AGREEMENT AND PLAN OF MERGER

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EXHIBIT 2.1

AGREEMENT AND PLAN OF MERGER

by and among

ARKONA, INC.,

DEALERTRACK HOLDINGS, INC., and

DA ACQUISITION CORP.

Dated as of April 26, 2007

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TABLE OF CONTENTS

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EXHIBITS

Exhibit A Tender and Support Agreement

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AGREEMENT AND PLAN OF MERGER

     THIS AGREEMENT AND PLAN OF MERGER, dated as of April 26, 2007 (this “ Agreement ”), is made and entered into by and among Arkona, Inc., a Delaware corporation (the “ Company ”), DealerTrack Holdings, Inc., a Delaware corporation (“ Parent ”), and DA Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of Parent (“ MergerSub ”, and together with Parent, the “ Buyer Parties ”).

     WHEREAS, pursuant to this Agreement and subject to the terms and conditions set forth herein, MergerSub shall commence a cash tender offer (such tender offer, as it may be amended and supplemented from time to time as permitted by this Agreement, the “ Offer ”) to (i) purchase all of the issued and outstanding shares of common stock, par value $.001 per share, of the Company (including the associated preferred stock purchase rights (the “ Company Rights ”) that are issued pursuant to the Rights Agreement, the “ Company Common Share s”), at a price per share of $1.38 net to the seller in cash without interest, and (ii) purchase all of the issued and outstanding shares Series B Convertible Preferred Stock, par value $.001 per share, of the Company (the “ Series B Preferred Shares ”), at a price per share of $6.90 net to the seller in cash without interest (such prices, or any higher prices per share as may be paid pursuant to the Offer being hereafter referred to as the “ Common Stock Offer Price ” and “ Preferred Stock Offer Price ”, respectively);

     WHEREAS, concurrently with this Agreement, Parent and MergerSub have entered into a tender and support agreement, dated as of the date hereof, with certain stockholders of the Company (the “ Tender and Support Agreement ”), a form of which is attached hereto as Exhibit A ;

     WHEREAS, following the consummation of the Offer, MergerSub will merge (the “ Merger ”) with and into the Company in accordance with the Delaware General Corporation Law (the “ DGCL ”), with the Company surviving the Merger as a wholly owned subsidiary of Parent, and each Company Common Share and Series B Preferred Share outstanding immediately prior to the Effective Time will thereupon be cancelled and converted into the right to receive cash in an amount equal to the Common Stock Offer Price and Preferred Stock Offer Price, respectively, on the terms and subject to the conditions set forth herein;

     WHEREAS, the Board of Directors of the Company (the “ Company Board ”) by a unanimous vote has (i) determined that this Agreement and the transactions contemplated hereby, including the Offer and the Merger, are advisable and in the best interest of the Company and its stockholders, (ii) adopted and approved this Agreement and the transactions contemplated hereby, including the Offer and the Merger, in accordance the requirements of the DGCL, and (iii) subject to the terms and conditions set forth herein, resolved to recommend acceptance of the Offer and approval and adoption of this Agreement and the Merger by its stockholders; and

     WHEREAS, the parties hereto desire to make certain representations, warranties, covenants and agreements in connection with the Merger, and also to prescribe various conditions to such transactions.

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     NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, the parties hereto hereby agree as follows:

ARTICLE I

DEFINITIONS

      Section 1.01. Definitions . For purposes of this Agreement:

     “ Acquisition Proposal ” means any inquiry, proposal or offer from any Person or group for, whether in one transaction or a series of related transactions, any (a) merger, consolidation or similar transaction involving the Company, (b) sale or other disposition, directly or indirectly, by merger, consolidation, combination, reorganization, share exchange or any similar transaction, of any assets of the Company representing 15% or more of the consolidated assets of the Company, (c) issue, sale or other disposition by the Company of (including by way of merger, consolidation, share exchange or any similar transaction) securities (or options, rights or warrants to purchase, or securities convertible into, such securities) representing 15% or more of the votes associated with the outstanding voting equity securities of the Company, (d) tender offer or exchange offer in which any Person or “group” (as such term is defined under the Exchange Act) shall acquire beneficial ownership (as such term is defined in Rule 13d-3 under the Exchange Act), or the right to acquire beneficial ownership, of 15% or more of the outstanding Company Common Shares, (e) recapitalization, liquidation, dissolution or other similar type of transaction with respect to the Company which would result in any Person or group acquiring 15% or more of the fair market value of the assets of the Company, or (f) transaction which is similar in form, substance or purpose to any of the foregoing transactions; provided, however, that the term “Acquisition Proposal” shall not include the Offer, the Merger or any of the other transactions contemplated by the parties pursuant to this Agreement.

     “ Action ” means any claim, action, suit, proceeding, arbitration, mediation or other investigation.

     “ Affiliate ” or “affiliate” of a specified person means a person who, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such specified person.

     “ beneficial owner ”, with respect to any Company Common Shares or Series B Preferred Shares, has the meaning ascribed to such term under Rule 13d-3(a) of the Exchange Act.

     “ Business Day ” or “business day” means any day other than a Saturday, Sunday and any day which is a legal holiday under the laws of the State of New York or is a day on which banking institutions in New York, New York are authorized or obligated by Law or other governmental action to close.

     “ Certificate ” or “ Certificates ” means any certificate representing Company Common Shares or Series B Preferred Shares.

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     “ Code ” means the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder.

     “ Company Bylaws ” means the bylaws of the Company, as amended to date.

     “ Company Charter ” means the Restated Certificate of Incorporation of the Company dated with a filing date of April 4, 2006, as amended and supplemented.

     “ Company Insurance Policy ” means any insurance policy that is owned by the Company, including any which pertains to the Company’s assets, employees or operations.

