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Agreement and Plan of Merger and Reorganization

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Sectors: Computer Software and Services, Internet
Governing Law: New York, View New York State Laws
Effective Date: February 28, 2000
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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION


among


JUPITER COMMUNICATIONS, INC.,


IRG ACQUISITION CORP.,


INTERNET RESEARCH GROUP


AND


THE SHAREHOLDERS OF


INTERNET RESEARCH GROUP


LISTED ON SCHEDULE I HERETO


Dated as of February 28, 2000 2
TABLE OF CONTENTS


Page
---- ARTICLE I DEFINITIONS.............................................................................................2
SECTION 1.01 Certain Defined Terms.....................................................................2


ARTICLE II THE MERGER.............................................................................................5
SECTION 2.01 The Merger ...............................................................................5
SECTION 2.02 Closing ..................................................................................5
SECTION 2.03 Effective Time ...........................................................................6
SECTION 2.04 Effect of the Merger......................................................................6
SECTION 2.05 Articles of Incorporation; Bylaws; Directors and Officers of Surviving Corporation........6


ARTICLE III CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES....................................................7
SECTION 3.01 Conversion of Shares......................................................................7
SECTION 3.02 Exchange of Shares Other than Treasury Shares.............................................7
SECTION 3.03 Stock Transfer Books......................................................................9
SECTION 3.04 No Fractional Share Certificates..........................................................9
SECTION 3.05 Certain Adjustments......................................................................10
SECTION 3.06 Lost, Stolen or Destroyed Certificates...................................................10
SECTION 3.07 Taking of Necessary Action; Further Action...............................................11


ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SHAREHOLDERS...................................11
SECTION 4.01 Organization and Qualification; No Subsidiaries..........................................11
SECTION 4.02 Articles of Incorporation and Bylaws.....................................................11
SECTION 4.03 Capitalization ..........................................................................12
SECTION 4.04 Authority Relative to This Agreement.....................................................12
SECTION 4.05 No Conflicts; Required Filings and Consents..............................................12
SECTION 4.06 Permits; Compliance with Laws............................................................13
SECTION 4.07 Financial Statements.....................................................................14
SECTION 4.08 Absence of Certain Changes or Events.....................................................14
SECTION 4.09 Employee Benefit Plans; Labor Matters....................................................15
SECTION 4.10 Certain Tax Matters......................................................................18
SECTION 4.11 Contracts ...............................................................................18
SECTION 4.12 Litigation ..............................................................................19
SECTION 4.13 Environmental Matters....................................................................19
SECTION 4.14 Intellectual Property....................................................................20
SECTION 4.15 Taxes ...................................................................................22
SECTION 4.16 Insurance ...............................................................................23
SECTION 4.17 Properties ..............................................................................23


i. 3
Page
----
SECTION 4.18 Affiliates ..............................................................................24
SECTION 4.19 Brokers .................................................................................24
SECTION 4.20 Certain Business Practices...............................................................25
SECTION 4.21 Business Activity Restriction............................................................25
SECTION 4.22 Accounts Receivable......................................................................25
SECTION 4.23 Customers and Suppliers..................................................................25
SECTION 4.24 Employee Matters.........................................................................25
SECTION 4.25 Financial Projections....................................................................26
SECTION 4.26 Representations Complete.................................................................26


ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT...............................................................27
SECTION 5.01 Organization and Qualification; Subsidiaries.............................................27
SECTION 5.02 Capitalization 27
SECTION 5.03 Authority Relative to this Agreement.....................................................27
SECTION 5.04 No Conflict; Required Filings and Consents...............................................28
SECTION 5.05 SEC Filings; Financial Statements........................................................29
SECTION 5.06 Absence of Certain Changes or Events.....................................................29
SECTION 5.07 Certain Tax Matters......................................................................30
SECTION 5.08 Brokers .................................................................................30
SECTION 5.09 Representations Complete.................................................................30


ARTICLE VI COVENANTS.............................................................................................30
SECTION 6.01 Conduct of Business by the Company Pending the Closing...................................30
SECTION 6.02 Notices of Certain Events................................................................32
SECTION 6.03 Access to Information; Confidentiality...................................................33
SECTION 6.04 No Solicitation of Transactions..........................................................33
SECTION 6.05 Tax-Free Transaction.....................................................................34
SECTION 6.06 Further Action; Consents; Filings........................................................34


