Sample Business Contracts


Agreement and Plan of Merger - SAP America Inc. and Retek Inc.


                          AGREEMENT AND PLAN OF MERGER

                                FEBRUARY 28, 2005

                                  BY AND AMONG

                               SAP AMERICA, INC.,

                         SAPPHIRE EXPANSION CORPORATION,

                                       AND

                                   RETEK INC.


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                                    CONTENTS



SECTION                                                                      PAGE
-------                                                                      ----

1.       THE OFFER..............................................................1
         1.1          The Offer.................................................1
         1.2          Company Actions...........................................3
         1.3          Directors.................................................3
         1.4          Top-Up Option.............................................4
2.       THE MERGER.............................................................6
         2.1          The Merger................................................6
         2.2          Closing...................................................6
         2.3          Effective Time............................................6
         2.4          Effects...................................................7
         2.5          Certificate of Incorporation and By-laws..................7
         2.6          Directors.................................................7
         2.7          Officers..................................................7
3.       EFFECT ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS; 
         EXCHANGE OF CERTIFICATES...............................................7
         3.1          Effect on Capital Stock...................................7
         3.2          Exchange of Certificates..................................8
4.       REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................10
         4.1          Organization, Standing and Power.........................10
         4.2          Company Subsidiaries; Equity Interests...................10
         4.3          Capital Structure........................................10
         4.4          Authority; Execution and Delivery; Enforceability........12
         4.5          No Conflicts; Consents...................................13
         4.6          SEC Documents; Undisclosed Liabilities...................13
         4.7          Information Supplied.....................................16
         4.8          Absence of Certain Changes or Events.....................16
         4.9          Taxes....................................................17
         4.10         Absence of Changes in Benefit Plans......................19
         4.11         ERISA Compliance; Excess Parachute Payments..............19
         4.12         Litigation...............................................21
         4.13         Compliance with Applicable Law...........................22
         4.14         Environmental Matters....................................22
         4.15         Contracts................................................23
         4.16         Title to Properties......................................25
         4.17         Intellectual Property; Computer Software.................26
         4.18         Labor Matters............................................30
         4.19         Insurance................................................30
         4.20         Brokers; Schedule of Fees and Expenses...................30
         4.21         Opinion of Financial Advisor.............................31
         4.22         Potential Conflicts of Interest..........................31
         4.23         Vote Required............................................31
5.       REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB......................31
         5.1          Organization, Standing and Power.........................31
         5.2          Sub......................................................32
         5.3          Authority; Execution and Delivery; Enforceability........32



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SECTION                                                                      PAGE
-------                                                                      ----

         5.4          No Conflicts; Consents...................................32
         5.5          Information Supplied.....................................33
         5.6          Brokers..................................................33
         5.7          Financing................................................33
         5.8          Litigation...............................................33
6.       COVENANTS RELATING TO CONDUCT OF BUSINESS.............................34
         6.1          Conduct of Business......................................34
         6.2          No Solicitation..........................................36
7.       ADDITIONAL AGREEMENTS.................................................39
         7.1          Preparation of Proxy Statement; Stockholders Meeting.....39
         7.2          Access to Information; Confidentiality...................40
         7.3          Reasonable Best Efforts..................................40
         7.4          Stock Options............................................41
         7.5          Indemnification..........................................42
         7.6          Fees and Expenses........................................43
         7.7          Public Announcements.....................................44
         7.8          Transfer Taxes...........................................44
         7.9          Stockholder Litigation...................................44
         7.10         Further Assurances.......................................44
         7.11         Additional Agreement Regarding Benefit Plans.............44
8.       CONDITIONS PRECEDENT..................................................45
9.       TERMINATION, AMENDMENT AND WAIVER.....................................45
         9.1          Termination..............................................45
         9.2          Effect of Termination....................................46
         9.3          Amendment................................................46
         9.4          Extension; Waiver........................................47
10.      GENERAL PROVISIONS....................................................47
         10.1         Nonsurvival of Representations and Warranties............47
         10.2         Notices..................................................47
         10.3         Definitions..............................................48
         10.4         Interpretation; Company Disclosure Schedule..............49
         10.5         Severability.............................................49
         10.6         Counterparts.............................................50
         10.7         Entire Agreement; No Third-Party Beneficiaries...........50
         10.8         Governing Law............................................50
         10.9         Assignment...............................................50
         10.10        Enforcement; Waiver of Jury Trial........................50



Signatories....................................................................52


ANNEX

1.       Conditions of the Offer..............................................A-1



                                       ii
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                                    GLOSSARY



TERM                                                                     SECTION
----                                                                     -------

Acquisition Agreement.....................................................6.2(b)
Adverse Change in Recommendation..........................................6.2(b)
affiliate................................................................10.3(a)
Appraisal Shares..........................................................3.1(d)
Certificate...........................................................3.1(c)(ii)
Certificate of Merger........................................................2.3
Closing......................................................................2.2
Closing Date.................................................................2.2
Code.....................................................................4.11(b)
Company.................................................................Preamble
Company Benefit Agreements...............................................4.10(b)
Company Benefit Plans....................................................4.10(a)
Company Board.............................................................4.4(b)
Company By-laws..............................................................4.1
Company Charter..............................................................4.1
Company Common Stock....................................................Recitals
Company Disclosure Schedule....................................................4
Company ESPP.............................................................4.11(k)
Company Intellectual Property.......................................4.17(m)(vii)
Company Licensed Intellectual Property...............................4.17(m)(ix)
Company Material Adverse Effect..............................................4.1
Company Multiemployer Pension Plan.......................................4.11(h)
Company Owned Intellectual Property................................4.17(m)(viii)
Company Pension Plans....................................................4.11(a)
Company Preferred Stock...................................................4.3(a)
Company SAR............................................................7.4(e)(i)
Company Software.........................................................4.17(d)
Company Stock Option..................................................7.4(e)(ii)
Company Stock Plans..................................................7.4(e)(iii)
Company Stockholder Approval................................................4.23
Company Stockholders Meeting..............................................7.1(b)
Company Subsidiaries.........................................................4.1
Company Takeover Proposal..............................................6.2(d)(i)
Company Web Sites........................................................4.17(l)
Confidentiality Agreement.................................................7.2(b)
Consent...................................................................4.5(b)
Contract..................................................................4.3(a)
Copyrights.........................................................4.17(m)(i)(C)
Current Purchase Period...................................................7.4(c)
Customer Software....................................................4.17(m)(vi)
Derivative Work.......................................................4.17(m)(x)
DGCL.........................................................................2.1
Effective Time...............................................................2.3
Environmental Claims..................................................4.14(b)(i)
Environmental Laws...................................................4.14(b)(ii)
Environmental Permits...............................................4.14(b)(iii)



                                       iii
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TERM                                                                     SECTION
----                                                                     -------

ERISA....................................................................4.11(a)
Exchange Act..............................................................4.4(c)
Exchange Fund.............................................................3.2(a)
Expiration Date...........................................................1.1(a)
Filed SEC Document........................................................4.6(a)
Fully Diluted Shares.....................................................Annex 1
GAAP......................................................................4.6(a)
Governmental Entity.......................................................4.5(b)
Hazardous Materials..................................................4.14(b)(iv)
HSR Act...................................................................4.5(b)
in the ordinary course of business.......................................10.3(c)
Indemnified Parties.......................................................7.5(a)
Independent Directors.....................................................1.3(a)
Information Statement.....................................................1.2(b)
Intellectual Property.................................................4.17(m)(i)
Judgment..................................................................4.5(a)
knowledge................................................................10.3(d)
Law.......................................................................4.5(a)
Licensed Software....................................................4.17(m)(iv)
Liens.....................................................................4.2(a)
material adverse effect..................................................10.3(b)
Merger..................................................................Recitals
Merger Consideration...................................................3.1(c)(i)
Minimum Tender Condition.................................................Annex 1
Notice of Superior Proposal...............................................6.2(b)
Offer...................................................................Recitals
Offer Documents...........................................................1.1(b)
Offer Price.............................................................Recitals
Open Source Software..................................................4.17(m)(v)
Owned Software...........................................................4.17(b)
Parent..................................................................Preamble
Parent Disclosure Schedule.....................................................5
Parent Material Adverse Effect............................................5.4(a)
Patents............................................................4.17(m)(i)(B)
Paying Agent..............................................................3.2(a)
Permits..................................................................4.13(b)
person...................................................................10.3(e)
Primary Company Executives...............................................4.11(l)
Proxy Statement...........................................................4.5(b)
Representatives...........................................................6.2(a)
Schedule 14D-9............................................................1.2(b)
SEC.......................................................................1.1(a)
SEC Documents.............................................................4.6(a)
Secret Information.................................................4.17(m)(i)(D)
Section 262...............................................................3.1(d)
Securities Act............................................................4.6(a)
Software.............................................................4.17(m)(ii)
SOX.......................................................................4.6(a)
Sub.....................................................................Preamble
subsidiary...............................................................10.3(f)
Superior Company Proposal.............................................6.2(d)(ii)



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TERM                                                                     SECTION
----                                                                     -------

Surviving Corporation........................................................2.1
Tax....................................................................4.9(h)(i)
Tax Return............................................................4.9(h)(ii)
Taxation...............................................................4.9(h)(i)
Taxes..................................................................4.9(h)(i)
Termination Fee...........................................................7.6(b)
Third-Party Software................................................4.17(m)(iii)
Top-Up Closing............................................................1.4(c)
Top-Up Exercise Event..................................................1.4(b)(i)
Top-Up Exercise Notice....................................................1.4(c)
Top-Up Notice Date........................................................1.4(c)
Top-Up Option.............................................................1.4(a)
Top-Up Option Shares......................................................1.4(a)
Top-Up Termination Date...............................................1.4(b)(ii)
Trademarks.........................................................4.17(m)(i)(A)
Transactions..............................................................1.2(a)
Transfer Taxes...............................................................7.8
Voting Company Debt.......................................................4.3(a)
Web......................................................................4.17(l)



                                       v
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AGREEMENT AND PLAN OF MERGER dated as of February 28, 2005

AMONG:

(1)   SAP AMERICA, INC., a Delaware corporation (PARENT),

(2)   SAPPHIRE EXPANSION CORPORATION, a Delaware corporation and a wholly-owned
      subsidiary of Parent (SUB), and

(3)   RETEK INC., a Delaware corporation (the COMPANY).

WHEREAS:

(A)   the respective Boards of Directors of Parent, Sub and the Company have
      approved the acquisition of the Company on the terms and subject to the
      conditions set forth in this Agreement;

(B)   in furtherance of such acquisition, Parent will cause Sub to make a tender
      offer (as it may be amended from time to time as permitted under this
      Agreement, the OFFER) to purchase all the outstanding shares of common
      stock, par value $0.01 per share, of the Company (the COMPANY COMMON
      STOCK) at a price per share of Company Common Stock of $8.50, net to the
      seller in cash (the OFFER PRICE), on the terms and subject to the
      conditions set forth in this Agreement;

(C)   the respective Boards of Directors of Parent, Sub and the Company have
      approved the merger (the MERGER) of Sub into the Company on the terms and
      subject to the conditions set forth in this Agreement, whereby each issued
      share of Company Common Stock not owned directly by Parent, Sub or the
      Company (other than Appraisal Shares, as defined in Section 3.1(d)) shall
      be converted into the right to receive an amount in cash equal to the
      Offer Price on the terms and subject to the conditions set forth in this
      Agreement; and

(D)   Parent, Sub and the Company desire to make certain representations,
      warranties, covenants and agreements in connection with the Offer and the
      Merger and also to prescribe various conditions to the Offer and the
      Merger.

NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, and
subject to the conditions set forth herein, the parties hereto agree as follows:

1.    THE OFFER

1.1   THE OFFER

      (a)   Subject to the conditions of this Agreement, as promptly as
            practicable but in no event later than five business days after the
            date hereof, Sub shall, and Parent shall cause Sub to, commence the
            Offer within the meaning of the applicable rules and regulations of
            the Securities and Exchange Commission (the SEC); provided, however,
            that the obligation of Sub to, and of Parent to cause Sub to,
            commence the Offer and accept for payment, and pay for, any shares
            of Company Common Stock tendered pursuant to the Offer is subject to
            the conditions set forth in Annex 1 (any or all of which (other than
            the Minimum Tender Condition) may, subject to the provisions hereof,
            be waived by Parent or Sub, subject to applicable Law). The initial
            expiration date of the Offer (the EXPIRATION DATE) shall be the 20th
            business day following the commencement of


                                       1
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            the Offer (determined pursuant to Rules 14d-1 and 14d-2 promulgated
            by the SEC). Sub expressly reserves the right to modify the terms
            and conditions of the Offer, except that, without the prior written
            consent of the Company, Sub shall not (i) reduce the number of
            shares of Company Common Stock sought to be purchased in the Offer,
            (ii) reduce the Offer Price, (iii) reduce or waive the Minimum
            Tender Condition (defined in Annex 1), (iv) add to the conditions
            set forth in Annex 1, (v) except as provided in the next sentence,
            extend the Offer, (vi) change the form of consideration payable in
            the Offer or (vii) amend any other condition of the Offer in any
            manner adverse to the Company's stockholders. Sub may, without the
            consent of the Company, (A) extend the Offer in increments of not
            more than ten business days each, if at the scheduled Expiration
            Date any of the conditions to Sub's obligation to purchase shares of
            Company Common Stock are not satisfied, until such time as such
            conditions are satisfied or waived, (B) extend the Offer for any
            period required by any rule, regulation, interpretation, position or
            request of the SEC or the staff thereof applicable to the Offer and
            (C) make available a subsequent offering period (within the meaning
            of Rule 14d-11 promulgated by the SEC). Without limiting the right
            of Sub to extend the Offer, in the event that any condition set
            forth in Annex 1 is not satisfied or waived at the scheduled
            Expiration Date, at the request of the Company, Sub shall, and
            Parent shall cause Sub to, extend the Expiration Date of the Offer
            in increments of five business days each until the earliest to occur
            of (v) the date that is 15 days after the initial Expiration Date,
            (w) the satisfaction or waiver of such condition, (x) the
            determination by Parent that such condition to the Offer is not
            capable of being satisfied on or prior to the date specified in
            Section 9.1(b)(ii)(B), provided that such inability to satisfy such
            condition is not due to any failure of Parent or Sub to perform in
            any material respect any covenant or agreement of Parent or Sub
            contained herein, or the material breach by Parent or Sub of any
            representation or warranty contained herein, (y) the termination of
            this Agreement in accordance with its terms and (z) the date
            specified in Section 9.1(b)(ii)(B); provided, however, that Parent
            and Sub shall not be required to so extend the Expiration Date if
            the failure to satisfy any condition set forth in Annex 1 was caused
            by or resulted from the failure of the Company to perform in any
            material respect any covenant or agreement of the Company contained
            herein, or the material breach by the Company of any representation
            or warranty contained herein. On the terms and subject to the
            conditions of the Offer and this Agreement, Sub shall, and Parent
            shall cause Sub to, accept for payment shares of Company Common
            Stock tendered as soon as it is legally permitted to do so under
            applicable Law.

      (b)   On the date of commencement of the Offer, Sub shall, and Parent
            shall cause Sub to, file with the SEC a Tender Offer Statement on
            Schedule TO with respect to the Offer, which shall contain an offer
            to purchase and a related letter of transmittal and summary
            advertisement (such Schedule TO and the documents included therein
            pursuant to which the Offer will be made, together with any
            supplements or amendments thereto, the OFFER DOCUMENTS). The Company
            shall cooperate fully in the preparation of the Offer Documents and
            the Company and its counsel shall be given a reasonable opportunity
            to review the Offer Documents before they are filed with the SEC.
            Each of Parent, Sub and the Company shall promptly correct any
            information provided by it for use in the Offer Documents if and to
            the extent that such information shall have become false or
            misleading in any material respect, and each of Parent and Sub shall
            take all steps necessary to amend or supplement the Offer Documents
            and to cause the Offer Documents as so amended or supplemented to be
            filed with the SEC and to be disseminated to the Company's
            stockholders, in each case as and to the extent required by
            applicable Federal securities Law. Parent and Sub shall provide the
            Company and its counsel in writing with any comments Parent, Sub or
            their counsel may receive from the SEC or its staff with respect to
            the Offer Documents promptly after the receipt of such comments.


                                       2
<PAGE>

      (c)   Parent and Sub shall timely file with the Commissioner of Commerce
            of the State of Minnesota any registration statement relating to the
            Offer required to be filed pursuant to Chapter 80B of the Minnesota
            Statutes and shall disseminate to the Company's stockholders via the
            Offer Documents the information set forth in any such registration
            statement to the extent and within the time period required by
            Chapter 80B of the Minnesota Statutes.

1.2   COMPANY ACTIONS

      (a)   The Company hereby approves of and consents to the Offer, the Merger
            and the other matters contemplated by this Agreement (collectively,
            the TRANSACTIONS).

      (b)   On the date the Offer Documents are filed with the SEC and as soon
            as practicable on such date after such filing, the Company shall
            file with the SEC a Solicitation/Recommendation Statement on
            Schedule 14D-9 with respect to the Offer, including an appropriate
            information statement (INFORMATION STATEMENT) under Rule 14f-1 (such
            Schedule 14D-9 and Information Statement, as amended or supplemented
            from time to time, the SCHEDULE 14D-9) containing the determinations
            and recommendations described in Section 4.4(b) and shall mail the
            Schedule 14D-9 to all holders of Company Common Stock. Each of
            Parent, Sub and their counsel shall be given a reasonable
            opportunity to review the Schedule 14D-9 before it is filed with
            SEC. Each of the Company, Parent and Sub shall promptly correct any
            information provided by it for use in the Schedule 14D-9 if and to
            the extent that such information shall have become false or
            misleading in any material respect, and the Company shall take all
            steps necessary to amend or supplement the Schedule 14D-9 and to
            cause the Schedule 14D-9 as so amended or supplemented to be filed
            with the SEC and disseminated to all Company stockholders, in each
            case as and to the extent required by applicable Federal securities
            Law. The Company shall provide Parent and its counsel in writing
            with any comments the Company or its counsel may receive from the
            SEC or its staff with respect to the Schedule 14D-9 promptly after
            the receipt of such comments.

      (c)   In connection with the Offer, the Company shall cause its transfer
            agent to furnish Sub promptly with mailing labels containing the
            names and addresses of the record holders of Company Common Stock as
            of the most recent practicable date and of those persons becoming
            record holders subsequent to such date, together with copies of all
            lists of stockholders, security position listings and computer files
            and all other information in the Company's possession or control
            regarding the beneficial owners of Company Common Stock, and shall
            furnish to Sub such information and assistance (including updated
            lists of stockholders, security position listings and computer
            files) as Parent or Sub may reasonably request in communicating the
            Offer to the Company's stockholders. Subject to the requirements of
            applicable Law, and except for such steps as are necessary to
            disseminate the Offer Documents and any other documents necessary to
            consummate the Transactions, Parent and Sub shall hold in confidence
            the information contained in any such labels, listings and files,
            shall use such information only in connection with the Offer and the
            Merger and, if this Agreement shall be terminated in accordance with
            Section 9.1, shall, upon written request, deliver, and shall use
            their reasonable efforts to cause their affiliates, agents and
            advisors to deliver, to the Company all copies of such information
            then in their possession.

1.3   DIRECTORS

      (a)   Promptly upon the acceptance for payment of, and payment by Sub for,
            any shares of Company Common Stock pursuant to the Offer, Sub shall
            be entitled to designate such number of directors on the Company
            Board as will give Sub, subject to compliance with Section 14(f) of
            the


                                       3
<PAGE>

            Exchange Act, representation on the Company Board equal to at least
            that number of directors, rounded up to the next whole number, that
            equals the product of (i) the total number of directors on the
            Company Board (giving effect to the directors elected pursuant to
            this sentence) multiplied by (ii) the percentage that (A) such
            number of shares of Company Common Stock so accepted for payment and
            paid for by Sub plus the number of shares of Company Common Stock
            otherwise owned by Sub or any other subsidiary of Parent bears to
            (B) the number of such shares outstanding, and the Company shall, at
            such time, cause Sub's designees to be so elected or appointed to
            the Company Board, provided that in the event that Sub's designees
            are appointed or elected to the Company Board, until the Effective
            Time the Company Board shall have at least three directors who are
            members of the Company Board on the date of this Agreement and who
            are not officers of the Company (the INDEPENDENT DIRECTORS); and
            provided further that, in such event, if the number of Independent
            Directors shall be reduced below three for any reason whatsoever,
            the remaining Independent Directors shall be entitled to nominate a
            person to fill such vacancy who shall be deemed to be an Independent
            Director for purposes of this Agreement or, if no Independent
            Directors then remain, the other directors shall designate two
            persons to fill such vacancies who are not officers, employees,
            stockholders or affiliates of the Company, Parent or Sub, and such
            persons shall be deemed to be Independent Directors for purposes of
            this Agreement. Subject to applicable Law, the Company shall take
            all action requested by Parent necessary to effect any such election
            or appointment, including mailing to its stockholders the
            Information Statement containing the information required by Section
            14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, and
            the Company shall make such mailing with the mailing of the Schedule
            14D-9 (provided that Sub shall have provided to the Company on a
            timely basis all information required to be included in the
            Information Statement with respect to Sub's designees). In
            connection with the foregoing, the Company shall promptly, at the
            option of Sub, either increase the size of the Company Board or
            obtain the resignation of such number of its current directors as is
            necessary to enable Sub's designees to be elected or appointed to
            the Company Board as provided above. The Company shall also use its
            reasonable efforts to cause the Sub's designees to be
            proportionately represented on each committee of the Company Board
            (other than any committee of the Company Board established to take
            action under this Agreement) and each board of directors of each
            subsidiary of the Company designated by Sub.