     “ Company Material Adverse Effect ” means, with respect to the Company, an effect, event, fact, development or change that is materially adverse to the assets, business, results of operations or financial condition of the Company, other than any effect, event, fact, development or change arising out of or resulting from (a) decrease in the market price of the Company Common Shares (but not any effect, fact, event, development or change underlying such decrease to the extent that such effect, fact, event, development or change would otherwise constitute a Company Material Adverse Effect), (b) changes in general legal, tax, regulatory, political or business conditions that, in each case, generally affect the geographic regions or industries in which the Company conducts its business (except to the extent such effect, event, development or change affects the Company in a materially disproportionate manner as compared to other persons or participants in the industries in which the Company conducts its business and that operate in the geographic regions affected by such effect, event, development or change), (c) changes in GAAP, (d) litigation resulting from the announcement or performance of this Agreement or the transactions contemplated hereby, (e) acts of war or armed hostilities that begin following the date hereof, or any material escalation or worsening of any acts of war or armed hostilities underway as of the date of this Agreement (except to the extent such effect, event, development or change affects the Company in a materially disproportionate manner as compared to other persons or participants in the industries in which the Company conducts its business and that operate in the geographic regions affected by such effect, event, development or change), or (f) any action taken by the Company at the written request or with the written consent of any of the Buyer Parties.

     “ Company Stock Options ” shall mean options to purchase Company Common Shares from the Company, whether granted by the Company pursuant to the Company Stock Plans or otherwise, but shall not include Company Warrants.

     “ Company Stockholder Approval ” means approval of the Merger, in accordance with the DGCL and the Company Charter.

     “ control ” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, as trustee or executor, by contract or otherwise.

     “ Disclosure Schedule ” means the disclosure schedule delivered by the Company to Parent concurrently with the execution of this Agreement, which disclosure schedule is arranged in paragraphs corresponding to the numbered and lettered sections contained in Article IV of this

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Agreement, provided, however, that the disclosure of any fact or item in any section of such disclosure schedule shall, should the existence of such fact or item be relevant to any other section, be deemed to be disclosed with respect to that other section so long as the relevance of such disclosure to such other section is reasonably apparent from the nature of such disclosure. Nothing in the Disclosure Schedule is intended to broaden the scope of any representation or warranty of the Company made herein.

     “ Exchange Act ” means the Securities Exchange Act of 1934, as amended and supplemented.

     “ Exclusivity Agreement ” means the exclusivity agreement, dated as of February 16, 2007, by and between the Company and Parent.

     “ Fully Diluted Outstanding Company Common Shares ” means the issued and outstanding Company Common Shares on a fully diluted basis (which assumes the conversion or exercise of all derivative securities or other rights to acquire Company Common Shares that have not expired or been terminated, including the conversion rights of the Series B Preferred Shares, regardless of the conversion or exercise price, the vesting schedule or other terms and conditions thereof).

     “ Governmental Authority ” means any United States federal, state, municipal or local government, governmental, regulatory or administrative authority, agency, instrumentality or commission or any United States court, tribunal, or judicial or arbitral body of any nature; or any United States body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power of any nature.

     “ Intellectual Property ” means all tangible or intangible proprietary information and materials, including, without limitation:

     (a) (i) all inventions (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereon, and all patents, patent applications and patent disclosures, together with all reissuances, continuations, continuations-in-part, divisions, revisions, extensions and re-examinations thereof, (ii) all trademarks, services marks, trade dress, logos, trade names, domain names, and corporate names, together with all translations, adaptations, derivations and combinations thereof and including all goodwill associated therewith, and all applications, registrations and renewals in connection therewith, (iii) all copyrights and all applications, registrations and renewals in connection therewith, (iv) all trade secrets and confidential business information (including ideas, research and development, know-how, formulas, compositions, manufacturing and production process and techniques, methods, schematics, technology, technical data, designs, drawings, flowcharts, block diagrams, specifications, customer and supplier lists, pricing and cost information and business and marketing plans and proposals), and (v) all software and firmware (including data, databases and related documentation);

     (b) all documents, records and files relating to design, end user documentation, manufacturing, quality control, sales, marketing or customer support for, and tangible embodiments of, all intellectual property described herein; and

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     (c) all licenses, agreements and other rights in any third party intellectual property described in (a) and (b) above other than any “off-the-shelf” third party software or related intellectual property.

     “ Liens ” means with respect to any asset (including any security), any mortgage, claim, lien, pledge, charge, title defect, security interest or encumbrance of any kind in respect to such asset.

     “ Parent Material Adverse Effect ” means any event, fact, circumstance, change or effect that would reasonably be expected to prevent, or materially hinder Parent or MergerSub from consummating the Offer, the Merger or any of the other transactions contemplated by this Agreement or otherwise complying with its obligations under this Agreement.

     “ person ” or “ Person ” means an individual, corporation, partnership, limited partnership, limited liability company, joint venture syndicate, person (including a “person” as defined in Section 13(d)(3) of the Exchange Act), trust, association or entity or government, political subdivision, agency or instrumentality of a government, including Governmental Authorities.

     “ Rights Agreement ” means the rights agreement, dated as of December 22, 2000, by and between the Company (f/k/a Sundog Technologies, Inc.) and Atlas Stock Transfer Corporation as Rights Agent thereunder as amended and restated as of the date hereof.

     “ Securities Act ” means the Securities Act of 1933, as amended and supplemented.

     “ Substantial Detriment ” shall mean any action having the effects that are: (a) reasonably likely to have a Company Material Adverse Effect or a Parent Material Adverse Effect (either before or after giving effect to the Merger), or (b) that could reasonably be expected to substantially impair the benefits to Parent reasonably expected, as of the date hereof, to be realized from consummation of the Merger.

