of Business by Company. Pending the Closing Closing. From the date of this Agreement to the Effective Time, except as expressly required by this Agreement, or otherwise with the prior written consent of Parent, Company agrees thatshall, and shall cause each of Company Subsidiaries, to (a) carry on its respective businesses in the ordinary course consistent with past practice, (b) use commercially reasonable efforts to preserve intact its current business organizations and keep available the services of its current officers and employees, (c) use commercially reasonable efforts to preserve its relationships with principal customers, suppliers and other Persons with which it has business dealings and (d) comply in all material respects with all Laws applicable to it or any of its properties, assets or business. Without limiting the generality of the foregoing, Company shall not, and it shall cause Company Subsidiaries not to, between the date of this Agreement and the Effective Time, unless Parent shall otherwise agree in writing, and except as a result of entering into expressly required by this Agreement (x) the respective businesses of Company and the Company Subsidiaries shall be conducted only in, and Company and the Company Subsidiaries shall not take any action except in, the ordinary course of business consistent with past practice and (y) Company shall use all reasonable efforts to keep available the services of such of the current officers, significant employees and consultants of Company and the Company Subsidiaries and to preserve the current relationships of Company and the Company Subsidiaries with such of the corporate partners, customers, suppliers and other persons with which Company or any Company Subsidiary has significant business relations in order to preserve substantially intact its business organization. By way of amplification and not limitation, neither Company nor any Company Subsidiary shall, between the date of this Agreement and the Effective TimeAgreement, directly or indirectly, do, or agree commit to do, any of the following without the prior written consent of Parent and except as a result of entering into this AgreementParent: (ai) amend Amend or otherwise change its certificate Certificate of incorporation Incorporation or bylaws By-Laws or the equivalent organizational documents; (bii) issueSell, pledge or encumber any stock owned by Company in any of Company Subsidiaries; (iii) Issue, reissue, sell, pledge, dispose of, grant, transfer, lease, license, guarantee or encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license reissuance or encumbrance of, (i) sale of any shares of capital stock of Company or any Company Subsidiary of any class, or securities any bonds, debentures, notes or other indebtedness of Company having the right to vote (or convertible into into, or exchangeable or exercisable for for, securities having the right to vote on any shares matters on which stockholders of such capital stockCompany may vote) ("Company Voting Debt"), or any options, warrants warrants, convertible securities or other rights of any kind to acquire any shares of such capital stockstock or any Company Voting Debt, or any other ownership interest (including, without limitationbut not limited to, any stock appreciation rights, phantom interest), of Company stock or any Company Subsidiary, other than (Astock-based performance units) the issuance of shares of Company Common Stock pursuant to the exercise of stock options theretofore outstanding as of the date of this Agreement or (B) the issuance of options to purchase up to 250,000 shares of Company Common Stock under the Company's 1999 Stock Incentive Plan, 200,000 shares of which may be issued to newly hired management employees and 50,000 shares of which may be issued to existing non-executive employees, or (ii) any property or assets of Company or any Company Subsidiary (except entering into alliance agreements for the issuance of shares of Common Stock required to be issued pursuant to the terms of the Options outstanding as of the date hereof) or providing products and services make any other changes in the ordinary course of business consistent with past practiceits capital structure; (i) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets) any interest in any corporation, partnership, other business organization or person or any division thereof; (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations of any person (other than Company and Company Subsidiaries) for borrowed money or make any loans or advances, other than routine employee loans to employees other than Company officers (not to exceed $1,000 to any individual), material to the business, assets, liabilities, financial condition or results of operations of Company and the Company Subsidiaries, taken as a whole, other than in the ordinary course of business consistent with past practice; (iii) terminate, cancel or request any material change in, or agree to any material change in, any Company Material Contract or other License Agreement; (iv) make or authorize any capital expenditure, other than capital expenditures in the ordinary course of business consistent with past practice that have been budgeted for fiscal year 1999 and disclosed in writing to Parent and that are not, in the aggregate, in excess of $3,000,000 for Company and the Company Subsidiaries taken as a whole; or (v) enter into or amend any contract, agreement, commitment or arrangement that, if fully performed, would not be permitted under this Section 6.01(c); (d) declareDeclare, set aside, make or pay any dividend or other distribution, whether payable in cash, stock, property or otherwise, with respect to any of its capital stock, except that stock (other than dividends or distributions by any wholly owned Company Subsidiary may pay dividends or make other distributions to Company or any other Company Subsidiaryits parent); (ev) reclassifyReclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any shares of its capital stock; (f) amend or change the period (or permit any acceleration, amendment or change unless required pursuant to the terms of existing agreements stock of Company previously provided to Parent) of exercisability of options granted under the Company Stock Plans or authorize cash payments in exchange for any Company Stock Options granted under any of such plans; (g) amend the terms of, repurchase, redeem or otherwise acquire, or permit any Company Subsidiary to repurchase, redeem or otherwise acquire, any of its securities or any securities of any Company Subsidiary or propose any securities convertible into or exercisable for any such shares of its capital stock or securities, other than pursuant to do any Options outstanding as of the foregoingdate hereof in accordance with their terms; (hvi) Acquire (by merger, consolidation, or acquisition of stock or assets) any corporation, partnership or other business organization or division thereof, or any assets that are material, individually or in the aggregate, to Company and Company Subsidiaries, taken as a whole; (vii) Incur any indebtedness for borrowed money (including by issuance of debt securities) other than borrowings in the ordinary course of the Business under Company's existing credit facility or issue any debt securities or warrants or other rights to acquire any debt securities of Company or any Company Subsidiary, or assume, guarantee or endorse (other than for collection or deposit in the ordinary course of the Business), or otherwise as an accommodation become responsible for, the obligations of any Person, or make any loans or advances or make any capital contributions to, or investments in, any other Person; (viii) Enter into, or modify, amend or terminate, any material Contract other than in the ordinary course of business consistent with past practices or pursuant to existing agreements of Company previously provided to Parent increase the compensation payable or to become payable to its directors, officers, consultants or employees, grant any rights to severance or termination pay to, or enter into any employment or severance agreement which provides benefits upon a change in control of Company that would be triggered by the Merger with, any director, officer, consultant or other employee of Company or any Company Subsidiary who is not currently entitled to such benefits from the Merger, establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer, consultant or employee of Company or any Company Subsidiary, except to the extent required by applicable Law or the terms of a collective bargaining agreement, or enter into or amend any contract, agreement, commitment or arrangement between Company or any Company Subsidiary and any of Company's directors, officers, consultants or employeesBusiness; (iix) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction in the ordinary course of business and consistent with past practice of liabilities reflected or reserved against on the consolidated balance sheet of Company and the consolidated the Company Subsidiaries dated Except as of March 31, 1999 included in Company's quarterly report on Form 10-Q for the period then ended (the "Company Balance Sheet") and only to the extent reflected or to the extent of such reserves or incurred in the ordinary course of business since March 31, 1999; (j) make any change with respect to Company's accounting policies, principles, methods or procedures, including, without limitation, revenue recognition policies, other than as required by U.S. GAAP; (k) make any material Tax election or settle or compromise any material Tax liability; or (l) authorize or enter into any formal or informal agreement or otherwise make any commitment to do any of the foregoing or to take any action which would make any of the representations or warranties of Company contained in this Agreement untrue or incorrect in any material respect or result in any of the conditions to the Merger set forth herein not being satisfied.on Company Disclosure Schedule 5.02

Conduct of Business by Company. Pending During the Closing period from the date of this ------------------------------ Agreement and continuing until the earlier of the termination of this Agreement pursuant to its terms or the Effective Time, Company agrees thatand each of its subsidiaries shall, between except to the extent that Parent shall otherwise consent in writing, carry on its business in the ordinary course in substantially the same manner as heretofore conducted and in substantial compliance with all applicable laws and regulations, pay its debts and taxes when due subject to good faith disputes over such debts or taxes, pay or perform other material obligations when due subject to good faith disputes over such obligations, and use its commercially reasonable efforts consistent with past practices and policies to (i) preserve intact its present business organization, (ii) keep available the services of its present officers and employees, and (iii) preserve its relationships with customers, suppliers, distributors, licensors, licensees and others with which it has business dealings material to Company's business. In addition, without the prior written consent of Parent, during the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement pursuant to its terms or the Effective Time, unless Parent shall otherwise agree in writing, and except as a result of entering into this Agreement (x) the respective businesses of Company and the Company Subsidiaries shall be conducted only in, and Company and the Company Subsidiaries shall not take do any action of the following and shall not permit its subsidiaries to do any of the following: (a) Except as required by law or pursuant to the terms of a Plan in effect as of the date hereof, waive any stock repurchase rights, accelerate, amend or change the period of exercisability of options or restricted stock, or reprice options granted under any employee, consultant, director or other stock plans or authorize cash payments in exchange for any options granted under any of such plans; (b) Grant any severance or termination pay to any officer or employee except inpursuant to written agreements outstanding, or policies existing, on the date hereof and as previously disclosed in writing or made available to Parent, or adopt any new severance plan, or amend or modify or alter in any manner any severance plan, agreement or arrangement existing on the date hereof; (c) Other than in the ordinary course of business consistent with past practice and (y) Company shall use all reasonable efforts practices, transfer or license to keep available the services of such of the current officersany person or entity or otherwise extend, significant employees and consultants of Company and amend or modify any rights to the Company Subsidiaries and Intellectual Property, or enter into grants to preserve the current relationships of transfer or license to any person future patent rights; provided that -------- in no event shall Company and the Company Subsidiaries with such of the corporate partners, customers, suppliers and other persons with which Company license on an exclusive basis or sell any Company Subsidiary has significant Intellectual Property (other than in connection with the abandonment of immaterial Company Intellectual Property after at least five business relations days' written notice to Parent); (d) Declare, set aside or pay any dividends on or make any other distributions (whether in order to preserve substantially intact its business organization. By way cash, stock, equity securities or property) in respect of amplification and not limitationany capital stock or split, neither Company nor combine or reclassify any Company Subsidiary shallcapital stock or issue or authorize the issuance of any other securities in respect of, between the date in lieu of this Agreement and the Effective Timeor in substitution for any capital stock; (e) Purchase, redeem or otherwise acquire, directly or indirectly, do, or agree to do, any of the following without the prior written consent of Parent and except as a result of entering into this Agreement: (a) amend or otherwise change its certificate of incorporation or bylaws or equivalent organizational documents; (b) issue, sell, pledge, dispose of, grant, transfer, lease, license, guarantee or encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license or encumbrance of, (i) any shares of capital stock of Company or its subsidiaries, except repurchases of unvested shares at cost in connection with the termination of the employment relationship with any employee pursuant to stock option or purchase agreements in effect on the date hereof (or any such agreements entered into in the ordinary course consistent with past practice by Company Subsidiary with employees hired after the date hereof); (f) Issue, deliver, sell, authorize, pledge or otherwise encumber or propose any of the foregoing with respect to any class, shares of capital stock or any securities convertible into or exchangeable or exercisable for any shares of such capital stock, or any optionssubscriptions, rights, warrants or other rights of any kind options to acquire any shares of such capital stock or any securities convertible into shares of capital stock, or enter into other agreements or commitments of any other ownership interest (includingcharacter obligating it to issue any such shares or convertible securities, without limitation, any phantom interest), of Company or any Company Subsidiaryequity-based awards (whether payable in shares, cash or otherwise) other than (Ax) the issuance issuance, delivery and/or sale of (i) shares of Company Common Stock pursuant to the exercise of stock options theretofore or warrants outstanding as of the date of this Agreement or Agreement, and (Bii) the issuance of options to purchase up to 250,000 shares of Company Common Stock issuable to participants in the ESPP consistent with the terms thereof, (y) the granting of stock options in the ordinary course of business in such amounts and in all other respects and consistent with past practices and with similar vesting terms except as set forth on Schedule 4.1(f), and (z) shares of Company Common Stock in connection with acquisition completed prior to the date hereof and with acquisitions permitted under the Section 4.1(h). (g) Cause, permit or submit to a vote of Company's 1999 Stock Incentive Plan, 200,000 shares stockholders any amendments to the Company Charter Documents (or similar governing instruments of which may be issued any of its subsidiaries); (h) Acquire or agree to newly hired management employees and 50,000 shares of which may be issued to existing non-executive employeesacquire by merging or consolidating with, or by purchasing any equity interest in or a portion of the assets of, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof, or otherwise acquire or agree to enter into any joint ventures, strategic partnerships or strategic investments; provided, that Company shall not be prohibited from (i) making strategic -------- ---- investments with a value of up to $20,000,000 per investment, provided, that -------- ---- Company gives Parent prior notice -35- of any such strategic investment with a value of $5,000,000 per investment or more; (ii) making or agreeing to make any property acquisitions the value of which does not exceed 2.5% of Company's market capitalization per acquisition (which value and market capitalization shall be determined upon the signing of agreements relating to such transaction); or (iii) entering into business development deals in the ordinary course of business; (i) Sell, lease, license, encumber or otherwise dispose of any properties or assets of Company or any Company Subsidiary except entering into alliance agreements or providing products and services in the ordinary course of business consistent with past practice, except for the sale, lease, licensing, encumbering or disposition (other than through licensing permitted by clause (c)) of property or assets which are not material, individually or in the aggregate, to the business of Company and its subsidiaries; (ij) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets) any interest in any corporation, partnership, other business organization or person or any division thereof; (ii) incur Incur any indebtedness for borrowed money or guarantee any such indebtedness of another person, issue or sell any debt securities or assumeoptions, guarantee warrants, calls or endorseother rights to acquire any debt securities of Company, enter into any "keep well" or otherwise as an accommodation become responsible for, other agreement to maintain any financial statement condition or enter into any arrangement having the obligations economic effect of any person (other than Company and Company Subsidiaries) for borrowed money or make any loans or advances, other than routine employee loans to employees other than Company officers (not to exceed $1,000 to any individual), material to of the business, assets, liabilities, financial condition or results of operations of Company and the Company Subsidiaries, taken as a whole, foregoing other than in connection with the ordinary course financing of business working capital consistent with past practice; ; (iiik) terminateExcept as may be required under Section 5.8(b) and (c), cancel adopt or request any material change in, or agree to any material change in, amend any Company Material Contract Plan or other License Agreementany employee stock purchase or employee stock option plan; or enter into any employment contract or collective bargaining agreement (iv) make or authorize any capital expenditure, other than capital expenditures offer letters and letter agreements entered into in the ordinary course of business consistent with past practice that have been budgeted for fiscal year 1999 and disclosed in writing with employees who are terminable "at will"); pay any special bonus or special remuneration to Parent and that are notany director or employee; or increase the salaries, wage rates, compensation or other fringe benefits (including rights to severance or indemnification) of its directors, officers, employees or consultants except, in the aggregateeach case, in excess of $3,000,000 as may be required by law and except for Company and the Company Subsidiaries taken as a whole; or (vi) enter into or amend any contract, agreement, commitment or arrangement that, if fully performed, would not be permitted under this Section 6.01(c); (d) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock, except that any Company Subsidiary may pay dividends or make other distributions to Company or any other Company Subsidiary; (e) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; (f) amend or change the period (or permit any acceleration, amendment or change unless required pursuant to the terms of existing agreements of Company previously provided to Parent) of exercisability of options granted under the Company Stock Plans or authorize cash payments in exchange for any Company Stock Options granted under any of such plans; (g) amend the terms of, repurchase, redeem or otherwise acquire, or permit any Company Subsidiary to repurchase, redeem or otherwise acquire, any of its securities or any securities of any Company Subsidiary or propose to do any of the foregoing; (h) other than salary increases in the ordinary course of business consistent with past practices or pursuant to existing agreements of Company previously provided to Parent increase the compensation payable or to become payable to its directors, officers, consultants or practice for non-officer employees, grant any rights to severance or termination pay to, or enter into any employment or severance agreement which provides benefits upon a change (ii) salary increases for officers in control an amount not exceeding 10% of Company that would be triggered by such officer's salary on the Merger with, any director, officer, consultant or other employee of Company or any Company Subsidiary who is not currently entitled to such benefits from the Merger, establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer, consultant or employee of Company or any Company Subsidiary, except to the extent required by applicable Law or the terms of a collective bargaining agreement, or enter into or amend any contract, agreement, commitment or arrangement between Company or any Company Subsidiary date hereof and any of Company's directors, officers, consultants or employees(iii) as set forth on Sechedule 4.1(k); (i) payPay, discharge discharge, settle or satisfy any litigation (whether or not commenced prior to the date of this Agreement) or any material claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge discharge, settlement or satisfaction satisfaction, in the ordinary course of business and consistent with past practice or in accordance with their terms, of liabilities reflected recognized or reserved against on the consolidated balance sheet of Company and the consolidated disclosed in the Company Subsidiaries dated as Balance Sheet or incurred since the date of March 31such financial statements or disclosed in Section 2.8 or 2.9 of the Company Schedule, 1999 included or (ii) waive the benefits of, agree to modify in Company's quarterly report on Form 10-Q for any manner, terminate, release any person from or knowingly fail to enforce the period then ended confidentiality or nondisclosure provisions of any agreement to which Company or any of its subsidiaries is a party or of which Company or any of its subsidiaries is a beneficiary, in the case of both (the "Company Balance Sheet"i) and only (ii) of this Section 4.2(l), which payment, discharge, satisfaction, waiver, termination, modification, release or failure to the extent reflected or enforce has a value to the extent Company in excess of $3,000,000; provided, that Company shall provide prior notice to -------- ---- Parent of any such reserves or incurred action with a value to Company in excess of $1,000,000; (m) Except in the ordinary course of business since March 31consistent with past practice, 1999materially modify, amend or terminate any Contract disclosed in 2.16 of the Company Schedule or waive, delay the exercise of, release or assign any material rights or claims thereunder without providing prior notice to Parent ; (jn) Except as required by GAAP, revalue any of its assets or make any change in accounting methods, principles or practices; (o) Engage in any action that would reasonably be expected to (i) cause the Merger to fail to qualify as a "reorganization" under Section 368(a) of the Code or (ii) interfere with respect Parent's ability to Company's account for the Merger as a pooling of interests, whether or not (in each case) otherwise permitted by the provisions of this Article IV; (p) Make any Tax election or accounting policies, principles, methods or procedures, including, without limitation, revenue recognition policies, other than method change (except as required by U.S. GAAP; (k) make inconsistent with past practice that, individually or in the aggregate, is reasonably likely to adversely affect in any material respect the Tax election liability or Tax attributes of Company or any of its subsidiaries, settle or compromise any material Tax liabilityliability or consent to any extension or waiver of any limitation period with respect to Taxes; or (lq) authorize or enter into any formal or informal agreement Agree in writing or otherwise make any commitment to do take any of the foregoing or to take any action which would make any of the representations or warranties of Company contained actions described in this Agreement untrue or incorrect in any material respect or result in any of the conditions to the Merger set forth herein not being satisfiedSection 4.1 (a) through (p) above.

Conduct of Business by Company. Pending During the Closing Company agrees that, between period from the date hereof to the earlier of (i) Closing and (ii) the date that this Agreement is terminated pursuant to Article X (the “Interim Period”), the Company will conduct and will cause its Subsidiaries to conduct their operations according to their ordinary course of business consistent with past practice, and the Effective TimeCompany will use and will cause each of its Subsidiaries to use its commercially reasonable efforts, unless Parent shall otherwise agree in writingconsistent with past practices, to preserve intact its business organization, taken as a whole, to keep available the services of its current officers and key employees and to preserve the goodwill of and maintain satisfactory relationships with those Persons having business relationships with the Company or any of its Subsidiaries. Without limiting the generality of the foregoing and except as a result of entering into otherwise expressly provided in this Agreement or set forth in Section 6.1 of the Company Disclosure Letter or required by Legal Requirements or any Material Contract to which it is a party during the Interim Period, without the prior written consent of Purchaser, which consent shall not be unreasonably withheld, the Company will not and will cause its respective Subsidiaries not to do any of the following: (xa) issue, sell, transfer, dispose of, acquire, redeem, grant options or rights to purchase or sell any securities of the Company or any of its Subsidiaries or permit any reclassifications of any securities of the Company or any of its Subsidiaries; (b) amend or modify its Charter Documents; (c) declare, pay or otherwise set aside for payment any non-cash dividend or other non-cash distribution with respect to its capital stock or other equity securities; (d) merge or consolidate with, or acquire all or substantially all the assets of, or otherwise acquire, any business, business organization or division thereof, or any other Person; (e) sell, lease, license, subject to any Encumbrance (other than Permitted Encumbrances) or otherwise dispose of any assets other than (i) the respective businesses sale of immaterial assets; (ii) the sale of inventory and damaged or obsolete or excess equipment; or (iii) the settlement of accounts receivable, in each case in the ordinary course of business on a basis consistent with past practice; (f) settle or compromise any Proceeding if such settlement or compromise involves (i) aggregate payments by the Company and its Subsidiaries in respect of all such Proceedings after the Closing in excess of $2,000,000; or (ii) any relief other than money damages, which would be materially adverse to Purchaser; (g) (i) enter into any new, or amend or terminate (other than for cause) any existing employment, severance, consulting or salary continuation agreements with or for the benefit of any Employee (other than payments in respect of Sale Bonus Amounts), provided that, for the avoidance of doubt, the foregoing shall not prohibit the hiring of non-executive Employees earning less than $100,000 per annum on a non-contract, at-will basis in the ordinary course; (ii) grant any material increases in the compensation, perquisites or benefits to officers, directors, employees or consultants, other than normal increases in compensation in the ordinary course of business for Employees who are not officers or directors to the extent consistent with the past practice of the Company; or (iii) agree to grant or grant any stock-related, cash-based, performance or similar awards or bonuses or any other award that, at the option of the grantee, is to be settled in securities of the Company; (h) (i) adopt, materially amend or terminate any Plan or adopt or enter into any new Plan (other than in respect of the Sale Bonus Amounts) or materially increase the benefits provided under any Plan, or promise or commit to undertake any of the foregoing in the future; or (ii) enter into, amend or extend any collective bargaining or other labor agreement; (i) enter into any transaction with or for the benefit of any Affiliate other than the transactions contemplated by this Agreement, the other Transaction Documents and the transactions contemplated herein and therein; (j) make, change, or rescind any material Tax or accounting method election, except with respect to elections consistent with past practice, settle or compromise any material Tax claim or Tax Dispute, consent to any waiver of the statute of limitations period applicable to any Tax claim or Tax Dispute, and enter into any closing agreement with respect to material Taxes; (k) terminate the coverage of any insurance policies, or fail to maintain insurance upon all its material assets and properties in such amounts and of such kinds comparable to that in effect as of the date hereof; (l) make any change in accounting practices or policies other than as required by applicable Legal Requirements or GAAP; (i) other than in the ordinary course consistent with past practice, incur, create or modify any Indebtedness, borrow any money or issue any debt (including by way of debt securities or any warrants or rights to acquire any debt security), (ii) assume, guarantee or endorse or otherwise become responsible for, the obligations of any other Person, (iii) enter into any off-balance sheet financing arrangement or any accounts receivable or payable financing arrangement, or (iv) make any loans, advances or investments or similar financial commitments, other than advances of reasonable expenses to any director, officer or other employee of the Company or its Subsidiaries in the ordinary course of business consistent with past practice, provided that, prior to Closing, Seller and the Company Subsidiaries shall cause all outstanding loans (other than loans to be conducted only inextinguished, and Company and forgiven or assigned or transferred to Seller on or immediately prior to the Closing) or advances (other than advances to Employees for reimbursable expenses in accordance with the policy of the Company or any of its Subsidiaries) from the Company or any of its Subsidiaries shall not take to any action Employee to be repaid in full; (n) materially amend, materially modify, renew, extend, replace, terminate (prior to the end of its term) or grant any release, waiver or relinquishment of any material right under any Material Contract, Real Property Lease, Active Government Contract or Active Government Contract Bid except in, in the ordinary course of business consistent with past practice and (y) Company shall use all reasonable efforts in an manner that is not materially adverse to keep available the services of such of the current officers, significant employees and consultants of Company and the Company Subsidiaries and its Subsidiaries, or enter into any new Contract that would have been a Material Contract, Real Property Lease, Active Government Contract or Active Government Contract Bid if entered into prior to preserve the current relationships of Company and the Company Subsidiaries with such of the corporate partners, customers, suppliers and other persons with which Company or any Company Subsidiary has significant business relations in order to preserve substantially intact its business organization. By way of amplification and not limitation, neither Company nor any Company Subsidiary shall, between the date of this Agreement and the Effective Timehereof, directly or indirectlyexcept, doin each case, or agree to do, any of the following without the prior written consent of Parent and except as a result of entering into this Agreement: (a) amend or otherwise change its certificate of incorporation or bylaws or equivalent organizational documents; (b) issue, sell, pledge, dispose of, grant, transfer, lease, license, guarantee or encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license or encumbrance of, (i) any shares of capital stock of Company or any Company Subsidiary of any class, or securities convertible into or exchangeable or exercisable for any shares of such capital stock, or any options, warrants or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of Company or any Company Subsidiary, other than (A) the issuance of shares of Company Common Stock pursuant to the exercise of stock options theretofore outstanding as of the date of this Agreement or (B) the issuance of options to purchase up to 250,000 shares of Company Common Stock under the Company's 1999 Stock Incentive Plan, 200,000 shares of which may be issued to newly hired management employees and 50,000 shares of which may be issued to existing non-executive employees, or (ii) any property or assets of Company or any Company Subsidiary except entering into alliance agreements or providing products and services in the ordinary course of business consistent with past practice; (io) acquire (includingliquidate, without limitationdissolve, by mergerfail to maintain its existence, consolidationrecapitalize, or acquisition of stock or assets) any interest in any corporation, partnership, other business organization or person or any division thereof; (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, reorganize or otherwise as an accommodation become responsible forwind up its business or operations; (p) take any action that could materially adversely affect the Company’s or its Subsidiaries’ ability to consummate the Acquisition; (q) enter into any lease, the obligations of any person (other than Company and Company Subsidiaries) for borrowed money or make any loans or advances, other than routine employee loans to employees other than Company officers (not to exceed $1,000 to any individual), material to the business, assets, liabilities, financial condition or results of operations of Company and the Company Subsidiariesor its Subsidiary as lessee would, taken as a wholeunder GAAP, other than in the ordinary course of business consistent with past practice; (iii) terminate, cancel or request any material change in, or agree be required to any material change in, any Company Material Contract or other License Agreement; (iv) make or authorize any capital expenditure, other than capital expenditures in the ordinary course of business consistent with past practice that have been budgeted for fiscal year 1999 and disclosed in writing to Parent and that are not, in the aggregate, in excess of $3,000,000 for Company and the Company Subsidiaries taken as a whole; or (v) enter into or amend any contract, agreement, commitment or arrangement that, if fully performed, would not be permitted under this Section 6.01(c); (d) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock, except that any Company Subsidiary may pay dividends or make other distributions to Company or any other Company Subsidiary; (e) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; (f) amend or change the period (or permit any acceleration, amendment or change unless required pursuant to the terms of existing agreements of Company previously provided to Parent) of exercisability of options granted under the Company Stock Plans or authorize cash payments in exchange for any Company Stock Options granted under any of such plans; (g) amend the terms of, repurchase, redeem or otherwise acquire, or permit any Company Subsidiary to repurchase, redeem or otherwise acquire, any of its securities or any securities of any Company Subsidiary or propose to do any of the foregoing; (h) other than in the ordinary course of business consistent with past practices or pursuant to existing agreements of Company previously provided to Parent increase the compensation payable or to become payable to its directors, officers, consultants or employees, grant any rights to severance or termination pay to, or enter into any employment or severance agreement which provides benefits upon a change in control of Company that would be triggered by the Merger with, any director, officer, consultant or other employee of Company or any Company Subsidiary who is not currently entitled to such benefits from the Merger, establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer, consultant or employee of Company or any Company Subsidiary, except to the extent required by applicable Law or the terms of a collective bargaining agreement, or enter into or amend any contract, agreement, commitment or arrangement between Company or any Company Subsidiary and any of Company's directors, officers, consultants or employees; (i) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction in the ordinary course of business and consistent with past practice of liabilities reflected or reserved against on the consolidated balance sheet of Company and the consolidated the Company Subsidiaries dated as of March 31, 1999 included in Company's quarterly report on Form 10-Q for the period then ended (the "Company Balance Sheet") and only to the extent reflected or to the extent of such reserves or incurred in the ordinary course of business since March 31, 1999; (j) make any change with respect to Company's accounting policies, principles, methods or procedures, including, without limitation, revenue recognition policies, other than as required by U.S. GAAP; (k) make any material Tax election or settle or compromise any material Tax liabilitycapitalized; or (lr) authorize authorize, or enter into any formal commit or informal agreement or otherwise make any commitment agree to do take, any of the foregoing or to take any action which would make any of the representations or warranties of Company contained in this Agreement untrue or incorrect in any material respect or result in any of the conditions to the Merger set forth herein not being satisfiedactions.