      (b)   Following the election or appointment of Sub's designees pursuant to
            Section 1.3(a) until the Effective Time, the concurrence of a
            majority of the Independent Directors shall be required for any
            amendment to this Agreement, any termination of this Agreement by
            the Company, any extension by the Company of the time for the
            performance of any of the obligations of Sub or Parent under this
            Agreement (except as expressly permitted hereunder), any
            recommendation to stockholders or any modification or withdrawal of
            any such recommendation, any retention of counsel or other advisors
            in connection with the transactions contemplated hereby, any
            required or permitted consent or action by the Company Board
            hereunder or any waiver of any of the Company's rights or Parent's
            or Sub's obligations under this Agreement.

1.4   TOP-UP OPTION

      (a)   Subject to the terms and conditions herein, the Company hereby
            grants to Parent an irrevocable option (the TOP-UP OPTION) to
            purchase up to that number of shares of the Company Common Stock
            (the TOP-UP OPTION SHARES) equal to the lowest number of shares of
            Company Common Stock that, when added to the number of shares of
            Company Common Stock collectively owned by Parent, Sub and any of
            their respective affiliates immediately following consummation of
            the Offer shall constitute 90% of the shares of Company Common Stock
            then outstanding (after giving effect to the issuance of the Top-Up
            Option Shares) at a purchase price per Top-Up


                                       4
<PAGE>

            Option Share equal to the Offer Price. Notwithstanding the foregoing
            provisions of this Section 1.4(a), the Top-Up Option shall not be
            exercisable if the aggregate number of shares issuable upon exercise
            of the Top-Up Option, plus the aggregate number of then-outstanding
            shares of Company Common Stock, plus the aggregate number of shares
            of Company Common Stock issuable upon exercise of all options and
            other rights to purchase Company Common Stock, plus the aggregate
            number of shares reserved for issuance pursuant to the Company Stock
            Plans (as defined in Section 7.4) would exceed the number of
            authorized shares of Company Common Stock.

      (b)   Parent may, at its election, exercise the Top-Up Option, in whole,
            but not in part, at any one time after the occurrence of a Top-Up
            Exercise Event and prior to the occurrence of a Top-Up Termination
            Event.

            (i)   A TOP-UP EXERCISE EVENT shall occur upon Parent's or Sub's
                  acceptance for payment pursuant to the Offer (which shall
                  include, for sake of clarity, any subsequent offering period
                  that Parent or Sub may elect to extend pursuant to the terms
                  and conditions of this Agreement) of shares of Company Common
                  Stock constituting, together with Company Common Stock owned
                  directly or indirectly by any other affiliates of Parent, at
                  least 80 percent, but less than 90 percent of the shares of
                  the Company Common Stock then outstanding.

            (ii)  The TOP-UP TERMINATION DATE shall occur upon the earliest to
                  occur of (A) the Effective Time, (B) the termination of this
                  Agreement, (C) the date that is ten business days after the
                  occurrence of a Top-Up Exercise Event, unless the Top-Up
                  Option has been previously exercised in accordance with the
                  terms and conditions hereof and (D) the date that is ten
                  business days after the Top-Up Notice Date unless the Top-Up
                  Closing shall have previously occurred.

      (c)   If Parent wishes to exercise the Top-Up Option, Parent shall send to
            the Company a written notice (a TOP-UP EXERCISE NOTICE, and the date
            of receipt of which notice is referred to herein as the TOP-UP
            NOTICE DATE) specifying the place for the closing of the purchase
            and sale of shares of Company Common Stock pursuant to the Top-Up
            Option (the TOP-UP CLOSING) and a date not earlier than one business
            day nor later than ten business days after the Top-Up Notice Date
            for the Top-Up Closing. The Company shall, promptly after receipt of
            the Top-Up Exercise Notice, deliver a written notice to Parent
            confirming the number of Top-Up Option Shares and the aggregate
            purchase price therefor.

      (d)   At the Top-Up Closing, subject to the terms and conditions of this
            Agreement, (i) the Company shall deliver to Parent a certificate or
            certificates evidencing the applicable number of Top-Up Option
            Shares, provided that the obligation of the Company to deliver
            Top-Up Option Shares upon the exercise of the Top-Up Option is
            subject to the condition that no provision of any applicable Law or
            Judgment shall prohibit the exercise of the Top-Up Option or the
            delivery of the Top-Up Option Shares in respect of any such exercise
            and (ii) Parent shall purchase each Top-Up Option Share from the
            Company at the Offer Price. Payment by Parent of the purchase price
            for the Top-Up Option Shares may be made, at Parent's option, by
            delivery of (A) immediately available funds by wire transfer to an
            account designated by the Company or (B) a demand note issued by
            Parent in customary form that is reasonably acceptable to the
            parties and in a principal face amount equal to the aggregate amount
            of the cash portion of the purchase price for the Top-Up Option
            Shares. Any demand note issued pursuant to the preceding sentence
            shall be accompanied by a credit support arrangement reasonably
            acceptable to the parties hereto.


                                       5
<PAGE>

      (e)   Upon the delivery by Parent to the Company of the Top-Up Exercise
            Notice, and the tender of the consideration described in Section
            1.4(d), Parent shall be deemed to be the holder of record of the
            Top-Up Option Shares issuable upon that exercise, notwithstanding
            that the stock transfer books of the Company shall then be closed or
            that certificates representing those Top-Up Option Shares shall not
            then be actually delivered to Parent or the Company shall have
            failed or refused to designate the bank account described in Section
            1.4(d).

      (f)   Certificates evidencing Top-Up Option Shares delivered hereunder may
            include legends legally required including a legend in substantially
            the following form:

            THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
            REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE
            REOFFERED OR SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH
            REGISTRATION IS AVAILABLE.

2.    THE MERGER

2.1   THE MERGER

      Upon the terms and subject to the conditions set forth in this Agreement,
      and in accordance with the General Corporation Law of the State of
      Delaware (the DGCL), Sub shall be merged with and into the Company at the
      Effective Time (as defined below). At the Effective Time, the separate
      corporate existence of Sub shall cease and the Company shall continue as
      the surviving corporation (the SURVIVING CORPORATION) and shall succeed to
      and assume all the rights and obligations of Sub in accordance with the
      DGCL.

2.2   CLOSING

      The closing of the Merger (the CLOSING) shall take place at 10:00 a.m.,
      New York time, on the second business day following the satisfaction or
      waiver of the conditions set forth in Article 8 (other than those
      conditions that by their nature are to be satisfied at the Closing, but
      subject to the fulfillment or waiver of those conditions), at the offices
      of Allen & Overy, 1221 Avenue of the Americas, New York, NY 10020, or at
      such other time, date or place as shall be agreed in writing between
      Parent and the Company; provided, however, that if all the conditions set
      forth in Article 8 shall not have been satisfied or waived on such second
      business day, then the Closing shall take place on the first business day
      on which all such conditions shall have been satisfied or waived. The date
      on which the Closing occurs is referred to in this Agreement as the
      CLOSING DATE.

2.3   EFFECTIVE TIME

      Prior to the Closing, the Company shall prepare, and on the Closing Date
      the Company (or Sub, in the case of a certificate of ownership and merger)
      shall file with the Secretary of State of the State of Delaware, a
      certificate of merger (or a certificate of ownership and merger, as the
      case may be) (the CERTIFICATE OF MERGER) executed in accordance with the
      relevant provisions of the DGCL and shall make all other filings or
      recordings required under the DGCL. The Merger shall become effective at
      such time as the Certificate of Merger is duly filed with such Secretary
      of State, or at such subsequent time as Parent and the Company shall agree
      and specify in the Certificate of Merger (the time the Merger becomes
      effective being the EFFECTIVE TIME).


                                       6
<PAGE>

2.4   EFFECTS

      The Merger shall have the effects set forth in Section 259 of the DGCL.

2.5   CERTIFICATE OF INCORPORATION AND BY-LAWS

      (a)   At the Effective Time, the certificate of incorporation of the
            Company shall be the certificate of incorporation of the Surviving
            Corporation until thereafter changed or amended as provided therein
            or by applicable Law.

      (b)   The by-laws of Sub, as in effect immediately prior to the Effective
            Time, shall be the by-laws of the Surviving Corporation until
            thereafter changed or amended as provided therein or by applicable
            Law.

2.6   DIRECTORS

      The directors of Sub immediately prior to the Effective Time shall be the
      directors of the Surviving Corporation until the next annual meeting of
      stockholders of the Surviving Corporation (or until their earlier of their
      resignation or removal) and until their respective successors are duly
      elected and qualified, as the case may be. The Company shall cause all
      directors of the Company to resign immediately prior to the Effective
      Time.

2.7   OFFICERS

      The officers of the Company immediately prior to the Effective Time shall
      be the officers of the Surviving Corporation until the earlier of their
      resignation or removal or until their respective successors are duly
      elected or appointed and qualified, as the case may be.

3.    EFFECT ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS; EXCHANGE OF
      CERTIFICATES

3.1   EFFECT ON CAPITAL STOCK

      At the Effective Time, the following events shall occur by virtue of the
      Merger and without any further action on the part of Sub, the Company or
      the holders of any securities of the Company or Sub.

      (a)   CAPITAL STOCK OF SUB. Each issued and outstanding share of common
            stock of Sub shall be converted into and become one validly issued,
            fully paid and nonassessable share of common stock, par value $0.01
            per share, of the Surviving Corporation.

      (b)   CANCELLATION OF TREASURY STOCK AND PARENT-OWNED STOCK. Each share of
            Company Common Stock that, immediately prior to the Effective Time,
            is owned directly by the Company as treasury stock, or by Parent or
            Sub, shall automatically be cancelled and shall cease to exist, and
            no consideration shall be delivered in exchange therefor.

      (c)   CONVERSION OF COMPANY COMMON STOCK.

            (i)   Subject to Sections 3.1(b) and 3.1(d), each share of Company
                  Common Stock that is issued and outstanding immediately prior
                  to the Effective Time shall be converted into the right to
                  receive an amount in cash equal to the Offer Price, without
                  interest (the MERGER CONSIDERATION).


                                       7
<PAGE>

            (ii)  As of the Effective Time, all such shares of Company Common
                  Stock shall no longer be outstanding and shall automatically
                  be cancelled and shall cease to exist, and each holder of a
                  certificate that immediately prior to the Effective Time
                  represented any such shares of Company Common Stock (a
                  CERTIFICATE) shall cease to have any rights with respect
                  thereto, except the right to receive Merger Consideration,
                  without interest, upon surrender of such Certificate in
                  accordance with Section 3.2.

      (d)   APPRAISAL RIGHTS. Notwithstanding anything in this Agreement to the
            contrary, shares (APPRAISAL SHARES) of Company Common Stock that are
            issued and outstanding immediately prior to the Effective Time and
            that are held by any person who is entitled to demand and properly
            demands appraisal of such shares pursuant to, and who complies in
            all respects with, Section 262 of the DGCL (SECTION 262), shall not
            be converted into the right to receive the Merger Consideration as
            provided in Section 3.1(c), but instead such holder shall be
            entitled to payment of the fair value of such shares in accordance
            with Section 262. At the Effective Time, all Appraisal Shares shall
            no longer be outstanding and shall automatically be cancelled and
            shall cease to exist, and each holder of Appraisal Shares shall
            cease to have any rights with respect thereto, except the right to
            receive the fair value of such shares in accordance with the
            provisions of Section 262. Notwithstanding the foregoing, if any
            such holder shall fail to perfect or otherwise shall waive, withdraw
            or lose the right to appraisal under Section 262 or if a court of
            competent jurisdiction shall determine that such holder is not
            entitled to the relief provided by Section 262, then the right of
            such holder to be paid the fair value of such holder's Appraisal
            Shares under Section 262 shall cease and each such Appraisal Share
            shall be deemed to have been converted as of the Effective Time
            into, and to have become, the right to receive Merger Consideration
            without interest as provided in Section 3.1(c). The Company shall
            provide prompt notice to Parent of any demands for appraisal of any
            shares of Company Common Stock pursuant to Section 262, and Parent
            shall have the right to participate in and direct all negotiations
            and proceedings with respect to such demands. Prior to the Effective
            Time, the Company shall not, without the prior written consent of
            Parent, make any payment with respect to, or settle or offer to
            settle, any such demands, or agree to do any of the foregoing.

3.2   EXCHANGE OF CERTIFICATES

      (a)   PAYING AGENT. Prior to the Effective Time, Parent shall designate a
            bank or trust company reasonably satisfactory to the Company to act
            as agent for the payment of the Merger Consideration (the PAYING
            AGENT). From time to time after the Effective Time, Parent shall
            provide, or cause the Surviving Corporation to provide, to the
            Paying Agent funds in amounts and at the times necessary for the
            payment of the Merger Consideration pursuant to Section 3.1(c) upon
            surrender of Certificates, it being understood that any and all
            interest or income earned on funds made available to the Paying
            Agent pursuant to this Agreement shall be turned over to Parent
            (such funds being hereinafter referred to as the EXCHANGE FUND).

      (b)   EXCHANGE PROCEDURE. As soon as reasonably practicable after the
            Effective Time, the Paying Agent shall mail to each holder of record
            of a Certificate (i) a letter of transmittal (which shall specify
            that delivery shall be effected, and risk of loss and title to the
            Certificates shall pass, only upon proper delivery of the
            Certificates to the Paying Agent and shall be in customary form and
            have such other provisions as Parent may reasonably specify) and
            (ii) instructions for use in effecting the surrender of a
            Certificate in exchange for the Merger Consideration. Upon surrender
            of a Certificate for cancellation to the Paying Agent, together with
            such letter of transmittal, duly completed, validly executed and
            authenticated, and such other documents as may reasonably be
            required by the Paying Agent, the holder of such Certificate shall
            be entitled to receive in exchange therefor the amount of cash into
            which the shares formerly represented


                                       8
<PAGE>

            by such Certificate shall have been converted pursuant to Section
            3.1(c), and the Certificate so surrendered shall forthwith be
            cancelled. In the event of a transfer of ownership of Company Common
            Stock that is not registered in the stock transfer books of the
            Company, the proper amount of cash may be paid in exchange therefor
            to a person other than the person in whose name the Certificate so
            surrendered is registered if such Certificate shall be properly
            endorsed or otherwise be in proper form for transfer and the person
            requesting such payment shall pay any transfer or other taxes
            required by reason of the payment to a person other than the
            registered holder of such Certificate or establish to the
            satisfaction of Parent that such tax has been paid or is not
            applicable. No interest shall be paid or shall accrue on the cash
            payable upon surrender of any Certificate.

      (c)   NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All cash paid
            upon the surrender of a Certificate in accordance with the terms of
            this Article 3 shall be deemed to have been paid in full
            satisfaction of all rights pertaining to the shares of Company
            Common Stock formerly represented by such Certificate. At the close
            of business on the day on which the Effective Time occurs, the stock
            transfer books of the Company shall be closed, and there shall be no
            further registration of transfers on the stock transfer books of the
            Surviving Corporation of the shares of Company Common Stock that
            were outstanding immediately prior to the Effective Time. If, after
            the Effective Time, Certificates are presented to the Surviving
            Corporation or the Paying Agent for transfer or any other reason,
            they shall be cancelled and exchanged as provided in this Article 3.

      (d)   NO LIABILITY. None of Parent, Sub, the Company or the Paying Agent
            shall be liable to any person in respect of any cash delivered to a
            public official pursuant to any applicable abandoned property,
            escheat or similar Law.

      (e)   LOST CERTIFICATES. If any Certificate shall have been lost, stolen,
            defaced or destroyed, upon the making of an affidavit of that fact
            by the person claiming such Certificate to be lost, stolen, defaced
            or destroyed and, if required by Parent, the posting by such person
            of a bond in such reasonable amount as Parent may direct as
            indemnity against any claim that may be made against the Surviving
            Corporation with respect to such Certificate, the Paying Agent shall
            pay in respect of such lost, stolen, defaced or destroyed
            Certificate the Merger Consideration with respect to each share of
            Company Common Stock formerly represented by such Certificate.

      (f)   WITHHOLDING RIGHTS. Parent, the Surviving Corporation or the Paying
            Agent shall be entitled to deduct and withhold any applicable taxes
            from the consideration otherwise payable pursuant to this Agreement
            to any holder of shares of Company Common Stock. To the extent that
            amounts are so deducted and withheld and paid over to the
            appropriate taxing authority by Parent, the Surviving Corporation or
            the Paying Agent, such deducted and withheld amounts shall be
            treated for all purposes of this Agreement as having been paid to
            the stockholder in respect of which such deduction and withholding
            was made by Parent, the Surviving Corporation or the Paying Agent.

      (g)   TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund that
            remains undistributed to the holders of the Certificates for six
            months after the Effective Time shall be delivered to Parent, upon
            demand, and any holder of a Certificate who has not theretofore
            complied with this Article 3 shall thereafter look only to Parent,
            as general unsecured creditors thereof, for payment of its claim for
            Merger Consideration.


                                       9
<PAGE>

4.    REPRESENTATIONS AND WARRANTIES OF THE COMPANY

      Except as set forth in the disclosure schedule delivered to Parent and Sub
      contemporaneously with the execution of this Agreement (the COMPANY
      DISCLOSURE SCHEDULE), the Company represents and warrants to Parent and
      Sub as follows:

4.1   ORGANIZATION, STANDING AND POWER

      The Company and each of its subsidiaries (the COMPANY SUBSIDIARIES) is a
      corporation or other legal entity duly organized, validly existing and in
      good standing (with respect to jurisdictions that recognize such concept)
      under the Law of the jurisdiction in which it is organized and has the
      requisite corporate or other power, as the case may be, and authority
      necessary to enable it to own, lease or otherwise hold its properties and
      assets and to conduct its businesses as currently conducted. The Company
      and each of the Company Subsidiaries is duly qualified to do business in
      each jurisdiction where the nature of its businesses or its ownership or
      leasing of properties make such qualification necessary except where the
      failure to so qualify has not had and would not reasonably be expected to
      have a material adverse effect (as defined in Section 10.3) on the Company
      and the Company Subsidiaries taken as a whole (a COMPANY MATERIAL ADVERSE
      EFFECT). The Company has delivered to Parent true and complete copies of
      the certificate of incorporation of the Company, as amended to the date of
      this Agreement (as so amended, the COMPANY CHARTER), and the by-laws of
      the Company, as amended to the date of this Agreement (as so amended, the
      COMPANY BY-LAWS), and the comparable charter and organizational documents
      of each of the Company Subsidiaries, in each case as amended through the
      date of this Agreement. Neither the Company nor any Company Subsidiary is
      in default or violation of any term, provision or condition of any
      document referred to in the preceding sentence.

4.2   COMPANY SUBSIDIARIES; EQUITY INTERESTS

      (a)   Section 4.2(a) of the Company Disclosure Schedule lists each of the
            Company Subsidiaries and its jurisdiction of organization. All the
            outstanding shares of capital stock of, or other ownership interests
            in, each of the Company Subsidiaries have been validly issued and
            are fully paid and nonassessable and are owned by the Company, by
            another Company Subsidiary or by the Company and another Company
            Subsidiary, free and clear of all pledges, claims, liens, charges,
            mortgages, encumbrances and security interests of any kind or nature
            whatsoever (including any restriction on the right to vote, sell,
            transfer, pledge or otherwise dispose of capital stock or other
            ownership interests) (collectively, LIENS).

      (b)   Except for its interests in the Company Subsidiaries, the Company
            does not own, directly or indirectly, any capital stock, membership
            interest, partnership interest, joint venture interest or other
            equity or ownership interest in any person.

4.3   CAPITAL STRUCTURE

      (a)   The authorized capital stock of the Company consists of 150,000,000
            shares of Company Common Stock and 5,000,000 shares of preferred
            stock, par value $0.01 per share (COMPANY PREFERRED STOCK). At the
            close of business on February 25, 2005 (i) 56,117,640 shares of
            Company Common Stock were issued and outstanding, (ii) no shares of
            Company Common Stock were held by the Company in its treasury, (iii)
            110,913 shares of Company Common Stock were subject to issuance upon
            exercise of Company Stock Options (as defined in Section 7.4) under
            the Company's 1999 Employee Stock Purchase Plan at a weighted
            average exercise price of $4.6325 per share, (iv) 8,004,358 shares
            of Company Common Stock were subject to issuance upon exercise of
            Company Stock Options under the Company's 1999 Equity


                                       10
<PAGE>

            Incentive Plan at a weighted average exercise price of $10.5900 per
            share, (v) 295,000 shares of Company Common Stock were subject to
            issuance upon exercise of Company Stock Options under the Company's
            1999 Director Stock Option Plan at a weighted average exercise price
            of $12.4510 per share, (vi) 1,208,325 shares of Company Common Stock
            were subject to issuance upon exercise of Company Stock Options
            under the Hightouch Technologies, Inc. 1999 Stock Option Plan at a
            weighted average exercise price of $5.9861 per share, (vii)
            5,896,126 additional shares of Company Common Stock were reserved
            for issuance pursuant to the Company Stock Plans and (viii) no
            shares of Company Preferred Stock were issued. Except as set forth
            above and except for the shares of Company Common Stock reserved for
            issuance upon the exercise of the Top-Up Option, at the close of
            business on the date of this Agreement, no shares of capital stock
            or other voting securities of the Company were issued, reserved for
            issuance or outstanding. There are no outstanding Company SARs (as
            defined in Section 7.4). All outstanding shares of Company capital
            stock are, and all such shares that may be issued prior to the
            Effective Time will be when issued, duly authorized, validly issued,
            fully paid and nonassessable and not subject to or issued in
            violation of any purchase option, call option, right of first
            refusal, preemptive right, subscription right or any similar right
            under any provision of the DGCL, the Company Charter, the Company
            By-laws or any contract, lease, license, indenture, note, bond,
            agreement, permit, concession, franchise or other instrument (a
            CONTRACT) to which the Company or any Company Subsidiary is a party
            or otherwise bound. There are not any bonds, debentures, notes or
            other indebtedness of the Company having the right to vote (or
            convertible into, or exchangeable for, securities having the right
            to vote) on any matters on which holders of Company Common Stock may
            vote (VOTING COMPANY DEBT). Except as set forth above, as of the
            date of this Agreement, there are not any options, warrants, rights,
            convertible or exchangeable securities, "phantom" stock rights,
            stock appreciation rights, stock-based performance units,
            commitments, Contracts, arrangements or undertakings of any kind to
            which the Company or any Company Subsidiary is a party or by which
            any of them is bound (x) obligating the Company or any Company
            Subsidiary to issue, deliver or sell, or cause to be issued,
            delivered or sold, additional shares of capital stock or other
            equity interests in, or any security convertible or exercisable for
            or exchangeable into any capital stock of or other equity interest
            in, the Company or any Company Subsidiary or any Voting Company
            Debt, (y) obligating the Company or any Company Subsidiary to issue,
            grant, extend or enter into any such option, warrant, call, right,
            security, unit, commitment, Contract, arrangement or undertaking or
            (z) that give any person the right to receive any economic benefit
            or right similar to or derived from the economic benefits and rights
            accruing to holders of Company capital stock. As of the date of this
            Agreement, there are not any outstanding contractual obligations of
            the Company or any Company Subsidiary to repurchase, redeem or
            otherwise acquire any shares of capital stock of the Company or any
            Company Subsidiary. No person is entitled to registration rights
            with respect to any shares of capital stock of the Company. Except
            as contemplated in connection with the execution of this Agreement,
            there are no stockholder agreements, voting trusts or other
            agreements, Contracts or understandings to which the Company or any
            Company Subsidiary is a party or to which it is bound relating to
            the voting of any shares of capital stock of the Company or any
            Company Subsidiary.