     “ Superior Proposal ” shall mean a bona fide written Acquisition Proposal made by a third party (a) on terms which the Company Board determines in good faith (after consultation with its financial and legal advisors) to be more favorable to the stockholders of the Company (in their capacity as stockholders) from a financial point of view as compared to the transactions contemplated hereby (after giving effect to any alternative proposed by Parent in accordance with Section 7.04(d)), (b) the material conditions to the consummation of which are reasonably capable of being satisfied in the judgment of the Company Board (taking into account, among other things, all legal, financial, regulatory and other aspects of the proposal, including any conditions, and the identity of the offeror) and (c) in respect of which any required financing has been determined in good faith by the Company Board to be reasonably likely to be obtained. For the purposes of this definition, the term “Acquisition Proposal” shall have the meaning set forth in the above definition of Acquisition Proposal, except that all references to “15%” shall be deemed references to “66 2/3%”.

     “ U.S. Dollars ” and the sign “ $ ” shall each mean the lawful currency of the United States of America.

     (a) the following terms have the meaning set forth in the Sections set forth below:

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      Section 1.02. Interpretation and Rules of Construction .

     In this Agreement, except to the extent otherwise provided or that the context otherwise requires:

          (a) when a reference is made in this Agreement to an Article, Section, Exhibit or Schedule, such reference is to an Article or Section of, or an Exhibit or Schedule to, this Agreement unless otherwise indicated;

          (b) the table of contents and headings for this Agreement are for reference purposes only and do not affect in any way the meaning or interpretation of this Agreement;

          (c) whenever the words “include,” “includes” or “including” are used in this Agreement, they are deemed to be followed by the words “without limitation”;

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          (d) the words “hereof,” “herein” and “hereunder” and words of similar import, when used in this Agreement, refer to this Agreement as a whole and not to any particular provision of this Agreement;

          (e) references to any statute, rule or regulation are to the statute, rule or regulation as amended, modified, supplemented or replaced from time to time (and, in the case of statutes, include any rules and regulations promulgated under the statute) and to any section of any statute, rule or regulation include any successor to the section;

          (f) all terms defined in this Agreement have the defined meanings when used in any certificate or other document made or delivered pursuant hereto, unless otherwise defined therein;

          (g) the definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms;

          (h) references to a person are also to its successors and permitted assigns; and

          (i) the use of “or” is not intended to be exclusive unless expressly indicated otherwise.

ARTICLE II

THE OFFER AND THE MERGER

      Section 2.01. The Offer .

          (a) Provided that this Agreement shall not have been terminated in accordance with Article IX, and none of the events set forth in paragraphs (a), (b), (c) (to the extent performance is required theretofore), (d), (e) and (f) of Annex I hereto shall have occurred and be continuing, as promptly as practicable and in any event within ten (10) Business Days after the date hereof, Parent shall cause MergerSub to commence (within the meaning of Rule 14d-2 under the Exchange Act) an offer to purchase all outstanding Company Common Shares and Series B Preferred Shares at the Common Stock Offer Price and Preferred Stock Offer Price, respectively, and Parent and MergerSub shall, upon commencement of the Offer but after affording the Company reasonable opportunity to review and comment thereon, file or cause to be filed a Tender Offer Statement on Schedule TO with respect to the Offer (together with all amendments and supplements thereto and including exhibits thereto, the “ Schedule TO ”) and all other necessary documents with the Securities and Exchange Commission (the “ SEC ”) and make all deliveries, mailings and telephonic notices required by Rule 14d-3 under the Exchange Act, in each case in connection with the Offer (the “ Offer Documents ”), and shall use its commercially reasonable efforts to consummate the Offer, subject to the terms and conditions thereof. Subject to the terms and conditions of this Agreement and to the satisfaction or waiver of the conditions set forth in Annex I hereto (the “ Tender Offer Conditions ”), MergerSub shall, and Parent shall cause it to, as soon as possible, but in no event more than five (5) Business Days after the expiration of the Offer, as extended in accordance with this Section 2.01, (or, if applicable, the expiration of the “initial offering period”), accept for payment, and pay for (after giving effect to any required withholding Tax), all Company Common Shares and Series B Preferred Shares

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validly tendered pursuant to the Offer and not withdrawn (the first date of acceptance for payment and payment, the “ Acceptance Date ”). Parent and the Company each agree promptly to correct any information provided by it for use in the Offer Documents if and to the extent that it shall have become false or misleading in any material respect and Parent shall take all steps necessary to cause the Schedule TO, as so corrected or supplemented, to be filed with the SEC and the Offer Documents, as so corrected or supplemented, to be disseminated to holders of shares, in each case as and to the extent required by applicable Federal securities laws. The Company and its counsel shall be given a reasonable opportunity to review and comment on any written (if in writing) and oral comments that may be received by Parent or its counsel from the SEC or its staff with respect to the Offer Documents and proposed responses to any such comments prior to the submission of any such responses to the SEC.