ARTICLE VII ADDITIONAL AGREEMENTS................................................................................35
SECTION 7.01 Public Announcements.....................................................................35
SECTION 7.02 Employee Benefit Matters.................................................................35
SECTION 7.03 Shareholder Investment Representations...................................................35
SECTION 7.04 Stock Options ...........................................................................36
SECTION 7.05 Lock-up Agreement of Shareholders........................................................36
SECTION 7.06 Legend. .................................................................................36
SECTION 7.07 Registration Rights......................................................................37


ARTICLE VIII CONDITIONS TO THE MERGER............................................................................41
SECTION 8.01 Conditions to the Obligations of Each Party to Consummate the Merger.....................41 4
Page
----
SECTION 8.02 Conditions to the Obligations of the Company.............................................41
SECTION 8.03 Conditions to the Obligations of Parent..................................................42


ARTICLE IX TERMINATION, AMENDMENT AND WAIVER.....................................................................44
SECTION 9.01 Termination .............................................................................44
SECTION 9.02 Effect of Termination....................................................................45
SECTION 9.03 Amendment ...............................................................................45
SECTION 9.04 Waiver ..................................................................................45
SECTION 9.05 Expenses ................................................................................46


ARTICLE X INDEMNIFICATION AND ESCROW.............................................................................46
SECTION 10.01 Indemnification..........................................................................46
SECTION 10.02 Damage Limitations.......................................................................46
SECTION 10.03 Procedures ..............................................................................47
SECTION 10.04 Escrow Fund; Non-Exclusive Remedy........................................................48
SECTION 10.05 Escrow Period ...........................................................................48
SECTION 10.06 Claims upon Escrow Fund..................................................................48
SECTION 10.07 Objections to Claims.....................................................................48
SECTION 10.08 Resolution of Conflicts; Arbitration.....................................................49


ARTICLE XI GENERAL PROVISIONS....................................................................................50
SECTION 11.01 Duration of Survival of Representations and Warranties...................................50
SECTION 11.02 Notices .................................................................................50
SECTION 11.03 Severability ............................................................................51
SECTION 11.04 Assignment; Binding Effect; Benefit......................................................51
SECTION 11.05 Incorporation of Exhibits................................................................51
SECTION 11.06 Governing Law ...........................................................................51
SECTION 11.07 Waiver of Jury Trial.....................................................................52
SECTION 11.08 Headings; Interpretation.................................................................52
SECTION 11.09 Counterparts ............................................................................52
SECTION 11.10 Entire Agreement.........................................................................52


ANNEXES


ANNEX A Agreement of Merger ANNEX B Form of Escrow Agreement ANNEX C Form of Opinion of Counsel to Parent ANNEX D Form of Opinion of Counsel to the Company ANNEX E Form of Employment Agreement ANNEX F Form of Confidentiality and Noncompetition Agreement 5
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION


AGREEMENT AND PLAN OF MERGER AND REORGANIZATION, dated as of February 28, 2000 (as amended, supplemented or otherwise modified from time to time, this "AGREEMENT"), among JUPITER COMMUNICATIONS, INC., a Delaware corporation ("PARENT"), IRG ACQUISITION CORP., a California corporation and a direct wholly owned Subsidiary of Parent ("MERGER SUB"), INTERNET RESEARCH GROUP, a California corporation (the "COMPANY") and each of the persons listed on Schedule I hereto (each, a "SHAREHOLDER" and collectively, the "SHAREHOLDERS"):


W I T N E S S E T H:


WHEREAS, the boards of directors of Parent and the Company have determined that it is advisable and in the best interests of their respective companies and shareholders to enter into a business combination by means of the merger of Merger Sub with and into the Company (the "MERGER") and have approved and adopted this Agreement;


WHEREAS, by virtue of their execution of a shareholder consent, the Shareholders have unanimously approved the Merger and this Merger Agreement in accordance with the California Corporations Code (the "CALIFORNIA CODE");


WHEREAS, upon the terms and subject to the conditions of this Agreement and in accordance with the California Code, Parent will acquire all of the common stock of the Company through the Merger; and


WHEREAS, for United States Federal income tax purposes, it is intended that the Merger shall qualify as a tax-free reorganization under Section 368(a) of the Internal Revenue Code of 1986, as amended (together with the rules and regulations promulgated thereunder, the "CODE"), and that this Agreement shall be, and hereby is, adopted as a plan of reorganization for purposes of Section 368 of the Code;


NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and agreements set forth herein, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto hereby agree as follows: 6
2


ARTICLE I


DEFINITIONS


SECTION 1.01 Certain Defined Terms


Unless the context otherwise requires, the following terms, when used in this Agreement, shall have the respective meanings specified below (such meanings to be equally applicable to the singular and plural forms of the terms defined):


"AFFILIATE" shall mean, with respect to any person, any other person that controls, is controlled by or is under common control with the first person.