      (b)   The Company Board (as defined below) or a committee administering
            the Company Stock Plans has the power and authority to adjust the
            terms of all outstanding Company Stock Options and all outstanding
            Company SARs granted under any Company Stock Plan, by resolution or
            other action, to provide that each such Company Stock Option and
            Company SAR outstanding immediately prior to the Effective Time
            shall be cancelled in accordance with Section 7.4, with the holder
            thereof becoming entitled to receive the amount of cash specified in
            Section 7.4. Such cancellation of Company Stock Options and Company
            SARs in exchange for the cash


                                       11
<PAGE>

            payments described in Section 7.4 will extinguish any and all rights
            the holders of such Company Stock Options and Company SARs had or
            may have had in respect thereof. No consents of the holders of the
            Company Stock Options or Company SARs are necessary to effectuate
            the foregoing. The Company Board or a committee administering the
            Company Stock Plans has the power and authority to cause (i) the
            Company Stock Plans to terminate as of the Effective Time and (ii)
            the provisions in any other Company Benefit Plan providing for the
            issuance, transfer or grant of any capital stock of the Company or
            any interest in respect of any capital stock of the Company to be
            deleted as of the Effective Time. Following the Effective Time no
            holder of a Company Stock Option or Company SAR or any participant
            in any Company Stock Plan or other Company Benefit Plan will have
            any right thereunder to acquire any capital stock of the Company or
            the Surviving Corporation.

4.4   AUTHORITY; EXECUTION AND DELIVERY; ENFORCEABILITY

      (a)   The Company has all requisite corporate power and authority to
            execute, deliver and perform this Agreement and to consummate the
            Transactions. The execution, delivery and performance by the Company
            of this Agreement and the consummation by the Company of the
            Transactions have been duly authorized by all necessary corporate
            and stockholder action on the part of the Company, subject, in the
            case of the Merger, to receipt of the Company Stockholder Approval
            if required by applicable Law. The Company has duly executed and
            delivered this Agreement and this Agreement constitutes its legal,
            valid and binding obligation, enforceable against the Company in
            accordance with its terms, except as such enforceability may be
            limited by bankruptcy, insolvency, moratorium and other similar Laws
            affecting creditors' rights generally and by general principles of
            equity.

      (b)   The Board of Directors of the Company (the COMPANY BOARD), at a
            meeting duly called and held at which directors of the Company
            constituting a quorum were present, duly and unanimously adopted
            resolutions (i) approving and declaring advisable this Agreement,
            the Offer, the Merger and the other Transactions, (ii) determining
            that the terms of the Offer, the Merger and the other Transactions
            are fair to and in the best interests of the Company and its
            stockholders, (iii) recommending that the holders of Company Common
            Stock accept the Offer and tender their shares of Company Common
            Stock pursuant to the Offer, (iv) directing that, if required by the
            DGCL, this Agreement be submitted to a vote at a meeting of the
            Company's stockholders and (v) recommending that, if required by the
            DGCL, the Company's stockholders adopt this Agreement. Such
            resolutions are sufficient to render the restrictions on "business
            combinations" (as defined in Section 203 of the DGCL) of Section 203
            of the DGCL inapplicable to Parent and Sub and this Agreement, the
            Offer, the Merger and the other Transactions. Other than Section 203
            of the DGCL and Chapter 80B of the Minnesota Statutes, no state
            takeover statute or similar statute or regulation applies to the
            Company or any Company Subsidiary with respect to this Agreement,
            the Offer, the Merger or any other Transaction.

      (c)   The Company has been advised by each of its directors and executive
            officers (which executive officers are, to the knowledge of the
            Company, aware of the Transactions as of the date hereof) that each
            such person intends to tender and sell all shares of Company Common
            Stock owned by such person in the Offer, except to the extent of any
            restrictions created by Section 16(b) of the Securities Exchange Act
            of 1934, as amended, and the rules and regulations promulgated
            thereunder (the EXCHANGE ACT) and otherwise intends to support the
            consummation of the Transactions.


                                       12
<PAGE>

4.5   NO CONFLICTS; CONSENTS

      (a)   The execution, delivery and performance by the Company of this
            Agreement do not, and the consummation of the Offer, the Merger and
            the other Transactions and compliance with the terms of this
            Agreement will not, conflict with, or result in any violation or
            breach of or default (with or without notice or lapse of time, or
            both) under, or give rise to a right of, or result in, termination,
            cancellation or acceleration of any obligation or to loss of a
            material benefit under, or to increased, additional, accelerated or
            guaranteed rights or entitlements of any person under, or result in
            the creation of any Lien upon any of the properties or assets of the
            Company or any Company Subsidiary under, any provision of (i) the
            Company Charter, the Company By-laws or the comparable charter or
            organizational documents of any Company Subsidiary, (ii) any
            Contract to which the Company or any Company Subsidiary is a party
            or by which any of their respective properties or assets is bound or
            (iii) subject to the filings and other matters referred to in
            Section 4.5(b), any judgment, injunction, order or decree (JUDGMENT)
            or statute, law (including common law), ordinance, rule,
            legislation, interpretation or regulation (LAW) applicable to the
            Company or any Company Subsidiary or their respective properties or
            assets, except in the case of clauses (ii) and (iii) above, for such
            matters that individually or in the aggregate have not had and would
            not reasonably be expected to have a Company Material Adverse Effect
            or result in a liability to the Company and the Company
            Subsidiaries, taken as a whole, in excess of $5,000,000.

      (b)   No consent, approval, license, permit, order or authorization
            (CONSENT) of, or registration, declaration or filing with, or Permit
            from, any Federal, state, local or foreign government or any court
            of competent jurisdiction, administrative agency or commission or
            other governmental authority or instrumentality, domestic, foreign
            or supranational (a GOVERNMENTAL ENTITY), or termination or
            expiration of any waiting period under applicable Law, is required
            to be obtained or made by or with respect to the Company or any
            Company Subsidiary in connection with the execution, delivery and
            performance of this Agreement or the consummation of the
            Transactions, other than: (i) compliance with and filings under the
            Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
            (the HSR ACT) and all other applicable competition and antitrust
            Laws, if any, including under the German Federal Cartel Office; (ii)
            the filing with the SEC of (A) the Schedule 14D-9, (B) a proxy or
            information statement relating to the adoption of this Agreement by
            the Company's stockholders (the PROXY STATEMENT), if such adoption
            is required by Law, (C) the Information Statement and (D) such
            reports under Section 13 of the Exchange Act, as may be required in
            connection with this Agreement, the Offer, the Merger and the other
            Transactions; (iii) the filing of the Certificate of Merger with the
            Secretary of State of the State of Delaware and appropriate
            documents with the relevant authorities of the other jurisdictions
            in which the Company is qualified to do business; (iv) compliance
            with and such filings as may be required under applicable
            Environmental Laws; (v) such filings as may be required in
            connection with the taxes described in Section 7.8 and (vi) such
            filings as may be required under Chapter 80B of the Minnesota
            Statutes.

4.6   SEC DOCUMENTS; UNDISCLOSED LIABILITIES

      (a)   The Company has filed all reports, schedules, forms, statements and
            other documents required to be filed by the Company with the SEC
            since December 31, 2002 (together with all information incorporated
            therein by reference, the SEC DOCUMENTS). As of its respective date,
            each SEC Document complied in all material respects with the
            requirements of the Securities Act of 1933, as amended, and the
            rules and regulations promulgated thereunder (the SECURITIES ACT),
            the Exchange Act and the Sarbanes-Oxley Act of 2002, and the rules
            and regulations promulgated thereunder (SOX), in each case,
            applicable to such SEC Document, and none of the SEC


                                       13
<PAGE>

            Documents contained any untrue statement of a material fact or
            omitted a material fact required to be stated therein or necessary
            in order to make the statements therein, in light of the
            circumstances under which they were made, not misleading. Except to
            the extent that information contained in any SEC Document has been
            duly revised or superseded by a later-filed SEC Document filed and
            publicly available prior to February 24, 2005 (a FILED SEC
            DOCUMENT), none of the SEC Documents contains any untrue statement
            of a material fact or omits any material fact required to be stated
            therein or necessary in order to make the statements therein, in
            light of the circumstances under which they were made, not
            misleading. As of their respective dates of filing with the SEC, the
            consolidated financial statements (including the related notes) of
            the Company included in the SEC Documents complied as to form in all
            material respects with applicable accounting requirements and the
            published rules and regulations of the SEC with respect thereto,
            have been prepared in accordance with generally accepted accounting
            principles in the United States (GAAP) (except, in the case of
            unaudited statements, as permitted by Form 10-Q of the SEC) applied
            on a consistent basis during the periods involved (except as may be
            indicated in the notes thereto). Such consolidated financial
            statements fairly present the consolidated financial position of the
            Company and its consolidated subsidiaries as of the dates thereof
            and the consolidated results of their operations and cash flows for
            the periods then ended. None of the Company Subsidiaries is, or has
            at any time been, subject to the reporting requirements of Section
            13(a) or 15(d) of the Exchange Act.

      (b)   Except as set forth on the face of, or expressly identified in the
            notes to, the most recent balance sheet of the Company included in
            the Filed SEC Documents, neither the Company nor any Company
            Subsidiary has any liabilities or obligations of any nature (whether
            accrued, absolute, contingent or otherwise) required under GAAP to
            be set forth on such balance sheet or in such notes thereto that
            individually or in the aggregate have had or would reasonably be
            expected to have a Company Material Adverse Effect.

      (c)   Each of the Company and its senior financial officers has consulted
            with the Company's independent auditors and with the Company's
            outside counsel with respect to, and (to the extent applicable to
            the Company) is familiar in all material respects with, the
            requirements of SOX as in existence on the date hereof. The Company
            is, and has been, in compliance in all material respects with the
            provisions of SOX applicable to it.

      (d)   Each of the principal executive officer of the Company and the
            principal financial officer of the Company has made all
            certifications required by Rule 13a-14 or 15d-14 under the Exchange
            Act and Sections 302 and 906 of SOX with respect to the SEC
            Documents, and the statements contained in such certifications are
            accurate in all material respects as of the date hereof. For
            purposes of this Agreement, "principal executive officer" and
            "principal financial officer" shall have the meanings given to such
            terms in SOX. Neither the Company nor any Company Subsidiary has
            outstanding, or has arranged any outstanding, "extensions of credit"
            to directors or executive officers within the meaning of Section 402
            of SOX.

      (e)   Neither the Company nor Company Subsidiary is a party to, or has any
            commitment to become a party to, any joint venture, off-balance
            sheet partnership or any similar Contract (including any Contract
            relating to any transaction or relationship between or among the
            Company and any Company Subsidiary, on the one hand, and any
            unconsolidated affiliate, including any structured finance, special
            purpose or limited purpose entity or person, on the other hand or
            any "off-balance sheet arrangements" (as defined in Item 303(a) of
            Regulation S-K of the SEC)), where the result, purpose or effect of
            such Contract is to avoid disclosure of any material transaction
            involving, or material liabilities of, the Company or any Company
            Subsidiary in the


                                       14
<PAGE>

            Company's or such Company Subsidiary's published financial
            statements or other SEC Documents.

      (f)   The books, records and accounts of the Company, all of which have
            been made available to Parent upon Parent's request, are complete
            and correct in all material respects.

      (g)   The Company's system of internal controls over financial reporting
            are reasonably sufficient in all material respects to provide
            reasonable assurance (i) that transactions are recorded as necessary
            to permit preparation of financial statements in conformity with
            GAAP, (ii) that receipts and expenditures are executed only in
            accordance with the authorization of management and (iii) regarding
            prevention or timely detection of the unauthorized acquisition, use
            or disposition of the Company's assets that would materially affect
            the Company's financial statements. No significant deficiency or
            material weakness was identified in management's assessment of
            internal controls as of December 31, 2004 (nor has any such
            deficiency or weakness since been identified) and, to management's
            knowledge and belief, the Company's external auditors are in a
            position to deliver an attestation without qualification of
            management's internal control report to be included in the Company's
            Form 10-K filing for the period ended December 31, 2004.

      (h)   The Company's "disclosure controls and procedures" (as defined in
            Rules 13a-15(e) and 15d-15(e) of the Exchange Act) are reasonably
            designed to ensure that (i) all information (both financial and
            non-financial) required to be disclosed by the Company in the
            reports that it files or submits under the Exchange Act is recorded,
            processed, summarized and reported within the time periods specified
            in the rules and forms of the SEC and (ii) all such information is
            accumulated and communicated to the Company's management as
            appropriate to allow timely decisions regarding required disclosure
            and to make the certifications of the principal executive officer
            and principal financial officer of the Company required under the
            Exchange Act with respect to such reports.

      (i)   Since the date of this Agreement, neither the chief executive
            officer nor the chief financial officer of the Company has become
            aware of any fact or circumstance that is reasonably likely to
            result in a substantial change to the Company's internal controls
            over financial reporting.

      (j)   Since the date of the most recent Filed SEC Report, neither the
            chief executive officer nor the chief financial officer of the
            Company has become aware of any fact, circumstance or change that is
            reasonably likely to result in a "material weakness" in the
            Company's internal controls over financial reporting.

      (k)   The audit committee of the Board of Directors of the Company
            includes an Audit Committee Financial Expert, as defined by Item
            401(h)(2) of Regulation S K.

      (l)   The Company has adopted a code of ethics, as defined by Item 406(b)
            of Regulation S-K, for senior financial officers, applicable to its
            principal financial officer, comptroller or principal accounting
            officer, or persons performing similar functions. The Company has
            promptly disclosed, by filing a Form 8-K, any change in or waiver of
            the Company's code of ethics, as required by Section 406(b) of SOX.
            To the knowledge of the Company, there have been no violations of
            provisions of the Company's code of ethics.


                                       15
<PAGE>

4.7   INFORMATION SUPPLIED

      None of the information supplied or to be supplied by the Company for
      inclusion or incorporation by reference in (a) the Offer Documents, the
      Schedule 14D-9 or the Information Statement will, at the time such
      document is filed with the SEC, at any time it is amended or supplemented
      or at the time it is first published, sent or given to the Company's
      stockholders, contain any untrue statement of a material fact or omit to
      state any material fact required to be stated therein or necessary to make
      the statements therein not misleading, or (b) the Proxy Statement will, at
      the date it is first mailed to the Company's stockholders or at the time
      of the Company Stockholders Meeting (defined in Section 7.1(b)), contain
      any untrue statement of a material fact or omit to state any material fact
      required to be stated therein or necessary in order to make the statements
      therein, in light of the circumstances under which they are made, not
      misleading. The Schedule 14D-9, the Information Statement and the Proxy
      Statement will comply as to form in all material respects with the
      requirements of the Exchange Act and the rules and regulations thereunder,
      except that no representation is made by the Company pursuant to this
      Section 4.7 with respect to statements made or incorporated by reference
      therein based on information supplied by Parent or Sub for inclusion or
      incorporation by reference therein.

4.8   ABSENCE OF CERTAIN CHANGES OR EVENTS

      Except as disclosed in the Filed SEC Documents, since the date of the most
      recent audited financial statements included in the Filed SEC Documents,
      each of the Company and the Company Subsidiaries has conducted its
      business in the ordinary course of business and there has not been:

      (a)   any event, change or development that, individually or in the
            aggregate, has had or would reasonably be expected to have a Company
            Material Adverse Effect;

      (b)   (i) any declaration, setting aside or payment of any dividend on, or
            other distribution (whether in cash, stock, property or otherwise)
            in respect of, any capital stock of the Company or any Company
            Subsidiary, other than dividends and distributions by a direct or
            indirect wholly owned subsidiary of the Company to its parent or
            (ii) any repurchase, redemption or other acquisition by the Company
            or any Company Subsidiary of any capital stock or other equity
            securities of, or other ownership interests in, the Company or any
            Company Subsidiary or any other securities thereof or any rights,
            options, warrants or calls to acquire any such shares or other
            securities;

      (c)   any split, combination or reclassification of any capital stock of
            the Company or any Company Subsidiary or any issuance of, or the
            authorization of any issuance of, any other securities in respect
            of, in lieu of or in substitution for, shares of capital stock of
            the Company or any Company Subsidiary;

      (d)   (i) any granting by the Company or any Company Subsidiary to any
            current or former director, officer or employee of the Company or
            any Company Subsidiary of any increase in compensation or pay any
            bonus, except for increases of cash compensation in the ordinary
            course of business to the extent required under employment
            agreements (or in the case of any employee not covered by an
            employment agreement to the extent granted in accordance with the
            Company's employment compensation policies) in each case in effect
            as of the date of the most recent audited financial statements
            included in the Filed SEC Documents, (ii) any granting by the
            Company or any Company Subsidiary to any such current or former
            director, officer or employee of any increase in severance or
            termination pay, except to the extent required under any agreement
            (or in the case of any employee not covered by an employment
            agreement to the extent granted in accordance with the Company's
            employment compensation policies) in each


                                       16
<PAGE>

            case in effect as of the date of the most recent audited financial
            statements included in the Filed SEC Documents or (iii) any
            amendment or modification to any Company Stock Option;

      (e)   any change in financial or tax accounting methods, principles or
            practices by the Company or any Company Subsidiary except insofar as
            may have been required by a change in GAAP or Law;

      (f)   any material Tax election by the Company or any Company Subsidiary
            or settlement or compromise by the Company or any Company Subsidiary
            of any material Tax liability or refund;

      (g)   any amendment of any term of any outstanding security of the Company
            or any Company Subsidiary that would increase the obligations of the
            Company or such Company Subsidiary under such security;

      (h)   any incurrence, assumption or guarantee by the Company or any
            Company Subsidiary of any indebtedness for borrowed money other than
            in the ordinary course of business;

      (i)   any creation or assumption by the Company or any Company Subsidiary
            of any Lien on any asset of the Company or any Company Subsidiary
            other than in the ordinary course of business;

      (j)   any making of any loans, advances or capital contributions to, or
            investments in, any other person, other than to the Company or any
            direct or indirect wholly-owned subsidiary of the Company;

      (k)   (i) any direct or indirect acquisition by the Company or any Company
            Subsidiary, or agreement to acquire, by merging or consolidating
            with, or by purchasing or by any other manner, any equity interest
            in, business of or any substantial portion of the assets of, any
            person or any acquisition by the Company or any Company Subsidiary
            of any assets that are material to the Company and the Company
            Subsidiaries, (ii) any sale, lease, license, Lien or other
            disposition of any intellectual property or other material assets of
            the Company or any Company Subsidiary, other than sales and licenses
            of products to customers in the ordinary course of business, (iii)
            any incurrence or agreement to incur any new capital expenditures by
            the Company or any Company Subsidiary that are in excess of
            $1,000,000 in any calendar quarter or (iv) any assignment,
            termination or relinquishment by the Company or any Company
            Subsidiary of any contract, license or other right with a value in
            excess of $250,000;

      (l)   any other transaction, Contract or commitment of the Company or any
            Company Subsidiary other than in the ordinary course of business and
            on an arm's length basis; or

      (m)   any authorization, commitment or agreement to take any action
            referred to in Sections 4.8(a) through 4.8(l).

4.9   TAXES

      (a)   The Company and the Company Subsidiaries have timely filed or caused
            to be filed with the appropriate Tax or governmental authority all
            material Tax Returns required to be filed by them and all such Tax
            Returns are true, correct and complete in all material respects. The
            Company and the Company Subsidiaries have timely paid or caused to
            be paid all material Taxes due with respect to the taxable periods
            covered by such Tax Returns and all other Taxes otherwise due and
            payable, and the most recent financial statements included in the
            Filed SEC Documents


                                       17
<PAGE>

            reflect an adequate reserve (including any reserve for deferred
            Taxes) for all Taxes not yet due but that are payable for periods or
            portions thereof accrued through the date of such financial
            statements.

      (b)   There is no written claim or notice of deficiency, audit
            examination, refund litigation, proposed adjustment or matter in
            controversy with any Tax authority with respect to any Taxes of the
            Company or any Company Subsidiary whether or not with respect to a
            Tax Return filed by the Company or any Company Subsidiary. No claim
            has been made by any Tax authority in a jurisdiction where the
            Company or any Company Subsidiary does not file Tax Returns that it
            is or may be subject to Taxation by that jurisdiction.

      (c)   No Liens for Taxes exist with respect to any of the assets or
            properties of the Company or any Company Subsidiary except for
            statutory Liens for Taxes not yet due or payable.