          (b) Without the prior written consent of the Company, MergerSub shall not decrease the Common Stock Offer Price or Preferred Stock Offer Price or change the form of consideration payable in the Offer, decrease the number of Company Common Shares or Series B Preferred Shares sought to be purchased in the Offer, impose additional conditions to the Offer or amend any other term of the Offer in any manner adverse to the holders of Company Common Shares or Series B Preferred Shares. MergerSub may, in its sole and absolute discretion, increase the Common Stock Offer Price or Preferred Stock Offer Price without the consent of the Company. The initial expiration date of the Offer shall be the twentieth business day (as such term is defined in Rule 14d-1(g)(3) under the Exchange Act) following the commencement of the Offer (determined using Rules 14d-1(g)(3) and 14d-2 promulgated under the Exchange Act), unless extended in accordance with this Section 2.01. MergerSub expressly reserves the right to waive any condition to the Offer or modify the terms of the Offer, subject to compliance with the Exchange Act and this subsection (b); provided that all such modifications to the terms of the Offer (other than a modification to increase the Common Stock Offer Price or Preferred Stock Offer Price or to waive a condition to the Offer) shall not, in the aggregate, reasonably be expected to delay the Acceptance Date by more than ten Business Days after the first public dissemination of notice of any such modification and more than twenty Business Days beyond the initial expiration date of the Offer. Except as expressly provided below in this subsection (b), MergerSub shall not extend the Offer if all of the conditions of the Offer are satisfied or waived and it is permitted under applicable Law to accept for payment and pay for tendered shares. Notwithstanding the foregoing, MergerSub shall extend the Offer at any time and, from time to time: (i) if at the then-scheduled expiration date of the Offer any of the Tender Offer Conditions shall not have been satisfied or waived, until such time as such conditions are satisfied or waived; provided that any extension shall be in increments of not more than three Business Days (unless a longer period of time is agreed to by the Company in writing, such agreement not to be unreasonably withheld); (2) for any period required by any rule, regulation, interpretation or position of the SEC or its staff applicable to the Offer; or (3) if the Minimum Tender Condition has been satisfied and all of the other Tender Offer Conditions are satisfied or waived, and Company Common Shares and Series B Preferred Shares have been accepted for payment, but the number of (X) Company Common Shares, plus (Y) Series B Preferred Shares acquired by MergerSub (together with other Company Common Shares and Series B Preferred Shares owned of record by Parent or its Affiliates) is less than 90% of the then Fully Diluted Outstanding Company Common Shares for an aggregate period of not more than ten Business Days (for all such extensions pursuant to this clause (3)) as a “subsequent offering period” (the “ Subsequent Offering Period ”) in accordance with Rule 14d-11 of the Exchange Act. Nothing contained in

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this paragraph shall affect any termination rights in Article IX. Subject to the terms of the Offer and this Agreement and the satisfaction of all the Tender Offer Conditions as of any date on which the Offer is scheduled to expire, MergerSub will accept for payment and pay for all Company Common Shares and Series B Preferred Shares validly tendered and not validly withdrawn pursuant to the Offer as soon as practicable, but in no event more than five (5) Business Days, after the expiration of the Offer, as extended in accordance with this Section 2.01.

      Section 2.02. Company Actions .

          (a) The Company shall, after affording Parent a reasonable opportunity to review and comment thereon, file with the SEC and mail to the holders of Company Common Shares and Series B Preferred Shares, as promptly as practicable on the date of the filing by Parent and MergerSub of the Offer Documents, a Solicitation/Recommendation Statement on Schedule 14D-9 (together with any amendments or supplements thereto, the “ Schedule 14D-9 ”) reflecting the recommendation of the Company Board that holders of Company Common Shares and Series B Preferred Shares tender their Company Common Shares and/or Series B Preferred Shares, as the case may be, pursuant to the Offer and including the information required under Rule 14f-1 and shall disseminate the Schedule 14D-9 and the Offer Documents to the stockholders of the Company as required by Rule 14d-9 promulgated under the Exchange Act. The Schedule 14D-9 will set forth, and the Company hereby represents, that the Company Board, at a meeting duly called and held at which a quorum was present throughout, has (i) determined that each of the Offer and the Merger is advisable and in the best interests of the Company and its stockholders, (ii) approved the Offer and this Agreement in accordance with the DGCL, (iii) recommended acceptance of the Offer and that holders of Company Common Shares and Series B Preferred Shares tender their shares into the Offer (the “Offer Recommendation”) and approval and adoption of this Agreement and the Merger by the Company’s stockholders if such approval and adoption is required by applicable Law (the “ Merger Recommendation ”), and (iv) taken all action necessary to approve and adopt an amendment to the Rights Agreement to render the Company Rights inapplicable to the Offer, the Merger, this Agreement and the transactions contemplated hereby; provided, however, that the Company may make a Company Adverse Recommendation Change (as hereinafter defined) only prior to the acceptance for payment of Company Common Shares and Series B Preferred Shares constituting 50% of the Fully Diluted Outstanding Company Common Shares pursuant to the Offer, and in any case only to the extent permitted by Section 7.04(d) (and then only after compliance with Section 7.04(c)). The Company hereby consents to the Offer and to the inclusion in the Offer Documents of the Offer Recommendation and the Merger Recommendation (provided, that if there has been a Company Adverse Recommendation Change, such change shall be reflected in the Offer Documents or amendments thereto). The Company agrees to correct the Schedule 14D-9 reasonably promptly if and to the extent that it shall become false or misleading in any material respect (and Parent, with respect to written information supplied by it specifically for use in the Schedule 14D-9, shall promptly notify the Company of any required corrections of such information and cooperate with the Company with respect to correcting such information) and to supplement the information contained in the Schedule 14D-9 to include any information that shall become necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The Company shall use commercially reasonable efforts to cause the Schedule 14D-9 as so

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corrected to be filed with the SEC and disseminated to the Company’s stockholders to the extent required by applicable Federal securities laws. The Company shall provide Parent (in writing, if written), and consult with Parent prior to responding to, any comments the Company or its counsel may receive from the SEC or its staff with respect to the Schedule 14D-9 as promptly as practicable after receipt of such comments prior to the submission of any such responses to the SEC.

          (b) In connection with the Offer, subject to the requirements and limitations of Rule 14d-5, the Company will promptly furnish MergerSub with mailing labels, security position listings, non-objecting beneficial owner lists and any available listing or computer list containing the names and addresses of the record holders of the Company Common Shares and Series B Preferred Shares as of the most recent practicable date and shall furnish MergerSub with such additional available information (including updated lists of holders of Company Common Shares and Series B Preferred Shares and their addresses, mailing labels and lists of security positions and non-objecting beneficial owner lists) and such other assistance as MergerSub or its agents may reasonably request in communicating the Offer to the Company’s record and beneficial stockholders. Subject to the requirements of applicable Laws, and except for such steps as are necessary to disseminate the Offer Documents and any other documents necessary to consummate the Merger, Parent, MergerSub and their Affiliates, associates, agents and advisors, shall keep such information confidential and use the information contained in any such labels, listings and files only in connection with the Offer and the Merger and, should the Offer terminate or if this Agreement shall be terminated, will promptly deliver to Company all copies of such information then in their possession.