Conduct of Business by Company. Pending the Closing Company agrees that, between the date of this Agreement and the Effective Time, unless Parent shall otherwise agree in writing, and except as a result of entering into this Agreement (x) the respective businesses of Company and the Company Subsidiaries shall be conducted only in, and Company and the Company Subsidiaries shall not take any action except in, the ordinary course of business consistent with past practice and (y) Company shall use all reasonable efforts to keep available the services of such of the current officers, significant employees and consultants of Company and the Company Subsidiaries and to preserve the current relationships of Company and the Company Subsidiaries with such of the corporate partners, customers, suppliers and other persons with which Company or any Company Subsidiary has significant business relations in order to preserve substantially intact its business organization. By way of amplification and not limitation, neither Company nor any Company Subsidiary shall, between the date of this Agreement and the Effective Time, directly or indirectly, do, or agree to do, any of the following without the prior written consent of Parent and except as a result of entering into this AgreementParent: (a) amend or otherwise change its certificate of incorporation or bylaws or equivalent organizational documents; (b) issue, sell, pledge, dispose of, grant, transfer, lease, license, guarantee or encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license or encumbrance of, (i) any shares of capital stock of Company or any Company Subsidiary of any class, or securities convertible into or exchangeable or exercisable for any shares of such capital stock, or any options, warrants or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of Company or any Company Subsidiary, other than (A) the issuance of shares of Company Common Stock pursuant to the exercise of warrants or stock options theretofore therefor outstanding as of the date of this Agreement or Agreement, (Bii) the issuance in the ordinary course of options to purchase business consistent with past practice of up to 250,000 an additional 500,000 shares of Company Common Stock under the Company's 1999 Stock Incentive Plan, 200,000 shares Plans pursuant to new grants of which may be issued to newly hired management employees and 50,000 shares of which may be issued to existing non-executive employees, options or share purchase rights or (iiiii) any property or assets of Company or any Company Subsidiary except entering into alliance agreements or providing products and services sales of inventory in the ordinary course of business consistent with past practice; (i) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets) any interest in any corporation, partnership, other business organization or person or any division thereofthereof (other than in connection with the formation of foreign subsidiaries and the capitalization thereof with no more than $500,000); (ii) incur any indebtedness for borrowed money (other than in de minimus amounts) or issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations of any person (other than Company and Company Subsidiaries) for borrowed money or make any loans or advances, other than routine employee loans to employees other than Company officers (not to exceed $1,000 to any individual), advances material to the business, assets, liabilities, financial condition or results of operations of Company and the Company Subsidiaries, taken as a whole, other than in the ordinary course of business consistent with past practice; (iii) terminate, cancel or request any material change in, or agree to any material change in, any Company Material Contract or other material License AgreementAgreement (other than as described in Section 6.01(c)(iii) of the Company Disclosure Schedule); (iv) make or authorize any capital expenditure, other than capital expenditures in the ordinary course of business consistent with past practice that have been budgeted for fiscal year 1999 and disclosed described in writing to Parent the Disclosure Schedule and that are not, in the aggregate, in excess of $3,000,000 4,000,000 for Company and the Company Subsidiaries taken as a whole; or (v) enter into or amend any contract, agreement, commitment or arrangement that, if fully performed, would not be permitted under this Section 6.01(c); (d) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock, except that any Company Subsidiary may pay dividends or make other distributions to Company or any other Company Subsidiary; (e) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stockstock except repurchases of unvested shares at cost in connection with the termination of the employment relationship with any employee pursuant to stock option or purchase agreements in effect on the date hereof; (f) amend or change the period (or permit any acceleration, amendment or change unless required pursuant to the terms of existing agreements of Company previously provided to Parentchange) of exercisability of options granted under the Company Stock Plans or authorize cash payments in exchange for any Company Stock Options granted under any of such plans, except pursuant to existing arrangements disclosed to Parent prior to the date hereof; (g) amend the terms of, repurchase, redeem or otherwise acquire, or permit any Company Subsidiary to repurchase, redeem or otherwise acquire, any of its securities or any securities of any Company Subsidiary or propose to do any of the foregoing; (h) other than in the ordinary course of business consistent with past practices or pursuant to existing agreements of Company previously provided to Parent Parent, increase the compensation payable or to become payable to its directors, officers, consultants or employeesemployees (other than any such increases for non-officers that are made in the ordinary course of business consistent with past practice), grant any rights to severance or termination pay to, or enter into any employment or severance agreement which provides benefits upon a change in control of Company that would be triggered by the Merger with, any director, officer, consultant or other employee of Company or any Company Subsidiary who is not currently entitled to such benefits from the Merger, establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer, consultant or employee of Company or any Company SubsidiarySubsidiary (except as allowed under Section 6.01(b)), except to the extent required by applicable Law or the terms of a collective bargaining agreement, or enter into or amend any contract, agreement, commitment or arrangement between Company or any Company Subsidiary and any of Company's directors, officers, consultants or employeesemployees (except as allowed under Section 6.01(b)); (i) except as permitted under Section 6.01(c), pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction in the ordinary course of business and consistent with past practice of liabilities (A) reflected or reserved against on the consolidated balance sheet of Company and the consolidated the Company Subsidiaries dated as of March 31, 1999 included in Company's quarterly report on Form 10-Q for the period then ended (the "Company Balance COMPANY BALANCE Sheet") and only to the extent reflected or to the extent of such reserves or (B) that are both immaterial in amount and incurred in the ordinary course of business since March 31, 1999consistent with past practice after the date of the Company Balance Sheet; (j) make any change with respect to Company's accounting policies, principles, methods or procedures, including, without limitation, revenue recognition policies, other than as required by U.S. GAAP; (k) make any material Tax election or settle or compromise any material Tax liability; or (l) authorize or enter into any formal or informal agreement or otherwise make any commitment to do any of the foregoing or to take any action which would make any of the representations or warranties of Company contained in this Agreement untrue or incorrect in any material respect or result in any of the conditions to the Merger set forth herein not being satisfied, except as specifically permitted hereunder.

Conduct of Business by Company. Pending (a) During the Closing Company agrees that, between period from the date of this Agreement and continuing until the earlier of the termination of this Agreement or the Effective Time, unless Parent shall otherwise agree Company shall: (i) carry on its business in writingthe usual, regular and ordinary course in a manner consistent with past practice; and (ii) use its reasonable best efforts consistent with past practices and policies to preserve intact its present business organization, keep available the services of its present employees and preserve its relationships with customers, suppliers, distributors, licensors, licensees, and except as others having business dealings with it; and (iii) use its reasonable best efforts to conduct its business in such a result manner that on the Closing Date the representations and warranties of entering into Company contained in this Agreement (x) the respective businesses of Company and the Company Subsidiaries shall be conducted only intrue and correct, as though such representations and warranties were made on and as of such date, and Company shall use its reasonable best efforts to cause all of the conditions to the obligations of ARGY under this Agreement to be satisfied as soon as practicable following the date hereof. (b) During the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement or the Effective Time, except as expressly provided in this Agreement, Company Subsidiaries shall not take not, without the prior written consent of ARGY: (i) adopt or propose any action except inamendment to the Charter Documents of Company; ______ ______ Initials Initials (ii) d declare, set aside or pay any dividend or other distribution (whether in cash, stock or other property) with respect to any securities; (iii) issue or authorize any stock dividends or engage in any subdivision, reclassification, recapitalization, split, combination or exchange of shares or any similar event with respect to Company Common Stock or (B) make any change in any issued and outstanding securities, or redeem, purchase or otherwise acquire any securities other than the repurchase at cost from employees of shares of Company Common Stock in connection with the termination of their employment pursuant to Company's standard form of option/restricted shares agreement or a cancellation of issued shares at no cost to Company; (iv) other than borrowings in the ordinary course of business consistent with past practice and (y) Company shall use all reasonable efforts to keep available the services of such of the current officers, significant employees and consultants of Company and the Company Subsidiaries and to preserve the current relationships of Company and the Company Subsidiaries with such of the corporate partners, customers, suppliers and other persons with which Company or any Company Subsidiary has significant business relations in order to preserve substantially intact its business organization. By way of amplification and not limitation, neither Company nor any Company Subsidiary shall, between the date of this Agreement and the Effective Time, directly or indirectly, do, or agree to do, any of the following without the prior written consent of Parent and except as a result of entering into this Agreement: (a) amend or otherwise change its certificate of incorporation or bylaws or equivalent organizational documents; (b) issue, sell, pledge, dispose of, grant, transfer, lease, license, guarantee or encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license or encumbrance of, (i) any shares of capital stock of Company or any Company Subsidiary of any class, or securities convertible into or exchangeable or exercisable for any shares of such capital stock, or any options, warrants or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of Company or any Company Subsidiary, other than (A) the issuance of shares of Company Common Stock pursuant to the exercise of stock options theretofore outstanding as of credit facilities existing on the date of this Agreement or the financing of ordinary course trade payables consistent with past practice, (A) assume, incur or guarantee any Indebtedness, other than endorsements for collection in the ordinary course of business or (B) modify the issuance terms of options any existing Indebtedness in any material respect; (v) other than Permitted Liens and Liens granted pursuant to purchase up credit facilities existing on the date of this Agreement in connection with borrowings permitted under subparagraph (vii), pledge or permit to 250,000 shares of Company Common Stock under the Company's 1999 Stock Incentive Plan, 200,000 shares of which may be issued become subject to newly hired management employees and 50,000 shares of which may be issued to existing non-executive employees, or (ii) Liens any property properties or assets of Company Company; (vi) other than travel loans or any Company Subsidiary except entering into alliance agreements or providing products and services advances in the ordinary course of business consistent with past practice, make any loans, advances or capital contributions to, or investments in, any other Person; (ivii) acquire not cancel any debts or waive any claims or rights of substantial value; (including, without limitation, by merger, consolidation, or acquisition of stock or assetsviii) any interest in any corporation, partnership, other business organization or person or any division thereof; (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations of any person (other than Company and Company Subsidiaries) for borrowed money or make any loans or advances, other than routine employee loans to employees other than Company officers (not to exceed $1,000 to any individual), material to the business, assets, liabilities, financial condition or results of operations of Company and the Company Subsidiaries, taken as a whole, other than in the ordinary course of business consistent with past practice; , (iiiA) amend, modify or terminate, cancel or request waive, release or assign any rights under any Company Material Contract, (B) enter into any Contract which, if entered into prior to the date hereof, would have been material change to the Company; (ix) acquire, or agree to acquire, from any Person any assets, operations, business or securities or engage in, or agree to any material change engage in, any Company Material Contract merger, consolidation or other License Agreement; (iv) make or authorize business combination with any capital expenditurePerson, other than capital expenditures in that would have a material impact on the ordinary course of business consistent with past practice that have been budgeted for fiscal year 1999 and disclosed in writing to Parent and that are not, in the aggregate, in excess of $3,000,000 for Company and the Company Subsidiaries taken as a whole; or (v) enter into or amend any contract, agreement, commitment or arrangement that, if fully performed, would not be permitted under this Section 6.01(c); (d) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock, except that any Company Subsidiary may pay dividends or make other distributions to Company or any other Company Subsidiary; (e) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; (f) amend or change the period (or permit any acceleration, amendment or change unless required pursuant to the terms of existing agreements of Company previously provided to Parent) of exercisability of options granted under the Company Stock Plans or authorize cash payments in exchange for any Company Stock Options granted under any of such plans; (g) amend the terms of, repurchase, redeem or otherwise acquireCompany, or permit any Company Subsidiary to repurchase, redeem or otherwise acquire, any of its securities or any securities of any Company Subsidiary or propose to do any of the foregoing; (h) other than in the ordinary course of business consistent with past practices or pursuant to existing agreements of Company previously provided to Parent increase the compensation payable or to become payable to its directors, officers, consultants or employees, grant any rights to severance or termination pay to, or enter into any employment or severance agreement which provides benefits upon a change in control of Company that would be triggered by the Merger with, any director, officer, consultant or other employee of Company or any Company Subsidiary who is not currently entitled to such benefits from the Merger, establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer, consultant or employee of Company or any Company Subsidiary, except to the extent required by applicable Law or the terms of a collective bargaining agreement, or enter into or amend any contract, agreement, commitment or arrangement between Company or any Company Subsidiary and any of Company's directors, officers, consultants or employees; (i) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction in the ordinary course of business and consistent with past practice of liabilities reflected or reserved against on the consolidated balance sheet of Company and the consolidated the Company Subsidiaries dated as of March 31, 1999 included in Company's quarterly report on Form 10-Q for the period then ended (the "Company Balance Sheet") and only to the extent reflected or to the extent of such reserves or incurred in the ordinary course of business since March 31, 1999; (j) make any change with respect to Company's accounting policies, principles, methods or procedures, including, without limitation, revenue recognition policies, other than as required by U.S. GAAP; (k) make any material Tax election or settle or compromise any material Tax liability; or (l) authorize or enter into any formal or informal agreement or otherwise make any commitment to do any of the foregoing or to take any action which would make any of the representations or warranties of Company contained in this Agreement untrue or incorrect in any material respect or result in any of the conditions to the Merger set forth herein not being satisfied.______ 18 ______ Initials Initials

Conduct of Business by Company. Pending During the Closing Company agrees that, between period from the date of this Agreement and continuing until the earlier of the termination of this Agreement pursuant to its terms or the Effective Time, unless Company shall, except as set forth in Section 2.9(k) of the Company Schedule and except to the extent that Parent shall otherwise agree consent in writing, carry on its business, in the ordinary course in all material respects, and in compliance in all material respects with all applicable laws and regulations, pay its debts and Taxes when due subject to good faith disputes over such debts or taxes, pay or perform other material obligations when due, and use its commercially reasonable efforts consistent with past practices and policies to (i) preserve intact its present business organization, (ii) keep available the services of its present officers and employees and (iii) preserve its relationships with customers, suppliers, distributors, licensors, licensees, and others with which it has business dealings. In addition, except as a result expressly permitted or required by the terms of entering into this Agreement, without the prior written consent of Parent, during the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement pursuant to its terms or the Effective Time, Company shall not do any of the following: (xa) Waive any stock repurchase rights, accelerate, amend or change the respective businesses period of exercisability of options or reprice options granted under any employee, consultant, director or other stock plans or authorize cash payments in exchange for any options granted under any of such plans; (b) Grant any severance or termination pay to any officer or employee except pursuant to written agreements outstanding on the date hereof and as previously disclosed in writing to Parent, or adopt any new severance plan; (c) Transfer or license to any person or entity or otherwise extend, amend or modify any rights to the Intellectual Property of Company and the Company Subsidiaries shall be conducted only in, and Company and the Company Subsidiaries shall not take any action except in, other than in the ordinary course of business consistent with past practice and practice, or enter into grants to transfer or license to any person future patent rights other than in the ordinary course of business consistent with past practices, provided that in no event shall Company license on an exclusive basis or sell any of its Intellectual Property; (yd) Company shall use all reasonable efforts to keep available Declare, set aside or pay any dividends on or make any other distributions (whether in cash, stock, equity securities or property) in respect of any capital stock or split, combine or reclassify any capital stock or issue or authorize the services issuance of such any other securities in respect of, in lieu of the current officersor in substitution for any capital stock; (e) Purchase, significant employees and consultants of Company and the Company Subsidiaries and to preserve the current relationships of Company and the Company Subsidiaries with such of the corporate partners, customers, suppliers and other persons with which Company redeem or any Company Subsidiary has significant business relations in order to preserve substantially intact its business organization. By way of amplification and not limitation, neither Company nor any Company Subsidiary shall, between the date of this Agreement and the Effective Timeotherwise acquire, directly or indirectly, do, or agree to do, any of the following without the prior written consent of Parent and except as a result of entering into this Agreement: (a) amend or otherwise change its certificate of incorporation or bylaws or equivalent organizational documents; (b) issue, sell, pledge, dispose of, grant, transfer, lease, license, guarantee or encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license or encumbrance of, (i) any shares of capital stock of Company Company; (f) Issue, deliver, sell, authorize, pledge or otherwise encumber or propose any of the foregoing with respect to, any shares of capital stock or any Company Subsidiary of any class, or securities convertible into or exchangeable or exercisable for any shares of such capital stock, or any optionssubscriptions, rights, warrants or other rights of any kind options to acquire any shares of such capital stock or any securities convertible into shares of capital stock, or enter into other agreements or commitments of any character obligating it to issue any such shares or convertible securities; (g) Cause, permit or propose any amendments to the Company Charter Documents; (h) Acquire or agree to acquire by merging or consolidating with, or by purchasing any equity interest in or a portion of the assets of, or by any other ownership interest (including, without limitationmanner, any phantom interest), of Company business or any Company Subsidiarycorporation, partnership, association or other business organization or division thereof, or otherwise acquire or agree to acquire any assets or enter into any agreement outside the ordinary course of Company's business consistent with past practice; (i) Sell, lease, license, encumber or otherwise dispose of any of Company's properties or assets other than (A) the issuance of shares of Company Common Stock pursuant to the exercise of stock options theretofore outstanding as of the date of this Agreement or (B) the issuance of options to purchase up to 250,000 shares of Company Common Stock under the Company's 1999 Stock Incentive Plan, 200,000 shares of which may be issued to newly hired management employees and 50,000 shares of which may be issued to existing non-executive employees, or (ii) any property or assets of Company or any Company Subsidiary except entering into alliance agreements or providing products and services in the ordinary course of business consistent with past practice; (ij) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets) any interest in any corporation, partnership, other business organization or person or any division thereof; (ii) incur Incur any indebtedness for borrowed money or guarantee any such indebtedness of another person, issue or sell any debt securities or assumeoptions, guarantee warrants, calls or endorseother rights to acquire any debt securities of Company, enter into any "keep well" or otherwise as an accommodation become responsible for, the obligations of other agreement to maintain any person (other than Company and Company Subsidiaries) for borrowed money or make any loans or advances, other than routine employee loans to employees other than Company officers (not to exceed $1,000 to any individual), material to the business, assets, liabilities, financial statement condition or results of operations of Company and the Company Subsidiaries, taken as a whole, other than in the ordinary course of business consistent with past practice; (iii) terminate, cancel or request any material change in, or agree to any material change in, any Company Material Contract or other License Agreement; (iv) make or authorize any capital expenditure, other than capital expenditures in the ordinary course of business consistent with past practice that have been budgeted for fiscal year 1999 and disclosed in writing to Parent and that are not, in the aggregate, in excess of $3,000,000 for Company and the Company Subsidiaries taken as a whole; or (v) enter into or amend any contract, agreement, commitment or arrangement that, if fully performed, would not be permitted under this Section 6.01(c); (d) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any having the economic effect of its capital stock, except that any Company Subsidiary may pay dividends or make other distributions to Company or any other Company Subsidiary; (e) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; (f) amend or change the period (or permit any acceleration, amendment or change unless required pursuant to the terms of existing agreements of Company previously provided to Parent) of exercisability of options granted under the Company Stock Plans or authorize cash payments in exchange for any Company Stock Options granted under any of such plans; (g) amend the terms of, repurchase, redeem or otherwise acquire, or permit any Company Subsidiary to repurchase, redeem or otherwise acquire, any of its securities or any securities of any Company Subsidiary or propose to do any of the foregoing; (hk) other than in the ordinary course of business consistent with past practices Adopt or pursuant to existing agreements of Company previously provided to Parent increase the compensation payable amend any employee benefit plan, policy or to become payable to its directorsarrangement, officers, consultants any employee stock purchase or employees, grant any rights to severance or termination pay toemployee stock option plan, or enter into any employment contract or severance agreement which provides benefits upon a change in control of Company that would be triggered by the Merger with, any director, officer, consultant or other employee of Company or any Company Subsidiary who is not currently entitled to such benefits from the Merger, establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer, consultant or employee of Company or any Company Subsidiary, except to the extent required by applicable Law or the terms of a collective bargaining agreement, pay any special bonus or enter into special remuneration to any director or amend any contractemployee, agreement, commitment or arrangement between Company increase the salaries or any Company Subsidiary and any wage rates or fringe benefits (including rights to severance or indemnification) of Company's its directors, officers, consultants employees or employeesconsultants; (il) pay, discharge Make any individual or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction in series of related payments outside of the ordinary course of business and consistent with past practice in excess of liabilities reflected $50,000; (m) Revalue any of its assets or, except as required by GAAP, make any change in accounting methods, principles or reserved against on the consolidated balance sheet practices; (n) Incur or enter into any agreement, contract or commitment outside of Company and the consolidated the Company Subsidiaries dated as of March 31, 1999 included in Company's quarterly report on Form 10-Q for the period then ended (the "Company Balance Sheet") and only to the extent reflected or to the extent of such reserves or incurred in the ordinary course of business since March 31, 1999in excess of $50,000 individually; (jo) make Make any change with respect Tax election that, individually or in the aggregate, is reasonably likely to Company's accounting policies, principles, methods or procedures, including, without limitation, revenue recognition policies, other than as required by U.S. GAAP; (k) make adversely affect in any material respect the Tax election liability or Tax attributes of Company or settle or compromise any material income Tax liability; or; (lp) authorize Engage in any action that would cause the Merger to fail to qualify as a "reorganization" under Section 368 of the Code, whether or enter into not otherwise permitted by this Article IV; (q) Take any formal action that will extend the exercise period of any Company Stock Option (as defined in Section 5.6) or informal agreement cause the vesting period of any Company Stock Option to accelerate under any circumstances, regardless of whether such circumstances are to occur before or after the Effective Time, or otherwise make amend the terms of any commitment Company Stock Option. (r) Agree in writing or otherwise to do take any of the foregoing or to take any action which would make any of the representations or warranties of Company contained actions described in this Agreement untrue or incorrect in any material respect or result in any of the conditions to the Merger set forth herein not being satisfiedSection 4.1 (a) through (q) above.