      (d)   Neither the Company nor any Company Subsidiary is a party to any
            written (i) Tax sharing agreement or similar agreement, arrangement
            or practice (including any liability for Taxes of any other Person
            under Treasury Regulation 1.1502-6 or comparable provision of
            foreign, state or local Law) with any party other than the Company
            or any Company Subsidiary or (ii) tax indemnity obligation or
            similar agreement, arrangement or practice (including any liability
            for Taxes of any other Person under Treasury Regulation 1.1502-6 or
            comparable provision of foreign, state or local Law) other than with
            respect to the Company or any Company Subsidiary. Neither the
            Company nor any Company Subsidiary is liable for Taxes of any other
            Person other than the Company or any Company Subsidiary as
            transferee or otherwise and whether by contract or otherwise.

      (e)   There is no currently effective agreement or other document
            extending the period of limitation on assessment or collection of
            any Taxes, and no power of attorney with respect to any Taxes has
            been executed or filed with any taxing authority by or on behalf of
            the Company or any Company Subsidiary.

      (f)   The Company and each Company Subsidiary has, within the time and the
            manner prescribed by Law, withheld from and paid over to the proper
            Tax or governmental authorities all amounts required to be withheld
            and paid over under applicable Law (including withholding of Taxes
            pursuant to Sections 1441, 1442, 3121 and 3402 of the Code or
            similar provisions under any state, local or foreign Laws).

      (g)   Neither the Company nor any Company Subsidiary has constituted
            either a "distributing corporation" or a "controlled corporation" in
            a distribution of stock qualifying for tax-free treatment under
            Section 355 of the Code in the two-year period ending on the date of
            this Agreement (or will constitute such a corporation in the
            two-year period ending on the Effective Time).

      (h)   For purposes of this Agreement:

            (i)   TAX or TAXES (and with correlative meaning, TAXATION) means
                  any and all taxes, charges, fees, levies, tariffs, duties,
                  liabilities, impositions or other assessments of any kinds
                  (together with any and all interest, penalties, additions to
                  tax and additional amounts imposed with respect thereto)
                  imposed by any tax or governmental authority, including
                  income, gross receipts, profits, alternative minimum tax,
                  gaming, excise, real or personal property, environmental,
                  sales, use, value-added, ad valorem, withholding, national
                  insurance and social security, customs, excise and import
                  duties, retirement,


                                       18
<PAGE>

                  employment, unemployment, workers' compensation, occupation,
                  service, license, net worth, capital stock, payroll,
                  franchise, gains, stamp, transfer and recording taxes.

            (ii)  TAX RETURN means any return, declaration, report, document,
                  claim for refund, estimate, information return or other
                  statement or information required to be filed or supplied to
                  any Tax or governmental authority with respect to Taxes,
                  including any schedule or attachment thereto, and including
                  any amendment thereof.

4.10  ABSENCE OF CHANGES IN BENEFIT PLANS

      (a)   Except as disclosed in the Filed SEC Documents, since December 1,
            2003 there has not been any adoption or amendment in any material
            respect by the Company or any Company Subsidiary of any collective
            bargaining agreement or any bonus, pension, profit sharing, deferred
            compensation, incentive compensation, stock ownership, stock
            purchase, stock option, phantom stock, retirement, thrift, savings,
            stock bonus, restricted stock, cafeteria, paid time off, perquisite,
            fringe benefit, vacation, severance, disability, death benefit,
            hospitalization, medical or other plan, arrangement or understanding
            (whether or not legally binding) providing benefits to any current
            or former employee, officer or director of the Company or any
            Company Subsidiary (collectively, COMPANY BENEFIT PLANS).

      (b)   Except as disclosed in the Filed SEC Documents, there are not any
            employment, consulting, deferred compensation, indemnification,
            severance or termination agreements or arrangements between the
            Company or any Company Subsidiary and any current or former
            employee, officer or director of the Company or any Company
            Subsidiary (collectively, COMPANY BENEFIT AGREEMENTS).

      (c)   Except as disclosed in the Filed SEC Documents, since December 1,
            2003 there has not been any action to accelerate any rights or
            benefits, any action to fund or in any other way secure the payment
            of compensation or benefits under any Company Benefit Agreement or
            Company Benefit Plan, or any material determinations not in the
            ordinary course of business, under any collective bargaining
            agreement or Company Benefit Plan or Company Benefit Agreement.

4.11  ERISA COMPLIANCE; EXCESS PARACHUTE PAYMENTS

      (a)   Section 4.11(a)(i) of the Company Disclosure Schedule sets forth a
            complete and accurate list and brief description of all "employee
            pension benefit plans" (as defined in Section 3(2) of the Employee
            Retirement Income Security Act of 1974, as amended (ERISA))
            (sometimes referred to herein as COMPANY PENSION PLANS), "employee
            welfare benefit plans" (as defined in Section 3(1) of ERISA) and all
            other Company Benefit Plans and Company Benefit Agreements
            (including in such description the number of participants in each
            such plan and the cost to the Company to maintain each such plan),
            each as of the date hereof maintained, or contributed to, by the
            Company or any Company Subsidiary, or to which the Company or any
            Company Subsidiary is a party, for the benefit of any current or
            former employees, officers or directors of the Company or any
            Company Subsidiary. The Company has made available to Parent true,
            complete and correct copies of (i) each Company Benefit Plan and
            Company Benefit Agreement (or, in the case of any unwritten Company
            Benefit Plan or Company Benefit Agreement a description thereof),
            (ii) the three most recent annual reports on Form 5500 filed with
            the Department of Labor with respect to each Company Benefit Plan
            (if any such report was required), as well as copies of all other
            filings made with the Internal Revenue Service, the Department of
            Labor and the Pension Benefit Guaranty Corporation for each Company
            Benefit Plan's most recent three plan years, (iii) the most recent
            summary plan description for each


                                       19
<PAGE>

            Company Benefit Plan for which such summary plan description is
            required and (iv) each trust agreement and insurance, group annuity
            and any other material contract relating to any Company Benefit
            Plan.

      (b)   All Company Pension Plans that are intended to be qualified under
            Section 401(a) of the Internal Revenue Code of 1986, as amended (the
            CODE) have received favorable determination letters from the
            Internal Revenue Service with respect to TRA (as defined in Section
            I of Rev. Proc. 93-39), to the effect that such Company Pension
            Plans are qualified and exempt from Federal income taxes under
            Sections 401(a) and 501(a), respectively, of the Code, and no such
            determination letter has been revoked nor, to the knowledge of the
            Company, has revocation been threatened, nor has any such Company
            Pension Plan been amended since the date of its most recent
            determination letter or application therefor in any respect that
            would adversely affect its qualification or materially increase its
            costs.

      (c)   With respect to all Company Benefit Plans, the reporting, disclosure
            and other requirements of ERISA and the Code, as applicable, have
            been fulfilled in all material respects.

      (d)   There are no pending or, to the knowledge of the Company, threatened
            claims, investigations, proceedings, suits, litigation or other
            actions by, on behalf of, against, or otherwise affecting, involving
            or in any way relating to any of the Company Benefit Plans or the
            Company Benefit Arrangements, and, to the knowledge of the Company,
            there are no facts or set of circumstances to the knowledge of the
            Company that has resulted in or would result in any such claims,
            investigations, proceedings, suits, litigation or actions.

      (e)   No Company Pension Plan is subject to Title IV of ERISA or the
            minimum funding requirements of Section 302 of ERISA or Section 412
            of the Code, and neither the Company nor any Company Subsidiary or
            any of their respective affiliates have any actual or contingent
            liability under any plan (whether or not currently sponsored,
            maintained or contributed to by any such entity) that is or was
            subject to such provisions of ERISA or the Code.

      (f)   None of the Company, any Company Subsidiary, any officer of the
            Company or any Company Subsidiary or any of the Company Benefit
            Plans which are subject to ERISA, including the Company Pension
            Plans, any trusts created thereunder or any trustee or administrator
            thereof, has engaged in a "prohibited transaction" (as defined in
            Section 406 of ERISA or Section 4975 of the Code) or any other
            breach of fiduciary responsibility that would subject the Company,
            any Company Subsidiary or any officer of the Company or any Company
            Subsidiary to the tax or penalty on prohibited transactions imposed
            by such Section 4975 or to any liability under Section 502(i) or
            502(1) of ERISA.

      (g)   All contributions and premiums required to be made under the terms
            of any Company Benefit Plan as of the date hereof have been timely
            made or have been reflected on the most recent consolidated balance
            sheet filed or incorporated by reference in the Filed SEC Documents.

      (h)   No Company Pension Plan is a multiemployer plan within the meaning
            of Section 4001(a)(3) of ERISA (a COMPANY MULTIEMPLOYER PENSION
            PLAN), and neither the Company nor any Company Subsidiary has any
            actual or contingent liability under any former Company
            Multiemployer Pension Plan.

      (i)   With respect to any Company Benefit Plan that is an employee welfare
            benefit plan, (i) no such Company Benefit Plan is funded through a
            "welfare benefit fund" (as defined in


                                       20
<PAGE>

            Section 419(e) of the Code), (ii) each such Company Benefit Plan
            that is a "group health plan" (as defined in Section 5000(b)(1) of
            the Code) complies in all material respects with the applicable
            requirements of Section 4980B(f) of the Code and (iii) each such
            Company Benefit Plan (including any such Plan covering retirees or
            other former employees) may be amended or terminated without
            material liability to the Company and the Company Subsidiaries on or
            at any time after the Effective Time.

      (j)   Neither the Company nor any Company Subsidiary have any obligations
            for retiree health and life benefits under any Company Benefit Plan
            or Company Benefit Agreement.

      (k)   Except with respect to accelerated vesting of Company Stock Options
            under the Company Stock Plans (excluding the Retek Inc. 1999
            Employee Stock Purchase Plan (the COMPANY ESPP)), the consummation
            of the Offer, the Merger or any other Transaction will not (i)
            entitle any employee, officer or director of the Company or any
            Company Subsidiary to severance pay, (ii) accelerate the time of
            payment or vesting or trigger any payment or funding (through a
            grantor trust or otherwise) of compensation or benefits under,
            increase the amount payable or trigger any other material obligation
            pursuant to, any of the Company Benefit Plans or Company Benefit
            Agreements or (iii) result in any breach or violation of, or a
            default under, any of the Company Benefit Plans or Company Benefit
            Agreements.

      (l)   Other than payments that may be made to the persons listed in the
            Company Disclosure Schedule (the PRIMARY COMPANY EXECUTIVES), any
            amount or economic benefit that would be received (whether in cash
            or property or the vesting of property) as a result of the Offer,
            the Merger or any other Transaction (including as a result of
            termination of employment on or following the Effective Time) by any
            employee, officer or director of the Company or any of its
            affiliates who is a "disqualified individual" (as defined in
            proposed Treasury Regulation Section 1.280G-1) under any Company
            Benefit Plan or Company Benefit Agreement or otherwise would not be
            characterized as an "excess parachute payment" (as defined in
            Section 280G(b)(1) of the Code), and no disqualified individual is
            entitled to receive any additional payment from the Company or any
            Company Subsidiary or any other person in the event that the excise
            tax under Section 4999 of the Code is imposed on such disqualified
            individual. Set forth in the Company Disclosure Schedule are (i) the
            estimated maximum amount that would be paid to each Primary Company
            Executive as a result of the Offer, the Merger and the other
            Transactions under all Company Benefit Plans and Company Benefit
            Agreements and (ii) the "base amount" (as defined in Section
            280G(b)(3) of the Code) for each Primary Company Executive
            calculated as of the date of this Agreement.

4.12  LITIGATION

      (a)   There is no suit, claim, action, proceeding or investigation pending
            or, to the knowledge of the Company, threatened against or
            affecting, the Company or any Company Subsidiary or any of their
            respective businesses or assets or any of the directors or employees
            of the Company or any Company Subsidiary or, to the knowledge of the
            Company, its stockholders or representatives (in each case insofar
            as any such matters relate to their activities with the Company or
            any Company Subsidiary) at law or in equity, or before any
            Governmental Entity, arbitrator or arbitration panel that
            individually or in the aggregate would reasonably be expected to
            have a Company Material Adverse Effect or result in a liability to
            the Company or any Company Subsidiary, taken as a whole, in excess
            of $5,000,000. Neither the Company nor any Company Subsidiary is
            subject to any outstanding Judgment against the Company or any
            Company Subsidiary or naming the Company or any Company Subsidiary
            as a party or by which any of the employees or representatives of
            the Company or any Company Subsidiary is prohibited or restricted
            from engaging in or otherwise conducting the business of the Company
            or any


                                       21
<PAGE>

            Company Subsidiary as presently conducted that, individually or in
            the aggregate, would reasonably be expected to have a Company
            Material Adverse Effect or result in a liability to the Company or
            any Company Subsidiary taken as a whole, in excess of $5,000,000.
            Section 4.12(a) of the Company Disclosure Schedule shall include a
            complete and accurate summary of each suit, claim, action,
            proceeding, investigation and Judgment set forth therein, together
            with a summary of its status as well as the damages or other relief
            sought or imposed thereby.

      (b)   There is no investigation or review by any Governmental Entity or
            self-regulatory authority with respect to the Company or any Company
            Subsidiary (excluding investigations and reviews of Intellectual
            Property applications by the Intellectual Property offices of a
            Governmental Entity) or any of their respective employees (insofar
            as any such investigation or review relates to their activities with
            the Company or any Company Subsidiary) actually pending or, to the
            knowledge of the Company, threatened, nor has any Governmental
            Entity or self-regulatory authority indicated to the Company or any
            Company Subsidiary in writing or, to the knowledge of the Company,
            verbally, an intention to conduct the same.

4.13  COMPLIANCE WITH APPLICABLE LAW

      (a)   Except as disclosed in the Filed SEC Documents, the Company and the
            Company Subsidiaries and their personnel and operations are, and
            since January 1, 2003 have been, in compliance in all material
            respects with all material Laws applicable to the Company or any
            Company Subsidiary. Except as disclosed in the Filed SEC Documents,
            neither the Company nor any Company Subsidiary has received any
            written notice since January 1, 2003 (i) of any administrative,
            civil or criminal investigation or audit (other than Tax audits) by
            any Governmental Entity relating to the Company or any Company
            Subsidiary or (ii) from any Governmental Entity alleging that the
            Company or a Company Subsidiary is not in compliance in any material
            respect with any applicable Law.

      (b)   Each of the Company and the Company Subsidiaries has in effect all
            approvals, authorizations, certificates, filings, franchises,
            licenses, variances, exemptions, notices, permits and rights of or
            with all Governmental Entities (PERMITS) necessary for it to own,
            lease or otherwise hold and to operate its properties and assets and
            to carry on its businesses and operations as now conducted, except
            for the failure to have such Permits that, individually and in the
            aggregate, have not had and would not reasonably be expected to have
            a Company Material Adverse Effect. There have occurred no defaults
            (with or without notice or lapse of time or both) under violations
            of, or event giving to others any right of termination, amendment or
            cancellation of, with or without notice or lapse of time or both,
            any such Permit, except for such defaults, violations and events
            that, individually and in the aggregate, have not had and would not
            reasonably be expected to have a Company Material Adverse Effect.
            Neither the Offer nor the Merger, in and of itself, would reasonably
            be expected to cause the revocation or cancellation (with or without
            notice or lapse of time or both) of any such Permit that
            individually or in the aggregate would reasonably be expected to
            have a Company Material Adverse Effect.

4.14  ENVIRONMENTAL MATTERS

      (a)   Except for such matters that individually and in the aggregate have
            not had and would not reasonably be expected to have a Company
            Material Adverse Effect: (i) each of the Company and the Company
            Subsidiaries is and has been in compliance with all applicable
            Environmental Laws and possesses and is and has been in compliance
            with all required Environmental Permits; (ii) there are no
            Environmental Claims (as defined below) pending or, to the knowledge
            of the


                                       22
<PAGE>

            Company, threatened against the Company or any Company Subsidiary
            and (iii) none of the Company, any Company Subsidiary or any of
            their predecessors has caused any releases or threatened releases of
            Hazardous Materials at any property currently or formed owned or
            operated by the Company, any Company Subsidiary or any of their
            predecessors, or at any off-site disposal location in connection
            with the current or past operations of the Company, any Company
            Subsidiary or their predecessors.

      (b)   For the purposes of this Agreement:

            (i)   ENVIRONMENTAL CLAIMS means any and all actions, orders,
                  decrees, suits, demands, notices, directives, claims, Liens,
                  investigations, proceedings or notices of noncompliance,
                  liability or violation by any Governmental Entity or other
                  person alleging liability, whether contingent or otherwise
                  (including investigation or remediation costs, administrative
                  oversight costs and natural resource damages) arising out of,
                  based on or related to Environmental Laws (including asbestos
                  or other personal injury or property damage claims).

            (ii)  ENVIRONMENTAL LAWS means all Laws or Judgments in each case
                  issued, promulgated by, or entered into with, any Governmental
                  Entity relating in any way to pollution or protection of human
                  heath or the environment (including ambient air, surface
                  water, groundwater, soils or subsurface strata), the
                  preservation or reclamation of natural resources, or the
                  presence, management, release or threatened release of
                  Hazardous Materials.

            (iii) ENVIRONMENTAL PERMITS means all Permits required pursuant to
                  Environmental Laws.

            (iv)  HAZARDOUS MATERIALS means (A) all hazardous, toxic, explosive
                  or radioactive substances, wastes or other pollutants,
                  including petroleum or petroleum distillates, asbestos or
                  asbestos-containing material and (B) all other substances,
                  materials, chemicals or wastes of any nature that are
                  prohibited, limited or regulated pursuant to any Environmental
                  Law.

4.15  CONTRACTS

      Except as filed as an exhibit to the Filed SEC Documents and except for
      Contracts made solely between the Company and one or more wholly-owned
      Company Subsidiaries or between two or more wholly-owned Company
      Subsidiaries, neither the Company nor any Company Subsidiary is a party to
      any:

      (a)   Contract that involves performance of services or delivery of goods,
            materials, supplies or equipment by the Company or any Company
            Subsidiary, or the payment therefor by the Company or any Company
            Subsidiary, with a remaining cost to complete in excess of $250,000;

      (b)   covenant of the Company or a Company Subsidiary not to compete or
            other covenant of the Company or a Company Subsidiary restricting
            the development, manufacture, marketing or distribution of the
            products or services of the Company or any Company Subsidiary or
            otherwise limiting the freedom of the Company or any Company
            Subsidiary to compete in any line of business or with any person or
            in any area or to own, operate, sell, transfer, pledge or otherwise
            dispose of or encumber any material assets or that by its terms
            purports to limit the freedom of any successor to or affiliate of
            the Company after the consummation of the Offer or the Merger;


                                       23
<PAGE>

      (c)   Contract or other arrangement with any current or former officer,
            director or employee of the Company or a Company Subsidiary (other
            than employment agreements covered by clause (b) above);

      (d)   lease, sublease or similar Contract with any person (other than the
            Company or a Company Subsidiary) under which the Company or a
            Company Subsidiary is a lessor or sublessor of, or makes available
            for use to any person (other than the Company or a Company
            Subsidiary), (i) any real property or interest in real property
            owned or leased by the Company or a Company Subsidiary or (ii) any
            portion of any premises otherwise occupied by the Company or a
            Company Subsidiary;

      (e)   lease or similar agreement with any person (other than the Company
            or a Company Subsidiary) under which (i) the Company or a Company
            Subsidiary is lessee of, or holds or uses, any machinery, equipment,
            vehicle or other tangible personal property owned by any person or
            (ii) the Company or a Company Subsidiary is a lessor or sub-lessor
            of, or makes available for use by any person, any tangible personal
            property owned or leased by the Company or a Company Subsidiary, in
            any such case which has an aggregate future liability or receivable,
            as the case may be, in excess of $250,000 and is not terminable by
            the Company or a Company Subsidiary by notice of not more than 90
            days for a cost of less than $250,000;

      (f)   (i) continuing Contract for the future purchase of materials,
            supplies or equipment (other than purchase Contracts and orders for
            inventory in the ordinary course of business), (ii) management,
            service, consulting or other similar type of Contract or (iii)
            advertising agreement or arrangement, in any such case which has an
            aggregate future liability to any person (other than the Company or
            a Company Subsidiary) in excess of $250,000 and is not terminable by
            the Company or a Company Subsidiary by notice of not more than 90
            days for a cost of less than $250,000;

      (g)   material license, option or other agreement relating in whole or in
            part (other than incidentally) to the Intellectual Property set
            forth in Section 4.17(a) of the Company Disclosure Schedule
            (including any license or other agreement under which the Company or
            a Company Subsidiary is licensee or licensor of any such
            Intellectual Property) other than any (i) Contract entered into by
            the Company or a Company Subsidiary in the ordinary course of
            business pursuant to which Company Software is licensed to a
            third-party customer, (ii) commercially available over-the-counter
            "shrink-wrap" used by the Company or a Company Subsidiary in the
            operation of its business or (iii) non-negotiated license of
            third-party Intellectual Property embedded in equipment or fixtures
            and used by the Company or a Company Subsidiary for internal
            purposes only;

      (h)   Contract under which the Company or a Company Subsidiary has
            borrowed any money from, or issued any note, bond, debenture or
            other evidence of indebtedness to, any person (other than the
            Company or a Company Subsidiary) or any other note, bond, debenture
            or other evidence of indebtedness issued to any person (other than
            the Company or a Company Subsidiary) in any such case which,
            individually, is in excess of $100,000;

      (i)   Contract (including so-called take-or-pay or keepwell agreements)
            under which (i) any person (including the Company or a Company
            Subsidiary) has directly or indirectly guaranteed indebtedness,
            liabilities or obligations of the Company or a Company Subsidiary or
            (ii) the Company or a Company Subsidiary has directly or indirectly
            guaranteed indebtedness, liabilities or obligations of any person
            (in each case other than endorsements for the purpose of collection


                                       24
<PAGE>

            in the ordinary course of business), in any such case which,
            individually, is in excess of $250,000;

      (j)   Contract under which the Company or a Company Subsidiary has,
            directly or indirectly, made any advance, loan, extension of credit
            or capital contribution to, or other investment in, any person
            (other than the Company or a Company Subsidiary), in any such case
            which, individually, is in excess of $100,000;

      (k)   mortgage, pledge, security agreement, deed of trust or other
            instrument granting a Lien upon any real property or interest in
            real property owned or leased by the Company or a Company
            Subsidiary;

      (l)   agreement or instrument providing for indemnification of any person
            with respect to material liabilities relating to any current or
            former business of the Company, a Company Subsidiary or any
            predecessor person other than indemnification obligations of the
            Company or any Company Subsidiary pursuant to the provisions of a
            Contract entered into by the Company or a Company Subsidiary in the
            ordinary course of business with a third-party customer licensing
            Company Software or purchasing related services;

      (m)   any partnership, joint venture or other similar agreement or
            arrangement;

      (n)   other Contract or commitment to which the Company or any Company
            Subsidiary is a party or by or to which it or any of its assets or
            business is bound or subject which has an aggregate future liability
            to any person (other than to the Company or a Company Subsidiary) in
            excess of $250,000 and is not terminable by the Company or a Company
            Subsidiary by notice of not more than 90 days for a cost of less
            than $250,000; or

      (o)   employee collective bargaining agreement or other Contract with any
            labor union or employment agreement or employment Contract (other
            than for employment at-will) that has an aggregate future liability
            in excess of $100,000 and is not terminable by the Company or a
            Company Subsidiary by notice of not more than 60 days for a cost of
            less than $100,000.