"BLUE SKY LAWS" shall mean state securities or "blue sky" laws.


"BUSINESS DAY" shall mean any day on which the principal offices of the SEC in Washington, D.C. are open to accept filings, or, in the case of determining a date when any payment is due, any day on which banks are not required or authorized by law or executive order to close in New York.


"COMPANY DISCLOSURE SCHEDULE" shall mean the disclosure schedule delivered by the Company to Parent prior to the execution of this Agreement and forming a part hereof.


"COMPANY INTELLECTUAL PROPERTY" shall mean all patents (including, without limitation, all U.S. and foreign patents, patent applications, patent disclosures, and any and all divisions, continuations, continuations-in-part, reissues, re-examinations and extensions thereof), design rights, trademarks, trade names and service marks (whether or not registered), trade dress, Internet domain names, copyrights (whether or not registered) and any renewal rights therefor, sui generis database rights, statistical models, technology, inventions, supplier lists, trade secrets, know-how, computer software programs or applications in both source and object code form, databases, technical documentation of such software programs ("TECHNICAL DOCUMENTATION"), registrations and applications for any of the foregoing and all other tangible or intangible proprietary information or materials that were material to the Company's business or are currently used in the Company's business in any product, technology or process (i) currently being or formerly manufactured, published or marketed by the Company or (ii) previously or currently under development for possible future manufacturing, publication, marketing or other use by the Company.


"COMPANY MATERIAL ADVERSE EFFECT" shall mean any change in or effect on the business of the Company that, individually or in the aggregate (taking into account all other such changes or effects), is, or is reasonably likely to be, materially adverse to the business, assets, liabilities, financial condition, results of operations or prospects of the Company.


"COMPANY STOCK PLAN" shall mean the Company's 1999 Stock Option Plan. 7
3


"COMPETING TRANSACTION" shall mean any of the following involving the Company (other than the Merger):


(i) any merger, consolidation, share exchange,
business combination or other similar transaction;


(ii) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition of 20% or more of the assets of the
Company and its subsidiaries, taken as a whole, in a single transaction
or series of transactions;


(iii) any tender offer or exchange offer for 20% or
more of the outstanding voting securities of the Company or the filing
of a registration statement under the Securities Act in connection
therewith; or


(iv) any person having acquired beneficial ownership
or the right to acquire beneficial ownership of, or any "group" (as
such term is defined under Section 13(d) of the Exchange Act) having
been formed that beneficially owns or has the right to acquire
beneficial ownership of, 20% or more of the outstanding voting
securities of the Company;


(v) any solicitation in opposition to the approval of
this Agreement by the Shareholders of the Company; or


(vi) any public announcement of a proposal, plan or
intention to do any of the foregoing or any agreement to engage in any
of the foregoing.


"CONFIDENTIALITY AGREEMENT" shall mean the confidentiality agreement dated January 19, 2000 between Parent and the Company.


"$" shall mean United States Dollars.


"ENVIRONMENTAL LAW" shall mean any Law and any enforceable judicial or administrative interpretation thereof, including any judicial or administrative order, consent decree or judgment, relating to pollution or protection of the environment or natural resources, including, without limitation, those relating to the use, handling, transportation, treatment, storage, disposal, release or discharge of Hazardous Material, as in effect as of the date hereof.


"ENVIRONMENTAL PERMIT" shall mean any permit, approval, identification number, license or other authorization required under or issued pursuant to any applicable Environmental Law.


"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended.


"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended, together with the rules and regulations promulgated thereunder. 8
4


"EXPENSES" shall mean, with respect to any party hereto, all out-of-pocket expenses (including, without limitation, all fees and expenses of counsel, accountants, investment bankers, experts and consultants to a party hereto and its Affiliates) incurred by such party or on its behalf in connection with or related to the authorization, preparation, negotiation, execution and performance of its obligations pursuant to this Agreement and the consummation of the Merger, the filings of HSR Act notice and all other matters related to the transactions contemplated hereby and the closing of the Merger.


"GOVERNMENTAL ENTITY" shall mean any United States Federal, state or local or any foreign governmental, regulatory or administrative authority, agency or commission or any court, tribunal or arbitral body.


"GOVERNMENTAL ORDER" shall mean any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Entity.