Conduct of Business by Company. Pending (a) During the Closing Company agrees that, between period from the date of this Agreement and continuing until the earlier of termination of this Agreement or the Effective Time, unless Parent Company and each of its subsidiaries shall, except (i) as set forth in Section 5.1 of the Company Disclosure Letter, (ii) in connection with specific actions that Company is explicitly required or permitted to take pursuant to this Agreement or (iii) to the extent that Acquiror shall otherwise consent in writing (which consent shall not be unreasonably withheld or delayed), carry on its business in all material respects, in the usual, regular and ordinary course, in substantially the same manner as heretofore conducted and in compliance with all applicable laws and regulations, pay its debts and taxes when due subject to good faith disputes over such debts or taxes, pay or perform other material obligations when due, and use its commercially reasonable efforts consistent with past practices and policies to (i) preserve intact its present business organization, (ii) keep available the services of its present officers and employees and (iii) preserve its relationships with customers, suppliers, distributors, licensors, licensees, and others with which it has significant business dealings. (b) During the period from the date of this Agreement and continuing until the earlier of termination of this Agreement or the Effective Time, except (i) as set forth in Section 5.1 of the Company Disclosure Letter, (ii) in connection with specific actions that Company is explicitly required to take pursuant to this Agreement, or (iii) to the extent that Acquiror shall otherwise consent in writing (which consent shall not be unreasonably withheld or delayed), Company shall not do any of the following and shall not permit its subsidiaries to do any of the following: (i) Waive any stock repurchase rights, accelerate, amend or change the period of exercisability of options or restricted stock or preferred stock purchase rights, or reprice options granted under any employee, consultant, director or other stock plans or authorize cash payments in exchange for any options granted under any of such plans; (ii) Grant (or agree to grant, whether orally or in writing) any severance or termination pay (cash, and equity or otherwise) to any officer or employee, except as a result of entering into this Agreement (x) pursuant to written agreements outstanding, or policies existing, on the respective businesses of Company date hereof and (y) as previously disclosed in writing to Acquiror in the Company Subsidiaries shall be conducted only inDisclosure Letter, and Company and or adopt any new severance plan; (iii) Transfer or license to any person or entity or otherwise extend, amend or modify any rights to the Company Subsidiaries shall not take Intellectual Property, or enter into grants to transfer or license to any action except in, person future patent rights other than in the ordinary course of business consistent with past practice and practices. Without limiting the foregoing, in no event shall Company license, sell, assign or transfer any Company Intellectual Property, other than non-exclusive licenses in the ordinary course of business; (yiv) Company shall use all reasonable efforts to keep available the services Declare, set aside or pay any dividends on or make any other distributions (whether in cash, stock, equity securities or property) in respect of such of the current officers, significant employees and consultants any capital stock of Company and or split, combine or reclassify any capital stock or issue or authorize the Company Subsidiaries and to preserve the current relationships issuance of Company and the Company Subsidiaries with such any other securities in respect of, in lieu of the corporate partnersor in substitution for any capital stock; (v) Purchase, customers, suppliers and other persons with which Company redeem or any Company Subsidiary has significant business relations in order to preserve substantially intact its business organization. By way of amplification and not limitation, neither Company nor any Company Subsidiary shall, between the date of this Agreement and the Effective Timeotherwise acquire, directly or indirectly, do, or agree to do, any of the following without the prior written consent of Parent and except as a result of entering into this Agreement: (a) amend or otherwise change its certificate of incorporation or bylaws or equivalent organizational documents; (b) issue, sell, pledge, dispose of, grant, transfer, lease, license, guarantee or encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license or encumbrance of, (i) any shares of capital stock of Company or its subsidiaries, except repurchases of unvested shares at cost in connection with the termination of the employment relationship with any Company Subsidiary employee pursuant to stock option or purchase agreements in effect on the date hereof; (vi) Issue, deliver, sell, authorize, pledge or otherwise encumber or propose any of the foregoing with respect to any class, shares of capital stock or any securities convertible into or exchangeable or exercisable for any shares of such capital stock, or any optionssubscriptions, rights, warrants or other rights of any kind options to acquire any shares of such capital stock or any securities convertible into shares of capital stock, or enter into other agreements or commitments of any other ownership interest (including, without limitation, character obligating it to issue any phantom interest), of Company such shares or any Company Subsidiaryconvertible securities, other than (Ax) the issuance issuance, delivery and/or sale of (i) shares of Company Common Stock pursuant to the exercise of stock options theretofore outstanding as of the date of this Agreement or Agreement, and (Bii) shares of Company Common Stock issuable to participants in the Company ESPP consistent with the terms thereof for periods commencing in July 2001, and (y) the issuance granting of stock options to purchase up to 250,000 fifteen thousand (15,000) shares to any individual or to purchase up to two hundred thousand (200,000) shares in the aggregate (and the issuance of Common Stock upon exercise thereof) under the terms of the Company 1997 Stock Option Plan; (vii) Cause, permit or propose any amendments to the Company Charter Documents (or similar governing instruments of any of its subsidiaries); (viii) Acquire or agree to acquire by merging or consolidating with, or by purchasing any equity interest in or a portion of the assets of, or by any other manner, any business or any 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 business of Company Common Stock under or enter into any material joint ventures, strategic partnerships or alliances; (ix) Sell, lease, license, encumber or otherwise dispose of any properties or assets which are material, except (A) sales, leases or licenses of product or of inventory in the Company's 1999 Stock Incentive Plan, 200,000 shares ordinary course of which may be issued to newly hired management employees and 50,000 shares of which may be issued to existing non-executive employeesbusiness consistent with past practice, or (iiB) any sales, leases or dispositions of property or assets which are not material, individually or in the aggregate, to the business of Company and its subsidiaries; (x) Incur any indebtedness for borrowed money or guarantee any Company Subsidiary except entering such indebtedness of another person, issue or sell any debt securities or options, warrants, calls or other rights to acquire any debt securities of Company, enter into alliance agreements any "keep well" or providing products and services other agreement to maintain any financial statement condition or enter into any arrangement having the economic effect of any of the foregoing other than in connection with the financing of ordinary course trade payables consistent with past practice or pursuant to existing credit facilities in the ordinary course of business consistent with past practice; (ixi) acquire Adopt or amend (except as necessary to conform to all applicable laws, including, without limitation, by mergerERISA or the Code) any employee benefit plan, consolidationpolicy, employee stock purchase or employee stock option plan, or acquisition of stock enter into any employment contract or assets) any interest in any corporation, partnership, other business organization or person or any division thereof; (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations of any person collective bargaining agreement (other than Company offer letters and Company Subsidiaries) for borrowed money or make any loans or advances, other than routine employee loans to employees other than Company officers (not to exceed $1,000 to any individual), material to the business, assets, liabilities, financial condition or results of operations of Company and the Company Subsidiaries, taken as a whole, other than in the ordinary course of business consistent with past practice; (iii) terminate, cancel or request any material change in, or agree to any material change in, any Company Material Contract or other License Agreement; (iv) make or authorize any capital expenditure, other than capital expenditures letter agreements entered into in the ordinary course of business consistent with past practice that have been budgeted for fiscal year 1999 and disclosed in writing to Parent and that with employees who are notterminable "at will"), in the aggregate, in excess of $3,000,000 for Company and the Company Subsidiaries taken as a whole; or (v) enter into or amend any contract, agreement, commitment or arrangement that, if fully performed, would not be permitted under this Section 6.01(c); (d) declare, set aside, make or pay any dividend special bonus or other distribution, payable in special remuneration (cash, stock, property equity or otherwise, with respect ) to any of its capital stockdirector or employee, except that any Company Subsidiary may pay dividends or make other distributions increase the salaries or wage rates or fringe benefits (including rights to Company severance or any other Company Subsidiary; (e) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; (f) amend or change the period (or permit any acceleration, amendment or change unless required pursuant to the terms of existing agreements of Company previously provided to Parentindemnification) of exercisability of options granted under the Company Stock Plans or authorize cash payments in exchange for any Company Stock Options granted under any of such plans; (g) amend the terms of, repurchase, redeem or otherwise acquire, or permit any Company Subsidiary to repurchase, redeem or otherwise acquire, any of its securities or any securities of any Company Subsidiary or propose to do any of the foregoing; (h) other than in the ordinary course of business consistent with past practices or pursuant to existing agreements of Company previously provided to Parent increase the compensation payable or to become payable to its directors, officers, employees or consultants or employees, grant any rights to severance or termination pay to, or enter into any employment or severance agreement which provides benefits upon a change in control of Company that would be triggered by the Merger with, any director, officer, consultant or other employee of Company or any Company Subsidiary who is not currently entitled to such benefits from the Merger, establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer, consultant or employee of Company or any Company Subsidiary, except to the extent than as required by applicable Law law or the terms of a collective bargaining agreement, or enter into or amend any contract, agreement, commitment or arrangement between Company or any Company Subsidiary and any of Company's directors, officers, consultants or employeesthis Agreement; (iA) pay, discharge discharge, settle or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise, and whether or not arising prior to, on or after the date of this Agreement), other than the payment, discharge discharge, settlement or satisfaction satisfaction, in the ordinary course of business and consistent or in accordance with past practice of their respective terms, or liabilities reflected recognized or reserved against on disclosed in the most recent consolidated balance sheet financial statements (or the notes thereto) of Company and the consolidated included in the Company Subsidiaries dated as of March 31, 1999 included in Company's quarterly report on Form 10-Q for SEC Reports or incurred since the period then ended (the "Company Balance Sheet") and only to the extent reflected or to the extent date of such reserves financial statements, or incurred (B) amend, terminate, waive in writing or release any confidentiality or similar agreement to which Company or any of its subsidiaries is a party or of which Company or any of its subsidiaries is a beneficiary; provided, however, that Company will use its good faith efforts to enforce any such agreements specifically requested to be enforced by Acquiror; (xiii) Make any individual or series of related payments outside of the ordinary course of business since March 31(including payments to financial, 1999; (j) make any change legal, accounting or other professional service advisors incurred in connection with respect to Company's accounting policies, principles, methods or procedures, including, without limitation, revenue recognition policies, other than as required the transactions contemplated by U.S. GAAP; (k) make any material Tax election or settle or compromise any material Tax liability; or (l) authorize or enter into any formal or informal agreement or otherwise make any commitment to do any of the foregoing or to take any action which would make any of the representations or warranties of Company contained in this Agreement untrue or incorrect otherwise) in any material respect or result in any excess of the conditions to the Merger set forth herein not being satisfied.$100,000;

Conduct of Business by Company. Pending the Closing The Company agrees covenants that, between except (i) for actions taken to implement this Agreement and the transactions contemplated hereby, (ii) as disclosed in Section 5.1 of the Disclosure Schedule, or (iii) as consented to in writing by Purchaser, from and after the date of this Agreement and until the Effective TimeClosing Date, unless Parent shall otherwise agree in writing, and except as a result the Company shall: (a) use reasonable best efforts consistent with good business judgment to preserve intact the present business organization of entering into this Agreement (x) the respective businesses of Company and to operate the Company Subsidiaries shall be conducted only in, and Company and the Company Subsidiaries shall not take any action except in, in the ordinary course of business consistent with past practice and (y) Company shall use in all reasonable efforts to keep available the services of such of the current officers, significant employees and consultants of Company and the Company Subsidiaries and to preserve the current relationships of Company and the Company Subsidiaries with such of the corporate partners, customers, suppliers and other persons with which Company or any Company Subsidiary has significant business relations in order to preserve substantially intact its business organization. By way of amplification and not limitation, neither Company nor any Company Subsidiary shall, between the date of this Agreement and the Effective Time, directly or indirectly, do, or agree to do, any of the following without the prior written consent of Parent and except as a result of entering into this Agreement: (a) amend or otherwise change its certificate of incorporation or bylaws or equivalent organizational documentsmaterial respects; (b) issue, sell, pledge, dispose of, grant, transfer, lease, license, guarantee or encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license or encumbrance of, not (i) issue or sell any shares of capital stock or other securities of the Company or any options, warrants or commitments of any kind with respect thereto, other than the issuance of Common Stock upon exercise of the Company Options to purchase up to 1,747 shares of Common Stock, (ii) directly or indirectly purchase, redeem or otherwise acquire or dispose of any shares of capital stock of Company the Company; (iii) declare, set aside or pay any Company Subsidiary of any class, or securities convertible into or exchangeable or exercisable for any shares of such capital stock, or any options, warrants dividend or other rights of any kind to acquire any shares of such distribution or advance on its capital stock, stock or make any other ownership interest distribution to its stockholders, except for the payment of accrued and unpaid dividends on the outstanding Class A Preferred Stock if and as declared; (includingiv) borrow or agree to borrow any funds or incur, without limitationwhether directly or by way of guarantee, any phantom interest), of Company or obligation for borrowed money; (v) subject any Company Subsidiary, other than (A) the issuance of shares of Company Common Stock pursuant to the exercise of stock options theretofore outstanding as of the date of this Agreement or (B) the issuance of options to purchase up to 250,000 shares of Company Common Stock under the Company's 1999 Stock Incentive Plan, 200,000 shares of which may be issued to newly hired management employees and 50,000 shares of which may be issued to existing non-executive employees, or (ii) any property or assets of the Company (real, personal or mixed, tangible or intangible) to any Company Subsidiary except entering into alliance agreements material mortgage, pledge, lien or providing products and services in the ordinary course of business consistent with past practice; (i) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets) any interest in any corporation, partnership, other business organization or person or any division thereof; (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, encumbrance or otherwise as an accommodation become responsible for, permit or allow the obligations sale or other disposition of any person material property or assets of the Company (other than Company and Company Subsidiaries) for borrowed money real, personal or make any loans mixed, tangible or advancesintangible), other than routine employee loans to employees other than Company officers (not to exceed $1,000 to any individual), material to the business, assets, liabilities, financial condition or results sale of operations of Company and the Company Subsidiaries, taken as a whole, other than Company's products in the ordinary course of business consistent with past practice; (iiivi) terminate, cancel or request make any material change in, or agree to any material change in, any Company Material Contract or other License Agreementin its accounting policies from those applied in the preparation of the Financial Statements; (ivvii) make or authorize any capital expenditureexpenditures not set forth in the Capital Plan dated July 17, other than 1997, a copy of which has been previously provided to Purchaser, except for capital expenditures in the ordinary course of business consistent with past practice that have been budgeted for fiscal year 1999 and disclosed in writing to Parent and that are not, in the aggregate, not in excess of $3,000,000 for Company and 250,000 individually or $500,000 in the Company Subsidiaries taken as a wholeaggregate; or (vviii) enter into or amend any contract, agreement, commitment or arrangement that, if fully performed, would not be permitted under this Section 6.01(c); (d) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock, except that any Company Subsidiary may pay dividends or make other distributions to Company or any other Company Subsidiary; (e) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; (f) amend modify or change the period (or permit in any acceleration, amendment or change unless required pursuant to the terms of existing agreements of Company previously provided to Parent) of exercisability of options granted under the Company Stock Plans or authorize cash payments in exchange for any Company Stock Options granted under any of such plans; (g) amend the terms of, repurchase, redeem or otherwise acquire, or permit any Company Subsidiary to repurchase, redeem or otherwise acquire, any of its securities or any securities of any Company Subsidiary or propose to do any of the foregoing; (h) other than in the ordinary course of business consistent with past practices or pursuant to existing agreements of Company previously provided to Parent increase the compensation payable or to become payable to its directors, officers, consultants or employees, grant any rights to severance or termination pay to, or enter into any employment or severance agreement which provides benefits upon a change in control of Company that would be triggered by the Merger with, any director, officer, consultant or other employee of Company or any Company Subsidiary who is not currently entitled to such benefits from the Merger, establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer, consultant or employee of Company or any Company Subsidiary, except to the extent required by applicable Law or the terms of a collective bargaining agreementmaterial respect, or enter into or amend terminate, any contractmaterial contract or commitment; (ix) acquire an equity interest in, agreementor the assets of, commitment any other corporation or arrangement between Company entity; (x) waive any claims or any Company Subsidiary and any of rights relating to the Company's directorsbusiness, officers, consultants or employees; (i) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction except in the ordinary course of business and consistent with past practice in an amount not to exceed $100,000 in the aggregate; (xi) increase the compensation payable or to become payable to any of liabilities reflected its directors, officers or reserved against employees or take any action with respect to the grant of any severance or termination pay, or stay bonus or other incentive arrangement (other than pursuant to benefit plans and policies in effect on the consolidated balance sheet date of Company and the consolidated the Company Subsidiaries dated as of March 31this Agreement), 1999 included in Company's quarterly report on Form 10-Q for the period then ended (the "Company Balance Sheet") and only to the extent reflected except any increases or to the extent of such reserves or incurred grants made in the ordinary course of business since March 31, 1999; consistent with past practice; (j) make any change with respect to Company's accounting policies, principles, methods or procedures, including, without limitation, revenue recognition policies, other than as required by U.S. GAAP; (kxii) make any material Tax election or settle pay any amounts under, or compromise in respect of, any material Tax liability; or (l) authorize or enter into any formal or informal tax sharing agreement or otherwise make any commitment to do any arrangement, except for payments in accordance with the Tax Sharing Agreement; (xiii) amend its certificate of the foregoing incorporation or to take any action which would make any of the representations or warranties of Company contained in this Agreement untrue or incorrect in any material respect or result in any of the conditions to the Merger set forth herein not being satisfied.bylaws;

Conduct of Business by Company. Pending During the Closing Company agrees that, between period from the date of this Agreement and continuing until the earlier of the termination of this Agreement pursuant to its terms or the Effective Time, unless Company and each of its subsidiaries shall, except to the extent that Parent shall otherwise agree consent in writing, carry on its business in the usual, regular and except ordinary course, in substantially the same manner as a result of entering into this Agreement (x) the respective businesses of Company heretofore conducted and the Company Subsidiaries shall be conducted only inin compliance in all material respects with all applicable laws and regulations, pay its debts and Taxes when due subject to good faith disputes over such debts or Taxes, pay or perform other material obligations when due, and Company and the Company Subsidiaries shall not take any action except in, the ordinary course of business use its commercially reasonable efforts consistent with past practice practices and policies to (yi) Company shall use all reasonable efforts to preserve intact its present business organization, (ii) keep available the services of such its present officers and employees and (iii) preserve its relationships with customers, suppliers, licensors, licensees, and others with which it has business dealings. In addition, Company will promptly notify Parent of any material adverse event involving its business or operations. In addition, except as permitted by the terms of this Agreement, and except as provided in Schedule 4.1 of the current officersCompany Disclosure Letter, significant employees and consultants without the prior written consent of Company and Parent, during the Company Subsidiaries and to preserve the current relationships of Company and the Company Subsidiaries with such of the corporate partners, customers, suppliers and other persons with which Company or any Company Subsidiary has significant business relations in order to preserve substantially intact its business organization. By way of amplification and not limitation, neither Company nor any Company Subsidiary shall, between period from the date of this Agreement and continuing until the earlier of the termination of this Agreement pursuant to its terms or the Effective Time, Company shall not do any of the following and shall not permit its subsidiaries to do any of the following: (a) Waive any stock repurchase rights, accelerate, amend or change the period of exercisability of options or repurchase of restricted stock, or reprice options granted to any employee, consultant, director or authorize cash payments in exchange for any options or take any such action with regard to any warrant or other right to acquire Company's capital stock; (b) Grant any severance or termination pay to any officer or employee except pursuant to written agreements in effect, or policies existing, on the date hereof and as previously disclosed in writing to Parent, or adopt any new severance plan; (c) Transfer or license to any person or entity or otherwise extend, amend or modify in any material respect any rights to the Company Intellectual Property, other than non-exclusive licenses in the ordinary course of business and consistent with past practice; (d) Declare, set aside or pay any dividends on or make any other distributions (whether in cash, stock, equity securities or property) in respect of any capital stock or split, combine or reclassify any capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for any capital stock; (e) Purchase, redeem or otherwise acquire, directly or indirectly, do, or agree to do, any of the following without the prior written consent of Parent and except as a result of entering into this Agreement: (a) amend or otherwise change its certificate of incorporation or bylaws or equivalent organizational documents; (b) issue, sell, pledge, dispose of, grant, transfer, lease, license, guarantee or encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license or encumbrance of, (i) any shares of capital stock of Company or its subsidiaries, except repurchases of unvested shares at cost in connection with the termination of the employment relationship with any employee pursuant to Company Subsidiary Stock Option or purchase agreements in effect on the date hereof; (f) Issue, deliver, sell, authorize, pledge or otherwise encumber any shares of capital stock or any class, or securities convertible into or exchangeable or exercisable for any shares of such capital stock, or any optionssubscriptions, rights, warrants or other rights of any kind options to acquire any shares of such capital stock or any securities convertible into shares of capital stock, or enter into other agreements or commitments of any other ownership interest (including, without limitation, character obligating it to issue any phantom interest), of Company such shares or any Company Subsidiaryconvertible securities, other than the issuance, delivery and/or sale of (Ai) the issuance of shares of Company Common Stock pursuant to the exercise of stock options theretofore outstanding as of the date of this Agreement or Company Options and Company Warrants, (Bii) the issuance of options to purchase up to 250,000 shares of Company Common Stock under issuable to participants in the Company's 1999 Stock Incentive Plan, 200,000 shares of which may be issued Company ESPP consistent with the terms thereof and (iii) options granted to newly hired management employees or newly promoted employees, consistent in amounts with Company's prior practices and 50,000 providing for vesting over a four year period with 25% vesting after one year and thereafter ratably monthly, not to exceed in the aggregate options to acquire 1,000,000 shares of Company Common Stock, provided, however, that if the Closing has not occurred before the expiration of four calendar months after the date of this Agreement, then such aggregate number of shares shall increase by 150,000 shares for each full calendar month thereafter that the Closing does not occur; (g) Cause, permit or propose any amendments to its Certificate of Incorporation, Bylaws or other charter documents (or similar governing instruments of any of its subsidiaries); (h) Acquire or agree to acquire by merging or consolidating with, or by purchasing any equity interest in or a portion of the assets of, or by any other manner, any business or any corporation, partnership, association or other business organization or division (i) Enter into any material strategic relationship or alliance in which may be issued Company agrees to existing share profits, pay royalties, share ownership of Intellectual Property or grant exclusive rights of any nature to Company Intellectual Property to any third party; (j) Sell, lease, license, encumber or otherwise dispose of any properties or assets which are material, individually or in the aggregate, to the business of Company, other than non-executive employees, or (ii) any property or assets exclusive licenses of Company or any Company Subsidiary except entering into alliance agreements or providing products and services Intellectual Property in the ordinary course of business consistent with past practice; (ik) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets) any interest in any corporation, partnership, other business organization or person or any division thereof; (ii) incur Incur any indebtedness for borrowed money or guarantee any such indebtedness of another person, issue or sell any debt securities or assumeoptions, guarantee warrants, calls or endorseother rights to acquire any debt securities of Company, enter into any "keep well" or otherwise as an accommodation become responsible for, other agreement to maintain any financial statement condition or enter into any arrangement having the obligations economic effect of any person (of the foregoing other than Company and Company Subsidiaries(i) for borrowed money in connection with the financing of ordinary course trade payables consistent with past practice or make any loans or advances, other than routine employee loans (ii) pursuant to employees other than Company officers (not to exceed $1,000 to any individual), material to the business, assets, liabilities, financial condition or results of operations of Company and the Company Subsidiaries, taken as a whole, other than existing credit facilities in the ordinary course of business consistent with past practice; business; (iiil) terminate, cancel Adopt or request amend any material change inemployee benefit plan or employee stock purchase or employee stock option plan, or agree to enter into any material change in, any Company Material Contract employment contract or other License Agreement; collective bargaining agreement (iv) make or authorize any capital expenditure, other than capital expenditures offer letters and letter agreements entered into in the ordinary course of business consistent with past practice that have been budgeted with employees who are terminable "at will"), pay any special bonus or special remuneration to any director or employee (other than payment of target bonuses for fiscal year 1999 and disclosed in writing 2000), or increase the salaries or wage rates or fringe benefits (including rights to Parent and that are notseverance or indemnification) of its directors, officers, employees or consultants other than in the aggregateordinary course of business, consistent with past practice, or change in any material respect any management policies or procedures; (m) Make any capital expenditures outside of the ordinary course of business in excess of $3,000,000 for Company and 5,000,000 in the Company Subsidiaries taken as a whole; or (v) enter into or amend any contract, agreement, commitment or arrangement that, if fully performed, would not be permitted under this Section 6.01(c)aggregate; (dn) declareModify, set aside, make amend or terminate any Company Contract or other material contract or agreement to which Company or any subsidiary thereof is a party or enter into any contract or agreement which provides for Company to incur or pay any dividend amounts in excess of $600,000 over the life of such contract or agreement; (o) Settle any material litigation or waive, release or assign any material rights or claims thereunder; (p) Enter into, modify, amend or cancel any development services, licensing, distribution, sales, sales representation or other distribution, payable in cash, stock, property similar agreement or otherwise, obligation with respect to any of its capital stock, except that any Company Subsidiary may pay dividends or make other distributions to Company or any other Company Subsidiary; (e) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; (f) amend or change the period (or permit any acceleration, amendment or change unless required pursuant to the terms of existing agreements of Company previously provided to Parent) of exercisability of options granted under the Company Stock Plans or authorize cash payments in exchange for any Company Stock Options granted under any of such plans; (g) amend the terms of, repurchase, redeem or otherwise acquire, or permit any Company Subsidiary to repurchase, redeem or otherwise acquire, any of its securities or any securities of any Company Subsidiary or propose to do any of the foregoing; (h) material Intellectual Property other than such agreements entered into in the ordinary course of business consistent with past practices or pursuant to existing agreements of Company previously provided to Parent increase the compensation payable or to become payable to its directors, officers, consultants or employees, grant practices; (r) Take any rights to severance or termination pay to, or enter into any employment or severance agreement which provides benefits upon a change in control of Company action that would be triggered by reasonably likely to interfere with the treatment of the Merger with, any director, officer, consultant or other employee as a "reorganization" within the meaning of Company or any Company Subsidiary who is not currently entitled to such benefits from Section 368 of the Merger, establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer, consultant or employee of Company or any Company Subsidiary, except to the extent required by applicable Law or the terms of a collective bargaining agreement, or enter into or amend any contract, agreement, commitment or arrangement between Company or any Company Subsidiary and any of Company's directors, officers, consultants or employeesCode; (is) payExcept as otherwise contemplated by Sections 2.20 and 5.12, discharge redeem the Rights or satisfy any claims, liabilities amend or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than terminate the payment, discharge or satisfaction in the ordinary course of business and consistent with past practice of liabilities reflected or reserved against on the consolidated balance sheet of Company and the consolidated the Company Subsidiaries dated as of March 31, 1999 included in Company's quarterly report on Form 10-Q for the period then ended (the "Company Balance Sheet") and only to the extent reflected or to the extent of such reserves or incurred in the ordinary course of business since March 31, 1999Rights Agreement; (jt) make Engage in any change action with the intent to directly or indirectly adversely impact any of the transactions contemplated by this Agreement and the Stock Option Agreement, including with respect to Company's accounting policiesthe Rights Agreement, principlesor with any other "poison pill" or similar plan, methods agreement or proceduresarrangement, including, without limitation, revenue recognition policies, other than as required by U.S. GAAP; (k) make or any material Tax election or settle or compromise any material Tax liabilityTakeover Statute; or (lu) authorize or enter into any formal or informal agreement Agree in writing or otherwise make any commitment to do take any of the foregoing or to take any action which would make any of the representations or warranties of Company contained actions described in this Agreement untrue or incorrect in any material respect or result in any of the conditions to the Merger set forth herein not being satisfiedSection 4.1(a) through (t) above.