      Neither the Company nor any Company Subsidiary, nor, to the knowledge of
      the Company, any other party thereto, is in violation of or in default
      under (nor does there exist any condition which upon the passage of time
      or the giving of notice would cause such a violation of or default under)
      in any material respect any Contract to which the Company or a Company
      Subsidiary is a party or by which the Company or a Company Subsidiary or
      any of its properties or assets is bound that is set forth in Section 4.15
      of the Company Disclosure Schedule. Each such Contract is a valid and
      binding agreement of the Company or a Company Subsidiary, and, to the
      knowledge of the Company, any other party thereto, and is in full force
      and effect except as such enforceability may be limited by bankruptcy,
      insolvency, moratorium and other similar Laws affecting creditors' rights
      generally and by general principles of equity.

4.16  TITLE TO PROPERTIES

      (a)   The Company and each of the Company Subsidiaries have good and
            marketable title to, or valid leasehold interests in, all their
            material tangible properties and material tangible assets. All such
            assets and properties, other than assets and properties in which the
            Company or any Company Subsidiary has leasehold interests, are free
            and clear of all Liens except for Liens that, in the aggregate, do
            not and would not reasonably be expected to result in a Company
            Material Adverse Effect.


                                       25
<PAGE>

      (b)   The Company and each of the Company Subsidiaries enjoy peaceful and
            undisturbed possession under all material real property leases to
            which they are parties.

4.17  INTELLECTUAL PROPERTY; COMPUTER SOFTWARE

      (a)   Section 4.17(a)(i) of the Company Disclosure Schedule sets forth (i)
            a complete and accurate list as of the date hereof of all Company
            Owned Intellectual Property and (ii) the owner of such Company Owned
            Intellectual Property and any registration thereof or application
            therefor. Section 4.17(a)(ii) of the Company Disclosure Schedule
            sets forth a complete and accurate list of Contracts existing as of
            the date hereof pursuant to which the Company or one of the Company
            Subsidiaries has obtained rights to the Company Licensed
            Intellectual Property (other than Contracts the non-disclosure of
            which therein does not constitute a misrepresentation under Section
            4.15(g)). All Company Owned Intellectual Property is owned by the
            Company or one of the Company Subsidiaries free and clear of all
            Liens, other than (A) immaterial Liens that do not limit the ability
            of the Company or any Company Subsidiary to use, modify, extend or
            enhance the same or require any royalty or other similar payment to
            be made to any person other than the Company or any Company
            Subsidiary and (B) statutory Liens for Taxes not yet due or payable.
            Neither the Company nor any Company Subsidiary has entered into any
            agreements which limit in any respect its or their right to use,
            execute, reproduce, display, perform, modify, enhance, distribute,
            prepare Derivative Works of and sublicense any Company Owned
            Intellectual Property, without payment or other material obligation,
            to any other person.

      (b)   Section 4.17(b) of the Company Disclosure Schedule contains a
            complete and accurate list of all Software owned by the Company or
            any Company Subsidiary as of the date of this Agreement (the OWNED
            SOFTWARE) that is material, which list specifies which of the
            Company or any Company Subsidiary is the owner thereof. The Company
            or one of the Company Subsidiaries has title to the Owned Software,
            free and clear of all Liens, including claims or rights of
            employees, agents, consultants, contractors, partners, inventors,
            customers, licensees or other parties involved in the development,
            creation, marketing, maintenance, enhancement or licensing of such
            computer software, other than (A) immaterial Liens that do not limit
            the ability of the Company or any Company Subsidiary to use, modify,
            extend or enhance the same or require any royalty or other similar
            payment to be made to any person other than the Company or any
            Company Subsidiary and (B) statutory Liens for Taxes not yet due or
            payable.

      (c)   Section 4.17(c) of the Company Disclosure Schedule contains a
            complete and accurate list of (i) all Open Source Software and (ii)
            all other Licensed Software that is material as identified by the
            license or other agreement by which such right to use has been
            obtained and the duration or term thereof. The Company and any
            Company Subsidiary utilizing such Licensed Software has the rights
            and licenses to the Licensed Software as set forth in the respective
            license, lease or similar agreement pursuant to which the Licensed
            Software is licensed to the Company or any Company Subsidiary, and
            the Company and each of the Company Subsidiaries are in compliance
            in all material respects with all applicable provisions of such
            agreements. None of the Licensed Software constitutes a component
            of, has been included, incorporated or embedded into or made a part
            of, any Owned Software or any other Licensed Software. Neither the
            Company nor any Company Subsidiary has published or disclosed any
            Licensed Software or other Third Party Software to any other party
            except in accordance with and as permitted by any license, lease or
            similar agreement relating to the Licensed Software or other Third
            Party Software, in which case neither the Company nor any Company
            Subsidiary has any obligations to make royalty or other similar
            payments in respect of such distribution. No party to whom the
            Company or any Company Subsidiary has disclosed Licensed Software
            has, to the knowledge of Company, breached its obligation of
            confidentiality in any material respect. To the knowledge


                                       26
<PAGE>

            of the Company, no (i) Open Source Software that is embedded in or
            bundled, shipped or distributed with any Customer Software nor (ii)
            any other Open Source Software (other than immaterial Open Source
            Software) is used in a manner that requires the contribution of any
            portion of any Customer Software to any person, including into the
            open source Software community.

      (d)   The Owned Software, Licensed Software and commercially available
            over-the-counter "shrink-wrap" Software constitute all Software used
            in the businesses of the Company and the Company Subsidiaries as of
            the date of this Agreement (collectively, the COMPANY SOFTWARE).
            Section 4.17(d) of the Company Disclosure Schedule sets forth a list
            of all contract programmers, independent contractors, nonemployee
            agents and persons or other entities (other than employees) who on
            or prior to the date hereof have performed computer programming
            services for the Company or any Company Subsidiary (it being
            understood that if any entity was engaged, the entity rather than
            the individual persons working for such entity are to be listed) and
            identifies all contracts and agreements pursuant to which such
            services were performed. Each such listed entity or person has
            executed an agreement providing that the Company or a Company
            Subsidiary, as the case may be, has the exclusive ownership rights
            to all Intellectual Property and other work product conceived,
            developed or produced in connection with the programming services
            provided by such persons. Between January 1, 1999 and the date of
            this Agreement, none of the former or current members of management
            or key personnel of the Company or any Company Subsidiary, including
            all former and current employees, agents, consultants and
            contractors who have contributed to or participated in the
            conception and development of Company Owned Intellectual Property
            has asserted any claim against the Company or any Company Subsidiary
            in connection with the involvement of such persons in the conception
            and development of any Company Owned Intellectual Property, and to
            the knowledge of the Company no such claim has been threatened. To
            the knowledge of the Company, no other person or entity is
            infringing in any respect any Intellectual Property rights of the
            Company or any Company Subsidiary with respect to the Company
            Software.

      (e)   Section 4.17(e)(1) of the Company Disclosure Schedule lists and
            separately identifies all agreements in effect as of the date of
            this Agreement pursuant to which the Company or any Company
            Subsidiary has been granted rights to market Third Party Software,
            and Section 4.17(e)(2) of the Company Disclosure Schedule lists and
            separately identifies all agreements in effect as of the date of
            this Agreement pursuant to which the Company or any Company
            Subsidiary has granted marketing rights in the Company Software to
            third parties.

      (f)   All Company Owned Intellectual Property consisting of patents,
            patent applications, trademark registrations, trademark applications
            and copyright registrations have been duly registered and/or filed,
            as applicable, with or issued by each applicable Governmental Entity
            in each jurisdiction in which the Company or any Company Subsidiary
            has sought to register such rights, all necessary affidavits of
            continuing use have been filed, and all necessary maintenance fees
            have been paid to continue all such rights in effect. The Company
            and each Company Subsidiary have complied with all applicable notice
            and marking requirements for such Patents, Trademarks and
            Copyrights.

      (g)   Between January 1, 1999 and the date of this Agreement, neither the
            Company nor any Company Subsidiary has received any notice of any
            possible infringement or other violation by the Company or any
            Company Subsidiary or any of its or their products or services. To
            the Company's knowledge, between January 1, 1999 and the date of
            this Agreement, neither the Company nor any Company Subsidiary is
            violating or has violated, and the conduct of the


                                       27
<PAGE>

            businesses of the Company and Company Subsidiaries as currently
            conducted, does not violate or infringe the rights of any person in
            any Intellectual Property.

      (h)   The execution and delivery of this Agreement do not, and the
            consummation of the Transactions will not, conflict with, or result
            in any violation of, or default (with or without notice or lapse of
            time or both) under, or give rise to any Lien, right, license, lease
            or similar agreement relating to, any Company Intellectual Property
            or any Company Software, or any right of termination, cancellation
            or acceleration of any Company Intellectual Property right or
            obligation set forth in any agreement to which the Company or any
            Company Subsidiary is a party, cause the loss or encumbrance of any
            Company Intellectual Property or material benefit related thereto,
            result in the creation of any Lien in or upon any Company
            Intellectual Property or right, or otherwise impair the Company's or
            any Company Subsidiary's ability to use the Company Software in the
            same manner as such Software is currently used by the Company or any
            Company Subsidiary.

      (i)   Neither the Company nor any Company Subsidiary has assigned, sold or
            otherwise transferred ownership of any material Patent, Trademark or
            Copyright since December 31, 2001.

      (j)   The Company and each of the Company Subsidiaries have taken
            reasonable steps to protect their rights in respect of Company Owned
            Intellectual Property, including complying with appropriate
            marking/notice requirements and to the knowledge of the Company no
            such rights, including any right to prevent other persons from using
            rights in Company Owned Intellectual Property, have been lost or are
            reasonably expected to be lost through failure to act by the Company
            or any Company Subsidiary. Neither the Company nor any Company
            Subsidiary has agreed to waive any rights in Company Intellectual
            Property except pursuant to customary right to use granting
            provisions of licenses to Customer Software.

      (k)   Section 4.17(k) of the Company Disclosure Schedule sets forth a
            complete and accurate list of all material actions that are required
            to be taken by the Company or any Company Subsidiary within 180 days
            of the date of this Agreement with respect to any of the Company
            Intellectual Property.

      (l)   The Company and each Company Subsidiary have at all times since
            January 1, 2001, maintained in connection with the conduct of the
            business of the Company and the Company Subsidiaries including its
            and their activities on or related to the World Wide Web (the WEB)
            and the Internet, one or more written privacy statements or policies
            governing the collection, maintenance, and use of data and
            information collected from users of Web sites owned, operated, or
            maintained by, on behalf of, or for the benefit of the Company or
            any Company Subsidiary (COMPANY WEB SITES) and such privacy
            statements or policies have at all relevant times been conspicuously
            made available to users of Company Web Sites. Such statements or
            policies, along with the collection, maintenance, and use of user
            data and information and transfer thereof, including in connection
            with the Transactions, comply and will comply in all material
            respects with all applicable Law, including the rules and
            regulations promulgated by the U.S. Federal Trade Commission.

      (m)   For purposes of this Agreement, the following terms shall have the
            definitions set forth below:

            (i)   INTELLECTUAL PROPERTY means:

                  (A)   all trademarks (registered or unregistered), service
                        marks, brand names, trade names, domain names,
                        certification marks, trade dress, assumed names, other
                        indications of origin and the goodwill associated
                        therewith, and all registrations


                                       28
<PAGE>

                        or applications for registration thereof in any
                        jurisdiction, including any extension, modification or
                        renewal of any such registration or application
                        (collectively, TRADEMARKS);

                  (B)   all patents, patent applications, continuations,
                        continuations-in-part, divisionals and foreign
                        counterparts in any jurisdiction (collectively,
                        PATENTS);

                  (C)   all copyrights, database rights and moral rights in both
                        published works and unpublished works, including all
                        such rights in Software, user and training manuals,
                        marketing and promotional materials, internal reports,
                        business plans and any other writings, expressions, mask
                        works, firmware and videos, whether copyrighted,
                        copyrightable or not, and all registrations or
                        applications for registration of copyrights thereof and
                        any renewals or extensions thereof in any jurisdiction
                        (collectively, COPYRIGHTS);

                  (D)   trade secret and confidential information, and rights in
                        any jurisdiction to limit the use or disclosure thereof
                        by a third party, including such rights in inventions,
                        discoveries and ideas, whether patented, patentable or
                        not in any jurisdiction (and whether or not reduced to
                        practice), know-how, customer lists, technical
                        information, proprietary information, technologies,
                        processes and formulae, software, data, plans, drawings
                        and blue prints, whether tangible or intangible and
                        whether stored, compiled, or memorialized physically,
                        electronically, photographically or otherwise
                        (collectively, SECRET INFORMATION); and

                  (E)   any similar intellectual property or proprietary rights
                        similar to any of the foregoing, licenses, immunities,
                        covenants not to sue and the like relating to the
                        foregoing, and any claims or causes of action arising
                        out of or related to any infringement, misuse or
                        misappropriation of any of the foregoing;

            (ii)  SOFTWARE means any and all: (A) computer programs and
                  applications, including any and all software implementations
                  of algorithms, models and methodologies, whether in source
                  code or object code, (B) databases and compilations, including
                  any and all data and collections of data, whether machine
                  readable or otherwise, (C) descriptions, flow-charts, library
                  functions, algorithms, architecture, structure, display
                  screens and development tools, and other information, work
                  product or tools used to design, plan, organize or develop any
                  of the foregoing and (D) all documentation, including user
                  manuals and training materials, relating to any of the
                  foregoing;

            (iii) THIRD PARTY SOFTWARE means Software with respect to which a
                  third party holds any copyright or other ownership right (and,
                  therefore, such Software is not owned exclusively by the
                  Company or any Company Subsidiary);

            (iv)  LICENSED SOFTWARE means all Software (other than commercially
                  available over-the-counter "shrink-wrap" Software) under which
                  the Company or any Company Subsidiary is, as of the date
                  hereof, a licensee, lessee or otherwise has obtained the right
                  to use, including all open source Software, shareware and
                  freeware;

            (v)   OPEN SOURCE SOFTWARE means all Licensed Software that is open
                  source Software, shareware or freeware;


                                       29
<PAGE>

            (vi)  CUSTOMER SOFTWARE means all Owned Software that is licensed by
                  the Company or any Company Subsidiary to customers in the
                  ordinary course of its or their business;

            (vii) COMPANY INTELLECTUAL PROPERTY means all Intellectual Property
                  consisting of patents, patent applications, trademark
                  registrations, trademark applications, common-law trademarks,
                  copyright registrations and domain names that is both (A)
                  material to and used in the business of the Company or any
                  Company Subsidiary as of the date of this Agreement and (B)
                  owned by or licensed to the Company or any Company Subsidiary;

            (viii) COMPANY OWNED INTELLECTUAL PROPERTY means Company
                  Intellectual Property that is owned by the Company or any
                  Company Subsidiary;

            (ix)  COMPANY LICENSED INTELLECTUAL PROPERTY means Company
                  Intellectual Property that is licensed to the Company or any
                  Company Subsidiary; and

            (x)   DERIVATIVE WORK shall have the meaning set forth in 17 U.S.C.
                  Section 101.

4.18  LABOR MATTERS

      There are no collective bargaining or other labor union or similar
      agreements or arrangements to which the Company or any Company Subsidiary
      is a party or by which any of them is bound in any jurisdiction in which
      the Company or any Company Subsidiary operates. To the knowledge of the
      Company, since January 1, 2002, neither the Company nor any Company
      Subsidiary has encountered any labor union organizing activity, or had any
      actual or threatened employee strikes, work stoppages, slowdowns or
      lockouts.

4.19  INSURANCE

      Section 4.19(a) of the Company Disclosure Schedule lists all insurance
      policies and fidelity bonds covering the assets, business, equipment,
      properties, operations, employees, officers and directors of the Company
      and the Company Subsidiaries. There is no claim by the Company or any
      Company Subsidiary pending under any of such policies or bonds as to which
      the Company has been notified that coverage has been questioned, denied or
      disputed by the underwriters of such policies or bonds. All premiums due
      and payable under all such policies and bonds have been paid, and the
      Company, the Company Subsidiaries and affiliates are otherwise in material
      compliance with the terms of such policies and bonds (or other policies
      and bonds providing substantially similar insurance coverage). As of the
      date hereof, the Company does not have any knowledge of threatened
      termination of, or material premium increase with respect to, any of such
      policies.

4.20  BROKERS; SCHEDULE OF FEES AND EXPENSES

      No broker, investment banker, financial advisor or other person, other
      than Deutsche Bank, the fees and expenses of which will be paid by the
      Company, is entitled to any broker's, finder's, financial advisor's or
      other similar fee or commission in connection with the Offer, the Merger
      and the other Transactions based upon arrangements made by or on behalf of
      the Company. The estimated professional fees and expenses incurred and to
      be incurred by the Company in connection with the Offer, the Merger and
      the other Transactions (including the fees of Deutsche Bank and the
      applicable hourly fee rates of the Company's legal counsel) are set forth
      in Section 4.20 of the Company Disclosure Schedule. The Company has
      furnished to Parent a true and complete copy of all agreements between the
      Company and Deutsche Bank relating to the Offer, the Merger and the other
      Transactions.


                                       30
<PAGE>

4.21  OPINION OF FINANCIAL ADVISOR

      The Company has received the opinion of Deutsche Bank Securities Inc.,
      dated the date of this Agreement, to the effect that, as of such date, the
      consideration to be received in the Offer and the Merger by the holders of
      Company Common Stock is fair to the holders of Company Common Stock from a
      financial point of view. A signed copy of that opinion has been provided
      to Parent.

4.22  POTENTIAL CONFLICTS OF INTEREST

      Except as disclosed in the Filed SEC Documents, there have been no
      transactions, agreements, arrangements or understandings between the
      Company or any Company Subsidiary, on the one hand, and their respective
      affiliates, on the other hand, that would be required to be disclosed
      under Item 404 of Regulation S-K under the Securities Act. Except as
      disclosed in the Filed SEC Documents, to the knowledge of the Company (a)
      no officer of the Company or any Company Subsidiary owns, directly or
      indirectly, any interest in (except stock holdings of publicly held and
      traded companies solely for investment purposes and not in excess of 1% of
      the outstanding shares of any such class of securities) or is an officer,
      director, employee or consultant of any person which is, a competitor,
      lessor, lessee, customer or supplier of the Company and (b) no officer or
      director of the Company or any Company Subsidiary (i) owns, directly or
      indirectly, in whole or in part, any Intellectual Property which the
      Company or any Company Subsidiary is using or the use of which is
      necessary for the business of the Company or the Company Subsidiaries,
      (ii) has any claim, charge, action or cause of action against the Company
      or any Company Subsidiary, except for claims for accrued vacation pay,
      accrued benefits under the employee benefit plans maintained by the
      Company or a Company Subsidiary and similar matters and agreements
      existing on the date hereof, (iii) has made, on behalf of the Company or
      any Company Subsidiary, any payment or commitment to pay any commission,
      fee or other amount to, or to purchase or obtain or otherwise contract to
      purchase or obtain any goods or services from, any other person of which
      any officer or director of the Company or any Company Subsidiary, or, to
      the Company's knowledge, a relative of any of the foregoing, is a partner
      or stockholder (except stock holdings solely for investment purposes in
      securities of publicly held and traded companies) or (iv) owes any money
      to the Company or any Company Subsidiary.

4.23  VOTE REQUIRED

      The only vote of holders of any class or series of Company capital stock
      necessary to approve and adopt this Agreement and the Merger is, if
      required by applicable Law, the approval and adoption of this Agreement by
      the affirmative vote of the holders of at least a majority of the
      outstanding shares of Company Common Stock (the COMPANY STOCKHOLDER
      APPROVAL). The affirmative vote of any holders of any other class of
      Company capital stock is not necessary to approve this Agreement or to
      consummate any Transaction.

5.    REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB

      Except as set forth in the disclosure schedule delivered to the Company
      contemporaneously with the execution and delivery hereof (the PARENT
      DISCLOSURE SCHEDULE), Parent and Sub represent and warrant to the Company
      as follows:

5.1   ORGANIZATION, STANDING AND POWER

      Each of Parent and Sub is a corporation duly organized, validly existing
      and in good standing under the Laws of the jurisdiction in which it is
      organized and has the requisite corporate power and authority


                                       31
<PAGE>

      necessary to enable it to own, lease or otherwise hold its properties and
      assets and to conduct its businesses as currently conducted.

5.2   SUB

      (a)   Since the date of its incorporation, Sub has not carried on any
            business or conducted any operations other than the execution of
            this Agreement, the performance of its obligations hereunder and
            thereunder and matters ancillary thereto.