"HAZARDOUS MATERIAL" shall mean (i) any petroleum, petroleum products, by-products or breakdown products, radioactive materials, asbestos-containing materials or polychlorinated biphenyls or (ii) any chemical, material or substance defined or regulated as toxic or hazardous or as a pollutant or contaminant or waste under any applicable Environmental Law.


"HSR ACT" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, together with the rules and regulations promulgated thereunder.


"IRS" shall mean the United States Internal Revenue Service.


"LAW" shall mean any Federal, state, foreign or local statute, law, ordinance, regulation, rule, code, order, judgment, decree, other requirement or rule of law of the United States or any other jurisdiction, and any other similar act or law.


"PARENT COMMON STOCK" shall mean the common stock, par value $.001 per share, of Parent.


"PARENT MATERIAL ADVERSE EFFECT" shall mean any change in or effect on the business of Parent and the Parent Subsidiaries that, individually or in the aggregate (taking into account all other such changes or effects), is, or is reasonably likely to be, materially adverse to the business, assets, liabilities, financial condition, results of operations or prospects of Parent and the Parent Subsidiaries, taken as a whole.


"PERSON" shall mean an individual, corporation, partnership, limited partnership, limited liability company, limited liability partnership, syndicate, person (including, without limitation, a "person" as defined in Section 13(d)(3) of the Exchange Act), trust, association, entity or government or political subdivision, agency or instrumentality of a government.


"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, together with the rules and regulations promulgated thereunder. 9
5


"SEC" shall mean the Securities and Exchange Commission.


"SUBSIDIARY" shall mean, with respect to any person, any corporation, partnership, limited partnership, limited liability company, limited liability partnership, joint venture or other legal entity of which such person (either alone or through or together with any other subsidiary of such person) owns, directly or indirectly, a majority of the stock or other equity interests.


"TAX" shall mean (i) any and all taxes, fees, levies, duties, tariffs, imposts and other charges of any kind (together with any and all interest, penalties, additions to tax and additional amounts imposed with respect thereto) imposed by any Governmental Entity or taxing authority, including, without limitation, taxes or other charges on or with respect to income, franchises, windfall or other profits, gross receipts, property, sales, use, capital stock, payroll, employment, social security, workers' compensation, unemployment compensation or net worth; taxes or other charges in the nature of excise, withholding, ad valorem, stamp, transfer, value-added or gains taxes; license, registration and documentation fees; and customers' duties, tariffs and similar charges; (ii) any liability for the payment of any amounts of the type described in (i) as a result of being a member of an affiliated, combined, consolidated or unitary group for any taxable period; and (iii) any liability for the payment of amounts of the type described in (i) or (ii) as a result of being a transferee of, or a successor in interest to, any Person or as a result of an express or implied obligation to indemnify any person.


"TAX RETURN" shall mean any return, statement or form (including, without limitation, any estimated tax reports or return, withholding tax reports or return and information report or return) required to be filed with respect to any Taxes.


ARTICLE II


THE MERGER


SECTION 2.01 The Merger


Upon the terms and subject to the conditions set forth in this Agreement, and in accordance with the California Code, at the Effective Time (as defined in Section 2.03), Merger Sub shall be merged with and into the Company. As a result of the Merger, the separate corporate existence of Merger Sub shall cease and the Company shall continue as the surviving corporation of the Merger as a wholly owned Subsidiary of Parent (the "SURVIVING CORPORATION").


SECTION 2.02 Closing


Unless this Agreement shall have been terminated and the Merger herein contemplated shall have been abandoned pursuant to Section 9.01 and subject to the satisfaction or waiver of the conditions set forth in Article VIII, the consummation of the Merger shall take place as promptly as practicable (and in any event within three Business days) after satisfaction or waiver of the conditions set forth in Article VIII, at a closing (the "CLOSING") to be held at the 10
6


offices of Brobeck, Phleger & Harrison LLP, 1633 Broadway, New York, New York 10019, unless another date, time or place is agreed to by Parent and the Company, provided, however, that the parties shall use their reasonable best efforts to consummate the Merger on or prior to March 22, 2000.


SECTION 2.03 Effective Time


At and after the time of the Closing, the parties shall cause the Merger to be consummated by filing an agreement of merger and officers' certificates in the form attached as Annex A hereto (the "AGREEMENT OF MERGER") with the Secretary of State of the State of California in such form as required by, and executed in accordance with the relevant provisions of, the California Code (the date and time of such filing, or such later date and time a
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