Conduct of Business by Company. Pending During the Closing Company agrees that, between period from the date of this Agreement and to the Effective Time, unless except as consented to in advance by Parent in writing (which consent shall not be unreasonably withheld) or as set forth in Section 5.1 of the Company Disclosure Letter, or as is otherwise agree in writingspecifically required or expressly permitted by this Agreement, Company shall, and shall cause each of its Subsidiaries to, carry on its business in the ordinary course consistent with past practice and use commercially reasonable efforts to preserve intact its business organization, maintain in effect all existing Permits, preserve its assets, rights and properties in good repair and condition and preserve its relationships and goodwill with Governmental Entities, customers, suppliers, licensors, licensees, distributors and others having business dealings with it. In addition to and without limiting the generality of the foregoing, during the period from the date of this Agreement to the Effective Time, except as set forth in Section 5.1 of the Company Disclosure Letter, or as is otherwise specifically required or expressly permitted by this Agreement, Company shall not, and shall not permit any of its Subsidiaries, without Parent’s prior written consent (which consent shall not be unreasonably withheld), to: (a) (i) 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 other equity interests, except for dividends by a result of entering into this Agreement (x) the respective businesses wholly owned Subsidiary of Company and to its parent, (ii) purchase, redeem or otherwise acquire shares of capital stock or other equity interests of Company or its Subsidiaries or any options, warrants, or rights to acquire any such shares or other equity interests, (iii) split, combine, reclassify or otherwise amend the terms of any of its capital stock or other equity interests or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock or other equity interests, or (iv) enter into any agreement with respect to the voting of any of its capital stock or other equity interests; (b) authorize for issuance, issue, deliver, sell, grant, pledge or otherwise encumber or subject to any Lien (other than Permitted Liens) any shares of its capital stock or other equity interests or any securities convertible into, or exchangeable for, or any rights, warrants or options to acquire, any such shares or other equity interests, or any stock appreciation rights, “phantom” stock rights, performance units, rights to receive shares of capital stock of Company Subsidiaries shall be conducted only inon a deferred basis or other rights linked to the value of Shares other than pursuant to Contracts as in effect on the date hereof providing for the issuance of Shares upon the exercise or settlement of Stock Options or Stock Units or Company Warrants outstanding on the date hereof in accordance with their terms as in effect on such date; (c) amend, and authorize or propose to amend its certificate of incorporation or bylaws (or similar organizational documents); (d) directly or indirectly acquire or agree to acquire (i) by merging or consolidating with, purchasing a substantial equity interest in or a substantial portion of the assets of, making an investment in or loan or capital contribution to or in any other manner, any corporation, partnership, association or other business organization or division thereof or (ii) any assets that are otherwise material to Company and the Company Subsidiaries shall not take any action except inits Subsidiaries, other than inventory and equipment acquired in the ordinary course of business consistent with past practice and (y) Company shall use all reasonable efforts to keep available other acquisitions for which the services of such fair market value of the current officers, significant employees and consultants of total consideration paid by Company and its Subsidiaries does not exceed $250,000 individually or $500,000 in the Company Subsidiaries and to preserve the current relationships of Company and the Company Subsidiaries with such of the corporate partners, customers, suppliers and other persons with which Company or any Company Subsidiary has significant business relations in order to preserve substantially intact its business organization. By way of amplification and not limitation, neither Company nor any Company Subsidiary shall, between the date of this Agreement and the Effective Time, directly or indirectly, do, or agree to do, any of the following without the prior written consent of Parent and except as a result of entering into this Agreement: (a) amend or otherwise change its certificate of incorporation or bylaws or equivalent organizational documentsaggregate; (be) issue, directly or indirectly sell, pledge, dispose of, grant, transfer, lease, license, guarantee sell and leaseback, abandon, permit to lapse, mortgage or encumber, otherwise encumber or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license or encumbrance of, (i) subject to any shares of capital stock of Company or any Company Subsidiary of any class, or securities convertible into or exchangeable or exercisable for any shares of such capital stock, or any options, warrants or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of Company or any Company SubsidiaryLien, other than (A) the issuance of shares of Company Common Stock pursuant to the exercise of stock options theretofore outstanding as of the date of this Agreement or (B) the issuance of options to purchase up to 250,000 shares of Company Common Stock under the Company's 1999 Stock Incentive Plan, 200,000 shares of which may be issued to newly hired management employees and 50,000 shares of which may be issued to existing non-executive employeesPermitted Liens, or (ii) otherwise dispose in whole or in part of any property of its properties, assets or assets of Company rights or any Company Subsidiary interest therein, except entering into alliance agreements or providing products for (1) sales of inventory and services equipment in the ordinary course of business consistent with past practice, (2) sales of other assets in the ordinary course of business consistent with past practice for which the book value or sales price, whichever is higher, does not exceed $250,000 individually or $500,000 in the aggregate, (3) non-exclusive licenses of Intellectual Property granted in the ordinary course of business consistent with past practice and non-disclosure agreements that provide for only limited, non-exclusive use rights of Intellectual Property for evaluation purposes only; and (4) adopt or enter into a plan or agreement of complete or partial liquidation, dissolution, restructuring, capitalization or other reorganization; (if) acquire (includingA) incur, without limitationcreate, by merger, consolidation, or acquisition of stock or assets) any interest in any corporation, partnership, other business organization or person or any division thereof; (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorseotherwise become liable for, any Indebtedness, other than Indebtedness (to the extent it does not relate to or arise out of Indebtedness for borrowed money) that does not exceed $100,000 in the aggregate, or otherwise as an accommodation become responsible for(B) (i) amend, the obligations of modify or refinance any person Indebtedness or (ii) make any loans, advances or capital contributions to, or investments in, any other Person, other than Company and Company Subsidiaries) for borrowed money or make any loans direct or advances, other than routine employee loans to employees other than Company officers (not to exceed $1,000 to any individual), material to the business, assets, liabilities, financial condition or results of operations indirect wholly owned Subsidiary of Company and (provided, that the Company Subsidiaries, taken as a whole, other than foregoing shall not include the extension of trade credit to customers in the ordinary course of business consistent with past practice; ); (iiii) terminatemodify or amend in any material respect, terminate (other than in accordance with its terms), cancel or request extend any material change in, or agree to any material change in, any Company Material Contract or other License Agreement; expressly waive any material benefits under any Material Contract or (ivii) enter into any Contract that if in effect on the date hereof would be a Material Contract; (h) change in any material respect its financial accounting methods, principles or practices, except insofar as may be required by GAAP or applicable Law; (i) settle or compromise any liability for Taxes, amend any Tax Return, make or authorize change any capital expenditureTax election, file any Tax Return in a manner inconsistent with past practice, adopt or change in any material respect any method of accounting for Tax purposes or surrender any right to claim a Tax refund; (j) except as required to comply with any Benefit Plan or Benefit Agreement as in effect on the date of this Agreement or with applicable Law, (i) increase the compensation or benefits of any Participant, (ii) pay to any Participant any compensation or benefit not provided for under any Benefit Plan or Benefit Agreement, other than capital expenditures the payment of base cash compensation in the ordinary course of business consistent with past practice that have been budgeted for fiscal year 1999 and disclosed in writing practice, (iii) grant any severance, change of control, retention, termination or similar compensation or benefits to Parent and that are notany Participant, in the aggregate(iv) adopt, in excess of $3,000,000 for Company and the Company Subsidiaries taken as a whole; establish, enter into, amend, modify or terminate any Benefit Plan, Benefit Agreement or collective bargaining or similar agreement, (v) enter into any trust, annuity or amend any contract, agreement, commitment insurance Contract or arrangement that, if fully performed, would not be permitted under this Section 6.01(c); (d) declare, set aside, make similar agreement or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock, except that any Company Subsidiary may pay dividends or make other distributions to Company or take any other Company Subsidiary; (e) reclassify, combine, split, subdivide or redeem, purchase action to fund or otherwise acquire, directly or indirectly, any of its capital stock; (f) amend or change secure the period (or permit any acceleration, amendment or change unless required pursuant to the terms of existing agreements of Company previously provided to Parent) of exercisability of options granted under the Company Stock Plans or authorize cash payments in exchange for any Company Stock Options granted under any of such plans; (g) amend the terms of, repurchase, redeem or otherwise acquire, or permit any Company Subsidiary to repurchase, redeem or otherwise acquire, any of its securities or any securities payment of any Company Subsidiary compensation or propose benefit or (vi) take any action to do any accelerate the time of the foregoing; (h) other than in the ordinary course of business consistent with past practices vesting or pursuant to existing agreements of Company previously provided to Parent increase the compensation payable or to become payable to its directors, officers, consultants or employees, grant any rights to severance or termination pay to, or enter into any employment or severance agreement which provides benefits upon a change in control of Company that would be triggered by the Merger with, any director, officer, consultant or other employee of Company or any Company Subsidiary who is not currently entitled to such benefits from the Merger, establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit payment of any director, officer, consultant compensation or employee of Company or any Company Subsidiary, except to the extent required by applicable Law or the terms of a collective bargaining agreement, or enter into or amend any contract, agreement, commitment or arrangement between Company or any Company Subsidiary and any of Company's directors, officers, consultants or employees; (i) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction in the ordinary course of business and consistent with past practice of liabilities reflected or reserved against on the consolidated balance sheet of Company and the consolidated the Company Subsidiaries dated as of March 31, 1999 included in Company's quarterly report on Form 10-Q for the period then ended (the "Company Balance Sheet") and only to the extent reflected or to the extent of such reserves or incurred in the ordinary course of business since March 31, 1999; (j) make any change with respect to Company's accounting policies, principles, methods or procedures, including, without limitation, revenue recognition policies, other than as required by U.S. GAAPbenefit; (k) make any material Tax election or settle or compromise any material Tax liabilitylitigation, audit, claim or action against Company or any of its Subsidiaries other than settlements or compromises of litigations, audits, claims or actions where the amounts paid in settlement or compromise do not exceed $100,000 individually or $300,000 in the aggregate; (l) forgive any loans to employees, officers, directors or any of their Affiliates; (m) other than as set forth in the capital budgets set forth in Section 5.1 of the Company Disclosure Letter, make or authorize any capital expenditures; or (ln) authorize any of, or enter into any formal commit or informal agreement or otherwise make any commitment to do any of the foregoing or agree to take any action which would make any of of, the representations or warranties of Company contained in this Agreement untrue or incorrect in any material respect or result in any of the conditions to the Merger set forth herein not being satisfiedforegoing actions.

Conduct of Business by Company. Pending Company shall, and shall cause each of the Closing Company agrees thatSubsidiaries to, during the period from the date of this Plan of Merger and ending at the earlier of the Effective Time and the termination of this Plan of Merger in accordance with Article VII, except as expressly contemplated by this Plan of Merger, as required by applicable Law or with the prior written consent of Purchaser (which consent shall not be unreasonably withheld, conditioned or delayed), conduct its business in the ordinary course of business generally consistent with past practice in all material respects, and, to the extent consistent therewith, Company shall, and shall cause each of the Company Subsidiaries to, use its commercially reasonable efforts to preserve substantially intact its and the Company Subsidiaries’ business organization and advantageous customer and business relationships and keep available the services of the present officers and employees. Without limiting the generality of the foregoing, between the date of this Agreement Plan of Merger and ending at the earlier of the Effective Time and the Effective Timetermination of this Plan of Merger in accordance with Article VII, unless Parent shall otherwise agree in writing, and except as a result otherwise expressly contemplated by this Plan of entering into this Agreement (x) Merger or as set forth in Section 5.1 of the respective businesses Company Disclosure Letter or as required by applicable Law, Company shall not, nor shall it permit any of Company and the Company Subsidiaries shall be conducted only into, and Company and the Company Subsidiaries shall not take any action except in, the ordinary course of business consistent with past practice and (y) Company shall use all reasonable efforts to keep available the services of such of the current officers, significant employees and consultants of Company and the Company Subsidiaries and to preserve the current relationships of Company and the Company Subsidiaries with such of the corporate partners, customers, suppliers and other persons with which Company or any Company Subsidiary has significant business relations in order to preserve substantially intact its business organization. By way of amplification and not limitation, neither Company nor any Company Subsidiary shall, between the date of this Agreement and the Effective Time, directly or indirectly, do, or agree to do, any of the following without the prior written consent of Parent and except as a result of entering into this Agreement:Purchaser (which consent shall not be unreasonably withheld, conditioned or delayed): (a) 5.1.1 amend or otherwise change its certificate articles of incorporation or bylaws (or equivalent other comparable organizational documents); 5.1.2 (ba) issuesplit, sell, pledge, dispose of, grant, transfer, lease, license, guarantee combine or encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license or encumbrance of, (i) reclassify any shares of capital stock of securities issued by Company or any Company Subsidiary of any class, or securities convertible into or exchangeable or exercisable for any shares of such capital stock, or any options, warrants or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of Company or any Company Subsidiary, other than (A) the issuance of shares of Company Common Stock pursuant to the exercise of stock options theretofore outstanding as of the date of this Agreement or (B) the issuance of options to purchase up to 250,000 shares of Company Common Stock under the Company's 1999 Stock Incentive Plan, 200,000 shares of which may be issued to newly hired management employees and 50,000 shares of which may be issued to existing non-executive employees, or (ii) any property or assets of Company or any Company Subsidiary except entering into alliance agreements or providing products and services in the ordinary course of business consistent with past practice; (i) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets) any interest in any corporation, partnership, other business organization or person or any division thereof; (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations of any person (other than Company and Company Subsidiaries) for borrowed money or make any loans or advances, other than routine employee loans to employees other than Company officers (not to exceed $1,000 to any individual), material to the business, assets, liabilities, financial condition or results of operations of Company and the Company Subsidiaries, taken as a whole, other than in the ordinary course of business consistent with past practice; (iiib) terminate, cancel or request any material change in, or agree to any material change in, any Company Material Contract or other License Agreement; (iv) make or authorize any capital expenditure, other than capital expenditures in the ordinary course of business consistent with past practice that have been budgeted for fiscal year 1999 and disclosed in writing to Parent and that are not, in the aggregate, in excess of $3,000,000 for Company and the Company Subsidiaries taken as a whole; or (v) enter into or amend any contract, agreement, commitment or arrangement that, if fully performed, would not be permitted under this Section 6.01(c); (d) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock, except that any Company Subsidiary may pay dividends or make other distributions to Company or any other Company Subsidiary; (e) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; (f) amend or change the period (or permit any acceleration, amendment or change unless required pursuant to the terms of existing agreements of Company previously provided to Parent) of exercisability of options granted under the Company Stock Plans or authorize cash payments in exchange for any Company Stock Options granted under any of such plans; (g) amend the terms of, repurchase, redeem or otherwise acquire, or permit any Company Subsidiary offer to repurchase, redeem or otherwise acquire, any of its securities issued by Company or any securities of any Company Subsidiary or propose to do any of the foregoing; (h) other than in Company Subsidiaries, except for the ordinary course acceptance of business consistent with past practices or pursuant to existing agreements shares of Company previously provided Common Stock delivered in satisfaction of the exercise price or tax withholding obligations by holders of Awards under Company Stock Plans that are outstanding as of the date of this Plan of Merger who exercise such Awards, and shares of Company Common Stock submitted for cancellation to Parent increase satisfy tax withholding obligations that occur upon the compensation payable vesting of Company Share-Based Awards that are outstanding as of the date of this Plan of Merger, or to become payable to its directors(c) declare, officersset aside or pay any dividend or distribution (whether in cash, consultants stock, property or employees, grant any rights to severance or termination pay tootherwise) in respect of, or enter into any employment Contract with respect to the voting of, any shares of its capital stock, except for distributions to or severance agreement which provides benefits upon a change from the Company Subsidiaries and except for quarterly cash dividends by Company each in control an amount not to exceed $0.25 per share of Company that would be triggered Common Stock and paid in a manner consistent with past practice; 5.1.3 issue, sell, pledge, dispose of or encumber any securities issued by the Merger with, any director, officer, consultant or other employee of Company or any of the Company Subsidiary who is not currently entitled to such benefits from the Merger, establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer, consultant or employee of Company or any Company Subsidiary, except to the extent required by applicable Law or the terms of a collective bargaining agreement, or enter into or amend any contract, agreement, commitment or arrangement between Company or any Company Subsidiary and any of Company's directors, officers, consultants or employees; (i) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise)Subsidiaries, other than the payment, discharge or satisfaction in the ordinary course issuance of business and consistent with past practice of liabilities reflected or reserved against on the consolidated balance sheet shares of Company and Common Stock upon the consolidated the exercise of any Award granted pursuant to a Company Subsidiaries dated as of March 31, 1999 included in Company's quarterly report on Form 10-Q for the period then ended (the "Company Balance Sheet") and only Stock Plan prior to the extent reflected or to the extent date of such reserves or incurred in the ordinary course this Plan of business since March 31, 1999Merger; (j) make any change with respect to Company's accounting policies, principles, methods or procedures, including, without limitation, revenue recognition policies, other than 5.1.4 except as required by U.S. GAAP; (k) make any material Tax election or settle or compromise any material Tax liability; or (l) authorize or enter into any formal or informal agreement or otherwise make any commitment to do any of the foregoing or to take any action which would make any of the representations or warranties of Company contained in this Agreement untrue or incorrect in any material respect or result in any of the conditions to the Merger set forth herein not being satisfied.on Section 5.1.4

Conduct of Business by Company. Pending During the Closing Company agrees that, between period from the date of this Agreement and continuing until the Effective Timeearlier of the termination of this Agreement pursuant to its terms or the Closing, unless Parent the Company, except to the extent that the other party shall otherwise agree consent in writing, shall carry on its business in the usual, regular and except as a result of entering into this Agreement (x) the respective businesses of Company and the Company Subsidiaries shall be conducted only in, and Company and the Company Subsidiaries shall not take any action except in, the ordinary course of business consistent with past practice practices, in substantially the same manner as heretofore conducted and (y) Company shall in compliance with all applicable laws and regulations, pay its debts and taxes when due subject to good faith disputes over such debts or taxes, pay or perform other material obligations when due, and use all its commercially reasonable efforts to keep available the services of such of the current officers, significant employees consistent with past practices and consultants of Company and the Company Subsidiaries and to preserve the current relationships of Company and the Company Subsidiaries with such of the corporate partners, customers, suppliers and other persons with which Company or any Company Subsidiary has significant business relations in order policies to preserve substantially intact its present business organization. By way In addition, except as required or permitted by the terms of amplification and not limitationthis Agreement, neither Company nor any Company Subsidiary shallwithout the prior written consent of the other party, between during the period from the date of this Agreement and continuing until the Effective Timeearlier of the termination of this Agreement pursuant to its terms or the Closing, the Company shall not to do any of the following: (a) Waive any stock repurchase rights, accelerate, amend or (except as specifically provided for herein) change the period of exercisability of options or restricted stock, or reprice options granted under any employee, consultant, director or other stock plans or authorize cash payments in exchange for any options granted under any of such plans; (b) Grant any severance or termination pay to any officer or employee except pursuant to applicable law, written agreements outstanding, or policies existing on the date hereof and as previously or concurrently disclosed in writing or made available to the other party, or adopt any new severance plan, or amend or modify or alter in any manner any severance plan, agreement or arrangement existing on the date hereof; (c) Except for the Distribution, declare, set aside or pay any dividends on or make any other distributions (whether in cash, stock, equity securities or property) in respect of any capital stock or split, combine or reclassify any capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for any capital stock; (d) Purchase, redeem or otherwise acquire, directly or indirectly, do, or agree to do, any of the following without the prior written consent of Parent and except as a result of entering into this Agreement: (a) amend or otherwise change its certificate of incorporation or bylaws or equivalent organizational documents; (b) issue, sell, pledge, dispose of, grant, transfer, lease, license, guarantee or encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license or encumbrance of, (i) any shares of capital stock of Company Company, except repurchases of unvested shares at cost in connection with the termination of the employment relationship with any employee pursuant to stock option or purchase agreements in effect on the date hereof; (e) Issue, deliver, sell, authorize, pledge or otherwise encumber, or agree to any of the foregoing with respect to, any shares of capital stock or any Company Subsidiary of any class, or securities convertible into or exchangeable or exercisable for any shares of such capital stock, or any optionssubscriptions, rights, warrants or other rights of any kind options to acquire any shares of such capital stock or any securities convertible into or exchangeable for shares of capital stock, or any enter into other ownership interest (including, without limitation, any phantom interest), of Company or any Company Subsidiary, other than (A) the issuance of shares of Company Common Stock pursuant to the exercise of stock options theretofore outstanding as of the date of this Agreement or (B) the issuance of options to purchase up to 250,000 shares of Company Common Stock under the Company's 1999 Stock Incentive Plan, 200,000 shares of which may be issued to newly hired management employees and 50,000 shares of which may be issued to existing non-executive employees, or (ii) any property or assets of Company or any Company Subsidiary except entering into alliance agreements or providing products and services in the ordinary course commitments of business consistent with past practiceany character obligating it to issue any such shares or convertible or exchangeable securities; (if) Amend its Charter Documents; (g) Except for the Transfer Agreement, acquire (including, without limitation, or dispose or agree to acquire or dispose by merger, consolidationmerging or consolidating with, or acquisition by purchasing or disposing of stock or assets) any equity interest in or a portion of the assets of, or by any other manner, any business or any corporation, partnership, association or other business organization or person or any division thereof; , or otherwise acquire or dispose or agree to acquire or dispose any assets which are material, individually or in the aggregate, to the business of Company, or enter into any joint ventures, strategic partnerships or alliances or other arrangement; (iih) incur Incur any indebtedness for borrowed money or guarantee any such indebtedness of another person, issue or sell any debt securities or assumeoptions, guarantee warrants, calls or endorseother rights to acquire any debt securities of Company, enter into any "keep well" or other agreement to maintain any financial statement condition or enter into any arrangement having the economic effect of any of the foregoing; (i) Adopt or amend any employee benefit plan, policy or arrangement, any employee stock purchase or employee stock option plan, or otherwise as an accommodation become responsible for, the obligations of enter into any person employment contract or collective bargaining agreement (other than Company offer letters and Company Subsidiaries) for borrowed money or make any loans or advances, other than routine employee loans to employees other than Company officers (not to exceed $1,000 to any individual), material to the business, assets, liabilities, financial condition or results of operations of Company and the Company Subsidiaries, taken as a whole, other than in the ordinary course of business consistent with past practice; (iii) terminate, cancel or request any material change in, or agree to any material change in, any Company Material Contract or other License Agreement; (iv) make or authorize any capital expenditure, other than capital expenditures letter agreements entered into in the ordinary course of business consistent with past practice that have been budgeted for fiscal year 1999 and disclosed in writing to Parent and that with employees who are notterminable "at will"), in the aggregate, in excess of $3,000,000 for Company and the Company Subsidiaries taken as a whole; or (v) enter into or amend any contract, agreement, commitment or arrangement that, if fully performed, would not be permitted under this Section 6.01(c); (d) declare, set aside, make or pay any dividend special bonus or other distribution, payable in cash, stock, property or otherwise, with respect special remuneration to any director or employee, or increase the salaries or wage rates or fringe benefits (including rights to severance or indemnification) of its capital stockdirectors, officers, employees or consultants, except that any Company Subsidiary may pay dividends or make other distributions to Company or any other Company Subsidiary; (e) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; (f) amend or change the period (or permit any acceleration, amendment or change unless required pursuant to the terms of existing agreements of Company previously provided to Parent) of exercisability of options granted under the Company Stock Plans or authorize cash payments in exchange for any Company Stock Options granted under any of such plans; (g) amend the terms of, repurchase, redeem or otherwise acquire, or permit any Company Subsidiary to repurchase, redeem or otherwise acquire, any of its securities or any securities of any Company Subsidiary or propose to do any of the foregoing; (h) other than in the ordinary course of business consistent with past practices or pursuant to existing agreements of Company previously provided to Parent increase the compensation payable or to become payable to its directors, officers, consultants or employees, grant any rights to severance or termination pay to, or enter into any employment or severance agreement which provides benefits upon a change in control of Company that would be triggered by the Merger with, any director, officer, consultant or other employee of Company or any Company Subsidiary who is not currently entitled to such benefits from the Merger, establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer, consultant or employee of Company or any Company Subsidiary, except to the extent required by applicable Law or the terms of a collective bargaining agreement, or enter into or amend any contract, agreement, commitment or arrangement between Company or any Company Subsidiary and any of Company's directors, officers, consultants or employeespractices; (ij) Except as disclosed in SCHEDULE 4.1(J) hereto, pay, discharge discharge, settle or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), or litigation (whether or not commenced prior to the date of this Agreement) other than the payment, discharge discharge, settlement or satisfaction satisfaction, in the ordinary course of business and consistent with past practice of liabilities reflected practices or reserved against on the consolidated balance sheet of Company and the consolidated the Company Subsidiaries dated as of March 31, 1999 included in Company's quarterly report on Form 10-Q for the period then ended (the "Company Balance Sheet") and only to the extent reflected or to the extent of such reserves or incurred in the ordinary course of business since March 31, 1999accordance with their terms; (jk) make any change with respect to Company's accounting policies, principles, methods or procedures, including, without limitation, revenue recognition policies, other than Except as required by U.S. GAAP, revalue any of its assets or make any change in accounting methods, principles or practices; (kl) make Except as set forth in SCHEDULE 4.1(L) hereto, incur or enter into any material Tax election agreement, contract or settle commitment requiring such party to pay in excess of $1,000 in any 12 month period; (m) Except for the ASAP Subsidiary, form, establish or compromise acquire any material Tax liabilitySubsidiary; (n) Permit the any person to exercise any of its discretionary rights under any Plan to provide for the automatic acceleration of any outstanding options, the termination of any outstanding repurchase rights or the termination of any cancellation rights issued pursuant to such plans; or (lo) authorize or enter into any formal or informal agreement Agree in writing or otherwise make any commitment agree, commit or resolve to do take any of the foregoing or to take any action which would make any of the representations or warranties of Company contained actions described in this Agreement untrue or incorrect in any material respect or result in any of the conditions to the Merger set forth herein not being satisfiedSection 4.1 (a) through (n) above.