      (b)   The authorized capital stock of Sub consists of 1000 shares of
            common stock, par value $0.01 per share, all of which have been
            validly issued, are fully paid and nonassessable and are owned
            directly by Parent free and clear of any Lien.

5.3   AUTHORITY; EXECUTION AND DELIVERY; ENFORCEABILITY

      Each of Parent and Sub has all requisite corporate power and authority to
      execute, deliver and perform this Agreement and to consummate the
      Transactions. The execution, delivery and performance by each of Parent
      and Sub of this Agreement and the consummation by it of the Transactions
      have been duly authorized by all necessary corporate and, subject to the
      next sentence, stockholder action on the part of Parent and Sub.
      Immediately after the execution and delivery of this Agreement, Parent, as
      sole stockholder of Sub, will approve and adopt this Agreement. Each of
      Parent and Sub has duly executed and delivered this Agreement and each
      this Agreement constitutes its legal, valid and binding obligation
      enforceable against it in accordance with its terms, except as such
      enforceability may be limited by bankruptcy, insolvency, moratorium and
      other similar Laws affecting creditors' rights generally and by general
      principles of equity.

5.4   NO CONFLICTS; CONSENTS

      (a)   The execution, delivery and performance by each of Parent and Sub of
            this Agreement do not, and the consummation of the Offer, the Merger
            and the other Transactions and compliance with the terms of this
            Agreement will not, conflict with, or result in any violation or
            breach of or default (with or without notice or lapse of time, or
            both) under, or give rise to a right of, or result in, termination,
            cancellation or acceleration of any obligation or to loss of a
            material benefit under, or to increased, additional, accelerated or
            guaranteed rights or entitlements of any person under, or result in
            the creation of any Lien upon any of the properties or assets of
            Parent or any of its subsidiaries under any provision of (i) the
            charter or organizational documents of Parent or any of its
            subsidiaries, (ii) any Contract to which Parent or any of its
            subsidiaries is a party or by which any of their respective
            properties or assets is bound or (iii) subject to the filings and
            other matters referred to in Section 5.4(b), any Judgment or Law
            applicable to Parent or any of its subsidiaries or their respective
            properties or assets, except in the case of clauses (ii) and (iii)
            above, for such matters that individually or in the aggregate, have
            not had and would not reasonably be expected to have a material
            adverse effect on Parent and its subsidiaries, taken as a whole (a
            PARENT MATERIAL ADVERSE EFFECT).

      (b)   No Consent of, or registration, declaration or filing with, or
            Permit from any Governmental Entity or termination or expiration of
            any waiting period under applicable Law, is required to be obtained
            or made by or with respect to Parent or Sub in connection with the
            execution, delivery and performance of this Agreement or the
            consummation of the Transactions, other than: (i) compliance with
            and filings under the HSR Act and all other applicable competition
            and antitrust Laws, including under the German Federal Cartel
            Office, (ii) the filing with the SEC of (A) the Offer Documents and
            (B) such reports under Sections 13 and 16 of the Exchange Act as


                                       32
<PAGE>

            may be required in connection with this Agreement, the Offer, the
            Merger and the other Transactions, (iii) the filing of the
            Certificate of Merger with the Secretary of State of the State of
            Delaware, (iv) compliance with and such filings as may be required
            under applicable Environmental Laws, (v) such filings as may be
            required in connection with the taxes described in Section 7.8, (vi)
            filings under state securities or takeover Law and (vii) such
            filings as may be required under Chapter 80B of the Minnesota
            Statutes.

5.5   INFORMATION SUPPLIED

      None of the information supplied or to be supplied by Parent or Sub for
      inclusion or incorporation by reference in (a) the Offer Documents, the
      Schedule 14D-9 or the Information Statement will, at the time such
      document is filed with the SEC, at any time it is amended or supplemented
      or at the time it is first published, sent or given to the Company's
      stockholders, contain any untrue statement of a material fact or omit to
      state any material fact required to be stated therein or necessary to make
      the statements therein not misleading or (b) Proxy Statement will, at the
      date it is first mailed to the Company's stockholders or at the time of
      the Company Stockholders Meeting, contain any untrue statement of a
      material fact or omit to state any material fact required to be stated
      therein or necessary in order to make the statements therein, in light of
      the circumstances under which they are made, not misleading. The Offer
      Documents will comply as to form in all material respects with the
      requirements of the Exchange Act and the rules and regulations thereunder,
      except that no representation is made by Parent or Sub pursuant to this
      Section 5.5 with respect to statements made or incorporated by reference
      therein based on information supplied by the Company for inclusion or
      incorporation by reference therein.

5.6   BROKERS

      No broker, investment banker, financial advisor or other person other than
      Credit Suisse First Boston LLC, the fees and expenses of which will be
      paid by Parent, is entitled to any broker's, finder's, financial advisor's
      or other similar fee or commission in connection with the Offer, the
      Merger and the other Transactions based upon arrangements made by or on
      behalf of Parent.

5.7   FINANCING

      Parent and Sub will have available (through cash on hand and existing
      credit arrangements or otherwise) all of the funds necessary for the
      acquisition of all shares of Company Common Stock pursuant to the Offer
      and conversion of all remaining shares of Company Common Stock pursuant to
      the Merger, as and when needed, and to perform their respective
      obligations under this Agreement.

5.8   LITIGATION

      There is no suit, action, proceeding or investigation pending against or,
      to the knowledge of Parent, threatened against or affecting, Parent or any
      of its subsidiaries or any of their respective properties before any
      Governmental Entity that questions the validity of this Agreement or any
      action to be taken by Parent or Sub in connection with the consummation of
      the Transactions or would otherwise prevent or delay the consummation of
      the Transactions that individually or in the aggregate would reasonably be
      expected to have a Parent Material Adverse Effect.


                                       33

<PAGE>

6.    COVENANTS RELATING TO CONDUCT OF BUSINESS

6.1   CONDUCT OF BUSINESS

      (a)   CONDUCT OF BUSINESS BY THE COMPANY. Except for matters contemplated
            by this Agreement, from the date of this Agreement to the Effective
            Time, the Company shall, and shall cause each of the Company
            Subsidiaries to, conduct its business in the usual, regular and
            ordinary course of business and use all reasonable efforts to
            preserve intact its assets, Intellectual Property, business
            organization and relationships with customers, suppliers, licensors,
            licensees, distributors and others having business dealings with
            them, and to keep available the services of its current officers and
            employees with the objective of preserving unimpaired their goodwill
            and ongoing business at the Effective Time. In addition, and without
            limiting the generality of the foregoing, except for matters
            expressly permitted by this Agreement or set forth on Section 6.1(a)
            of the Company Disclosure Schedule, from the date of this Agreement
            to the Effective Time, the Company shall not, and shall not permit
            any Company Subsidiary to do any of the following without the prior
            written consent of Parent:

            (i)   (A) 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 capital stock of the Company
                  or any Company Subsidiary, other than dividends and
                  distributions by a direct or indirect wholly owned subsidiary
                  of the Company to its parent, (B) split, combine or reclassify
                  any of capital stock of the Company or any Company Subsidiary
                  or issue or authorize the issuance of any other securities in
                  respect of, in lieu of or in substitution for, shares of
                  capital stock of the Company or any Company Subsidiary or (C)
                  purchase, redeem or otherwise acquire any shares of capital
                  stock of the Company or any Company Subsidiary or any other
                  securities thereof or any rights, options, warrants or calls
                  to acquire any such shares or other securities;

            (ii)  issue, deliver, sell, grant, pledge, transfer or otherwise
                  encumber or dispose of or subject to any Lien (A) any shares
                  of its capital stock, (B) any Voting Company Debt or other
                  voting securities, (C) any securities convertible into or
                  exchangeable for, or any options, warrants or rights of any
                  kind to acquire, any such shares, Voting Company Debt, voting
                  securities or convertible or exchangeable securities or (D)
                  any "phantom" stock, "phantom" stock rights, stock
                  appreciation rights or stock-based performance units, other
                  than (1) the issuance of Company Common Stock upon the
                  exercise of Company Stock Options outstanding on the date of
                  this Agreement and in accordance with their current terms and
                  (2) the issuance of Company Common Stock pursuant to the
                  Top-Up Option;

            (iii) amend the Company Charter, Company By-laws or other comparable
                  charter or organizational documents;

            (iv)  directly or indirectly acquire or agree to acquire, by merging
                  or consolidating with, or by purchasing or by any other
                  manner, any equity interest in, business of or a substantial
                  portion of the assets of, any person or any acquisition by the
                  Company or any Company Subsidiary of any assets that are
                  material to the Company and the Company Subsidiaries;

            (v)   (A) grant to any current or former director, officer or
                  employee of the Company or any Company Subsidiary any increase
                  in compensation or pay any bonus, except for increases of cash
                  compensation in the ordinary course of business or to the
                  extent


                                       34
<PAGE>
                  required under employment agreements in effect on the date
                  hereof and set forth in Section 4.15 of the Company Disclosure
                  Schedule, (B) grant to any such current or former director,
                  officer or employee of the Company or any Company Subsidiary
                  any increase in severance or termination pay, except to the
                  extent required under any agreement in effect on the date
                  hereof and set forth in Section 4.15 of the Company Disclosure
                  Schedule, (C) establish, adopt, enter into or amend any
                  Company Benefit Agreement, (D) establish, adopt, enter into or
                  amend in any material respect any collective bargaining
                  agreement or Company Benefit Plan, (E) take any action to
                  accelerate any rights or benefits, take any action to fund or
                  in any other way secure the payment of compensation or
                  benefits under any Company Benefit Agreement or Company
                  Benefit Plan, or make any material determinations not in the
                  ordinary course of business, under any collective bargaining
                  agreement or Company Benefit Plan or Company Benefit Agreement
                  or (F) amend or modify any Company Stock Option;

            (vi)  make any change in its fiscal year, revalue any assets or make
                  any change in its financial or tax accounting methods,
                  principles or practices, except insofar as may have been
                  required by a change in GAAP or Law;

            (vii) except licenses of Company Intellectual Property to customers
                  in the ordinary course of business, directly or indirectly
                  sell, lease (as lessor), license or otherwise dispose of or
                  subject to any Lien any properties or assets with a value,
                  individually or in the aggregate, in excess of $100,000;

            (viii) (A) incur, assume or guarantee any indebtedness for borrowed
                  money, issue or sell any debt securities or warrants or other
                  rights to acquire any debt securities of the Company or any
                  Company Subsidiary, guarantee any debt securities of another
                  person, enter into any "keep well" or other agreement to
                  maintain any financial statement condition of another person
                  or enter into any arrangement having the economic effect of
                  any of the foregoing, or (B) make any loans, advances (other
                  than advances to non-officer employees in the ordinary course
                  of business) or capital contributions to, or investments in,
                  any other person, other than to the Company or any direct or
                  indirect wholly-owned subsidiary of the Company;

            (ix)  engage in (A) any trade loading practices or any other
                  promotional sales or discount activity with any customers or
                  distributors with any intent of accelerating to prior fiscal
                  quarters (including the current fiscal quarter) sales to the
                  trade or otherwise that would otherwise be expected (based on
                  past practice) to occur in subsequent fiscal quarters, (B) any
                  practice which would have the effect of accelerating to prior
                  fiscal quarters (including the current fiscal quarter)
                  collections of receivables that would otherwise be expected
                  (based on past practice) to be made in subsequent fiscal
                  quarters, (C) any practice which would have the effect of
                  postponing to subsequent fiscal quarters payments by the
                  Company or any Company Subsidiary that would otherwise be
                  expected (based on past practice) to be made in prior fiscal
                  quarters (including the current fiscal quarter) or (D) any
                  other promotional sales or discount activity, in each case in
                  clauses (A) through (D) in a manner outside the ordinary
                  course of business;

            (x)   incur or agree to incur any new capital expenditures that, in
                  the aggregate, are in excess of $1,000,000 in any calendar
                  quarter;

            (xi)  make or change any material Tax election or settle or
                  compromise any material Tax liability or refund;


                                       35
<PAGE>
            (xii) (A) pay, discharge, settle or satisfy any claims, liabilities,
                  obligations or litigation (absolute, accrued, asserted or
                  unasserted, contingent or otherwise), other than the payment,
                  discharge, settlement or satisfaction, in the ordinary course
                  of business or in accordance with their terms, of liabilities
                  reflected or reserved against in, or contemplated by, the most
                  recent consolidated financial statements (or the notes
                  thereto) of the Company included in the Filed SEC Documents or
                  incurred since the date of such financial statements in the
                  ordinary course of business or (B) cancel any indebtedness
                  that is material, individually or in the aggregate, to the
                  Company and the Company Subsidiaries taken as a whole, or
                  waive any claims or rights of substantial value;

            (xiii) adopt a plan or agreement of, or resolutions providing for or
                  authorizing, complete or partial liquidation, dissolution,
                  merger, consolidation, restructuring, recapitalization or
                  other reorganization other than for the liquidation of any
                  Company Subsidiary into the Company;

            (xiv) make, enter into or renew, extend, amend, modify, or waive any
                  material provisions of any Contract or commitment or
                  relinquish or waive any material Contract rights or agree to
                  the termination of any material Contract, except in the
                  ordinary course of business;

            (xv)  institute, settle, or agree to settle any action, claim or
                  proceeding pending or threatened before any arbitrator, court
                  or other Governmental Entity;

            (xvi) agree to any covenant of the Company or a Company Subsidiary
                  not to compete or other covenant of the Company or a Company
                  Subsidiary restricting the development, manufacture, marketing
                  or distribution of the products or services of the Company or
                  any Company Subsidiary or otherwise limiting the freedom of
                  the Company or any Company Subsidiary to compete in any line
                  of business or with any person or in any area or to own,
                  operate, sell, transfer, pledge or otherwise dispose of or
                  encumber any material assets or that would so limit the
                  freedom of Parent or any of its affiliates after the
                  consummation of the Offer or the Merger;

            (xvii) make any change in personnel relating to key employees,
                  operations or finance; or

            (xviii) authorize, commit or agree to take any action referred to in
                  Sections 6.1(a)(i) through 6.1(a)(xvii).

            Without limiting the generality of Section 10.7 (Entire Agreement;
            No Third-Party Beneficiaries), the provisions of this Section 6.1(a)
            shall be limited by and subject to the provisions of Section 10.7.

      (b)   OTHER ACTIONS. The Company and Parent shall not, and shall not
            permit any of their respective subsidiaries to, take any action that
            would, or that would reasonably be expected to, result in, except as
            otherwise permitted by Section 6.2, any condition to the Offer set
            forth in Annex 1, or any condition to the Merger set forth in
            Article 8, not being satisfied.

6.2   NO SOLICITATION

      (a)   The Company shall not, nor shall it authorize or permit any Company
            Subsidiary to, nor shall it authorize or permit any officer,
            director or employee of, or any investment banker, financial
            advisor, attorney, accountant or other advisor, agent or
            representative (collectively,


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<PAGE>
            REPRESENTATIVES) of, the Company or any Company Subsidiary to,
            directly or indirectly, (i) solicit, initiate or encourage the
            submission of, any Company Takeover Proposal (as defined below),
            (ii) participate in any discussions or negotiations regarding, or
            furnish to any person any information with respect to, or take any
            other action to facilitate knowingly the making of any inquiry or
            any proposal that constitutes, or would reasonably be expected to
            lead to, any Company Takeover Proposal or (iii) make or authorize
            any statement, recommendation or solicitation in respect of any
            Company Takeover Proposal (except as permitted by Section 6.2(b)).
            The Company shall, and shall cause each of the Company Subsidiaries
            and each Representative of the Company or any Company Subsidiary to,
            (A) immediately cease and cause to be terminated all discussions or
            negotiations with any person conducted heretofore with respect to
            any proposal that constitutes or would reasonably be expected to
            lead to a Company Takeover Proposal and (B) request the prompt
            return or destruction of all confidential information previously
            furnished. The Company shall, and shall cause each Company
            Subsidiary to, enforce (and not release any person from any
            obligations under) any confidentiality, standstill or similar
            agreement to which the Company or any Company Subsidiary is a party.
            Notwithstanding the foregoing, at any time prior to acceptance for
            payment of shares of Company Common Stock pursuant to the Offer, the
            Company may, in response to a Company Takeover Proposal that the
            Company Board determines in good faith after consultation with
            outside counsel and an independent financial advisor of nationally
            recognized reputation is or is reasonably likely to result in a
            Superior Company Proposal (as defined below) that was not solicited
            by the Company or its Representatives and that did not otherwise
            result from a breach or a deemed breach of this Section 6.2(a), and
            subject to providing prior written notice of its decision to take
            such action to Parent and compliance with Section 6.2(c): (x)
            furnish information with respect to the Company and the Company
            Subsidiaries to the person making such Company Takeover Proposal
            pursuant to a confidentiality agreement not less restrictive of the
            other party (including with respect to standstill provisions) than
            the Confidentiality Agreement (as defined in Section 7.2), provided
            that all such information not previously provided to Parent
            is provided or made available on a substantially concurrent basis to
            Parent and (y) participate in discussions or negotiations with the
            person making such Company Takeover Proposal regarding such Company
            Takeover Proposal. Without limiting the foregoing, any violation of
            the restrictions set forth in the preceding sentence by any
            Representative or affiliate of the Company or any Company
            Subsidiary, whether or not such person is purporting to act on
            behalf of the Company or any Company Subsidiary or otherwise, shall
            be deemed to be a breach of this Section 6.2(a) by the Company.

      (b)   Neither the Company nor the Company Board nor any committee thereof
            shall (i) (A) withdraw or modify, or propose to withdraw or modify
            the approval or recommendation by the Company Board or any such
            committee of this Agreement, the Offer or the Merger or (B) approve
            or recommend, or propose to approve or recommend, any Company
            Takeover Proposal (either (A) or (B) being an ADVERSE CHANGE IN
            RECOMMENDATION) or (ii) approve, cause or permit the Company or any
            Company Subsidiary to enter into any letter of intent, agreement in
            principle, acquisition agreement or similar agreement (each, an
            ACQUISITION AGREEMENT) relating to any Company Takeover Proposal.
            Notwithstanding the foregoing, the Company may, to the extent that a
            failure to do so would be inconsistent with the fiduciary
            obligations of the Company Board under applicable Law as determined
            in good faith by a majority of the disinterested members thereof
            after consultation with outside counsel, (x) make an Adverse Change
            in Recommendation or (y) at any time prior to the acceptance for
            payment of shares of Company Common Stock pursuant to the Offer, in
            response to a Superior Company Proposal that was not solicited by or
            on behalf of the Company or any Company Subsidiary and did not
            otherwise


                                       37
<PAGE>
            result from a breach of Section 6.2(a), terminate this Agreement
            pursuant to Section 9.1(e) so long as concurrently with or
            immediately after such termination, the Company Board causes the
            Company to accept such Superior Company Proposal and enter into an
            Acquisition Agreement with respect thereto; provided, however, that
            such determination shall not be made prior to: (1) the fifth
            business day following the receipt by Parent of a Notice of Superior
            Proposal if such Notice of Superior Proposal is received prior to
            the date on which the Company has filed the Schedule 14D-9 or (2)
            the third business day following receipt of such Notice of Superior
            Proposal thereafter. A NOTICE OF SUPERIOR PROPOSAL means a written
            notice to Parent from the Company advising Parent that the Company
            Board is prepared to make an Adverse Change in Recommendation or
            accept a Superior Company Proposal, specifying the terms and
            conditions of such Superior Company Proposal and identifying the
            person making such Superior Company Proposal (it being understood
            and agreed that any amendment to the price or any other material
            term of such Superior Company Proposal shall require a new Notice of
            Superior Proposal and a new three or five business day period, as
            provided above). In determining whether to make an Adverse Change in
            Recommendation or to accept a Superior Company Proposal, the Company
            Board shall give effect to any changes to the terms of this
            Agreement proposed by Parent following receipt of such written
            notice.

      (c)   The Company shall promptly, but in any event within 24 hours, advise
            Parent orally and in writing of any Company Takeover Proposal or any
            inquiry with respect to, or that would reasonably be expected to
            lead to or contemplates, any Company Takeover Proposal (including
            any change to the terms of any such Company Takeover Proposal or
            inquiry) and the identity of the person making any such Company
            Takeover Proposal or inquiry. The Company shall (i) keep Parent
            fully informed of the status of any such Company Takeover Proposal
            or inquiry, (ii) promptly advise Parent of any material amendments
            to the terms of any such Company Takeover Proposal or inquiry and
            (iii) provide to Parent copies of all correspondence and other
            written material in the possession or control of the Company or its
            Representatives, in connection with any Company Takeover Proposal,
            as soon as practicable after receipt or delivery thereof. The
            Company shall not take any actions whether contractually or
            otherwise to limit its ability to comply with its obligations
            hereunder.

      (d)   For purposes of this Agreement:

            (i)   COMPANY TAKEOVER PROPOSAL means any inquiry, proposal or offer
                  from any person relating to, or that is reasonably likely to
                  lead to, directly or indirectly: (A) a merger, consolidation,
                  tender offer, exchange offer, binding share exchange, joint
                  venture, dissolution, recapitalization, liquidation, business
                  combination or other similar transaction involving the Company
                  or any Company Subsidiary, (B) the acquisition by any person
                  in any manner of a number of shares of any class of equity
                  securities of the Company or any Company Subsidiary equal to
                  or greater than 15% of the number of such shares outstanding
                  before such acquisition or (C) the acquisition by any person
                  in any manner, directly or indirectly, of assets that
                  constitute 15% or more of the net revenues, net income, EBITDA
                  or assets of the Company and the Company Subsidiaries taken as
                  a whole, in each case other than the Transactions.