      Section 2.03. Directors .

          (a) Subject to compliance with applicable Laws, promptly upon the payment by MergerSub for Company Common Shares and Series B Preferred Shares pursuant to the Offer and from time to time thereafter, Parent shall be entitled to designate such number of directors, rounded down to the next whole number (unless Parent and its Affiliates at such time beneficially own a majority of the outstanding Company Common Shares and Series B Preferred Shares (on an as converted basis) and in such case, then such number of directors shall be rounded up to the next whole number), on the Company Board as is equal to the product of the total number of directors on the Company Board (determined after giving effect to the directors elected pursuant to this sentence) multiplied by the percentage that the aggregate number of Company Common Shares and Series B Preferred Shares (on an as converted basis) beneficially owned by Parent and its Affiliates bears to the total number of Company Common Shares and Series B Preferred Shares (on an as converted basis) then outstanding (including Company Common Shares and Series B Preferred Shares that are accepted for payment or for which payment has been made, but excluding any shares held by the Company), and the Company shall, upon request of Parent, promptly take all actions necessary and allowable to cause Parent’s designees to be so elected, including, if necessary, seeking the resignations of one or more existing directors; provided , however , that Parent shall be entitled to designate at least a majority of the directors on the Company Board (as long as Parent and its Affiliates beneficially own a majority of the outstanding Company Common Shares and Series B Preferred Shares (on an as converted basis), which for these purposes shall exclude any Company Common Shares or Series B Preferred Shares held by the Company); and provided , further , that prior to the Effective Time,

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the Company Board shall always have at least two members who are (1) not officers, directors, employees or designees of Parent or any of its Affiliates (“ Purchaser Insiders ”) or officers or directors of Affiliates of the Company (other than by reason of being directors of the Company) or officers or directors of any joint venture partner or participant (other than the Company) or its Affiliates (“ Interested Persons ”), (2) members of the Company Board as of the date hereof, and (3) reasonably satisfactory to Parent. If the number of directors who are not Purchaser Insiders is reduced below two prior to the Effective Time, the remaining director who is not a Purchaser Insider shall be entitled to designate a Person to fill such vacancy who is not a Purchaser Insider or Interested Person and who shall be a director not deemed to be a Purchaser Insider or Interested Person for all purposes of this Agreement; provided that if the number of directors who are not Purchaser Insiders is reduced to zero prior to the Effective Time, a majority of the members of the Company Board at the time of the execution of this Agreement shall be entitled to designate two Persons to fill such vacancies who are not Purchaser Insiders or Interested Persons and who are reasonably satisfactory to Parent and who shall be directors not deemed to be Purchaser Insiders for all purposes of this Agreement.

          (b) The Company’s obligations to appoint Parent’s designees to the Company Board shall be subject to Section 14(f) of the Exchange Act and Rule 14-f thereunder. The Company shall promptly take all actions required pursuant to such Section and Rule in order to fulfill its obligations under this Section 2.03 and shall include in the Schedule 14D-9 such information with respect to the Company and its officers and directors as is required under such Section and Rule in order to fulfill its obligations under this Section 2.03. Parent will promptly supply to Company any information with respect to itself and its officers, directors and Affiliates required by such Section and Rule.

          (c) Following the election or appointment of Parent’s designees pursuant to this Section 2.03 and prior to the Effective Time, any amendment or termination of this Agreement by the Company, any extension by the Company of the time for the performance of any of the obligations or other acts of Parent, the waiver of any of the Company’s rights hereunder, or the taking of any other action by the Company in connection with this Agreement or the transactions contemplated hereby required to be taken by the Company Board will require the concurrence of the two directors of the Company then in office who are not Purchaser Insiders if such amendment, termination, extension or waiver would or could reasonably be expected to have an adverse effect on the stockholders of the Company other than Parent and its Affiliates. The directors of the Company who are not Purchaser Insiders shall have the authority to retain such counsel (which may include current counsel to the Company) and other advisors at the expense of the Company as determined appropriate by such directors and shall have the authority to institute any action on behalf of the Company to enforce the performance of this Agreement.

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      Section 2.04. Company Stock Options .

          (a) On the earlier to occur of (i) the Acceptance Date (if the Minimum Tender Condition has been satisfied) MergerSub acquires pursuant to the Offer (including the Tender and Support Agreements) a majority of the outstanding Company Common Shares and Series B Preferred Shares (on an as converted basis) combined as of such date, and (ii) the Effective Time (the earlier of such dates, the “ Majority Purchase Date ”), and without any action on the part of any holder of outstanding Company Stock Options, each Company Stock Option, shall be cancelled and shall only entitle the holder thereof to receive, as soon as reasonably practicable after the Acceptance Date, an amount in cash, without interest, equal to the product of (x) the total number of vested shares of Company Common Shares subject to the Company Stock Option multiplied by (y) the excess, if any, of the value of the Common Stock Offer Price over the per share exercise price of any such Company Stock Option less applicable Taxes required to be withheld with respect to any such payment (the “ Option Consideration ”). In the event that the exercise price of any Company Stock Option is equal to or greater than the Common Stock Offer Price, such Company Stock Option shall be cancelled and have no further force or effect. Prior to the Acceptance Date, the Company shall take any actions that are necessary to accomplish the provisions of this Section 2.04(a).

          (b) On the Acceptance Date, the Parent shall remit to the Company’s payroll provider an amount equal to the aggregate Option Consideration to be paid to the holders of the Company Stock Options. Payment of the Option Consideration shall be made by the Company’s payroll service provider as soon as reasonably practicable after the Acceptance Date.