Conduct of Business by Company. Pending (a) During the Closing Company agrees that, between period from the date of this Agreement and continuing until the earlier of termination of this Agreement or the Effective Time, unless Parent Company and each of its subsidiaries shall, except (i) as set forth in Section 5.1 of the Company Disclosure Letter, (ii) in connection with specific actions that Company is explicitly required or permitted to take pursuant to this Agreement or (iii) to the extent that Acquiror shall otherwise consent in writing (which consent shall not be unreasonably withheld or delayed), carry on its business in all material respects, in the usual, regular and ordinary course, in substantially the same manner as heretofore conducted and in compliance with all applicable laws and regulations, pay its debts and taxes when due subject to good faith disputes over such debts or taxes, pay or perform other material obligations when due, and use its commercially reasonable efforts consistent with past practices and policies to (i) preserve intact its present business organization, (ii) keep available the services of its present officers and employees and (iii) preserve its relationships with customers, suppliers, distributors, licensors, licensees, and others with which it has significant business dealings. (b) During the period from the date of this Agreement and continuing until the earlier of termination of this Agreement or the Effective Time, except (i) as set forth in Section 5.1 of the Company Disclosure Letter, (ii) in connection with specific actions that Company is explicitly required to take pursuant to this Agreement, or (iii) to the extent that Acquiror shall otherwise consent in writing (which consent shall not be unreasonably withheld or delayed), Company shall not do any of the following and shall not permit its subsidiaries to do any of the following: (i) Waive any stock repurchase rights, accelerate, amend or change the period of exercisability of options or restricted stock or preferred stock purchase rights, or reprice options granted under any employee, consultant, director or other stock plans or authorize cash payments in exchange for any options granted under any of such plans; (ii) Grant (or agree to grant, whether orally or in writing) any severance or termination pay (cash, and equity or otherwise) to any officer or employee, except as a result of entering into this Agreement (x) pursuant to written agreements outstanding, or policies existing, on the respective businesses of Company date hereof and (y) as previously disclosed in writing to Acquiror in the Company Subsidiaries shall be conducted only inDisclosure Letter, and Company and or adopt any new severance plan; (iii) Transfer or license to any person or entity or otherwise extend, amend or modify any rights to the Company Subsidiaries shall not take Intellectual Property, or enter into grants to transfer or license to any action except in, person future patent rights other than in the ordinary course of business consistent with past practice and practices. Without limiting the foregoing, in no event shall Company license, sell, assign or transfer any Company Intellectual Property, other than non-exclusive licenses in the ordinary course of business; (yiv) Company shall use all reasonable efforts to keep available the services Declare, set aside or pay any dividends on or make any other distributions (whether in cash, stock, equity securities or property) in respect of such of the current officers, significant employees and consultants any capital stock of Company and or split, combine or reclassify any capital stock or issue or authorize the Company Subsidiaries and to preserve the current relationships issuance of Company and the Company Subsidiaries with such any other securities in respect of, in lieu of the corporate partnersor in substitution for any capital stock; (v) Purchase, customers, suppliers and other persons with which Company redeem or any Company Subsidiary has significant business relations in order to preserve substantially intact its business organization. By way of amplification and not limitation, neither Company nor any Company Subsidiary shall, between the date of this Agreement and the Effective Timeotherwise acquire, directly or indirectly, do, or agree to do, any of the following without the prior written consent of Parent and except as a result of entering into this Agreement: (a) amend or otherwise change its certificate of incorporation or bylaws or equivalent organizational documents; (b) issue, sell, pledge, dispose of, grant, transfer, lease, license, guarantee or encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license or encumbrance of, (i) any shares of capital stock of Company or its subsidiaries, except repurchases of unvested shares at cost in connection with the termination of the employment relationship with any Company Subsidiary employee pursuant to stock option or purchase agreements in effect on the date hereof; (vi) Issue, deliver, sell, authorize, pledge or otherwise encumber or propose any of the foregoing with respect to any class, shares of capital stock or any securities convertible into or exchangeable or exercisable for any shares of such capital stock, or any optionssubscriptions, rights, warrants or other rights of any kind options to acquire any shares of such capital stock or any securities convertible into shares of capital stock, or enter into other agreements or commitments of any other ownership interest (including, without limitation, character obligating it to issue any phantom interest), of Company such shares or any Company Subsidiaryconvertible securities, other than (Ax) the issuance issuance, delivery and/or sale of (i) shares of Company Common Stock pursuant to the exercise of stock options theretofore outstanding as of the date of this Agreement or Agreement, and (Bii) shares of Company Common Stock issuable to participants in the Company ESPP consistent with the terms thereof for periods commencing in July 2001, and (y) the issuance granting of stock options to purchase up to 250,000 fifteen thousand (15,000) shares to any individual or to purchase up to two hundred thousand (200,000) shares in the aggregate (and the issuance of Common Stock upon exercise thereof) under the terms of the Company 1997 Stock Option Plan; (vii) Cause, permit or propose any amendments to the Company Charter Documents (or similar governing instruments of any of its subsidiaries); (viii) Acquire or agree to acquire by merging or consolidating with, or by purchasing any equity interest in or a portion of the assets of, or by any other manner, any business or any 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 business of Company Common Stock under or enter into any material joint ventures, strategic partnerships or alliances; (ix) Sell, lease, license, encumber or otherwise dispose of any properties or assets which are material, except (A) sales, leases or licenses of product or of inventory in the Company's 1999 Stock Incentive Plan, 200,000 shares ordinary course of which may be issued to newly hired management employees and 50,000 shares of which may be issued to existing non-executive employeesbusiness consistent with past practice, or (iiB) any sales, leases or dispositions of property or assets which are not material, individually or in the aggregate, to the business of Company and its subsidiaries; (x) Incur any indebtedness for borrowed money or guarantee any Company Subsidiary except entering such indebtedness of another person, issue or sell any debt securities or options, warrants, calls or other rights to acquire any debt securities of Company, enter into alliance agreements any "keep well" or providing products and services other agreement to maintain any financial statement condition or enter into any arrangement having the economic effect of any of the foregoing other than in connection with the financing of ordinary course trade payables consistent with past practice or pursuant to existing credit facilities in the ordinary course of business consistent with past practice; (ixi) acquire Adopt or amend (except as necessary to conform to all applicable laws, including, without limitation, by mergerERISA or the Code) any employee benefit plan, consolidationpolicy, employee stock purchase or employee stock option plan, or acquisition of stock enter into any employment contract or assets) any interest in any corporation, partnership, other business organization or person or any division thereof; (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations of any person collective bargaining agreement (other than Company offer letters and Company Subsidiaries) for borrowed money or make any loans or advances, other than routine employee loans to employees other than Company officers (not to exceed $1,000 to any individual), material to the business, assets, liabilities, financial condition or results of operations of Company and the Company Subsidiaries, taken as a whole, other than in the ordinary course of business consistent with past practice; (iii) terminate, cancel or request any material change in, or agree to any material change in, any Company Material Contract or other License Agreement; (iv) make or authorize any capital expenditure, other than capital expenditures letter agreements entered into in the ordinary course of business consistent with past practice that have been budgeted for fiscal year 1999 and disclosed in writing to Parent and that with employees who are notterminable "at will"), in the aggregate, in excess of $3,000,000 for Company and the Company Subsidiaries taken as a whole; or (v) enter into or amend any contract, agreement, commitment or arrangement that, if fully performed, would not be permitted under this Section 6.01(c); (d) declare, set aside, make or pay any dividend special bonus or other distribution, payable in special remuneration (cash, stock, property equity or otherwise, with respect ) to any of its capital stockdirector or employee, except that any Company Subsidiary may pay dividends or make other distributions increase the salaries or wage rates or fringe benefits (including rights to Company severance or any other Company Subsidiary; (e) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; (f) amend or change the period (or permit any acceleration, amendment or change unless required pursuant to the terms of existing agreements of Company previously provided to Parentindemnification) of exercisability of options granted under the Company Stock Plans or authorize cash payments in exchange for any Company Stock Options granted under any of such plans; (g) amend the terms of, repurchase, redeem or otherwise acquire, or permit any Company Subsidiary to repurchase, redeem or otherwise acquire, any of its securities or any securities of any Company Subsidiary or propose to do any of the foregoing; (h) other than in the ordinary course of business consistent with past practices or pursuant to existing agreements of Company previously provided to Parent increase the compensation payable or to become payable to its directors, officers, employees or consultants or employees, grant any rights to severance or termination pay to, or enter into any employment or severance agreement which provides benefits upon a change in control of Company that would be triggered by the Merger with, any director, officer, consultant or other employee of Company or any Company Subsidiary who is not currently entitled to such benefits from the Merger, establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer, consultant or employee of Company or any Company Subsidiary, except to the extent than as required by applicable Law law or the terms of a collective bargaining agreement, or enter into or amend any contract, agreement, commitment or arrangement between Company or any Company Subsidiary and any of Company's directors, officers, consultants or employeesthis Agreement; (ixii) (A) pay, discharge discharge, settle or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise, and whether or not arising prior to, on or after the date of this Agreement), other than the payment, discharge discharge, settlement or satisfaction satisfaction, in the ordinary course of business and consistent or in accordance with past practice of their respective terms, or liabilities reflected recognized or reserved against on disclosed in the most recent consolidated balance sheet financial statements (or the notes thereto) of Company and the consolidated included in the Company Subsidiaries dated as of March 31, 1999 included in Company's quarterly report on Form 10-Q for SEC Reports or incurred since the period then ended (the "Company Balance Sheet") and only to the extent reflected or to the extent date of such reserves financial statements, or incurred (B) amend, terminate, waive in writing or release any confidentiality or similar agreement to which Company or any of its subsidiaries is a party or of which Company or any of its subsidiaries is a beneficiary; provided, however, that Company will use its good faith efforts to enforce any such agreements specifically requested to be enforced by Acquiror; (xiii) Make any individual or series of related payments outside of the ordinary course of business since March 31(including payments to financial, 1999; (j) make any change legal, accounting or other professional service advisors incurred in connection with respect to Company's accounting policies, principles, methods or procedures, including, without limitation, revenue recognition policies, other than as required the transactions contemplated by U.S. GAAP; (k) make any material Tax election or settle or compromise any material Tax liability; or (l) authorize or enter into any formal or informal agreement or otherwise make any commitment to do any of the foregoing or to take any action which would make any of the representations or warranties of Company contained in this Agreement untrue or incorrect otherwise) in any material respect or result in any excess of the conditions to the Merger set forth herein not being satisfied.$100,000;

Conduct of Business by Company. Pending During the Closing Company agrees that, between period from the date of this Agreement and continuing until the earlier of the termination of this Agreement or the Effective Time, unless the Company agrees (except to the extent that Parent shall otherwise agree consent in writing), to carry on its business in the usual, regular and ordinary course in substantially the same manner as heretofore conducted, to pay debts and Taxes when due (except for Taxes being contested in good faith by appropriate proceedings diligently pursued and for which adequate reserves have been made), to pay or perform other obligations when due (including paying accounts payable when due), and, to the extent consistent with such business, use all reasonable efforts consistent with past practice and policies to preserve intact the Company’s present business organization, keep available the services of present officers and other key Employees (other than as contemplated in this Agreement) and preserve relationships with material customers, suppliers, distributors, licensors, licensees, and except as a result others having material business dealings with it, all with the goal of entering into this Agreement preserving unimpaired the Company’s goodwill and ongoing businesses at the Effective Time. The Company shall promptly notify Parent of (xa) the respective businesses of Company and the Company Subsidiaries shall be conducted only inany event, and Company and the Company Subsidiaries shall occurrence or emergency not take any action except in, in the ordinary course of business consistent with past practice and (y) Company shall use all reasonable efforts to keep available the services of such of the current officersCompany, significant employees and consultants of Company and (b) any material event involving the Company Subsidiaries and to preserve the current relationships of Company and the Company Subsidiaries with such of the corporate partners, customers, suppliers and other persons with which Company or any of its Subsidiaries and (c) any event involving the Company Subsidiary has significant business relations in order to preserve substantially intact its business organization. By way of amplification and not limitation, neither Company nor any Company Subsidiary shall, between the date of this Agreement and the Effective Time, directly or indirectly, do, or agree to do, any of its Subsidiaries that could reasonably be expected to result in a Company Material Adverse Effect. Without limiting the following generality of the foregoing, except as expressly contemplated by this Agreement, the Company shall not, without the prior written consent of Parent and except as a result of entering into this AgreementParent: (a) amend or otherwise change its certificate of incorporation or bylaws or equivalent organizational documents; (b) issue, deliver, sell, pledgepurchase, dispose of, grant, transfer, lease, license, guarantee authorize or designate (including by certificate of designation) or pledge or otherwise encumber, or authorize propose any of the issuance, sale, pledge, disposition, grant, transfer, lease, license or encumbrance of, (i) foregoing with respect to any shares of capital stock of the Company or any Company Subsidiary of its Subsidiaries or any class, or securities convertible into or exchangeable or exercisable for any shares of such capital stockstock of the Company or any of its Subsidiaries, or any optionssubscriptions, rights, warrants or other rights of any kind options to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), stock of the Company or any of its Subsidiaries or any securities convertible into shares of capital stock of the Company Subsidiaryor any of its Subsidiaries, or enter into other agreements or commitments of any character obligating it to issue any such shares or convertible securities, other than (A) the issuance of shares issuance, delivery or sale of Company Common Stock pursuant to the exercise of stock options theretofore Company Options outstanding as of the date of this Agreement Agreement; (b) purchase, redeem or otherwise acquire, directly or indirectly, any shares of capital stock of the Company or any of its Subsidiaries, except repurchases of Company Unvested Capital Stock at or below cost in connection with the termination of the employment relationship with any Employee pursuant to stock option or purchase agreements in effect on the date of this Agreement, provided that no such repurchase shall be permitted in the event the per share repurchase price is greater than the amount of per share consideration payable to such share under the terms of this Agreement; (Bc) waive any stock repurchase rights, accelerate, amend or change the period of exercisability or vesting of any Company Options or other rights granted under any Company Stock Plan or the vesting of the securities purchased or purchasable under such Company Options or other rights or the vesting schedule or repurchase rights applicable to any Company Unvested Capital Stock; (d) amend or change any other terms of Company Options or Company Unvested Capital Stock or other rights granted under the Company Stock Plans; (e) declare, set aside or pay any dividends on or make any other distributions (whether in cash, stock, equity securities or property) in respect of any Company Capital Stock or split, combine or reclassify any Company Capital Stock or issue or authorize the issuance of options any other securities in respect of, in lieu of or in substitution for any Company Capital Stock; (f) transfer or license to purchase up any person or entity or otherwise extend, amend or modify any rights to 250,000 shares of the Company Common Stock under Intellectual Property, or enter into grants to transfer or license to any person future rights to the Company's 1999 Stock Incentive PlanCompany Intellectual Property, 200,000 shares of which may be issued to newly hired management employees and 50,000 shares of which may be issued to existing in each case other than non-executive employeesexclusive licenses granted under End-User Agreements and non-exclusive licenses granted under End-User Agreements and non-exclusive distribution, reseller and similar commercial agreements entered into in the ordinary course of business and consistent with past practice, or (ii) transfer or license from any property person or assets of Company or entity any Company Subsidiary except entering into alliance agreements or providing products and services Intellectual Property other than under Shrinkwrap Agreements in the ordinary course of business consistent with past practice; ; provided that in no event shall the Company (i) acquire (includinglicense, without limitation, by merger, consolidationon an exclusive basis, or acquisition of stock enter into a distribution, reseller or assets) similar arrangement, on an exclusive basis, or sell or transfer the ownership of, any interest in any corporation, partnership, other business organization Company Intellectual Property; or person or any division thereof; (ii) incur enter into any indebtedness Contract (A) providing for borrowed money any site licenses, (B) containing pricing or issue any debt securities discounting terms or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations of any person (other than Company and Company Subsidiaries) for borrowed money or make any loans or advances, other than routine employee loans to employees other than Company officers (not to exceed $1,000 to any individual), material to the business, assets, liabilities, financial condition or results of operations of Company and the Company Subsidiaries, taken as a whole, provisions other than in the ordinary course of business consistent with past practice; , (iiiC) terminaterelating to Source Code of the Company, cancel (D) limiting the right of the Company to engage in any line of business or request to compete with any material change inperson, (E) providing for unlimited indemnification. (g) sell, lease, license, encumber or agree to otherwise dispose of any material change in, any Company Material Contract tangible properties or other License Agreement; (iv) make or authorize any capital expenditure, other than capital expenditures tangible assets except sales of inventory in the ordinary course of business consistent with past practice that have been budgeted practice, and except for fiscal year 1999 and disclosed the sale, lease, licensing, encumbering or disposition of property or assets not in writing to Parent and that are not, excess of $10,000 individually or $50,000 in the aggregate, provided such property or assets are not material, individually or in excess the aggregate, to the business or prospects of $3,000,000 for the Company and the Company its Subsidiaries taken as a whole; , or (vii) enter into any agreement for the purchase or sale of any interest in real property, grant any security interest in any real property, enter into any lease, sublease, license or other occupancy agreement with respect to any real property or alter, amend, modify, knowingly violate or terminate any of the material terms of any Lease Agreements; (h) enter into or amend any contract, agreement, commitment Contract pursuant to which any other party is granted exclusive rights or arrangement that, if fully performed, would not be permitted under this Section 6.01(c); (d) declare, set aside, make “most favored party” rights of any type or pay any dividend or other distribution, payable in cash, stock, property or otherwise, scope with respect to any of the Company Products, Intellectual Property or business, or containing any non-competition covenants or other material restrictions relating to its capital stockor Parent’s business activities or the effect of which would be to grant to a third party following the Merger the actual or potential right to license any Intellectual Property owned by Parent or its Subsidiaries (other than, except that any Company Subsidiary may pay dividends or make other distributions with respect to Company or any other Company SubsidiarySubsidiaries, the Surviving Corporation); (ei) reclassifymake any loan, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; advance (f) amend or change the period (or permit any acceleration, amendment or change unless required pursuant to the terms of existing agreements of Company previously provided to Parent) of exercisability of options granted under the Company Stock Plans or authorize cash payments in exchange for any Company Stock Options granted under any of such plans; (g) amend the terms of, repurchase, redeem or otherwise acquire, or permit any Company Subsidiary to repurchase, redeem or otherwise acquire, any of its securities or any securities of any Company Subsidiary or propose to do any of the foregoing; (h) other than business expense advances to Employees in the ordinary course of business consistent with past practices practice) or pursuant to existing agreements of Company previously provided to Parent increase the compensation payable or to become payable to its directors, officers, consultants or employees, grant any rights to severance or termination pay capital contribution to, or enter into any employment or severance agreement which provides benefits upon a change in control of Company that would be triggered by the Merger withinvestment in, any directorperson, officer, consultant or other employee of Company or incur any Company Subsidiary who is not currently entitled to such benefits from the Merger, establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement indebtedness for the benefit of any director, officer, consultant or employee of Company or any Company Subsidiary, except to the extent required by applicable Law or the terms of a collective bargaining agreement, or enter into or amend any contract, agreement, commitment or arrangement between Company or any Company Subsidiary and any of Company's directors, officers, consultants or employees; borrowed money (i) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than indebtedness for borrowed money under the payment, discharge or satisfaction Material Contracts listed in Section 2.17 of the ordinary course of business Disclosure Schedule and consistent with past practice of liabilities reflected or reserved against on the consolidated balance sheet of Company and the consolidated the Company Subsidiaries dated as of March 31, 1999 included in Company's quarterly report on Form 10-Q for the period then ended (the "Company Balance Sheet") and only to the extent reflected or to the extent of such reserves or incurred in the ordinary course of business since March 31consistent with past practice) or guarantee any such indebtedness or the indebtedness of another person, 1999issue or sell any debt securities or options, warrants, calls or other rights to acquire any debt securities of the Company, enter into any “keep well” or other agreement to maintain any financial statement condition, forgive or discharge in whole or in part any outstanding loans for borrowed money, modify any loan for borrowed money previously granted, enter into any hedging agreement or other financial agreement or arrangement designed to protect the Company or its Subsidiaries against fluctuations in commodities prices or exchange rates, or enter into any arrangement having the economic effect of any of the foregoing, in each case, other than in connection with the financing of ordinary course trade payables consistent with past practice; (j) make grant or pay, or enter into any agreement, arrangement or amendment to an existing agreement or arrangement providing for the granting of, any severance or termination pay (whether in cash, stock, equity securities, or property) or the acceleration of vesting or other benefits to any Employee except pursuant to written agreements, policies or plans outstanding on the date hereof and identified in the Disclosure Schedule, or adopt any new severance or termination plan, program or arrangement, or amend or modify or alter in any manner any severance or termination plan, agreement or arrangement existing on the date hereof (including any retention, change with respect to Company's accounting policiesof control or similar agreement), principlesor grant any equity-based compensation, methods whether payable in cash or procedures, including, without limitation, revenue recognition policies, other than as required by U.S. GAAPstock; (k) make adopt, terminate or amend any Company Employee Plan or enter into any Company Employee Plan, or amend any compensation, bonus, commission, insurance coverage (except as contemplated by this Agreement), benefit, entitlement, grant or award provided or made under any Company Employee Plan; or enter into any collective bargaining agreement; pay any special bonus, commission or special remuneration to any Employee (cash, equity or otherwise); increase the salaries, bonuses, commissions or wage rates or fringe benefits (including rights to severance or indemnification) of its Employees; pay any benefit not provided for as of the date of this Agreement under any Company Employee Plan; or add any new members to the Board; (l) except as set forth in Section 4.1(l) of the Company Disclosure Schedule, (i) hire any officers, consultants, independent contractors or employees or enter into, or amend or extend the term of, any employment or consulting agreement with any Employee, or (ii) terminate any Employee (except for termination for cause), or take any action that would allow any Employee to claim a constructive termination or termination for “good reason”; (m) commence or settle any threatened or pending litigation (other than any litigation to enforce any of its rights under this Agreement); (n) enter into, renew or materially modify any Contract relating to the distribution, sale, license or marketing by third parties of the Company Products, other than (i) renewals of existing Contracts on a nonexclusive basis or modifications in connection with renewals of existing Contracts on a nonexclusive basis, or (ii) new nonexclusive Contracts, either of which can be terminated without penalty upon notice of 60 days or less, and are otherwise in compliance with this Section 4.1; (o) engage in any action with the intent to, directly or indirectly, adversely impact or materially delay the consummation of the transactions contemplated by this Agreement; (p) materially change the amount of any insurance coverage; (q) cause or permit any amendments to its certificate of incorporation, bylaws or other charter or similar documents of the Company or any of its Subsidiaries; or (r) Make or change any material Tax election in respect of Taxes, adopt or change any accounting method in respect of Taxes, settle or compromise any material Tax liability; or claim or assessment in respect of Taxes or consent to the extension or waiver of the limitation period applicable to any claim or assessment in respect of Taxes. (ls) authorize or enter into any formal or informal agreement agree in writing or otherwise make any commitment to do take any of the foregoing actions described in Section 4.1(a) through Section 4.1(r), or to take any action which would reasonably be expected to make any of the Company’s representations or warranties of Company contained in this Agreement untrue or incorrect such that the conditions set forth in any material respect or result in any Section 6.3 would not be satisfied as of the conditions time of such breach or as of the time such representation or warranty shall have become untrue or prevent the Company from performing or cause the Company not to perform one or more covenants required hereunder to be performed by the Merger set forth herein not being satisfiedCompany.