            (ii)  SUPERIOR COMPANY PROPOSAL means any bona fide written offer
                  not solicited by or on behalf of the Company or any Company
                  Subsidiary made by a third party that if consummated would
                  result in such third party acquiring, directly or indirectly,
                  at least a majority of the voting power of the Company Common
                  Stock (so long as such third party is obliged to consummate a
                  customary back end merger pursuant to which any remaining
                  holders of Company Common Stock are entitled to receive the
                  same


                                       38
<PAGE>
                  consideration) or all or substantially all the assets of the
                  Company and the Company Subsidiaries taken as a whole, (A) for
                  consideration that the Company Board determines in its good
                  faith judgment to be superior from a financial point of view
                  on a present value basis to the holders of Company Common
                  Stock than the Transactions (based on the advice of an
                  independent financial advisor of nationally recognized
                  reputation), taking into account all the terms and conditions
                  of such proposal, this Agreement and any proposal by Parent to
                  amend the terms of this Agreement, (B) for which financing, to
                  the extent required, is then committed, (C) for which, in the
                  good faith judgment of the Company Board, no regulatory
                  approvals are required, including antitrust approvals, that
                  would not reasonably be expected to be obtained without undue
                  cost or delay and (D) that, in the good faith judgment of the
                  Company Board, is otherwise reasonably likely to be
                  consummated, taking into account all legal, financial,
                  regulatory and other aspects of the proposal and the person
                  making the proposal.

7.    ADDITIONAL AGREEMENTS

7.1   PREPARATION OF PROXY STATEMENT; STOCKHOLDERS MEETING

      (a)   If the adoption of this Agreement by the Company's stockholders is
            required by Law, the Company shall, as soon as practicable following
            the expiration of the Offer (provided that the Minimum Tender
            Condition has been satisfied), prepare and file with the SEC the
            Proxy Statement in preliminary form, and each of the Company and
            Parent shall use its reasonable best efforts to respond as promptly
            as practicable to any comments of the SEC with respect thereto. The
            Company shall notify Parent promptly of the receipt of any comments
            from the SEC or its staff and of any request by the SEC or its staff
            for amendments or supplements to the Proxy Statement or for
            additional information and shall supply Parent with copies of all
            correspondence between the Company or any of its representatives, on
            the one hand, and the SEC or its staff, on the other hand, with
            respect to the Proxy Statement. If at any time prior to receipt of
            the Company Stockholder Approval there shall occur any event that
            should be set forth in an amendment or supplement to the Proxy
            Statement, the Company shall promptly prepare and mail to its
            stockholders such an amendment or supplement. No filing of, or
            amendment to, the Proxy Statement or any response to comments of the
            SEC shall be made by the Company without first providing Parent a
            reasonable opportunity to review and comment thereon. The Company
            shall include in such document or response all comments reasonably
            proposed by Parent and shall not mail any Proxy Statement, or any
            amendment or supplement thereto, to which Parent reasonably objects.
            The Company shall use its reasonable efforts to cause the Proxy
            Statement to be mailed to the Company's stockholders as promptly as
            practicable after filing with the SEC.

      (b)   If the adoption of this Agreement by the Company's stockholders is
            required by Law, the Company shall, as soon as practicable following
            the expiration of the Offer (provided that the Minimum Tender
            Condition has been satisfied), duly call, give notice of, convene
            and hold a meeting of its stockholders (the COMPANY STOCKHOLDERS
            MEETING) for the purpose of seeking the Company Stockholder Approval
            regardless of whether the Company Board determines at any time that
            this Agreement or the Merger are no longer advisable or recommends
            that the stockholders of the Company reject this Agreement or the
            Merger. The Company shall, through the Company Board, recommend to
            its stockholders that they give the Company Stockholder Approval
            (subject to Section 6.2(b)). Without limiting the generality of the
            foregoing, the Company agrees that its obligations pursuant to the
            first sentence of this Section 7.1(b) shall not be affected by the
            commencement, public proposal, public disclosure or communication to
            the Company of any Company Takeover Proposal or the occurrence of
            any Adverse Change in


                                       39
<PAGE>
            Recommendation. Notwithstanding the foregoing, if Sub or any other
            subsidiary of Parent shall acquire at least 90% of the outstanding
            shares of Company Common Stock with or without exercising its rights
            under the Top-Up Option, the parties shall take all necessary and
            appropriate action to cause the Merger to become effective as soon
            as practicable after the expiration of the Offer without a
            stockholders meeting in accordance with Section 253 of the DGCL.

      (c)   Parent shall cause all shares of Common Stock purchased pursuant to
            the Offer and all other shares of Company Common Stock owned by Sub
            or any other subsidiary of Parent to be voted in favor of the
            approval and adoption of this Agreement.

7.2   ACCESS TO INFORMATION; CONFIDENTIALITY

      (a)   The Company shall, and shall cause each of the Company Subsidiaries
            to, afford to Parent, and to Parent's officers, employees,
            accountants, counsel, financial advisors and other advisors and
            representatives, reasonable access during reasonable business hours
            during the period prior to the Effective Time to: (i) all their
            respective properties, facilities, books, contracts, commitments,
            personnel and records and other information and business documents
            and (ii) customers of the Company or any Company Subsidiary as may
            reasonably be designated by Parent, provided that a representative
            of the Company shall be entitled to participate in any meetings or
            calls with such customers. During the period prior to the Effective
            Time, the Company shall, and shall cause each of the Company
            Subsidiaries to, furnish promptly to Parent (A) a copy of each
            report, schedule, registration statement and other document filed by
            it during such period pursuant to the requirements of Federal or
            state securities Laws and (B) all other information concerning its
            business, properties and personnel as Parent may reasonably request
            (including the work papers of PricewaterhouseCoopers LLP). Without
            limiting the generality of the foregoing, the Company shall, within
            two business days of request therefor, provide to Parent the
            information described in Rule 14a-7(a)(2)(ii) under the Exchange Act
            and any information to which a stockholder of the Company would be
            entitled under Section 219 of the DGCL (assuming such holder met the
            requirements of such section). In connection with the access
            contemplated by this Section 7.2, Parent shall, and shall cause its
            representatives to, act in a manner as not to unreasonably interfere
            with the operations of the Company or the Company Subsidiaries.

      (b)   Neither any investigation conducted by Parent or its representatives
            pursuant to this Section 7.2 nor the results thereof shall affect
            any representation or warranty of the Company contained in this
            Agreement or the ability of Parent to rely thereon. All information
            exchanged pursuant to this Section 7.2 shall be subject to the
            confidentiality agreement dated October 29, 2004, between the
            Company and Parent (the CONFIDENTIALITY AGREEMENT).

7.3   REASONABLE BEST EFFORTS

      (a)   Upon the terms and subject to the conditions set forth in this
            Agreement (including Section 6.2), each of the parties shall use all
            reasonable best efforts to take, or cause to be taken, all actions,
            and to do, or cause to be done, and to assist and cooperate with the
            other parties in doing, all things necessary, proper or advisable to
            consummate and make effective, in the most expeditious manner
            reasonably practicable, the Offer, the Merger and the other
            Transactions, including: (i) the obtaining of all necessary actions
            or nonactions, waivers, consents and approvals from Governmental
            Entities and the making of all necessary registrations and filings
            (including using all reasonable best efforts to cause the pre-merger
            notifications required under the HSR Act to be filed within seven
            business days after the date hereof and including other


                                       40
<PAGE>
            filings with Governmental Entities, if any) and the taking of all
            reasonable steps as may be necessary to obtain an approval or waiver
            from, or to avoid an action or proceeding by, any Governmental
            Entity, (ii) the obtaining of all necessary consents, approvals or
            waivers from third parties, (iii) the defending of any lawsuits or
            other legal proceedings, whether judicial or administrative,
            challenging this Agreement or the consummation of the Transactions,
            including seeking to have any stay or temporary restraining order
            entered by any court or other Governmental Entity vacated or
            reversed and (iv) the execution and delivery of any additional
            instruments necessary to consummate the Transactions and to fully
            carry out the purposes of this Agreement; provided, however, that
            Parent shall not be required to consent to any action described in
            paragraph (a) of Annex 1 to this Agreement. In connection with and
            without limiting the foregoing, Parent, Sub, the Company and the
            Company Board shall (A) take all action necessary to ensure that no
            state takeover statute or similar statute or regulation is or
            becomes applicable to any Transaction or this Agreement and (B) if
            any state takeover statute or similar statute or regulation becomes
            applicable to this Agreement, take all action necessary to ensure
            that the Offer, the Merger and the other Transactions may be
            consummated as promptly as practicable on the terms contemplated by
            this Agreement and otherwise to minimize the effect of such statute
            or regulation on the Offer, the Merger and the other Transactions.

      (b)   The Company shall give prompt notice orally and in writing to
            Parent, and Parent or Sub shall give prompt notice orally and in
            writing to the Company, of any failure of any condition to the Offer
            set forth in Annex 1 or any condition to the Merger set forth in
            Article 8; provided, however, that no such notification shall affect
            the representations, warranties, covenants or agreements of the
            parties or the conditions to the obligations of the parties under
            this Agreement.

7.4   STOCK OPTIONS

      (a)   The holder of each vested Company Stock Option that has not been
            exercised prior to the Effective Time shall be entitled to receive
            an amount of cash equal to the product of the following: (1) the
            excess, if any, of (A) the per share Merger Consideration over (B)
            the exercise price per share of the Company Common Stock subject to
            such Company Stock Option, multiplied by (2) the number of shares of
            Company Common Stock issuable pursuant to the vested and unexercised
            portion of such Company Stock Option. Any Company Stock Option that
            is unvested immediately prior to the Effective Time shall be
            terminated and cancelled as of the Effective Time without any
            consideration paid in respect thereof. No Company Stock Options
            shall be assumed by Parent. No amount greater than the amount
            provided under the first sentence of this subparagraph may be paid
            to any option holder in respect of any Company Stock Option. All
            Company Stock Plans shall be terminated as of the Effective Time.

      (b)   All amounts payable pursuant to this Section 7.4 shall be subject to
            any required withholding of Taxes and shall be paid at or as soon as
            practicable following the Effective Time, but in any event within
            seven days following the Effective Time, without interest. The
            cancellation of Company Stock Options in exchange for the cash
            payments described in this Section 7.4 shall be deemed a release of
            any and all rights the holder of such Company Stock Options had or
            may have had in respect thereof.

      (c)   The Company Board (or if appropriate, any committee administering
            the Company ESPP) has adopted resolutions providing that a new
            purchase date for the Purchase Period (as defined in the Company
            ESPP) ongoing at the date of this Agreement (the CURRENT PURCHASE
            PERIOD) shall be set as of the date immediately preceding the
            Effective Time and any Offering Periods (as defined in the Company
            ESPP) shall end, and each participant's right to purchase any


                                       41
<PAGE>
            Company Common Stock pursuant to the Company ESPP shall be
            converted, as of the date immediately preceding the Effective Time,
            into the right to receive an amount of cash equal to (i) (A) the
            Merger Consideration minus the Purchase Price (as defined in the
            Company ESPP) per share of the Company Common Stock multiplied by
            (B) the number of shares of Company Common Stock that such
            participant's actual payroll contributions during the Current
            Purchase Period up to the date immediately preceding the Effective
            Time would have purchased at the Purchase Price plus (ii)
            reimbursement of such participant's actual payroll contribution
            during the Current Purchase Period up to the date immediately
            preceding the Effective Time; provided, however, that the maximum
            number of shares that would have been subject to purchase for the
            Current Purchase Period shall not exceed 286,434 shares. The Company
            ESPP shall terminate immediately following the consummation of such
            conversion.

      (d)   As soon as practicable following the date of this Agreement, the
            Company Board (or, if appropriate, any committee administering the
            Company Stock Plans) shall take or cause to be taken such actions as
            are required to cause (i) the Company Stock Plans to terminate as of
            the Effective Time and (ii) the provisions in any other Company
            Benefit Plan providing for the issuance, transfer or grant of any
            capital stock of the Company to be deleted as of the Effective Time.

      (e)   In this Agreement:

            (i)   COMPANY SAR means a stock appreciation right awarded pursuant
                  to the Retek Inc. 1999 Equity Incentive Plan;

            (ii)  COMPANY STOCK OPTION means any option to purchase Company
                  Common Stock granted under any Company Stock Plan; and

            (iii) COMPANY STOCK PLANS means the Retek Inc. 1999 Director Stock
                  Option Plan, the Retek Inc. 1999 Equity Incentive Plan, the
                  Retek Inc. 1999 Employee Stock Purchase Plan, the Hightouch
                  Technologies, Inc. 1999 Stock Option Plan, and any other
                  Company stock option, stock incentive, employee stock purchase
                  or other equity-based stock plans in effect, in each case as
                  amended from time to time.

      (f)   Without limiting the generality of Section 10.7 (Entire Agreement;
            No Third-Party Beneficiaries), the provisions of this Section 7.4
            shall be limited by and subject to the provisions of Section 10.7.

7.5   INDEMNIFICATION

      (a)   Parent and Sub agree that all rights to indemnification for all acts
            or omissions occurring prior to the Effective Time now existing in
            favor of the current or former directors or officers of the Company
            and its subsidiaries (the INDEMNIFIED PARTIES) as provided in their
            respective certificates of incorporation, by-laws or indemnification
            agreements shall survive the Merger and shall continue in full force
            and effect in accordance with their terms until the expiration of
            the applicable statute of limitations; provided, that in the event
            any claim or claims are asserted or made prior to the expiration of
            all applicable statutes of limitations, all rights to
            indemnification in respect of any such claim or claims shall
            continue until disposition of any and all such claims.

      (b)   Parent shall, or shall cause the Surviving Corporation to, maintain
            in effect for six years after the Effective Time the current
            policies of directors' and officers' liability insurance maintained
            by


                                       42
<PAGE>
            the Company and the Company Subsidiaries on the date hereof
            (provided that Parent may substitute therefor policies with
            reputable and financially sound carriers having at least the same
            coverage and amounts thereof and containing material terms and
            conditions that are no less advantageous to the persons currently
            covered by such policies as the insured) for acts or omissions
            occurring at or prior to the Effective Time to the extent that such
            liability insurance can be maintained annually at a cost to Parent
            not greater than 200% of the current annual premium for the current
            Company directors' and officers' liability insurance; provided,
            however, that if such insurance cannot be so maintained or obtained
            at such cost, Parent shall maintain or obtain as much of such
            insurance as can be so maintained or obtained at a cost equal to
            200% of the current annual premium of the Company for such
            insurance.

7.6   FEES AND EXPENSES

      (a)   Except as provided below, all fees and expenses incurred in
            connection with the Offer, the Merger and the other Transactions
            shall be paid by the party incurring such fees or expenses, whether
            or not the Offer or the Merger is consummated, except that printing
            costs related to the Transactions are to be shared equally between
            the Company and Parent.

      (b)   In the event that:

            (i)   this Agreement is terminated by the Company pursuant to
                  Section 9.1(e) or by Parent or Sub pursuant to Section
                  9.1(d)(i), or

            (ii)  (A) the Company has knowledge of a Company Takeover Proposal,
                  (B) a Company Takeover Proposal shall have been made directly
                  to holders of Company Common Stock or (C) any person has
                  announced an intention (whether or not conditional) to make a
                  Company Takeover Proposal, and thereafter this Agreement is
                  terminated pursuant to Section 9.1(b)(ii), 9.1(c), or
                  9.1(d)(ii),

            and within twelve months of such termination the Company either
            enters into an Acquisition Agreement or consummates a Company
            Takeover Proposal, then the Company shall promptly, but in no event
            later than the date of the earliest such event, pay to Parent a fee
            equal to $15,000,000 (the TERMINATION FEE), payable by wire transfer
            of same day funds.

      (c)   The Company acknowledges that the agreements contained in this
            Section 7.6 are an integral part of the Transactions, and that,
            without these agreements, Parent and Sub would not enter into this
            Agreement. Accordingly, if the Company fails promptly to make a
            payment due pursuant to this Section 7.6, and, in order to obtain
            such payment, Parent or Sub commences a suit that results in a
            judgment against the Company, the Company shall pay to Parent and
            Sub their reasonable costs and expenses (including attorneys' fees
            and expenses) in connection with such suit, together with interest
            on the amount set forth in this Section 7.6 at the prime rate of
            Citibank, N.A. in effect on the date such payment was required to be
            made. The Company acknowledges and agrees that the payment of any
            amounts due pursuant to this Section 7.6 shall not constitute the
            exclusive remedy of Parent and Sub under this Agreement. Without
            limiting the generality of the foregoing, in the event of a breach
            or deemed breach by the Company of Section 6.2, Parent and Sub shall
            be entitled to the remedies set forth in Section 10.10, including an
            injunction, and all other remedies available at law or in equity to
            which Parent and Sub are entitled.

      (d)   In no event shall more than one Termination Fee be payable
            hereunder.


                                       43
<PAGE>
7.7   PUBLIC ANNOUNCEMENTS

      Parent and Sub, on the one hand, and the Company, on the other hand, shall
      to the extent reasonably practicable consult with each other before
      issuing, and provide each other a reasonable opportunity to review and
      comment upon, any press release or other public statements with respect to
      the Offer, the Merger and the other Transactions and shall not issue any
      such press release or make any such public statement prior to such
      consultation, except as may be required by applicable Law, by court
      process or by obligations pursuant to any listing agreement with any
      national securities exchange.

7.8   TRANSFER TAXES

      All stock transfer, real estate transfer, documentary, stamp, recording
      and other similar Taxes (including interest, penalties and additions to
      any such Taxes) (TRANSFER TAXES) incurred in connection with the
      Transactions shall be paid by the party upon whom the primary burden is
      placed by the applicable Law. Each party shall cooperate with the other in
      preparing, executing and filing any Tax Returns with respect to such
      Transfer Taxes, including supplying in a timely manner a complete list of
      all real property interests held by the Company and any information with
      respect to such property that is reasonably necessary to complete such Tax
      Returns.

7.9   STOCKHOLDER LITIGATION

      The Company shall give Parent the opportunity to participate at Parent's
      expense in the defense or settlement of any stockholder litigation against
      the Company and its directors relating to any Transaction and the Company
      shall not agree to any such settlement without Parent's consent.

7.10  FURTHER ASSURANCES

      At and after the Effective Time, the officers and directors of the
      Surviving Corporation shall be authorized to execute and deliver, in the
      name and on behalf of the Company or Sub, any deeds, bills of sale,
      assignments or assurances and to take and do, in the name and on behalf of
      the Company or Sub, any other actions and things to vest, perfect or
      confirm of record or otherwise in the Surviving Corporation any and all
      right, title and interest in, to and under any of the rights, properties
      or assets of the Company acquired or to be acquired by the Surviving
      Corporation as a result of, or in connection with, the Merger.

7.11  ADDITIONAL AGREEMENT REGARDING BENEFIT PLANS

      For a period of one year after the Effective Time, Parent will cause the
      Surviving Corporation to provide benefit plans and arrangements to
      employees of the Surviving Corporation who were employees of the Company
      or the Company Subsidiaries as of the Effective Time that are no less
      favorable in the aggregate than the benefit plans and arrangements
      (excluding compensation and equity-based plans and arrangements) provided
      to such employees as of the date hereof. Parent shall, or shall cause the
      Surviving Corporation to (a) waive all limitations as to pre-existing
      conditions, exclusions and waiting periods with respect to participation
      and coverage requirements applicable to the employees of the Surviving
      Corporation who were employees of the Company or the Company Subsidiaries
      as of the Effective Time under any welfare plan in which such employees
      are eligible to participate after the Effective Time, to the extent that
      such conditions, exclusions and waiting periods would not apply under a
      similar plan of the Company in which such employees participated prior to
      the Effective Time and (b) provide each such employee with credit for
      service with the Company and the Company Subsidiaries under each employee
      benefit plan, program, or arrangement in which such employees become
      eligible to participate following the Effective Time for purposes of
      eligibility to participate and vesting of benefits,


                                       44
<PAGE>
      but not for purposes of benefit accruals, levels or amounts of benefits
      including any employer contributions.

8.    CONDITIONS PRECEDENT

      CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The respective
      obligation of each party to effect the Merger is subject to the
      satisfaction or, if permitted by applicable Law, waiver on or prior to the
      Closing Date of the following conditions:

      (a)   STOCKHOLDER APPROVAL. If required by Law, the Company shall have
            obtained the Company Stockholder Approval.

      (b)   ANTITRUST AND OTHER REGULATORY APPROVALS. Any consents, approvals
            and filings under any foreign competition and antitrust Law,
            including the German Federal Cartel Office, the absence of which
            would prohibit the consummation of the Merger, shall have been
            obtained or made. All other regulatory approvals required to
            consummate the Transactions contemplated hereby whether U.S. or
            foreign shall have been obtained and shall be in full force and
            effect.

      (c)   NO INJUNCTIONS OR RESTRAINTS. No temporary restraining order,
            preliminary or permanent injunction or other order issued by any
            court of competent jurisdiction or other legal restraint or
            prohibition preventing the consummation of the Merger shall be in
            effect; provided, however, that prior to asserting this condition,
            subject to Section 7.3, the party asserting such condition shall
            have used all reasonable efforts to prevent the entry of any such
            injunction or other order and to appeal as promptly as possible any
            such injunction or other order that may be entered.

      (d)   NO STATUTORY PROHIBITION. No statute, rule or regulation shall have
            been enacted or promulgated by any Governmental Entity that
            prohibits consummation of the Merger.

      (e)   PURCHASE OF COMMON STOCK. Sub shall have previously accepted for
            payment and paid for shares of Company Common Stock pursuant to the
            Offer.