          (c) The Option Consideration paid with respect to Company Stock Options in accordance with the terms of this Article II shall be deemed to have been paid in full satisfaction of all rights and privileges pertaining to the canceled Company Stock Options, and on and after the Acceptance Date the holder of a Company Stock Option shall have no further rights with respect to any Company Stock Option, other than the right to receive the Option Consideration as provided in Section 2.04(a).

          (d) As soon as practicable following the execution of this Agreement, the Company shall mail to each person who is a holder of Company Stock Options a letter describing the treatment of and payment for such Company Stock Options pursuant to Section 2.04(a) and providing instructions for use in obtaining payment for such Company Stock Options.

      Section 2.05. Top-Up Option .

          (a) Subject to Section 2.05(b) and Section 2.05(c) hereof, the Company grants to MergerSub an irrevocable option (the “ Top-Up Option ”), for so long as this Agreement has not been terminated pursuant to the provisions of Article IX, to purchase from the Company at a price per share equal to the Common Stock Offer Price the number of authorized and unissued shares of Company Common Shares equal to the number of Company Common Shares that, when added to the number of Company Common Shares and Series B Preferred Shares owned by MergerSub at the time of exercise of the Top-Up Option, constitutes one (1) Company Common Share more than 90% of the Fully Diluted Outstanding Company Common Shares that

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would be outstanding immediately after the issuance of all shares of Company Common Shares subject to the Top-Up Option (such shares of Company Common Shares subject to the Top-Up Option, the “ Top-Up Shares ”).

          (b) The Top-Up Option may be exercised by MergerSub, in whole or in part, only once, at any time during the 10 business day period following the Acceptance Date, or if the Subsequent Offering Period is made available, during the 10 business day period following the expiration date of the Subsequent Offering Period and only if Parent and MergerSub collectively shall own as of such time (1) less than 90% of the Fully Diluted Outstanding Company Common Shares and (2) more than 66% of the Fully Diluted Company Common Shares; provided , however , that notwithstanding anything in this Agreement to the contrary (i) the Top-Up Option shall not be exercisable if any provision of applicable Laws or any judgment, injunction, order or decree of any Governmental Authority would prohibit, or require any action, consent, approval, authorization or permit of, action by, or filing with or notification to, any Governmental Authority or the Company’s stockholders in connection with the exercise of the Top-Up Option or the delivery of the Top-Up Shares in respect of such exercise, which action, consent, approval, authorization or permit, action, filing or notification has not theretofore been obtained or made, as applicable and (ii) the Top-Up Option shall be exercisable only up to the number of authorized but unissued shares of Company Common Stock after taking into account any shares of Company Common Stock reserved for issuance upon the exercise of any outstanding Warrant. The aggregate purchase price payable for the shares of Company Common Shares being purchased by MergerSub pursuant to the Top-Up Option shall be determined by multiplying the number of such shares by the Common Stock Offer Price. Such purchase price may be paid by MergerSub, at its election, either entirely in cash or by paying in cash an amount equal to not less than the aggregate par value of such shares and by executing and delivering to the Company a promissory note fully secured by collateral other than the Company Common Shares issuable upon exercise of the Top-Up Option having a principal amount equal to the balance of such purchase price. Any such promissory note shall bear interest at the rate of 3% per annum, shall mature on the first anniversary of the date of execution and delivery of such promissory note and may be prepaid without premium or penalty.

          (c) In the event MergerSub wishes to exercise the Top-Up Option, MergerSub shall deliver to the Company a notice (the “ Top-Up Notice ”) setting forth (i) the number of Top-Up Shares that MergerSub intends to purchase pursuant to the Top-Up Option, (ii) the manner in which MergerSub intends to pay the applicable purchase price and (iii) the place and time at which the closing of the purchase of such Top-Up Shares by MergerSub is to take place. The Top-Up Notice shall also include an undertaking signed by Parent and MergerSub that, as promptly as practicable following such exercise of the Top-Up Option, MergerSub and Parent intend to (and MergerSub shall, and Parent shall cause MergerSub to, as promptly as practicable after such exercise) consummate the Merger in accordance with the DGCL as contemplated by Section 7.02. At the closing of the purchase of the Top-Up Shares, Parent and MergerSub shall cause to be delivered to the Company the consideration required to be delivered in exchange for the Top-Up Shares, and the Company shall cause to be issued to Parent, a certificate representing the Top-Up Shares. The parties hereto agree to use their commercially reasonable efforts to cause the closing of the purchase of the Top-Up Shares to occur on the same day that the Top-Up Notice is deemed received by the Company pursuant to Section 10.02, and if not so consummated on such day, as promptly thereafter as possible. The parties further agree to use

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their commercially reasonable efforts to cause the Merger to be consummated in accordance with the DGCL as contemplated by Section 7.02 as close in time as possible to (including, to the extent possible, on the same day as) the issuance of the Top-Up Shares.

          (d) Parent and MergerSub understand that the Top-Up Shares will not be registered under the Securities Act and will be issued in reliance upon an exemption thereunder for transactions not involving a public offering. Parent and MergerSub represent, warrant and agree that the Top-Up Option is being, and the Top-Up Shares will be, acquired by MergerSub for the purpose of investment and not with a view to or for resale in connection with any distribution thereof within the meaning of the Securities Act. Any certificates evidencing Top-Up Shares may include any legends required by applicable securities laws.

      Section 2.06. Merger . Subject to the terms and conditions of this Agreement, and in accordance with the DGCL, at the Effective Time, MergerSub, Parent and the Company shall consummate the Merger pursuant to which (i) MergerSub shall be merged with and into the Company and the separate existence of MergerSub shall thereupon cease and (ii) the Company shall be the surviving corporation in the Merger (the “ Surviving Corporation ”). The Merger shall have the effects specified in the DGCL.