Conduct of Business by Company. Pending (a) Except for matters set forth in Section 5.01 of the Closing Company agrees thatDisclosure Letter, between otherwise expressly required, permitted or contemplated by this Agreement or any other Transaction Document, required by applicable Law or consented to in writing by Parent (such consent not to be unreasonably withheld, delayed or conditioned), from the date hereof until the earlier of the Effective Time or the termination of this Agreement and the Effective Timein accordance with its terms, unless Parent shall otherwise agree in writingCompany shall, and except as a result shall cause each of entering into this Agreement (x) the respective businesses of Company and its Subsidiaries to, use reasonable best efforts to conduct the Company Subsidiaries shall be conducted only in, and Company and the Company Subsidiaries shall not take any action except in, the ordinary course of business consistent with past practice and (y) Company shall use Business in all reasonable efforts to keep available the services of such of the current officers, significant employees and consultants of Company and the Company Subsidiaries and to preserve the current relationships of Company and the Company Subsidiaries with such of the corporate partners, customers, suppliers and other persons with which Company or any Company Subsidiary has significant business relations in order to preserve substantially intact its business organization. By way of amplification and not limitation, neither Company nor any Company Subsidiary shall, between the date of this Agreement and the Effective Time, directly or indirectly, do, or agree to do, any of the following without the prior written consent of Parent and except as a result of entering into this Agreement: (a) amend or otherwise change its certificate of incorporation or bylaws or equivalent organizational documents; (b) issue, sell, pledge, dispose of, grant, transfer, lease, license, guarantee or encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license or encumbrance of, (i) any shares of capital stock of Company or any Company Subsidiary of any class, or securities convertible into or exchangeable or exercisable for any shares of such capital stock, or any options, warrants or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of Company or any Company Subsidiary, other than (A) the issuance of shares of Company Common Stock pursuant to the exercise of stock options theretofore outstanding as of the date of this Agreement or (B) the issuance of options to purchase up to 250,000 shares of Company Common Stock under the Company's 1999 Stock Incentive Plan, 200,000 shares of which may be issued to newly hired management employees and 50,000 shares of which may be issued to existing non-executive employees, or (ii) any property or assets of Company or any Company Subsidiary except entering into alliance agreements or providing products and services in the ordinary course of business consistent with past practice; (i) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets) any interest in any corporation, partnership, other business organization or person or any division thereof; (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations of any person (other than Company and Company Subsidiaries) for borrowed money or make any loans or advances, other than routine employee loans to employees other than Company officers (not to exceed $1,000 to any individual), material to the business, assets, liabilities, financial condition or results of operations of Company and the Company Subsidiaries, taken as a whole, other than in the ordinary course of business consistent with past practice; (iii) terminate, cancel or request any material change in, or agree to any material change in, any Company Material Contract or other License Agreement; (iv) make or authorize any capital expenditure, other than capital expenditures respects in the ordinary course of business consistent with past practice that have been budgeted and, to the extent consistent therewith, use reasonable best efforts to preserve the Company Business substantially intact, including using reasonable best efforts to maintain existing relationships with customers and suppliers. (b) In addition, and without limiting the generality of the foregoing, except for fiscal year 1999 and disclosed matters set forth in Section 5.01 of the Company Disclosure Letter, otherwise expressly required, permitted or contemplated by this Agreement or any other Transaction Document, required by applicable Law or consented to in writing by Parent (such consent not to Parent be unreasonably withheld, delayed or conditioned), from the date hereof until the earlier of the Effective Time or the termination of this Agreement in accordance with its terms, Company shall not, and shall not permit any of its Subsidiaries to, do any of the following: (i) in the case of Company and the Company Subsidiaries (A) issue or sell any shares of its capital stock or other equity or voting interests, or any securities convertible into, or exchangeable or exercisable for, any shares of its capital stock or other equity or voting interests (including any rights, warrants, puts, calls or options to purchase any shares of its capital stock or other equity or voting interests), other than, in each case, pursuant to Company Equity Awards or rights under the Company ESPP outstanding as of the date of this Agreement in accordance with their terms or granted following the date of this Agreement as permitted by this Agreement, (B) establish a record date for, approve, declare, set aside for payment or pay any dividends or make any other distributions in respect of its shares of capital stock or other equity interests, other than dividends and distributions by any wholly owned Subsidiary to its parent, (C) split, combine or reclassify any of its capital stock or other equity interests, or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for its shares of capital stock or other equity interests, other than any such transaction by a wholly owned Subsidiary that remains a wholly owned Subsidiary after consummation of such transaction or (D) purchase, redeem or otherwise acquire or amend the terms of any shares of its capital stock or other equity interests or any rights, warrants, options or other equity awards to acquire, directly or indirectly, any such shares of capital stock or other equity interests other than, in each case, pursuant to the cashless exercise of Company Options, the forfeiture of, or withholding of taxes with respect to, Company Equity Awards or the purchase of shares of Company Common Stock under the Company ESPP; (ii) in the case of Company and the Company Subsidiaries, amend its certificate or articles of incorporation or bylaws or comparable organizational documents, other than to change its name in accordance with the terms of any Transaction Document; (iii) sell, transfer, acquire or dispose of, including by entering or terminating any lease with respect to, in a single transaction or a series of related transactions, direct or indirectly any interests in real property owned or leased by Company or any Company Subsidiary or otherwise used in the conduct of the Company Business (including, any Company Owned Real Property or any Company Leased Real Property), except for the expiration or renewal of any lease, in each case, in accordance with its terms; (iv) create any Company Subsidiary that is not, directly or indirectly, wholly owned by the Company; (v) with respect to Company or any Company Subsidiary, acquire, in a single transaction or a series of related transactions, whether by merging or consolidating with, or by purchasing a substantial equity interest in or a substantial portion of the assets of, or by any other manner, any business or any partnership, corporation, joint venture, limited liability entity or other business organization or division thereof or any other Person, in each case that would be owned by Company or any Company Subsidiary after giving effect to the Separation and with a value or purchase price that, individually or in the aggregate, exceeds $50,000,000; (vi) sell, transfer or otherwise dispose of, including by entering any license with respect to, in a single transaction or a series of related transactions, any tangible property or asset (other than, for the avoidance of doubt, sales, transfers or dispositions of Inventory in the ordinary course of business) of the Company Business with a value or purchase price that, individually or in the aggregate, exceeds $25,000,000, except for dispositions of obsolete or worn-out assets that are notno longer used or useful in the operation or conduct of the Company Business; (vii) transfer, sell, assign, lease, exclusively license, cancel, abandon, fail to maintain or enforce, or allow to lapse or expire, or otherwise dispose of any material Company Intellectual Property owned by Company or a Company Subsidiary, or take any action or fail to take any action, if such action or failure to take any such action would reasonably be likely to result in the loss, lapse, abandonment, invalidity or unenforceability of any material Company Intellectual Property, in each case, except for the disposal of any Company Registered Intellectual Property at the end of its statutory life or non-exclusive licenses or sublicenses granted in the ordinary course of business; (viii) modify in any material respect any of its policies related to Privacy and Data Security Requirements, or any administrative, technical or physical safeguards related to privacy or data security, of the Company or the Company Subsidiaries, except (A) to remediate any security issue, (B) to enhance data security or integrity, (C) to comply with Privacy and Data Security Requirements, or (D) as otherwise directed or required by a Governmental Authority; (ix) in the case of Company and the Company Subsidiaries (A) with respect to the Company Employees, adopt, enter into, terminate, materially amend or modify, extend or renew any Labor Agreement or Company Benefit Plan, (B) increase the compensation or benefits of, or pay any bonus to, any former or current Company Employee, other than with respect to increases made in the ordinary course of business consistent with past practice for employees whose annual base salary would not exceed $200,000; provided, however, that subject to clause (I) below, the foregoing shall not restrict Company or any of its Subsidiaries from providing, or making available to, employees who are newly hired in the ordinary course of business compensation and benefit arrangements and Benefit Plans that are substantially consistent with the compensation and benefit arrangements and Benefit Plans previously provided or made available by Company or its applicable Subsidiary to newly hired employees in similar positions, (C) with respect to former or current Company Employees, take any action to fund or in any other way secure the payment of compensation or benefits under any Company Benefit Plan, (D) with respect to any former or current Company Employees, take any action to accelerate the vesting or payment of any compensation or benefits, (E) with respect to any former or current Company Employees, make any material determination under any Company Benefit Plan that is not in the ordinary course of business, (F) transfer the sponsorship of any Company Benefit Plan to any member of the Outdoor Products Group or accept the transfer of or retain (as applicable) the sponsorship or Liabilities relating to any Outdoor Products Benefit Plan, (G) grant any Company Equity Award, (H) grant to any Company Employee any new change in control, transaction, retention or other payments or benefits that could be triggered in connection with the consummation of the transactions contemplated hereunder, (I) hire or engage any Company Employee whose annual base salary would exceed $200,000 or (J) terminate any Company Employee (other than for cause as reasonably determined by Company) whose annual base salary exceeds $200,000, except in each case, (I) as required to ensure that any Benefit Plan in effect on the date hereof is not then out of compliance with applicable Law, (II) as expressly required pursuant to the terms of any Benefit Plan or applicable Law, (III) as expressly required by Article VI or the Employee Matters Agreement or (IV) to the extent all Liability for such action will, after the Separation, be assumed or retained by Outdoor Products or the Outdoor Products Subsidiaries; (x) other than in the ordinary course of business, incur any Indebtedness, guarantee or otherwise become contingently liable for any Indebtedness of another Person, or enter into any “keep well” or other agreement to maintain any financial statement condition of another Person, except for (A) Indebtedness solely (i) between or among members of the Company Group or (ii) between or among members of the Outdoor Products Group, (B) Indebtedness incurred under or in respect of any Existing Credit Agreement, the Existing Notes or any other agreement or instrument existing as of the date of this Agreement, (C) foreign currency hedging arrangements on customary arms’ length commercial terms entered into in the ordinary course of business for bona fide commercial purposes and not for speculative purposes and which would not have fees or costs to unwind that would reasonably be expected to exceed $2,000,000 in the aggregate, (D) Indebtedness (i) that, following the Closing, will be an obligation of Outdoor Products or an Outdoor Products Subsidiary and (ii) with respect to which, following the Closing, neither Company nor any Company Subsidiary shall have any Liability and (E) any Indebtedness that is incurred to refinance any Indebtedness outstanding as of the date of this Agreement or any of the foregoing, to the extent the amount of such refinancing Indebtedness is not greater than the amount of Indebtedness being refinanced; (xi) encumber or subject material Company Assets to any Liens other than Company Permitted Liens; (xii) (A) make any loan, advance or capital contribution to, or investment in, any Person that, individually or in the aggregate, exceeds $10,000,000 (other than Contracts relating to acquisitions or Indebtedness, which are the subject of clauses (v) and (x) above, respectively) or (B) authorize or make any capital expenditure in an amount, individually or in the aggregate, in excess of $3,000,000 for Company 12,000,000 in any fiscal year, in the case of each of clauses (A) and the Company Subsidiaries taken (B), except as a whole; (1) in response to any bona fide casualty loss or property damage or (v2) to the extent that any Liability for such action will, after the Separation, be assumed or retained in full by Outdoor Products or the Outdoor Products Subsidiaries; (xiii) make any change in its financial accounting methods, principles and practices in effect on the Balance Sheet Date in any material respect, except as may be required by a change in GAAP after the date hereof, in each case, except to the extent such action relates only to Outdoor Products, the Outdoor Products Subsidiaries or the Outdoor Products Business and such action will, after the Separation, be assumed or retained in full by Outdoor Products or the Outdoor Products Subsidiaries; (xiv) (A) make, change or revoke any material Tax election (including any “domestic use election” pursuant to Treasury Regulations Section 1.1503(d)-6), (B) file any material amended Tax Return, (C) settle or compromise any material Tax liability, (D) surrender any right to claim a material Tax refund, (E) waive or extend any statute of limitations relating to any material Tax or material Tax Return, (F) enter into any voluntary disclosure agreement or amend program with any contractGovernmental Authority implicating any material Taxes, (G) enter into any “closing agreement” as described in Section 7121 of the Code (or any similar agreement under state, commitment local or arrangement thatforeign Law) with respect to a material Tax liability or (H) change any material Tax accounting period or any method of Tax accounting, if fully performedin each case, would not be permitted under this Section 6.01(c)except to the extent such action relates only to Outdoor Products, the Outdoor Products Subsidiaries or the Outdoor Products Business; (dxv) declareadopt a plan or agreement of complete or partial liquidation, set asidedissolution, make or pay any dividend merger, consolidation, restructuring, recapitalization or other distribution, payable reorganization in cash, stock, property or otherwise, with respect to any of its capital stock, except that any Company Subsidiary may pay dividends or make other distributions relation to Company or any other Company Subsidiary; (exvi) reclassifyadopt or implement any stockholder rights plan, combine“poison pill” or similar anti-takeover agreement or plan, splitin each case that would prohibit, subdivide restrict or redeemdelay, purchase or otherwise acquirebe applicable to, directly the Transactions; (xvii) settle any Action with respect to the Company Business if such settlement would require any payment by Company or indirectlyany Company Subsidiary in an amount in excess of $1,000,000 individually or $2,500,000 in the aggregate, or would obligate Company or any of its capital stockSubsidiaries to take any material action with respect to the Company Business, or impose any material restrictions on the Company Business; (fxviii) amend or change in the period (or permit any acceleration, amendment or change unless required pursuant to the terms of existing agreements case of Company previously provided to Parent) of exercisability of options granted under and the Company Stock Plans Subsidiaries, engage in any business other than the Company Business substantially as conducted as of the date hereof or authorize cash payments in exchange for any Company Stock Options granted under any of such plansthe Outdoor Products Business; (gxix) amend the terms ofamend, repurchaseextend, redeem or otherwise acquire, renew or permit to lapse any material insurance policy held by Company Subsidiary to repurchase, redeem or otherwise acquire, any of its securities or any securities of any Company Subsidiary or propose to do any of the foregoingCompany Subsidiaries covering the Company Business, or enter into new insurance policies binding on the Company Business, except in either case on such terms and for such amounts as is consistent with past practice; (hxx) other than in the ordinary course of business consistent (and, with past practices respect to any existing Company Material Contract, in accordance with the existing terms of such Company Material Contract), or pursuant as otherwise permitted by the terms of this Section 5.01(b), enter into, amend, accelerate, cancel, fail to existing agreements of Company previously provided to Parent increase the compensation payable or to become payable to its directors, officers, consultants or employeesexercise an expiring renewal option, grant a material waiver under or modify in any rights material respect, terminate or transfer to severance any person other than a Company Subsidiary any Company Material Contract, or termination pay toany Contract that would constitute a Company Material Contract if in effect as of the date of this Agreement; (xxi) amend any engagement letter between the Company and any financial advisor listed in Section 4.20, or enter into a new engagement letter with any such financial advisor; (xxii) transfer the employment of any individual to or severance agreement which provides benefits upon a change in control of Company that would be triggered by the Merger with, any director, officer, consultant or other employee of from Company or any a Company Subsidiary who is not currently entitled to such benefits or from Outdoor Products or an Outdoor Products Subsidiary, except in accordance with the MergerEmployee Matters Agreement; (xxiii) amend, establish, adopt, modify or terminate any Lease Agreement or take any action in material violation thereof other than the expiration or renewal thereof in each case in accordance with its terms; (xxiv) enter into or amend any collective bargainingContract or take any other action, bonusif such Contract, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer, consultant or employee of Company or any Company Subsidiary, except to the extent required by applicable Law or the terms amendment of a collective bargaining agreementContract or action would reasonably be expected to prevent or materially impede, interfere with, hinder or enter into or amend any contract, agreement, commitment or arrangement between Company or any Company Subsidiary and any delay the consummation of Company's directors, officers, consultants or employeesthe Transactions; (ixxv) pay, discharge amend or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than otherwise modify the payment, discharge or satisfaction Separation Agreement in the ordinary course of business and consistent with past practice of liabilities reflected or reserved against on the consolidated balance sheet of Company and the consolidated the Company Subsidiaries dated as of March 31, 1999 included in Company's quarterly report on Form 10-Q for the period then ended (the "Company Balance Sheet") and only to the extent reflected or to the extent of such reserves or incurred in the ordinary course of business since March 31, 1999; (j) make any change with respect to Company's accounting policies, principles, methods or procedures, including, without limitation, revenue recognition policies, other than as required by U.S. GAAP; (k) make any material Tax election or settle or compromise any material Tax liabilityrespect; or (lxxvi) authorize any of, or enter into any formal commit or informal agreement or otherwise make any commitment to do any of the foregoing or agree to take any action which would make any of of, the representations or warranties of Company contained in this Agreement untrue or incorrect in any material respect or result in any of the conditions to the Merger set forth herein not being satisfiedforegoing actions.

Conduct of Business by Company. Pending the Closing Merger. Each Company covenants and agrees with the other Parties that, between the date of this Agreement hereof and the Effective Time, except as expressly required or permitted by this Agreement or unless Parent each other Party shall otherwise agree in writing, such Company shall conduct and except as a result of entering into this Agreement (x) shall cause the respective businesses of Company and the Company each of its Subsidiaries shall to be conducted only in, and such Company and the Company its Subsidiaries shall not take any action except in, the ordinary course of business and in a manner consistent with past practice and (y) practice. Each Company shall use all its commercially reasonable best efforts to preserve intact the business organization and assets of such Company and each of its Subsidiaries, and to operate, and cause each of its Subsidiaries to operate, according to plans and budgets provided to each other Party, to keep available the services of such of the current present officers, significant employees and consultants of such Company and each of its Subsidiaries and, except as set forth in Section 5.1 of the Company Subsidiaries Disclosure Schedule, to maintain in effect Company Material Contracts and to preserve the current present relationships of the Company and the Company each of its Subsidiaries with such of the corporate partnerslicensors, licensees, sponsors, customers, suppliers suppliers, consultants and other persons Persons with which the Company or any Company Subsidiary of its Subsidiaries has significant business relations in order to preserve substantially intact its business organizationrelations. By way of amplification and not limitation, except as expressly permitted by this Agreement or except as set forth in the Company Disclosure Schedule, neither Company the Companies nor any Company Subsidiary of their respective Subsidiaries shall, between the date of this Agreement hereof and the Effective Time, directly or indirectly, indirectly do, or agree propose to do, any of the following without the prior written consent of Parent and except as a result of entering into this Agreementeach other Party: (a) amend or otherwise change its certificate the Certificate or Articles of incorporation Incorporation or bylaws By-laws or equivalent organizational documentsdocument of the Company or any of its Subsidiaries or alter through merger, liquidation, reorganization, restructuring or in any other fashion the corporate structure or ownership of Company or any of its Subsidiaries; (b) issue, sell, transfer, pledge, dispose of, grant, transfer, lease, license, guarantee of or encumber, or authorize the issuance, sale, transfer, pledge, disposition, grant, transfer, lease, license disposition or encumbrance of, (i) any shares of capital stock of Company or any Company Subsidiary of any class, or securities convertible into or exchangeable or exercisable for any shares of such capital stock, or any options, warrants warrants, convertible securities or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of the Company or any Company Subsidiary, other than of its Subsidiaries (A) except for the issuance of shares of Company Common Stock pursuant to upon the exercise of stock options theretofore Company Options or Company Warrants outstanding as on the date hereof or upon the conversion of any convertible securities outstanding on the date hereof); or sell, transfer, pledge, dispose of or encumber, or authorize the sale, transfer, pledge, disposition or encumbrance, of any assets of the date of this Agreement or (B) the issuance of options to purchase up to 250,000 shares of Company Common Stock under the Company's 1999 Stock Incentive Plan, 200,000 shares of which may be issued to newly hired management employees and 50,000 shares of which may be issued to existing non-executive employees, or (ii) any property or assets of Company or any Company Subsidiary of its Subsidiaries (except entering into alliance agreements or providing products and services for sales of assets in the ordinary course of business and in a manner consistent with past practice; (i) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets) any interest in any corporation, partnership, other business organization or person or any division thereof; (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations of any person (other than Company and Company Subsidiaries) for borrowed money or make any loans or advances, other than routine employee loans to employees other than Company officers (not to exceed $1,000 to any individual), material to the business, assets, liabilities, financial condition or results of operations of Company and the Company Subsidiaries, taken as a whole, other than in the ordinary course of business consistent with past practice; (iii) terminate, cancel or request any material change in, or agree to any material change in, any Company Material Contract or other License Agreement; (iv) make or authorize any capital expenditure, other than capital expenditures in the ordinary course of business consistent with past practice that have been budgeted for fiscal year 1999 and disclosed in writing to Parent and that are not, in the aggregate, in excess of $3,000,000 for Company and the Company Subsidiaries taken as a whole; or (v) enter into or amend any contract, agreement, commitment or arrangement that, if fully performed, would not be permitted under this Section 6.01(c); (d) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock, except that any Company Subsidiary may pay dividends or make other distributions to Company or any other Company Subsidiary; (e) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its the capital stockstock of the Company or interest in or securities of any Subsidiary; (fc) amend declare, set aside or change the period pay any dividend or other distribution (whether in cash, stock or permit property or any accelerationcombination thereof) in respect of any of its capital stock (except that a wholly owned Subsidiary of any Company may declare and pay a dividend to its parent); split, amendment combine or change unless required pursuant to the terms reclassify any of existing agreements of Company previously provided to Parent) of exercisability of options granted under the Company Stock Plans its capital stock or issue or authorize cash payments or propose the issuance of any other securities in exchange respect of, in lieu of or in substitution for any Company Stock Options granted under any shares of such plans; (g) its capital stock or amend the terms of, repurchase, redeem or otherwise acquire, or permit any Company Subsidiary to repurchase, redeem or otherwise acquire, any of its securities or any securities of any Company Subsidiary its Subsidiaries, or propose to do any of the foregoing; (hd) other than sell, transfer, lease, out-license, out-sublicense, mortgage, pledge, dispose of, encumber, grant or otherwise dispose of any Intellectual Property Rights, or amend or modify in any material way any existing agreements with respect to any Intellectual Property Rights, except for (i) non-exclusive licenses granted pursuant to material transfer agreements entered into in the ordinary course of business consistent with past practices practice and (ii) non- exclusive research licenses granted as part of a research agreement that is otherwise permitted under this Agreement; (e) acquire (by merger, consolidation, acquisition of stock or pursuant assets or otherwise) any corporation, limited liability company, partnership, joint venture or other business organization or division thereof; incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse or otherwise as an accommodation become responsible for, the obligations of any Person, or make any loans, advances or enter into any financial commitments, except in the ordinary course of business consistent with past practice and as otherwise permitted under any loan or credit agreement to existing agreements which the Company is a party; authorize any capital expenditures which are, in the aggregate, in excess of $100,000 for the Company previously provided and its Subsidiaries taken as a whole; or enter into or amend in any material respect any contract, agreement, commitment or arrangement with respect to Parent any of the matters set forth in this Section 5.1(e); (f) hire any employee or consultant; terminate any employee or consultant, except in the ordinary course of business consistent with past practice; increase the compensation (including, without limitation, bonus) payable or to become payable to its directors, officers, consultants officers or employees, except for increases in salary or wages of employees of the Company or its Subsidiaries who are not officers of the Company in the ordinary course of business consistent with past practices, or grant any rights to severance or termination pay or stock options to, or enter into any employment or severance agreement which provides benefits upon a change in control of Company that would be triggered by the Merger with, with any director, officer, consultant officer or other employee of the Company or any Company Subsidiary who is not currently entitled to such benefits from the Mergerof its Subsidiaries, or establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer, consultant current or employee of Company or any Company Subsidiary, except to the extent required by applicable Law or the terms of a collective bargaining agreement, or enter into or amend any contract, agreement, commitment or arrangement between Company or any Company Subsidiary and any of Company's former directors, officers, consultants officers or employees; (g) change any accounting policies or procedures (including procedures with respect to reserves, revenue recognition, payments of accounts payable and collection of accounts receivable) unless required by statutory accounting principles or GAAP; (h) create, incur, suffer to exist or assume any Lien on any of their material assets other than Liens outstanding on the date hereof; (i) other than in the ordinary course of business consistent with past practice, (i) enter into any Company Material Contract, (ii) modify, amend or transfer in any material respect or terminate any Company Material Contract or waive, release or assign any material rights or claims thereto or thereunder or (iii) enter into or extend any lease with respect to real property with any third party; (j) make any Tax election or settle or compromise any federal, state, local or foreign income Tax liability or agree to an extension of a statute of limitations; (k) settle any material Litigation or waive, assign or release any material rights or claims except, in the case of Litigation, any Litigation which settlement would not (i) impose either material restrictions on the conduct of the Company's business or any of its Subsidiaries or (ii) for any individual Litigation item settled, exceed $50,000 in cost or value to the Company or any of its Subsidiaries; (l) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction except in the ordinary course of business and consistent with past practice in an amount or value not exceeding $100,000 in any instance or series of liabilities reflected related instances or reserved against on $250,000 in the consolidated balance sheet of Company and the consolidated the Company Subsidiaries dated aggregate or in accordance with their terms as in effect as of March 31, 1999 included in Company's quarterly report on Form 10-Q for the period then ended (the "Company Balance Sheet") and only to the extent reflected or to the extent of such reserves or incurred in the ordinary course of business since March 31, 1999date hereof; (jm) make engage in any change with respect to Company's accounting policiestransaction, principles, methods or procedures, including, without limitation, revenue recognition policies, other than as required by U.S. GAAP; (k) make any material Tax election or settle or compromise any material Tax liability; or (l) authorize or enter into any formal agreement, arrangement, or informal agreement understanding with, directly or otherwise make indirectly, any commitment Affiliate, other than those contemplated pursuant to the terms of this Agreement and those existing as of the date hereof which are listed in the Company Disclosure Schedule; (n) fail to renew or maintain in full force and effect all insurance policies, as the case may be, currently in effect or fail to pay any insurance premiums thereon; and (o) authorize, recommend, propose or announce an intention to do any of the foregoing foregoing, or agree or enter into any agreement, contract commitment or arrangement to take any action which would make do any of the representations or warranties of Company contained in this Agreement untrue or incorrect in any material respect or result in any of the conditions to the Merger set forth herein not being satisfiedforegoing.