9.    TERMINATION, AMENDMENT AND WAIVER

9.1   TERMINATION

      This Agreement may be terminated and the Merger may be abandoned at any
      time prior to the Effective Time, whether before or after receipt of
      Company Stockholder Approval:

      (a)   by mutual written consent of Parent and the Company;

      (b)   by either Parent or the Company:

            (i)   if any Governmental Entity issues an order, decree or ruling
                  or takes any other action permanently enjoining, restraining
                  or otherwise prohibiting the acceptance for payment of, or
                  payment for, shares of Company Common Stock pursuant to the
                  Offer or the Merger and such order, decree, ruling or other
                  action shall have become final and nonappealable; or

            (ii)  if as the result of the failure of any of the conditions set
                  forth in Annex 1 to this Agreement, (A) Sub shall have failed
                  to commence the Offer within 30 days following the date of
                  this Agreement or (B) the Offer shall have terminated or
                  expired in


                                       45
<PAGE>
                  accordance with its terms (including after giving effect to
                  any extensions) without Sub having purchased any shares of
                  Company Common Stock pursuant to the Offer prior to September
                  30, 2005, provided, however, that the right to terminate this
                  Agreement pursuant to this Subsection (ii) shall not be
                  available to any party whose failure to comply with its
                  obligations under or breach of this Agreement results in the
                  failure of any such condition;

      (c)   by Parent, if any representation or warranty made by the Company in
            this Agreement shall not be true and correct, or if the Company
            breaches or fails to perform in any material respect any of its
            covenants or agreements contained in this Agreement, which failure
            to be true and correct, breach or failure to perform (i) would give
            rise to the failure of a condition set forth in Annex 1 and (ii)
            cannot be or has not been cured within 15 days after the giving of
            written notice to the Company of such breach;

      (d)   by Parent if (i) either Parent or Sub is entitled to terminate the
            Offer as a result of the occurrence of any event set forth in
            paragraph (e) of Annex 1 to this Agreement or (ii) there shall not
            have been validly tendered and not withdrawn prior to the expiration
            of the Offer at least a majority of the outstanding shares of
            Company Common Stock, on a fully diluted basis, on or prior to such
            date;

      (e)   by the Company, prior to the acceptance for payment of shares of
            Company Common Stock pursuant to the Offer, in accordance with
            Section 6.2(b); provided, however, that, in order for the
            termination of this Agreement pursuant to this subparagraph to be
            effective, the Company shall have complied with all of the
            provisions of Section 6.2, including the notice provisions therein,
            and with all applicable requirements of Section 7.6 including
            payment of the Termination Fee; or

      (f)   by the Company prior to the acceptance of shares of Company Common
            Stock for payment pursuant to the Offer, if Parent shall have
            breached or failed to perform in any material respect any of its
            representations, warranties, covenants or agreements contained in
            this Agreement and if such failure to perform cannot be or has not
            been cured within 15 days after the giving of written notice to
            Parent of such breach.

9.2   EFFECT OF TERMINATION

      In the event of termination of this Agreement by either the Company or
      Parent as provided in Section 9.1, this Agreement shall forthwith become
      void and have no effect, without any liability or obligation on the part
      of Parent, Sub or the Company, other than Section 4.20, Section 5.6,
      Section 7.2(b), Section 7.6, this Section 9.2 and Article 10, which
      provisions shall survive such termination, and except that nothing in this
      Section 9.2 shall relieve a party from liability for fraud or to the
      extent that such termination pursuant to Section 9.1 results from the
      willful and material breach by a party of any representation, warranty or
      covenant set forth in this Agreement.

9.3   AMENDMENT

      This Agreement may be amended, supplemented or modified by the parties at
      any time before or after receipt of the Company Stockholder Approval;
      provided, however, that after receipt of the Company Stockholder Approval,
      there shall be made no amendment, supplement or modification that by Law
      requires further approval by the stockholders of the Company without the
      further approval of such stockholders. This Agreement may not be amended,
      supplemented or modified except by an instrument in writing duly executed
      and delivered by or on behalf of each of the parties.


                                       46
<PAGE>
9.4   EXTENSION; WAIVER

      At any time prior to the Effective Time, the parties may (a) extend the
      time for the performance of any of the obligations or other acts of the
      other parties, (b) waive any inaccuracies in the representations and
      warranties contained in this Agreement or in any document delivered
      pursuant to this Agreement or (c) subject to the proviso of Section 9.3,
      waive compliance with any of the agreements or conditions contained in
      this Agreement. Any agreement on the part of a party to any such extension
      or waiver shall be valid only if set forth in an instrument in writing
      duly executed and delivered by or on behalf of such party. The failure or
      delay of any party to this Agreement to assert any of its rights under
      this Agreement or otherwise shall not constitute a waiver of such rights.

10.   GENERAL PROVISIONS

10.1  NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES

      None of the representations and warranties in this Agreement (including
      the Company Disclosure Schedule and the Parent Disclosure Schedule) or in
      any instrument delivered pursuant to this Agreement shall survive the
      Effective Time. This Section 10.1 shall not limit any covenant or
      agreement of the parties hereto that by its terms contemplates performance
      after the Effective Time.

10.2  NOTICES

      All notices, requests, claims, demands and other communications under this
      Agreement shall be in writing and shall be deemed given upon receipt (or
      upon the next succeeding business day if received after 5 p.m. local time
      on a business day or if received on a Saturday, Sunday or United States
      holiday) by the parties at the following addresses (or at such other
      address for a party as shall be specified by like notice):

      (a)   if to Parent or Sub, to:

            SAP America, Inc.
            3999 West Chester Pike
            Newtown Square, PA  19073

            Attention: Brad C. Brubaker

            with a copy to each of:

            SAP America, Inc.
            3999 West Chester Pike
            Newtown Square, PA  19073

            Attention: James Mackey

            SAP AG
            Neurottstrasse 16
            69190 Walldorf
            Germany

            Attention: Michael Junge

            and


                                       47
<PAGE>
            Allen & Overy LLP
            1221 Avenue of the Americas
            New York, NY  10020

            Attention: A. Peter Harwich
                       Eric S. Shube

      (b)   if to the Company, to:

            Retek Inc.
            950 Nicollet Mall
            Minneapolis, MN  55403

            Attention: Thomas F. Carretta

            with a copy to:

            Faegre & Benson LLP
            2200 Wells Fargo Center
            90 South Seventh Street
            Minneapolis, MN  55402-3901
            Attention: Michael A. Stanchfield
                       Steven C. Kennedy

10.3  DEFINITIONS

      For purposes of this Agreement:

      (a)   an AFFILIATE, when used with reference to any person, means another
            person that directly or indirectly, through one or more
            intermediaries, controls, is controlled by, or is under common
            control with such first person;

      (b)   a MATERIAL ADVERSE EFFECT on a party means any state of facts,
            change, development or occurrence that would reasonably be expected
            (i) to be material and adverse to the business, assets, properties,
            financial condition or results of operations of the party and the
            subsidiaries of the party taken as a whole or (ii) directly or
            indirectly to prevent or materially impede or materially delay the
            consummation of the Offer or the Merger, except for changes,
            developments or occurrences relating to (A) the economy, the
            securities markets or the software industry in general that do not
            have a significantly disproportionate effect on the party and the
            subsidiaries of the party, (B) the public announcement or existence
            of this Agreement (including with respect to employees, customers
            and prospective customers), (C) acts of terrorism or war (whether or
            not declared) or (D) actions or omissions expressly required by this
            Agreement or taken with the prior written consent of Parent;

      (c)   IN THE ORDINARY COURSE OF BUSINESS, with respect to any action,
            means such action is:

            (i)   consistent with the recent past practices of such person and
                  is taken in the ordinary course of the normal day-to-day
                  operations of such person; and

            (ii)  not required to be authorized by the Board of Directors of
                  such person;


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<PAGE>
      (d)   as it relates to the Company, KNOWLEDGE means, with respect to any
            matter in question, the actual knowledge of the Company's directors
            and executive officers, including the individuals listed on Section
            10.3(d) of the Company Disclosure Schedule;

      (e)   a PERSON means any individual, firm, corporation, partnership,
            company, limited liability company, division, trust, joint venture,
            association, Governmental Entity or other entity or organization;
            and

      (f)   a SUBSIDIARY of any person means another person, an amount of the
            voting securities, other voting ownership or voting partnership
            interests of which is sufficient to elect at least 50% of its Board
            of Directors or other governing body (or, if there are no such
            voting interests, 50% or more of the equity interests of which) is
            owned directly or indirectly by such first person.

10.4  INTERPRETATION; COMPANY DISCLOSURE SCHEDULE

      (a)   When a reference is made in this Agreement to an Article, Section,
            Subsection or Schedule, such reference shall be to an Article,
            Section or Subsection of, or a Schedule to, this Agreement unless
            otherwise indicated. The table of contents and headings contained in
            this Agreement are for reference purposes only and shall not affect
            in any way the meaning or interpretation of this Agreement. Whenever
            the words "include," "includes" or "including" are used in this
            Agreement, they shall be deemed to be followed by the words "without
            limitation." The words "hereof," "herein" and "hereunder" and words
            of similar import when used in this Agreement shall refer to this
            Agreement as a whole and not to any particular provision of this
            Agreement. The term "or" is not exclusive. The definitions contained
            in this Agreement are applicable to the singular as well as the
            plural forms of such terms. Any agreement or instrument defined or
            referred to herein or in any agreement or instrument that is
            referred to herein means such agreement or instrument as from time
            to time amended, modified or supplemented, except as otherwise
            specified herein. References to a person are also to its permitted
            successors and assigns.

      (b)   Matters reflected in the Company Disclosure Schedule are not
            necessarily limited to matters required by this Agreement to be so
            reflected. Such additional matters are set forth for informational
            purposes and do not necessarily include other matters of a similar
            nature. Any matter disclosed in any section of the Company
            Disclosure Schedule shall be deemed disclosed with respect to all
            Sections of this Agreement to the extent that such disclosure of the
            matter is reasonably sufficient to inform Parent of the nature of
            the matter. If the same item is required to be disclosed in more
            than one section of the Company Disclosure Schedule, such item may
            be fully described in the principal section to which such item
            relates and incorporated into another section by a specific cross
            reference in such other section to the section in which such item is
            fully described. Nothing in the Company Disclosure Schedule shall be
            deemed adequate to disclose an exception to a representation or
            warranty made herein unless the Company Disclosure Schedule
            identifies the exception with reasonable particularity. Without
            limiting the generality of the foregoing, the mere listing (or
            inclusion of a copy) of a document or other item shall not be deemed
            adequate to disclose an exception to a representation or warranty
            made herein (unless the representation or warranty has to do with
            the existence of the document or other item itself or the copy
            adequately describes the matter at issue).

10.5  SEVERABILITY

      If any term or other provision of this Agreement is invalid, illegal or
      incapable of being enforced by any rule or Law, or public policy, all
      other terms and provisions of this Agreement shall nevertheless remain


                                       49
<PAGE>
      in full force and effect so long as the economic and legal substance of
      the Transactions is not affected in any manner materially adverse to any
      party. Upon such determination that any term or other provision is
      invalid, illegal or incapable of being enforced, the parties hereto shall
      negotiate in good faith to modify this Agreement so as to effect the
      original intent of the parties as closely as possible in an acceptable
      manner to the end that the Transactions are fulfilled to the extent
      possible.

10.6  COUNTERPARTS

      This Agreement may be executed in one or more counterparts, all of which
      shall be considered one and the same agreement and shall become effective
      when one or more counterparts have been signed by each of the parties and
      delivered to the other parties.

10.7  ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES

      This Agreement, taken together with the Company Disclosure Schedule and
      the Parent Disclosure Schedule constitutes the entire agreement and
      supersedes all prior agreements and understandings, both written and oral,
      among the parties with respect to the Transactions. For the avoidance of
      doubt and without limiting the foregoing, except for the provisions of
      Article 3 and Section 7.5 (and only in that case after the Effective
      Time), no other provision of this Agreement, including any provision
      relating to employee benefits or compensation, shall be deemed to confer
      any rights as a third-party beneficiary or otherwise on any person
      notwithstanding any principle of contractual interpretation that would
      otherwise be deemed to establish or confer such rights.

10.8  GOVERNING LAW

      This Agreement (and any claims or disputes arising out of or related
      thereto or to the transactions contemplated thereby or to the inducement
      of any party to enter therein, whether for breach of contract, tortious
      conduct or otherwise and whether predicated on common law, statute or
      otherwise) shall in all respects be governed by and construed in
      accordance with the Laws of the State of New York, including all matters
      of construction, validity and performance, in each case without reference
      to any conflict of Law rules that might lead to the application of the
      Laws of any other jurisdiction, except to the extent the Laws of Delaware
      are mandatorily applicable to the Company Board (including the fiduciary
      duties thereof and any actions taken pursuant to Section 6.2), the
      stockholders of the Company or the Merger.

10.9  ASSIGNMENT

      Neither this Agreement nor any of the rights, interests or obligations
      under this Agreement shall be assigned, in whole or in part, by operation
      of Law or otherwise by any of the parties without the prior written
      consent of the other parties, except that Sub may assign, in its sole
      discretion, any of or all its rights, interests and obligations under this
      Agreement to Parent or to any direct or indirect wholly-owned subsidiary
      of Parent, but no such assignment shall relieve Sub of any of its
      obligations under this Agreement if its transferee does not perform such
      obligations. Any purported assignment without such consent shall be void.
      Subject to the preceding sentences, this Agreement will be binding upon,
      inure to the benefit of, and be enforceable by, the parties hereto and
      their respective successors and assigns.

10.10 ENFORCEMENT; WAIVER OF JURY TRIAL

      The parties agree that irreparable damage would occur in the event that
      any of the provisions of this Agreement were not performed in accordance
      with their specific terms or were otherwise breached. It is accordingly
      agreed that the parties shall be entitled to seek an injunction or
      injunctions or other appropriate equitable relief to prevent breaches of
      this Agreement and to enforce specifically the terms


                                       50
<PAGE>
      and provisions of this Agreement in any federal court located in the State
      of Delaware or any Delaware state court, this being in addition to any
      other remedy to which they are entitled at law or in equity, and the
      parties hereby waive in any such proceeding the defense of adequacy of a
      remedy at law and any requirement for the securing or posting of any bond
      or any other security relating to such equitable relief. In addition, each
      of the parties hereto (a) consents to submit itself to the personal
      jurisdiction of any federal court located in the State of Delaware or any
      Delaware state court in the event any dispute (whether in contract, tort
      or otherwise) arises out of this Agreement or any Transaction, (b) agrees
      that it will not attempt to deny or defeat such personal jurisdiction by
      motion or other request for leave from any such court, (c) agrees that it
      will not bring any action relating to this Agreement or any Transaction in
      any court other than any federal court located in the State of Delaware or
      any Delaware state court and (d) waives any right to trial by jury with
      respect to any action related to or arising out of this Agreement or any
      Transaction.


                                       51
<PAGE>
                                   SIGNATORIES

IN WITNESS WHEREOF, Parent, Sub and the Company have duly executed this
Agreement, all as of the date first written above.

                                    SAP AMERICA, INC.,

                                    By: /s/ Brad C. Brubaker
                                        ---------------------------
                                        Brad C. Brubaker
                                        Authorized Signatory

                                    SAPPHIRE EXPANSION CORPORATION,

                                    By: /s/ James Mackey
                                        ---------------------------
                                        James Mackey
                                        President

                                    RETEK INC.,

                                    By:  /s/ Martin J. Leestma
                                         --------------------------
                                         Martin J. Leestma
                                         President and Chief Executive Officer


                                       52
<PAGE>
                                     ANNEX 1

                             CONDITIONS OF THE OFFER

Notwithstanding any other term of the Offer or this Agreement, Sub shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act (relating
to Sub's obligation to pay for or return tendered shares of Company Common Stock
promptly after the termination or withdrawal of the Offer), to pay for any
shares of Company Common Stock tendered pursuant to the Offer unless (i) there
shall have been validly tendered and not withdrawn prior to the expiration of
the Offer that number of shares of Company Common Stock which would represent at
least a majority of the Fully Diluted Shares (the MINIMUM TENDER CONDITION) and
(ii) any waiting period under the HSR Act, the German Federal Cartel Office and
any other similar and necessary foreign approvals or waiting periods applicable
to the purchase of shares of Company Common Stock pursuant to the Offer shall
have expired or been terminated. The term FULLY DILUTED SHARES means all
outstanding securities entitled generally to vote in the election of directors
of the Company on a fully diluted basis, after giving effect to the exercise or
conversion of all options (other than the option granted pursuant to the Top-Up
Option), rights and securities exercisable or convertible into such voting
securities. Furthermore, notwithstanding any other term of the Offer or this
Agreement, Sub shall not be required to commence the Offer, accept for payment
or, subject as aforesaid, to pay for any shares of Company Common Stock not
theretofore accepted for payment or paid for, and may terminate or amend the
Offer, with the consent of the Company if, at any time on or after the date of
this Agreement and before the acceptance of such shares for payment or the
payment therefor, any of the following conditions exists:

(a)   there shall be pending or threatened any suit, action or proceeding by any
      Governmental Entity, or pending any suit, action or proceeding that has a
      reasonable likelihood of success by any other person, (i) challenging the
      acquisition by Parent or Sub of any Company Common Stock, seeking to
      restrain or prohibit the making or consummation of the Offer or the Merger
      or any other Transaction or, other than litigation that is set forth in
      Section 4.12(a) of the Company Disclosure Schedule, seeking to obtain from
      the Company, Parent or Sub or any of their respective subsidiaries or
      affiliates any damages that are material in relation to the Company and
      the Company Subsidiaries taken as whole, (ii) seeking to prohibit or limit
      the ownership or operation by the Company, Parent or any of their
      respective subsidiaries of any material portion of the business or assets
      of the Company, Parent or any of their respective subsidiaries or
      affiliates, or to compel the Company, Parent or any of their respective
      subsidiaries or affiliates to dispose of or hold separate any material
      portion of the business or assets of the Company, Parent or any of their
      respective subsidiaries or affiliates, as a result of the Offer, the
      Merger or any other Transaction, (iii) seeking to impose limitations on
      the ability of Parent or Sub to acquire or hold, or exercise full rights
      of ownership of, any shares of Company Common Stock, including the right
      to vote the Company Common Stock purchased by it on all matters properly
      presented to the stockholders of the Company, (iv) seeking to prohibit
      Parent or any of its subsidiaries from effectively controlling in any
      material respect the business or operations of the Company and the Company
      Subsidiaries or (v) other than litigation that is set forth in Section
      4.12(a) of the Company Disclosure Schedule, that otherwise individually or
      in the aggregate would reasonably be expected to have a Company Material
      Adverse Effect;

(b)   any Law or Judgment shall have been enacted, entered, enforced,
      promulgated, amended or issued with respect to, or deemed applicable to,
      or any Consent or Permit withheld with respect to, (i) Parent, the Company
      or any of their respective subsidiaries or affiliates or (ii) the Offer,
      the Merger or any other Transaction, in either case by any Governmental
      Entity that individually or


                                      A-1
<PAGE>
      in the aggregate would reasonably be expected to result, directly or
      indirectly, in any of the consequences referred to in paragraph (a) above;

(c)   since the date of this Agreement, there shall have occurred any event,
      change or development that, individually or in the aggregate, has had or
      would reasonably be expected to have a Company Material Adverse Effect;

(d)   there shall have occurred and be continuing at the time immediately prior
      to such obligation of Sub (i) any general suspension of trading in, or
      limitation on prices for, securities on any national securities exchange
      or in the over-the-counter market in the United States (other than a
      shortening of trading hours or any trading halt triggered solely as a
      result of a specified increase or decrease in a market index), (ii) any
      extraordinary adverse change in the financial markets or major stock
      exchange indices in the United States or (iii) a declaration of a banking
      moratorium or any suspension of payments in respect of banks in the United
      States;

(e)   the Company Board or any committee thereof shall have (i) failed to
      recommend the Offer or the approval and adoption of this Agreement and the
      Merger by the stockholders of the Company or withdrawn or modified the
      approval or recommendation of the Company Board or any committee thereof
      of this Agreement, the Offer, the Merger or the other Transactions
      (including by amendment of the Schedule 14D-9) in a manner adverse to
      Parent, (ii) approved or recommended to the stockholders of Company a
      Company Takeover Proposal or announced its intention to enter into an
      Acquisition Agreement with respect to a Company Takeover Proposal or (iii)
      approved or recommended that stockholders of the Company tender their
      shares of Company Common Stock into any tender offer or exchange offer
      that is a Company Takeover Proposal or is related thereto;

(f)   any representation and warranty of the Company in this Agreement shall not
      be true and correct (disregarding solely for purposes of this paragraph
      (f) any materiality or Company Material Adverse Effect qualifications
      therein), which failure to be true and correct, individually or in the
      aggregate, has had or would reasonably be expected to have a Company
      Material Adverse Effect as of the scheduled or extended expiration of the
      Offer, except to the extent such representation and warranty expressly
      relates to an earlier date (in which case on and as of such earlier date);

(g)   any representation and warranty of the Company contained in Section 4.3 or
      Section 4.17 of this Agreement that is qualified as to materiality or
      material adverse effect shall not be true and correct or any such
      representation and warranty that is not so qualified shall not be true and
      correct in any material respect, as of the date of this Agreement and as
      of the scheduled or extended expiration of the Offer, except to the extent
      such representation and warranty expressly relates to an earlier date (in
      which case on and as of such earlier date);

(h)   the Company shall have failed to perform in any material respect any
      obligation or to comply in any material respect with any agreement or
      covenant of the Company to be performed or complied with by it under this
      Agreement;

(i)   the Company shall have (i) failed to timely file with the SEC its annual
      report on Form 10-K including all information required to be disclosed
      pursuant to Item 9A of Form 10-K or (ii) failed to include in its annual
      report on Form 10-K an unqualified opinion from its auditors on the
      Company's financial statements; or

(j)   this Agreement shall have been terminated in accordance with its terms.


                                      A-2
<PAGE>
The foregoing conditions are for the sole benefit of Sub and Parent and may be
asserted by Sub or Parent regardless of the circumstances giving rise to such
condition or may be waived by Sub and Parent in whole or in part at any time and
from time to time in their sole discretion; provided, however, that the Minimum
Tender Condition may not be waived. The failure by Parent, Sub or any other
affiliate of Parent at any time to exercise any of the foregoing rights shall
not be deemed a waiver of any such right, the waiver of any such right with
respect to particular facts and circumstances shall not be deemed a waiver with
respect to any other facts and circumstances and each such right shall be deemed
an ongoing right that may be asserted at any time and from time to time.

                                      A-3

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