      Section 2.07. The Company Charter . At the Effective Time, the Company Charter as in effect immediately prior to the Effective Time shall be amended and restated in its entirety to be identical to the certificate of incorporation of the MergerSub until thereafter amended as provided therein or by applicable Law; provided , however , that Article I of the certificate of incorporation of the Surviving Corporation shall read as follows: The name of the corporation is Alias, Inc. After the Effective Time, the authorized capital stock of the Surviving Corporation shall consist of 10,000 shares of common stock, par value $.01 per share.

      Section 2.08. The Company Bylaws . At the Effective Time, the Company Bylaws as in effect immediately prior to the Effective Time shall be amended and restated in their entirety to be identical to the bylaws of MergerSub, as in effect immediately prior to the Effective Time until thereafter amended as provided therein or by applicable Law.

      Section 2.09. Effective Time . As soon as practicable following the Closing, the Company and MergerSub will cause a Certificate of Merger (the “ Certificate of Merger ”) to be executed and delivered to the Secretary of State of the State of Delaware as provided in Section 251 of the DGCL. The Merger shall become effective at the time when the Certificate of Merger has been duly filed with the Secretary of State of the State of Delaware or at such later time as may be agreed by the parties in writing and specified in the Certificate of Merger (the “ Effective Time ”).

      Section 2.10. Closing . The closing of the Merger (the “ Closing ”) shall occur as promptly as practicable (but in no event later than the second (2nd) Business Day) after all of the conditions set forth in Article VIII (other than conditions which by their terms are required to be satisfied or waived at the Closing) shall have been satisfied or waived by the party entitled to the benefit of the same, and, subject to the foregoing, shall take place at such time and on a date to be specified by the parties (the “ Closing Date ”). The Closing shall take place at the offices of

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Goodwin Procter LLP, 53 State Street, Exchange Place, Boston, MA 02109, or at such other place as agreed to by the parties hereto.

      Section 2.11. Directors and Officers of Surviving Corporation . The directors and officers of MergerSub immediately prior to the Effective Time, shall be the initial directors and officers, respectively, of Surviving Corporation, each to hold office in accordance with the terms of the certificate of incorporation of Surviving Corporation.

ARTICLE III

EFFECTS OF THE MERGER

      Section 3.01. Effects on Shares . As of the Effective Time, by virtue of the Merger and without any action on the part of the holder of Company Common Shares, Series B Preferred Shares or holders of any shares of stock of MergerSub:

          (a) Each share of the stock of MergerSub issued and outstanding immediately prior to the Effective Time shall be converted into one duly authorized, validly issued, fully paid and nonassessable share of common stock, $.01 par value per share, of the Surviving Corporation, so that, after the Effective Time, the stockholders of MergerSub shall be the holder of all of the issued and outstanding common stock of the Surviving Corporation.

          (b) Each Company Common Share and Series B Preferred Share that is owned by the Company or by MergerSub shall, immediately prior to the Effective Time, automatically be cancelled and retired and shall cease to exist, and no payment shall be made with respect thereto.

          (c) Each Company Common Share issued and outstanding immediately prior to the Effective Time (other than Dissenting Shares, as defined below, and shares to be canceled in accordance with Section 3.01(b)) shall automatically be converted into, and canceled in exchange for, the right to receive an amount in cash to be paid by Parent equal to the Common Stock Offer Price (the “ Company Common Share Merger Consideration ”). At any time prior to the date of the Company Stockholder Meeting, Parent may, in its sole and absolute discretion but subject to all applicable Laws, increase the Company Common Share Merger Consideration without the consent of the Company.

          (d) At the Effective Time, by virtue of the Merger and without any action on the part of any holder of outstanding warrants to purchase shares of Company Common Shares (“ Company Warrants ”), if permitted by the terms of the respective Company Warrant, each Company Warrant shall be canceled and shall only entitle the holder thereof to receive, as soon as reasonably practicable after the Effective Time, an amount in cash, without interest, equal to the product of (x) the total number of Company Common Shares issuable upon exercise of the Company Warrant multiplied by (y) the excess, if any, of the value of the Company Common Share Merger Consideration over the per share exercise price of such Company Warrant less applicable Taxes required to be withheld with respect to any such payment (the “ Warrant Merger Consideration ”). In the event that the exercise price of any Company Warrant is equal to or greater than the Company Common Share Merger Consideration, such Company Warrant shall

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be cancelled and have no further force or effect. Prior to the Effective Time, the Company shall use commercially reasonable efforts to take any actions that are necessary to accomplish the provisions of Section 3.01(d).

          (e) Each Series B Preferred Share issued and outstanding immediately prior to the Effective Time (other than Dissenting Shares, as defined below, and shares to be canceled in accordance with Section 3.01(b)) shall automatically be converted into, and canceled in exchange for, the right to receive an amount in cash to be paid by Parent equal to the Preferred Stock Offer Price (the “ Series B Per Share Merger Consideration ”).

      Section 3.02. Exchange of Certificates and Warrants; Paying Agent .

          (a) Paying Agent . Prior to the Effective Time, Parent shall appoint a bank or trust company reasonably satisfactory to the Company to act as Exchange and Paying Agent (the “ Paying Agent ”) for the payment or exchange, as applicable, in accordance with this Article III, of the Company Common Share Merger Consideration, the Series B Per Share Merger Consideration and the Warrant Merger Consideration (collectively, such cash being referred to as the “ Exchange Fund ”). On or before the Effective Time, Parent shall deposit with the Paying Agent the Exchange Fund for the benefit of the holders of Company Common Shares, Series B Preferred Shares and Company Warrants. Parent shall cause the Paying Agent to make, and the Paying Agent shall make, payments of the Company Common Share Merger Consideration, the Series B Per Share Merger Consideration and the Warrant Merger Consideration out of the Exchange Fund in accordance with this Agreement and the Articles of Merger. The Exchange Fund shall not be used for any other purpose. Any and all interest earned on cash deposited in the Exchange Fund shall be paid to Surviving Corporation.