Conduct of Business by Company. Pending the Closing Company agrees that, between (a) From and after the date of this Agreement and prior to the earlier of the Effective TimeTime or the date, unless Parent shall otherwise agree in writingif any, on which this Agreement is earlier terminated and abandoned pursuant to Section 8.1 (the “Termination Date”), and except (i) as a result may be required by applicable Law (including any Public Health Measures or the regulations or requirements of entering into any regulatory organization applicable to Company and its Subsidiaries), (ii) as may be consented to in writing by Parent (which consent shall not be unreasonably withheld, delayed or conditioned), (iii) as may be expressly required or expressly permitted by this Agreement or (xiv) the respective businesses as set forth in Section 6.1(b) of Company and the Company Subsidiaries shall be conducted only inDisclosure Letter, Company shall, and Company and the Company shall cause each of its Subsidiaries shall not take any action except in, to use reasonable best efforts to (A) conduct its business in the ordinary course of business consistent with past practice and (yB) Company shall use preserve in all reasonable efforts to keep available the services of such of the current officers, significant employees and consultants of Company and the Company Subsidiaries material respects its business organization and to preserve the current relationships of Company maintain in all material respects existing relations and the Company Subsidiaries goodwill with such of the corporate partnersGovernmental Entities, employees, customers, suppliers suppliers, creditors and other persons with which Company or any Company Subsidiary has significant business relations in order to preserve substantially intact its business organization. By way lessors. (b) Without limiting the generality of amplification and not limitation, neither Company nor any Company Subsidiary shallthe foregoing Section 6.1(a), between the date of this Agreement and the Effective TimeTime or the Termination Date, directly if any, except (A) as may be required by applicable Law (including any Public Health Measures or indirectlythe regulations or requirements of any regulatory organization applicable to Company and its Subsidiaries), do(B) as may be consented to in writing by Parent (which consent shall not be unreasonably withheld, delayed or agree to doconditioned), (C) as may be expressly required or expressly permitted by this Agreement or (D) as set forth in Section 6.1(b) of the Company Disclosure Letter, Company shall not, and shall not permit any of the following without the prior written consent of Parent and except as a result of entering into this Agreementits Subsidiaries to: (ai) amend authorize or otherwise pay any dividends on or make any distribution with respect to its issued and outstanding shares of capital stock, Membership Interests, Company Common Units or other limited liability company interests (whether in cash, assets, stock, units or other securities of Company or its Subsidiaries), except dividends, dividend equivalents and distributions paid by wholly owned Subsidiaries of Company to Company or to any of its other wholly owned Subsidiaries; (ii) split, combine, consolidate, subdivide or reclassify any of its capital stock, Membership Interests or Company Common Units or issue or authorize or propose the issuance of any of its capital stock, Membership Interests, Company Common Units, equity interests or other securities in respect of, in lieu of or in substitution for shares of its capital stock, Membership Interests, Company Common Units or equity interests, except for any such transaction by a wholly owned Subsidiary of Company which remains a wholly owned Subsidiary after consummation of such transaction or issuances of Company Common Units in respect of Company Equity Awards outstanding as of the Company Capitalization Date; (iii) except as required by a Company Benefit Plan in effect on the date of this Agreement, (A) (1) increase the base salary, target bonus or bonus opportunity, pension, welfare, fringe or other benefits, severance or retainer or other fees or any other component of compensation for any current or former director, executive officer, employee or individual independent contractor of Company or its Subsidiaries, or (2) increase the benefits provided to Company’s or its Subsidiaries’ current or former directors, executive officers, or employees (other than increases resulting from routine changes to benefit programs); (B) enter into, amend, modify or terminate any employment, change of control, severance or retention agreement with any current or former directors, executive officers, employees or individual independent contractors of Company or any of its certificate Subsidiaries; (C) enter into, establish, adopt, amend, terminate or waive any rights with respect to, any collective bargaining agreement or any agreement with any labor organization or other employee representative; (D) except as permitted pursuant to clause (A) or (B) above, enter into, establish, adopt, amend, terminate or waive any rights with respect to any material Company Benefit Plan (or any plan, trust, fund, policy or arrangement for the benefit of incorporation any current or former directors, executive officers or employees or any of their beneficiaries that would be a material Company Benefit Plan if it were in existence as of the date of this Agreement); (E) take any action to accelerate any payment or benefit, or to accelerate the funding of any payment or benefit, payable or to become payable to Company’s current or former employees, individual independent contractors, executive officers or directors; (F) grant any new Company Equity Awards or other equity-based incentive awards; or (G) hire, promote or terminate (other than for cause) any employee or individual independent contractor of Company; provided, that the foregoing clause (G) shall not apply to any Company or Subsidiary employee earning the equivalent of $150,000 or less in base salary annually if the total expenditures and commitments made pursuant to the exception in this proviso does not exceed $500,000 in the aggregate; (iv) change material financial accounting policies or material procedures or any of its material methods of reporting income, deductions or other material items for financial accounting purposes, except as required by changes in GAAP, SEC rule or applicable Law; (v) adopt any amendments to its charter or bylaws or equivalent similar applicable organizational documentsdocuments (including partnership agreements and limited liability company agreements) in any manner with respect to Company (or, in the case of its Subsidiaries, in a manner adverse to Company); (bvi) except for transactions among Company and its wholly owned Subsidiaries or among Company’s wholly owned Subsidiaries or issuances of Company Common Units in respect of Company Equity Awards outstanding as of the Company Capitalization Date, issue, sell, pledge, dispose of, grant, transfer, lease, license, guarantee of or encumber, encumber or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license or encumbrance of, otherwise subject to a Lien (iother than a Permitted Lien) any shares of its capital stock of stock, Membership Interests, Company Common Units or other ownership interest in Company or any Company Subsidiary of Subsidiaries or any class, or securities convertible into or exchangeable or exercisable for any such shares, Membership Interests, Company Common Units or other ownership interest, or any rights, warrants or options to acquire or with respect to any such shares of such capital stock, Membership Interests, Company Common Units, other ownership interest or any optionsconvertible or exchangeable securities; (vii) except for transactions among Company and its wholly owned Subsidiaries or among Company’s wholly owned Subsidiaries, warrants directly or other rights of any kind to indirectly, purchase, redeem or otherwise acquire any shares of such its capital stock, Membership Interests, Company Common Units or any rights, warrants or options to acquire any such shares, Membership Interests, or Company Common Units other ownership interest than the acquisition of Company Common Units from a holder of Company Equity Awards in satisfaction of withholding obligations upon the settlement of such award; (includingviii) incur, without limitationoffer, place, arrange, syndicate, assume, guarantee, prepay or otherwise become liable for any phantom interestFinancial Indebtedness (directly, contingently or otherwise), of except (1) for any Financial Indebtedness among Company and its wholly owned Subsidiaries or among Company’s wholly owned Subsidiaries, and (2) Financial Indebtedness not to exceed $5,000,000 in aggregate principal amount outstanding at any time incurred by Company or any Company Subsidiary, of its Subsidiaries other than in accordance with clauses (A1) through (2), inclusive; (ix) sell, lease, license, transfer, exchange or swap, mortgage or otherwise encumber (including securitizations), or subject to any Lien (other than Permitted Liens) or otherwise dispose of any portion of its material properties or assets having a fair market value in excess of $5,000,000 in the issuance of shares of aggregate, except (1) for transactions among Company Common Stock and its wholly owned Subsidiaries or among Company’s wholly owned Subsidiaries, (2) pursuant to existing agreements in effect prior to the exercise execution of stock options theretofore outstanding as of this Agreement and disclosed or made available to Parent prior to the date of this Agreement, (3) for Liens arising by reason of deposits necessary to obtain standby letters of credit and bank guarantees in the ordinary course of business consistent with past practice, (4) as may be required by applicable Law or any Governmental Entity in order to permit or facilitate the consummation of the transactions contemplated by this Agreement or (B5) the issuance sales, charters, leases or dispositions of options to purchase up to 250,000 shares of Company Common Stock under the Company's 1999 Stock Incentive Plan, 200,000 shares of which may be issued to newly hired management employees and 50,000 shares of which may be issued to existing non-executive employees, or (ii) any property properties or assets of Company or any Company Subsidiary except entering into alliance agreements or providing products and services made in the ordinary course of business consistent with past practice; (i1) acquire (includingmodify, without limitationamend, by merger, consolidation, terminate or acquisition of stock or assets) waive any interest rights under any Company Material Contract in any corporation, partnership, other business organization or person or any division thereof; (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations of any person (other than material respect in a manner which is adverse to Company and Company Subsidiaries) for borrowed money or make any loans or advances, other than routine employee loans to employees other than Company officers (not to exceed $1,000 to any individual), material to the business, assets, liabilities, financial condition or results of operations of Company and the Company Subsidiaries, taken as a whole, other than in the ordinary course of business consistent with past practice; practice or (iii2) terminate, cancel or request enter into any material change in, or agree to any material change in, any Contract that would constitute a Company Material Contract or other License Agreement; (iv) make or authorize any capital expenditure, other than capital expenditures in the ordinary course of business consistent with past practice that have been budgeted for fiscal year 1999 and disclosed in writing to Parent and that are not, in the aggregate, in excess of $3,000,000 for Company and the Company Subsidiaries taken as a whole; or (v) enter if entered into or amend any contract, agreement, commitment or arrangement that, if fully performed, would not be permitted under this Section 6.01(c); (d) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock, except that any Company Subsidiary may pay dividends or make other distributions to Company or any other Company Subsidiary; (e) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; (f) amend or change the period (or permit any acceleration, amendment or change unless required pursuant prior to the terms date of existing agreements of Company previously provided to Parent) of exercisability of options granted under the Company Stock Plans or authorize cash payments in exchange for any Company Stock Options granted under any of such plans; this Agreement (g) amend the terms of, repurchase, redeem or otherwise acquire, or permit any Company Subsidiary to repurchase, redeem or otherwise acquire, any of its securities or any securities of any Company Subsidiary or propose to do any of the foregoing; (h) other than in the ordinary course of business consistent with past practices practice or pursuant to existing agreements in connection with the expiration or renewal of Company previously provided to Parent increase the compensation payable or to become payable to its directors, officers, consultants or employees, grant any rights to severance or termination pay to, or enter into any employment or severance agreement which provides benefits upon a change in control of Company that would be triggered by the Merger with, any director, officer, consultant or other employee of Company or any Company Subsidiary who is not currently entitled to such benefits from the Merger, establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer, consultant or employee of Company or any Company SubsidiaryMaterial Contract), except to the extent required by applicable Law or the terms of a collective bargaining agreement, or enter into or amend any contract, agreement, commitment or arrangement between Company or any Company Subsidiary and any of Company's directors, officers, consultants or employeessuch Contract provides for an action that would otherwise be permitted under this Section 6.1(b); (ixi) voluntarily settle, pay, discharge or satisfy (1) any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise)Action, other than any Action to which Section 6.16 applies or that involves only the payment of monetary damages not in excess of $1,500,000 in the aggregate, excluding from such dollar thresholds amounts covered by any insurance policy of Company or any of its Subsidiaries (provided, that in no event shall Company or any of its Subsidiaries be prevented from paying, discharging or satisfying (with prior notice to Parent if practicable) any judgment and the amount of any such payment, discharge or satisfaction shall not be included in the foregoing dollar thresholds) or (2) any Action to which Section 6.16 applies; (xii) (1) make, change or revoke any material Tax election, except in the ordinary course of business and consistent with past practice practice, (2) file any material amended Tax Return, (3) change any material Tax accounting period or make a material change in any material method of liabilities reflected Tax accounting, (4) settle or reserved against on compromise any material Tax liability or any audit or other proceeding relating to a material Tax or surrender any right to claim a material refund of Taxes, (5) enter into any “closing agreement” within the consolidated balance sheet meaning of Company and Section 7121 of the consolidated Code (or any similar provision of U.S. state or local Law or non-U.S. Law) with respect to Taxes, or (6) waive or extend the Company Subsidiaries dated as statute of March 31, 1999 included limitations in Company's quarterly report on Form 10-Q for the period then ended respect of material Taxes (the "Company Balance Sheet") and only other than pursuant to the extent reflected or extensions of time to the extent of such reserves or incurred file Tax Returns obtained in the ordinary course of business since March 31, 1999consistent with past practice); (jxiii) make acquire (by merger, amalgamation, consolidation, purchase of shares, stock, equity interests, or assets or otherwise) or agree to so acquire any change with respect to Company's accounting policiesentity, principlesbusiness or assets that constitute a business or division of any Person, methods or proceduresany assets from any other Person (excluding ordinary course purchases of capital equipment, includinggoods, without limitationproducts, revenue recognition policiesservices and off-the-shelf Intellectual Property), other than as required by U.S. GAAPacquisitions for consideration (including assumed liabilities) that does not exceed $5,000,000 in the aggregate; (kxiv) adopt any plan or agreement of complete or partial liquidation, dissolution, merger, amalgamation, consolidation, restructuring or other reorganization of Company or any of its Subsidiaries (other than the Merger or the transactions contemplated by this Agreement or in compliance with Section 6.5 and Article VIII of this Agreement); (xv) enter into or amend any material transaction with any Affiliate (other than transactions among Company and its wholly owned Subsidiaries or among Company’s wholly owned Subsidiaries); provided, that the payment of compensation and benefits in the ordinary course of business consistent with past practice to directors, officers and employees shall not be deemed to be a “transaction” with an Affiliate for purposes of this Section 6.1(b)(xv), it being understood that this Section 6.1(b)(xv) (including this proviso) shall not be read to narrow Section 6.1(b)(iii); (xvi) make any material Tax election changes to existing insurance policies and programs (except as permitted pursuant to Section 6.1(b)(iii)); (xvii) make or settle commit to make any capital commitments or compromise any material Tax liabilitycapital expenditures (or series of related capital commitments or capital expenditures) in excess of $2,000,000, in the aggregate, in the case of each of the T-16 or the Vencedor drilling rigs, or $5,000,000, in the aggregate, in the case of the Aquarius drilling rig; or (lxviii) authorize agree, in writing or enter into any formal or informal agreement or otherwise make any commitment otherwise, to do take any of the foregoing or to take any action which would make any of the representations or warranties of Company contained in this Agreement untrue or incorrect in any material respect or result in any of the conditions to the Merger set forth herein not being satisfiedactions.

Conduct of Business by Company. Pending the Closing Company agrees that, between the date of this Agreement and the Effective Time, unless Parent shall otherwise agree in writing, and except as a result of entering into this Agreement (x) the respective businesses of Company and the Company Subsidiaries shall be conducted only in, and Company and the Company Subsidiaries shall not take any action except in, the ordinary course of business consistent with past practice and (y) Company shall use all reasonable efforts to keep available the services of such of the current officers, significant employees and consultants of Company and the Company Subsidiaries and to preserve the current relationships of Company and the Company Subsidiaries with such of the corporate partners, customers, suppliers and other persons with which Company or any Company Subsidiary has significant business relations in order to preserve substantially intact its business organization. By way of amplification and not limitation, neither Company nor any Company Subsidiary shall, between the date of this Agreement and the Effective Time, directly or indirectly, do, or agree to do, any of the following without the prior written consent of Parent and except as a result of entering into this Agreement: (a) amend Amend or otherwise change its certificate of incorporation or bylaws or equivalent organizational documents; (b) issueIssue, sell, pledge, dispose of, grant, transfer, lease, license, guarantee or encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license or encumbrance of, (i) any shares of capital stock of Company or any Company Subsidiary of any class, or securities convertible into or exchangeable or exercisable for any shares of such capital stock, or any options, warrants or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of Company or any Company Subsidiary, other than (Aa) the issuance of shares of Company Common Stock common stock pursuant to the exercise of stock options theretofore outstanding as of the date of this Agreement agreement or (Bb) the issuance of options to purchase up to 250,000 shares of Company Common Stock common stock under the Company's 1999 Stock Incentive Planstock incentive plan, 200,000 shares of which may be issued to newly hired management employees and 50,000 shares of which may be issued to existing non-executive employees, or (ii) any property or assets of Company or any Company Subsidiary except entering into alliance agreements or providing products and services in the ordinary course of business consistent with past practice; (i) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets) any interest in any corporation, partnership, other business organization or person or any division thereof; (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations of any person (other than Company and Company Subsidiariessubsidiaries) for borrowed money or make any loans or advances, other than routine employee loans to employees other than Company officers (not to exceed $1,000 to any individual), material to the business, assets, liabilities, financial condition or results of operations of Company and the Company Subsidiariessubsidiaries, taken as a whole, other than in the ordinary course of business consistent with past practice; (iii) terminate, cancel or request any material change in, or agree to any material change in, any Company Material Contract material contract or other License Agreementlicense agreement; (iv) make or authorize any capital expenditure, other than capital expenditures in the ordinary course of business consistent with past practice that have been budgeted for fiscal year 1999 and disclosed in writing to Parent and that are not, in the aggregate, in excess of $3,000,000 for Company and the Company Subsidiaries subsidiaries taken as a whole; or (v) enter into or amend any contract, agreement, commitment or arrangement that, if fully performed, would not be permitted under this Section 6.01(c); (d) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock, except that any Company Subsidiary may pay dividends or make other distributions to Company or any other Company Subsidiary; (e) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; (f) amend or change the period (or permit any acceleration, amendment or change unless required pursuant to the terms of existing agreements of Company previously provided to Parent) of exercisability of options granted under the Company Stock Plans stock plans or authorize cash payments in exchange for any Company Stock Options stock options granted under any of such plans; (g) amend the terms of, repurchase, redeem or otherwise acquire, or permit any Company Subsidiary subsidiary to repurchase, redeem or otherwise acquire, any of its securities or any securities of any Company Subsidiary subsidiary or propose to do any of the foregoing; (h) other than in the ordinary course of business consistent with past practices or pursuant to existing agreements of Company previously provided to Parent increase the compensation payable or to become payable to its directors, officers, consultants or employees, grant any rights to severance or termination pay to, or enter into any employment or severance agreement which provides benefits upon a change in control of Company that would be triggered by the Merger merger with, any director, officer, consultant or other employee of Company or any Company Subsidiary subsidiary who is not currently entitled to such benefits from the Mergermerger, establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer, consultant or employee of Company or any Company Subsidiarysubsidiary, except to the extent required by applicable Law law or the terms of a collective bargaining agreement, or enter into or amend any contract, agreement, commitment or arrangement between Company or any Company Subsidiary subsidiary and any of Company's directors, officers, consultants or employees; (i) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction in the ordinary course of business and consistent with past practice of liabilities reflected or reserved against on the consolidated balance sheet of Company and the consolidated the Company Subsidiaries subsidiaries dated as of March 31, 1999 included in Company's quarterly report on Form 10-Q for the period then ended (the "Company Balance Sheetbalance sheet") and only to the extent reflected or to the extent of such reserves or incurred in the ordinary course of business since March 31, 1999; (j) make any change with respect to Company's accounting policies, principles, methods or procedures, including, without limitation, revenue recognition policies, other than as required by U.S. GAAP; (k) make any material Tax tax election or settle or compromise any material Tax tax liability; or (l) authorize or enter into any formal or informal agreement or otherwise make any commitment to do any of the foregoing or to take any action which would make any of the representations or warranties of Company contained in this Agreement agreement untrue or incorrect in any material respect or result in any of the conditions to the Merger merger set forth herein not being satisfied.

Conduct of Business by Company. Pending Company shall, and shall cause each of the Closing Company agrees thatSubsidiaries to, between during the period from the date of this Agreement Plan of Merger and ending at the earlier of the Effective Time and the Effective Timetermination of this Plan of Merger in accordance with Article VII, unless Parent shall otherwise agree in writing, and except as a result expressly contemplated by this Plan of entering into this Agreement (x) the respective businesses of Company and the Company Subsidiaries shall be conducted only in, and Company and the Company Subsidiaries shall not take any action except in, the ordinary course of business consistent Merger or as required by applicable Law or with past practice and (y) Company shall use all reasonable efforts to keep available the services of such of the current officers, significant employees and consultants of Company and the Company Subsidiaries and to preserve the current relationships of Company and the Company Subsidiaries with such of the corporate partners, customers, suppliers and other persons with which Company or any Company Subsidiary has significant business relations in order to preserve substantially intact its business organization. By way of amplification and not limitation, neither Company nor any Company Subsidiary shall, between the date of this Agreement and the Effective Time, directly or indirectly, do, or agree to do, any of the following without the prior written consent of Parent and except as a result of entering into this Agreement: Purchaser (which consent shall not be unreasonably withheld, conditioned or delayed), (a) amend or otherwise change conduct its certificate of incorporation or bylaws or equivalent organizational documents; (b) issue, sell, pledge, dispose of, grant, transfer, lease, license, guarantee or encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license or encumbrance of, (i) any shares of capital stock of Company or any Company Subsidiary of any class, or securities convertible into or exchangeable or exercisable for any shares of such capital stock, or any options, warrants or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of Company or any Company Subsidiary, other than (A) the issuance of shares of Company Common Stock pursuant to the exercise of stock options theretofore outstanding as of the date of this Agreement or (B) the issuance of options to purchase up to 250,000 shares of Company Common Stock under the Company's 1999 Stock Incentive Plan, 200,000 shares of which may be issued to newly hired management employees and 50,000 shares of which may be issued to existing non-executive employees, or (ii) any property or assets of Company or any Company Subsidiary except entering into alliance agreements or providing products and services in the ordinary course of business consistent with past practice; (i) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets) any interest in any corporation, partnership, other business organization or person or any division thereof; (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations of any person (other than Company and Company Subsidiaries) for borrowed money or make any loans or advances, other than routine employee loans to employees other than Company officers (not to exceed $1,000 to any individual), material to the business, assets, liabilities, financial condition or results of operations of Company and the Company Subsidiaries, taken as a whole, other than in the ordinary course of business consistent with past practice; (iii) terminate, cancel or request any material change in, or agree to any material change in, any Company Material Contract or other License Agreement; (iv) make or authorize any capital expenditure, other than capital expenditures in the ordinary course of business consistent with past practice that have been budgeted for fiscal year 1999 in all material respects, and, to the extent consistent therewith, Company shall, and disclosed in writing shall cause each of the Company Subsidiaries to, use its commercially reasonable efforts to Parent and that are not, in the aggregate, in excess of $3,000,000 for Company preserve substantially intact its and the Company Subsidiaries' business organization and advantageous customer and business relationships and keep available the services of the present officers and employees and (b) take no action that would reasonably be expected to adversely affect or materially delay the ability to obtain any necessary approvals of any Governmental Entity required for the transactions contemplated hereby or to consummate the transactions contemplated hereby on a timely basis. Without limiting the generality of the foregoing, between the date of this Plan of Merger and ending at the earlier of the Effective Time and the termination of this Plan of Merger in accordance with Article VII, except as otherwise expressly contemplated by this Plan of Merger or as set forth in Section 5.1 of the Company Disclosure Letter or as required by applicable Law, Company shall not, nor shall it permit any of the Company Subsidiaries taken as a whole; to, without the prior written consent of Purchaser (which consent shall not be unreasonably withheld, conditioned or delayed, other than with respect to Section 5.1.1, 5.1.2, 5.1.3, subsections (b), (c), (d), (e) or (vh) enter into of 5.1.4, 5.1.11 or 5.1.12, for which Purchaser may withhold its consent at its sole discretion): 5.1.1 amend any contract, agreement, commitment its articles of incorporation or arrangement that, if fully performed, would not be permitted under this Section 6.01(cbylaws (or other comparable organizational documents); 5.1.2 (da) split, combine or reclassify any securities issued by Company or any of the Company Subsidiaries or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of its securities, (b) purchase, repurchase, redeem or otherwise acquire any securities issued by Company or any of the Company Subsidiaries, or (c) declare, set aside, make aside or pay any dividend or other distribution, payable distribution (whether in cash, stock, property or otherwise) in respect of, or enter into any Contract with respect to the voting of, any shares of its capital stock, except that any for distributions by a Company Subsidiary may pay to its parent, and except for quarterly cash dividends or make other distributions by Company in an amount not to exceed $0.11 per share of Company or any other Company Subsidiary; (e) reclassifyCommon Stock and paid in a manner consistent with past practice with respect to the timing of the declaration, combinepayment and record date of such dividend, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; (f) amend or change the period (or permit any acceleration, amendment or change unless required pursuant subject to the terms of existing agreements of Company previously provided to Parent) of exercisability of options granted under the Company Stock Plans or authorize cash payments in exchange for any Company Stock Options granted under any of such plansSection 5.20; (g) amend the terms of, repurchase, redeem or otherwise acquire, or permit any Company Subsidiary to repurchase, redeem or otherwise acquire, any of its securities or any securities of any Company Subsidiary or propose to do any of the foregoing; (h) other than in the ordinary course of business consistent with past practices or pursuant to existing agreements of Company previously provided to Parent increase the compensation payable or to become payable to its directors, officers, consultants or employees, grant any rights to severance or termination pay to, or enter into any employment or severance agreement which provides benefits upon a change in control of Company that would be triggered by the Merger with, any director, officer, consultant or other employee of Company or any Company Subsidiary who is not currently entitled to such benefits from the Merger, establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer, consultant or employee of Company or any Company Subsidiary, except to the extent required by applicable Law or the terms of a collective bargaining agreement, or enter into or amend any contract, agreement, commitment or arrangement between Company or any Company Subsidiary and any of Company's directors, officers, consultants or employees; (i) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction in the ordinary course of business and consistent with past practice of liabilities reflected or reserved against on the consolidated balance sheet of Company and the consolidated the Company Subsidiaries dated as of March 31, 1999 included in Company's quarterly report on Form 10-Q for the period then ended (the "Company Balance Sheet") and only to the extent reflected or to the extent of such reserves or incurred in the ordinary course of business since March 31, 1999; (j) make any change with respect to Company's accounting policies, principles, methods or procedures, including, without limitation, revenue recognition policies, other than as required by U.S. GAAP; (k) make any material Tax election or settle or compromise any material Tax liability; or (l) authorize or enter into any formal or informal agreement or otherwise make any commitment to do any of the foregoing or to take any action which would make any of the representations or warranties of Company contained in this Agreement untrue or incorrect in any material respect or result in any of the conditions to the Merger set forth herein not being satisfied.

Conduct of Business by Company. Pending Except as otherwise expressly contemplated by this Agreement or as consented to in writing by the Closing Company agrees thatParent, between during the period from the date of this Agreement and to the earliest of (a) the termination of this Agreement in accordance with Article VI, (b) the time that Merger Sub's designees are elected or appointed to the Company's Board of Directors pursuant to Section 1.2(c), or (c) the Effective Time, unless Parent shall otherwise agree in writingthe Company shall, and except as a result shall cause its Subsidiaries to, carry on their respective businesses only in the ordinary course consistent with past practice and in compliance in all material respects with all applicable Laws and regulations and, to the extent consistent therewith, use commercially reasonable efforts to preserve intact their current business organizations, use commercially reasonable efforts to keep available the services of entering into their current officers and other key employees and preserve their relationships with those Persons having business dealings with them. Without limiting the generality of the foregoing (but subject to the above exceptions), during the period from the date of this Agreement to the earlier of (xa) the respective businesses termination of this Agreement in accordance with Article VI or (b) the Effective Time, the Company shall not, and shall not permit any of its Subsidiaries to: (a) other than dividends and distributions (including liquidating distributions) by a direct or indirect wholly-owned Subsidiary of the Company to its parent, (i) declare, set aside or pay any dividends on, or make any other distributions (whether in cash, stock, property or otherwise) in respect of, any of its capital stock, (ii) 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 its capital stock, or (iii) purchase, redeem or otherwise acquire, directly or indirectly, for value any shares of capital stock of the Company or any of its Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities; (b) issue, deliver, sell, pledge or otherwise encumber or subject to any Lien (i) any shares of its capital stock, (ii) any other voting securities, (iii) any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or (iv) any "phantom" stock or stock rights, SARs or stock-based performance units, other than the issuance of shares of Company Common Stock and associated rights upon the exercise of Company Subsidiaries shall be conducted only inStock Options outstanding as of the date hereof in accordance with their present terms; (c) amend its certificate of incorporation, and Company and the Company Subsidiaries shall not take bylaws or other comparable organizational documents; (d) merge or consolidate with another Person, acquire, license or agree to acquire or license any action except inbusiness, division or Person or any equity or debt interest therein, acquire, license or agree to acquire or license any assets, other than immaterial assets or assets acquired in the ordinary course of business consistent with past practice and (y) Company shall use all reasonable efforts to keep available the services of such of the current officers, significant employees and consultants of Company and the Company Subsidiaries and to preserve the current relationships of Company and the Company Subsidiaries with such of the corporate partners, customers, suppliers and other persons with which Company or any Company Subsidiary has significant business relations in order to preserve substantially intact its business organization. By way of amplification and not limitation, neither Company nor any Company Subsidiary shall, between the date of this Agreement and the Effective Time, directly or indirectly, dopractice, or agree to doenter into any joint venture, any of the following without the prior written consent of Parent and except as a result of entering into this Agreement: (a) amend partnership or otherwise change its certificate of incorporation or bylaws or equivalent organizational documentssimilar arrangement; (be) issue, sell, pledge, dispose of, grant, transfer, lease, license, guarantee or encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license out, sell and leaseback, mortgage or encumbrance ofotherwise encumber or subject to any Lien (other than any Lien imposed by Law, (isuch as a carriers', warehousemen's or mechanics' Lien) any shares of capital stock of Company or any Company Subsidiary otherwise dispose of any class, of its properties or securities convertible into assets having a value of $200,000 or exchangeable or exercisable for any shares of such capital stock, or any options, warrants or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of Company or any Company Subsidiarymore, other than (A) the issuance of shares of Company Common Stock pursuant to the exercise of stock options theretofore outstanding as of the date of this Agreement sales or (B) the issuance of options to purchase up to 250,000 shares of Company Common Stock under the Company's 1999 Stock Incentive Plan, 200,000 shares of which may be issued to newly hired management employees and 50,000 shares of which may be issued to existing non-executive employees, exclusive licenses out of finished goods or (ii) any property or assets of Company or any Company Subsidiary except entering into alliance agreements or providing products and services in the ordinary course of business consistent with past practice; (if) acquire (including, without limitation, by merger, consolidation, repurchase or acquisition of stock or assets) any interest in any corporation, partnership, other business organization or person or any division thereof; (ii) incur any indebtedness for borrowed money or issue guarantee any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations such indebtedness of any person (other than Company and Company Subsidiaries) for borrowed money or make any loans or advances, other than routine employee loans to employees other than Company officers (not to exceed $1,000 to any individual), material to the business, assets, liabilities, financial condition or results of operations of Company and the Company Subsidiaries, taken as a whole, another Person other than in the ordinary course of business consistent with past practice, issue or sell any debt securities or warrants or other rights to acquire any debt securities of the Company or any of its Subsidiaries, guarantee any debt securities of another Person, enter into any "keep well" or other Contract to maintain any financial statement condition of another Person or enter into any Contract having the economic effect of any of the foregoing, other than intercompany indebtedness between the Company and any of its direct or indirect wholly-owned Subsidiaries or between such Subsidiaries; provided, however, that upon notice to, and consultation with, Parent, the Company and its Subsidiaries shall be permitted to continue, renew, or extend for a period of no more than three (iii3) terminateyears any existing revolving lines of credit on terms no less favorable in the aggregate to the Company than currently exist; (g) make any loans, cancel advances or request any material change capital contributions to, or investments in, any other Person, other than the Company or any direct or indirect wholly-owned Subsidiary of the Company and except for investments in publicly traded securities or other investments in the ordinary course of the Company's cash management or benefit plan management systems; (h) make or agree to make any material change innew capital expenditures, or enter into any Contract providing for payments by the Company Material Contract or other License Agreement; (iv) make any of its Subsidiaries which, individually, are in excess of $100,000 or, in the aggregate, are in excess of $200,000, except for Contracts to purchase inventory or authorize any capital expenditure, other than capital expenditures supplies entered into in the ordinary course of business consistent with past practice that have been budgeted for fiscal year 1999 and disclosed or renewals or extensions of existing Contracts relating to capital projects already in writing to Parent and that progress as of the date of this Agreement, which existing projects are not, identified in the aggregate, in excess Section 4.1(h) of $3,000,000 for Company and the Company Subsidiaries taken as a whole; or (v) enter into or amend any contract, agreement, commitment or arrangement that, if fully performed, would not be permitted under this Section 6.01(c); (d) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock, except that any Company Subsidiary may pay dividends or make other distributions to Company or any other Company Subsidiary; (e) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; (f) amend or change the period (or permit any acceleration, amendment or change unless required pursuant to the terms of existing agreements of Company previously provided to Parent) of exercisability of options granted under the Company Stock Plans or authorize cash payments in exchange for any Company Stock Options granted under any of such plans; (g) amend the terms of, repurchase, redeem or otherwise acquire, or permit any Company Subsidiary to repurchase, redeem or otherwise acquire, any of its securities or any securities of any Company Subsidiary or propose to do any of the foregoing; (h) other than in the ordinary course of business consistent with past practices or pursuant to existing agreements of Company previously provided to Parent increase the compensation payable or to become payable to its directors, officers, consultants or employees, grant any rights to severance or termination pay to, or enter into any employment or severance agreement which provides benefits upon a change in control of Company that would be triggered by the Merger with, any director, officer, consultant or other employee of Company or any Company Subsidiary who is not currently entitled to such benefits from the Merger, establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer, consultant or employee of Company or any Company Subsidiary, except to the extent required by applicable Law or the terms of a collective bargaining agreement, or enter into or amend any contract, agreement, commitment or arrangement between Company or any Company Subsidiary and any of Company's directors, officers, consultants or employeesDisclosure Letter; (i) pay, discharge discharge, settle or satisfy any material claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise) or Legal Proceeding (whether or not commenced prior to the date of this Agreement), other than the payment, discharge discharge, settlement or satisfaction satisfaction, in the ordinary course of business and consistent with past practice or in accordance with their terms, of liabilities reflected recognized or reserved against on disclosed in the most recent consolidated balance sheet financial statements (or the notes thereto) of Company and the consolidated the Company Subsidiaries dated as of March 31, 1999 included in Company's quarterly report on Form 10-Q for the period then ended (the "Company Balance Sheet") and only to the extent reflected or to the extent of such reserves SEC Documents or incurred in the ordinary course of business since March 31, 1999the date of such financial statements; (j) make except as required in order to comply with Law, (i) establish, enter into, adopt, amend or terminate any Company Benefit Plan or Company Stock Plan, (ii) change any actuarial or other assumption used to calculate funding obligations with respect to Company's accounting policiesany Company Pension Plan, principlesor change the manner in which contributions to any Company Pension Plan are made or the basis on which such contributions are determined, methods or procedures(iii) take any action to accelerate any rights or benefits, includingor make any material determinations not in the ordinary course of business consistent with past practice, without limitationunder any collective bargaining agreement or Company Benefit Plan, revenue recognition policies, other than as except in each case to the extent required by U.S. GAAPto comply with any changes in the Laws applicable to any such Company Benefit Plan or Company Stock Plan; (k) make other than in the ordinary course of business consistent with past practice (except with respect to directors and officers whose compensation may not be increased), (i) increase the compensation, bonus or other benefits of any material Tax election current or settle former director, consultant or compromise employee, (ii) grant any material Tax liability; orPerson any increase in severance or termination pay, or (iii) pay any benefit or amount not required by an agreement, plan, or arrangement as in effect on the date of this Agreement to any such Person; (l) authorize transfer or enter into license to any formal or informal agreement Person or otherwise extend, amend or modify or allow to revert, lapse or expire any material rights to the Intellectual Property Rights of the Company and its Subsidiaries, other than in the ordinary course of business consistent with past practice; (m) increase the number of full-time, permanent employees of the Company or any of its Subsidiaries other than as a result of hiring permanent employees for annual salaries of less than $100,000 in the ordinary course of business consistent with past practice; (n) except insofar as may be required by a change in GAAP or regulatory requirements, make any commitment material changes in accounting methods, principles or practices; (o) authorize, or commit, resolve or agree to do take, any of the foregoing or to take any action which would make any of the representations or warranties of Company contained in this Agreement untrue or incorrect in any material respect or result in any of the conditions to the Merger set forth herein not being satisfiedactions.

Conduct of Business by Company. Pending During the Closing Company agrees that, between period from the date of this Agreement and continuing until the earlier of the termination of this Agreement pursuant to its terms or the Effective Time, unless Parent Company except to the extent that Purchaser shall otherwise agree consent in writing, carry on its business, in the usual, regular and except ordinary course, in substantially the same manner as a result of entering into this Agreement (x) the respective businesses of Company heretofore conducted and the Company Subsidiaries shall be conducted only inin compliance with all applicable laws and regulations, pay its debts and taxes when due subject to good faith disputes over such debts or taxes, pay or perform other material obligations when due, and Company and the Company Subsidiaries shall not take any action except in, the ordinary course of business use its commercially reasonable efforts consistent with past practice practices and policies to (yi) Company shall use all reasonable efforts to preserve intact its present business organization, (ii) keep available the services of such of the current officers, significant its present officers and employees and consultants of Company and the Company Subsidiaries and to (iii) preserve the current its relationships of Company and the Company Subsidiaries with such of the corporate partners, customers, suppliers suppliers, distributors, licensors, licensees, and other persons others with which Company or any Company Subsidiary it has significant business relations dealings. In addition, except as permitted by the terms of this Agreement, and the transactions contemplated hereby, and except as provided in order to preserve substantially intact its business organization. By way SECTION 5.1 OF THE DISCLOSURE SCHEDULE, without the prior written consent of amplification and not limitationPurchaser, neither Company nor any Company Subsidiary shall, between during the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement pursuant to its terms or the Effective Time, directly Company shall not, and with respect to Section (a) below, Parent shall not permit the Company or indirectly, do, or agree to do, any of the following without Company's subsidiaries to, do any of the prior written consent of Parent and except as a result of entering into this Agreementfollowing: (a) amend or otherwise change its certificate of incorporation or bylaws or equivalent organizational documents; (b) issue, sell, pledge, dispose of, grant, transfer, lease, license, guarantee or encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license or encumbrance of, (i) any shares of capital stock of Company or any Company Subsidiary of any class, or securities convertible into or exchangeable or exercisable for any shares of such capital stock, or any options, warrants or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of Company or any Company Subsidiary, other than (A) the issuance of shares of Company Common Stock pursuant to the exercise of stock options theretofore outstanding as of the date of this Agreement or (B) the issuance of options to purchase up to 250,000 shares of Company Common Stock under the Company's 1999 Stock Incentive Plan, 200,000 shares of which may be issued to newly hired management employees and 50,000 shares of which may be issued to existing non-executive employees, or (ii) any property or assets of Company or any Company Subsidiary except entering into alliance agreements or providing products and services in the ordinary course of business consistent with past practice; (i) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets) any interest in any corporation, partnership, other business organization or person or any division thereof; (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations of any person (other than Company and Company Subsidiaries) for borrowed money or make any loans or advances, other than routine employee loans to employees other than Company officers (not to exceed $1,000 to any individual), material to the business, assets, liabilities, financial condition or results of operations of Company and the Company Subsidiaries, taken as a whole, other than in the ordinary course of business consistent with past practice; (iii) terminate, cancel or request any material change in, or agree to any material change in, any Company Material Contract or other License Agreement; (iv) make or authorize any capital expenditure, other than capital expenditures in the ordinary course of business consistent with past practice that have been budgeted for fiscal year 1999 and disclosed in writing to Parent and that are not, in the aggregate, in excess of $3,000,000 for Company and the Company Subsidiaries taken as a whole; or (v) enter into or amend any contract, agreement, commitment or arrangement that, if fully performed, would not be permitted under this Section 6.01(c); (d) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with With respect to Parent, waive any of its capital stockstock repurchase rights, except that any Company Subsidiary may pay dividends or make other distributions to Company or any other Company Subsidiary; (e) reclassifyaccelerate, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; (f) amend or change the period (or permit any acceleration, amendment or change unless required pursuant to the terms of existing agreements of Company previously provided to Parent) of exercisability of options or restricted stock, or reprice options granted under the Company Stock Plans any employee, consultant, director or other stock plans or authorize cash payments in exchange for any Company Stock Options options granted under any of such plansplans to any employee, consultant or director of the Company, except as provided for under this Agreement or the attached exhibits; (gb) amend the terms of, repurchase, redeem or otherwise acquire, or permit Grant any Company Subsidiary to repurchase, redeem or otherwise acquire, any of its securities or any securities of any Company Subsidiary or propose to do any of the foregoing; (h) other than in the ordinary course of business consistent with past practices or pursuant to existing agreements of Company previously provided to Parent increase the compensation payable or to become payable to its directors, officers, consultants or employees, grant any rights to severance or termination pay toto any officer or employee except pursuant to written agreements outstanding, or policies existing, on the date hereof and as previously disclosed in writing or made available to Purchaser, or adopt any new severance plan, or amend or modify or alter in any manner any severance plan, agreement or arrangement existing on the date hereof; (c) Transfer or license to any person or entity or otherwise extend, amend or modify any rights to the Company Intellectual Property, or enter into any employment grants to transfer or severance agreement which provides benefits upon a change in control of Company that would be triggered by the Merger with, any director, officer, consultant or other employee of Company or any Company Subsidiary who is not currently entitled to such benefits from the Merger, establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer, consultant or employee of Company or any Company Subsidiary, except to the extent required by applicable Law or the terms of a collective bargaining agreement, or enter into or amend any contract, agreement, commitment or arrangement between Company or any Company Subsidiary and any of Company's directors, officers, consultants or employees; (i) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction in the ordinary course of business and consistent with past practice of liabilities reflected or reserved against on the consolidated balance sheet of Company and the consolidated the Company Subsidiaries dated as of March 31, 1999 included in Company's quarterly report on Form 10-Q for the period then ended (the "Company Balance Sheet") and only to the extent reflected or to the extent of such reserves or incurred in the ordinary course of business since March 31, 1999; (j) make any change with respect to Company's accounting policies, principles, methods or procedures, including, without limitation, revenue recognition policies, other than as required by U.S. GAAP; (k) make any material Tax election or settle or compromise any material Tax liability; or (l) authorize or enter into any formal or informal agreement or otherwise make any commitment to do any of the foregoing or to take any action which would make any of the representations or warranties of Company contained in this Agreement untrue or incorrect in any material respect or result in any of the conditions to the Merger set forth herein not being satisfied.license

Conduct of Business by Company. Pending the Closing Company agrees that, between (a) From and after the date of this Agreement until the earlier of the Effective Time and the Effective Time, unless Parent shall otherwise agree time that this Agreement is terminated in writingaccordance with its terms, and except (i) as a result may be required by applicable Law, (ii) with the prior written consent of entering into Acquiror, which consent shall not be unreasonably withheld, (iii) as may be expressly contemplated or required by this Agreement or (xiv) as set forth in Section 4.1(a) of the Company Disclosure Letter, Company covenants and agrees that Company shall, and shall cause each of its Subsidiaries to, conduct its and their respective businesses of Company and the Company Subsidiaries shall be conducted only in, and Company and the Company Subsidiaries shall not take any action except in, in the ordinary course of business consistent with past practice and (y) Company shall use all commercially reasonable efforts to keep available the services preserve intact their present lines of such of the current officersbusiness, significant employees maintain their rights, assets, franchises and consultants of Company Permits and the Company Subsidiaries and to preserve the current their present relationships of Company and the Company Subsidiaries with such of the corporate partners, customers, suppliers and other persons service providers. (b) Company agrees with which Company or any Company Subsidiary has significant business relations in order to preserve substantially intact Acquiror, on behalf of itself and its business organization. By way of amplification and not limitationSubsidiaries, neither Company nor any Company Subsidiary shall, between that from the date hereof and prior to the earlier of the Effective Time and the time that this Agreement and the Effective Timeis terminated in accordance with its terms, directly or indirectlyexcept (i) as may be required by applicable Law, do, or agree to do, any of the following without (ii) with the prior written consent of Parent and except Acquiror, which consent shall not be unreasonably withheld, (iii) as a result of entering into may be expressly contemplated or required by this Agreement, or (iv) as set forth in Section 4.1(b) of the Company Disclosure Letter, Company shall not, and shall cause each of its Subsidiaries not to: (ai) amend any constating documents or otherwise change similar applicable organizational documents of Company or any of its certificate of incorporation or bylaws or equivalent organizational documentsSubsidiaries; (bii) issuesplit, sell, pledge, dispose of, grant, transfer, lease, license, guarantee combine or encumber, reclassify any of its securities or issue or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license or encumbrance issuance of any other securities in respect of, in lieu of or in substitution for any of its securities, except for any such transaction by a wholly owned Subsidiary of Company which remains a wholly owned Subsidiary after consummation of such transaction; (iiii) authorize or pay any dividends on or make any distribution with respect to its outstanding shares of capital stock (whether in cash, assets, stock or other securities of Company or its Subsidiaries), except dividends or distributions by any Subsidiaries of Company only to Company or to any other Subsidiary of any class, or securities convertible into or exchangeable or exercisable for any shares of such capital stock, or any options, warrants or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of Company or any Company Subsidiary, other than (A) the issuance of shares of Company Common Stock pursuant to the exercise of stock options theretofore outstanding as of the date of this Agreement or (B) the issuance of options to purchase up to 250,000 shares of Company Common Stock under the Company's 1999 Stock Incentive Plan, 200,000 shares of which may be issued to newly hired management employees and 50,000 shares of which may be issued to existing non-executive employees, or (ii) any property or assets of Company or any Company Subsidiary except entering into alliance agreements or providing products and services in the ordinary course of business consistent with past practice; (iiv) adopt a plan of complete or partial liquidation, dissolution, merger, amalgamation, consolidation, restructuring, recapitalization or other reorganization, other than any mergers, amalgamations, consolidations, restructurings or reorganizations solely among Company and its Subsidiaries or among Company’s Subsidiaries, or take any action with respect to any securities owned by such person that would reasonably be expected to prevent, materially impede or materially delay the consummation of the Arrangement; (v) acquire (including, without limitation, by merger, amalgamation, consolidation, or acquisition of stock shares or assets or otherwise), directly or indirectly, any assets) any interest , securities, properties, interests or businesses in any corporation, partnership, other business organization excess of C$500,000 individually or person or any division thereof; (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, C$3,000,000 in the obligations of any person (other than Company and Company Subsidiaries) for borrowed money or make any loans or advancesaggregate, other than routine employee loans to employees other than (A) any such transaction among Company officers and its wholly owned Subsidiaries or among Company’s wholly owned Subsidiaries, (not to exceed $1,000 to any individualB) capital expenditures permitted by Section 4.1(b)(viii), material to (C) the business, assets, liabilities, financial condition acquisition of any raw materials or results of operations of Company and the Company Subsidiaries, taken as a whole, other than inventory in the ordinary course of business consistent with past practice; (iii) terminate, cancel or request any material change in, or agree (D) pursuant to a Contract in existence on the date hereof and disclosed to Acquiror prior to the date hereof; (vi) make any material change loans, advances, capital contributions, donations or charitable contributions to, or investments in, any Company Material Contract or other License Agreement; (iv) make or authorize any capital expenditurePerson, other than (A) loans, advances or capital expenditures contributions among Company and its wholly owned Subsidiaries or among Company’s wholly owned Subsidiaries, (B) any donations or charitable contributions consistent with past practice not in excess of C$100,000 in the aggregate or (C) short-term extensions of credit to customers in the ordinary course of business consistent with past practice that have been budgeted for fiscal year 1999 and disclosed in writing to Parent and that are not, in the aggregate, in excess of $3,000,000 for Company and the Company Subsidiaries taken as a whole; or (v) enter into or amend any contract, agreement, commitment or arrangement that, if fully performed, would not be permitted under this Section 6.01(c)practice; (dvii) declaresell, set asidelicense, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock, except that any Company Subsidiary may pay dividends or make other distributions to Company or any other Company Subsidiary; (e) reclassify, combine, split, subdivide or redeem, purchase lease or otherwise acquiretransfer or abandon or suffer to exist any Lien (other than Permitted Liens) on, directly or indirectly, any of Company’s or its capital stock; Subsidiaries’ assets, securities, properties, interests or businesses (f) amend or change which shall not be considered to include the period (or permit any acceleration, amendment or change unless required pursuant to the terms of existing agreements of sale by Company previously provided to Parent) of exercisability of options granted under the Company Stock Plans or authorize cash payments in exchange for any Company Stock Options granted under any of such plans; (g) amend the terms of, repurchase, redeem or otherwise acquire, or permit any Company Subsidiary to repurchase, redeem or otherwise acquire, any of its securities or any securities Subsidiary of any Company Subsidiary accounts receivable or propose to do any of the foregoing; (h) other than inventory in the ordinary course of business consistent with past practices practice), other than the sale, license, lease, transfer or pursuant abandonment of non-operating assets (including assets that are obsolete or no longer used or useful) for an amount not in excess of C$7,500,000 in the aggregate or transactions among Company and its wholly owned Subsidiaries or among Company’s wholly owned Subsidiaries; (viii) incur any capital expenditures in excess of the amounts provided in Company’s capital expenditure plan attached to existing agreements Section 4.1 of the Company previously provided to Parent Disclosure Letter; (ix) except as may be required by the terms of a Collective Bargaining Agreement or by any Company Benefit Plan, in each case, in existence as of the date hereof or as may be required by applicable Law, (A) increase the compensation or benefits payable or to become payable to any of its directors, officers, consultants employees or employeesindividual independent contractors, (B) grant to any rights to of its directors, officers, employees or individual independent contractors any increase in severance or termination pay, (C) pay toor award, or commit to pay or award, any bonuses or incentive compensation, (D) enter into any employment employment, severance, or retention agreement (excluding offer letters that provide for no severance agreement which provides benefits upon a or change in control benefits) with any of Company that would be triggered by the Merger withits directors, any directorofficers, officeremployees or individual independent contractors, consultant or other employee of Company or any Company Subsidiary who is not currently entitled to such benefits from the Merger, (E) establish, adopt, enter into, amend or terminate any Collective Bargaining Agreement or Company Benefit Plan, except any amendments to Company Benefit Plans that are health and welfare plans in the ordinary course of business, consistent with past practice, that do not materially increase the cost to the Company, in the aggregate, of maintaining such Company Benefit Plans, (F) take any action to accelerate any payment or benefit, or the funding of any payment or benefit, payable or to become payable to any of its directors, officers, employees or individual independent contractors, (G) terminate the employment of any employee or individual independent contractor whose base salary exceeds C$135,000, or (H) hire any employee or individual independent contractor whose base salary exceeds C$135,000; (x) materially change financial accounting policies or procedures or any of its methods of reporting income, deductions or other material items for financial accounting purposes, except as required by IFRS or applicable Law; (xi) issue, sell, pledge, dispose of or encumber, or authorize the issuance, sale, pledge, disposition or encumbrance of, any Equity Interests in Company or any of its Subsidiaries or any securities convertible into or amend exchangeable for any collective bargainingEquity Interests or take any action to cause to be exercisable any otherwise unexercisable award under any existing Company Benefit Plans, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance other than (A) issuances of Company Common Shares in respect of the vesting or other plan, agreement, trust, fund, policy or arrangement for the benefit settlement of any directorCompany Share-Based Instruments outstanding on the date hereof in accordance with their terms as in effect on the date hereof or (B) for transactions among Company and its wholly owned Subsidiaries or among Company’s wholly owned Subsidiaries; (xii) directly or indirectly, officerpurchase, consultant redeem or employee otherwise acquire any securities of Company or any Company Subsidiaryof its Subsidiaries or any rights, warrants or options to acquire any such securities, except to the extent required by applicable Law for transactions among Company and its Subsidiaries or the terms of a collective bargaining agreementamong Company’s Subsidiaries; (xiii) incur, assume, guarantee or enter into or amend otherwise become liable for any contract, agreement, commitment or arrangement between Company indebtedness for borrowed money or any Company Subsidiary and any guarantee of Company's directorssuch indebtedness, officers, consultants or employees;other than (i) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than indebtedness incurred under the payment, discharge or satisfaction Credit Agreement in the ordinary course of business and consistent with past practice of liabilities reflected or reserved against the Company’s business plan as in effect on the consolidated balance sheet date hereof; provided, the aggregate principal amount of indebtedness incurred and outstanding pursuant to this clause (i) shall not at any time exceed C$20,000,000, (ii) any indebtedness among Company and its wholly owned Subsidiaries or among Company’s wholly owned Subsidiaries, or (iii) the refinancing of any indebtedness for borrowed money of Company and or any of its Subsidiaries in existence on the consolidated date hereof (including the Company Subsidiaries dated refinancing of the Term Loans (as defined in the Credit Agreement) outstanding under the Credit Agreement on the date hereof with the proceeds of March 31, 1999 included Revolving Loans (as defined in Company's quarterly report on Form 10-Q for the period then ended (Credit Agreement) drawn under the "Company Balance Sheet"Credit Agreement) and only to the extent reflected that (1) the material terms and conditions of any refinancing indebtedness are reasonable market terms, (2) the aggregate principal amount of the refinanced indebtedness is not increased as a result of such refinancing, except in an amount necessary to cover reasonable fees and expenses incurred in connection with such refinancing, (3) none of the execution, delivery or performance of this Agreement, or the consummation of the transactions contemplated hereby or to be consummated in connection herewith, (a) shall (I) conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, (II) give rise to a right of termination, cancellation or acceleration of any obligation under or any other material right of the extent lenders (or their agents or trustees) under or any loss of such reserves a material benefit of Acquiror or incurred any of its Subsidiaries under, or (III) result in the ordinary course creation of business since March 31any Lien (other than Liens on collateral securing the indebtedness being refinanced) under such refinancing indebtedness, 1999or (b) would reasonably likely require the preparation of separate financial statements of Acquiror or any of its Subsidiaries under such refinancing indebtedness following the Closing and (4) such refinancing indebtedness is prepayable at the applicable borrowers option at any time without premium or penalty (other than customary LIBOR breakage); (jxiv) make modify, amend, transfer to a third party or terminate, or waive, release or assign any change with respect material rights or claims under any Material Contract, or enter into any new Contract that would have been a Material Contract had it been entered into prior to Company's accounting policies, principles, methods or procedures, including, without limitation, revenue recognition policiesthe date of this Agreement, other than as required permitted by U.S. GAAPSection 4.1(b)(xiii); (kxv) make take any action or fail to take any action which action or failure to act would reasonably be expected to cause any Governmental Entity: (A) to institute proceedings for the suspension, revocation or limitation of rights under or to refuse to issue or renew, any Company Permit necessary to conduct its business in all material respects as now conducted, or (B) to issue a notice or Order alleging that Company or any of its Subsidiaries may be in material violation of or materially liable under any Environmental Law; (xvi) modify amend, transfer or terminate, or waive, release or assign any rights or claims under any Company Real Property Lease, or enter into any Contract providing for the lease or sublease of real property; (xvii) enter into any Contract that binds Company or its Subsidiaries to any material indemnity, contribution, reimbursement or similar obligation in respect of liabilities under Environmental Laws; (xviii) materially change any of the businesses carried on by Company and its Subsidiaries; (xix) enter into any Contract that would reasonably be expected to, after the Effective Time, restrict or limit in any material respect Acquiror or Company or any of their respective Subsidiaries from engaging in any business or competing in any line of business or geographic location with any person; (xx) waive, release, assign, settle or compromise any Legal Proceeding in excess of an aggregate amount of C$2,500,000, other than waivers, releases, assignments, settlements or compromises equal to or lesser than the amounts reserved with respect thereto on the balance sheet as of the Company Recent Balance Sheet included in the Company Securities Reports, in any case without the imposition of any equitable relief on, or the admission of wrongdoing by, Company and its Subsidiaries; (xxi) make, change or revoke any material Tax election or election, change any material tax accounting method, file any material amended Tax Return, enter into any material “closing agreement” within the meaning of Section 7121 of the Code, request any material Tax ruling, settle or compromise any material Tax liabilityproceeding, or surrender any claim for a material refund of Taxes; orand (lxxii) authorize agree, resolve or enter into any formal or informal agreement or otherwise make any commitment commit to do any of the foregoing foregoing. Nothing in this Section 4.1 shall give Acquiror the right to control, directly or to take any action which would make indirectly, the operations or the business of Company or any of the representations or warranties of Company contained in this Agreement untrue or incorrect in its Subsidiaries at any material respect or result in any of the conditions time prior to the Merger set forth herein not being satisfiedClosing.