          (b) Share Transfer Books . At the Effective Time, the share transfer books of the Company shall be closed and thereafter there shall be no further registration of transfers of the Company Common Shares or Series B Preferred Shares. From and after the Effective Time, persons who held Company Common Shares or Series B Preferred Shares immediately prior to the Effective Time shall cease to have rights with respect to such shares, except as otherwise provided for herein. On or after the Effective Time, any Certificates of the Company presented to the Paying Agent, Surviving Corporation or the transfer agent for any reason shall be exchanged for the Company Common Share Merger Consideration or Series B Preferred Share Consideration with respect to the Company Common Shares or Series B Preferred Shares formerly represented thereby.

          (c) Exchange Procedures for Certificates and Warrants . Promptly after the Effective Time, Parent and the Surviving Corporation shall cause the Paying Agent to mail to each person who immediately prior to the Effective Time held Company Common Shares and/or Series B Preferred Shares and/or Company Warrants that were converted into the right to receive the Company Common Share Merger Consideration and/or Series B Per Share Merger Consideration and/or Warrant Merger Consideration, respectively, pursuant to Section 3.01: (i) a letter of transmittal (which shall specify that delivery of Certificates and/or the original warrant agreement or instruments formerly representing such Company Warrants shall be effected, and risk of loss and title to the Certificates and Company Warrants shall pass to the Paying Agent, only upon delivery of the Certificates or original warrant agreement or instruments formerly

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representing such Company Warrants to the Paying Agent, and which letter shall be in such form and have such other provisions as Parent and the Company may reasonably specify); and (ii) instructions for use in effecting the surrender of the holder’s Certificates and Company Warrants in exchange for the Company Common Share Merger Consideration and/or Series B Per Share Merger Consideration and/or Warrant Merger Consideration to which the holder thereof is entitled. Upon surrender of a Certificate or Company Warrant for cancellation to the Paying Agent or to such other agent or agents reasonably satisfactory to the Company as may be appointed by Parent, together with such letter of transmittal, duly executed and completed in accordance with the instructions thereto, and such other documents as may reasonably be required by the Paying Agent, the holder of such Certificate or Company Warrant shall receive in exchange therefor the Company Common Share Merger Consideration payable in respect of the Company Common Shares and/or the Series B Per Share Merger Consideration payable in respect of the Series B Preferred Shares and/or the Warrant Merger Consideration payable in respect of the Company Warrants, each of which were previously represented by such Certificate or Company Warrant pursuant to the provisions of this Article III, and the Certificate or Company Warrants so surrendered shall forthwith be canceled. In the event of a transfer of ownership of Company Common Shares or Series B Preferred Shares or Company Warrants that is not registered in the transfer records of the Company, payment may be made to a person other than the person in whose name the Certificate or Company Warrant so surrendered is registered, if such Certificate or Company Warrant 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 Company Warrant or establish to the satisfaction of Parent that such tax has been paid or is not applicable. Until surrendered as contemplated by this Section 3.02, each Certificate or Company Warrant shall be deemed at any time after the Effective Time to represent only the right to receive, upon such surrender, the Company Common Share Merger Consideration, Series B Per Share Merger Consideration or Warrant Merger Consideration, as the case may be, as contemplated by this Section 3.02. No interest shall be paid or accrue on the Company Common Share Merger Consideration, the Series B Per Share Merger Consideration or Warrant Merger Consideration.

          (d) No Further Ownership Rights . At the Effective Time, holders of Company Common Shares and Series B Preferred Shares shall cease to be, and shall have no rights as, stockholders of the Company other than the right to receive the Company Common Share Merger Consideration or Series B Per Share Merger Consideration, respectively, as provided under this Article III. The Company Common Share Merger Consideration and Series B Per Share Merger Consideration paid upon the surrender for exchange of Certificates representing Company Common Shares or Series B Preferred Shares, as the case may be, in accordance with the terms of this Article III shall be deemed to have been paid in full satisfaction of all rights and privileges pertaining to the Company Common Shares and Series B Preferred Shares exchanged theretofore and represented by such Certificates. The Warrant Merger Consideration paid with respect to Company Warrants in accordance with the terms of this Article III shall be deemed to have been paid in full satisfaction of all rights and privileges pertaining to the canceled Company Warrants, and on and after the Effective Time the holder of a Company Warrant canceled pursuant to this Article III shall have no further rights with respect to any Company Warrant, other than the right to receive the Warrant Merger Consideration as provided in Section 3.01(d).

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          (e) Termination of Exchange Fund. Any portion of the Exchange Fund which remains undistributed to the holders of Company Common Shares, Series B Preferred Shares or Company Warrants, for one hundred eighty (180) days after the Effective Time shall be delivered to Parent, and any holders of Company Common Shares, Series B Preferred Shares or Company Warrants prior to the Merger who have not theretofore complied with this Article III shall thereafter look only to Parent for payment of the Company Common Share Merger Consideration, Series B Per Share Merger Consideration, or Warrant Merger Consideration, as applicable.

          (f) No Liability . None of Parent, MergerSub, Surviving Corporation, the Company or the Paying Agent, or any employee, officer, director, stockholder, partner, member, agent or Affiliate thereof, shall be liable to any person in respect of the Company Common Share Merger Consideration, Series B Per Share Merger Consideration, Option Consideration or Warrant Merger Consideration if the Exchange Fund (or Option Consideration funds) has been delivered to a public official as required by any applicable abandoned property, escheat or similar Law.

          (g) Investment of Exchange Fund . The Paying Agent shall invest the cash included in the Exchange Fund, as directed by Parent, on a daily basis. Any net profit resulting from, or interest or income produced by, such investments shall be placed in the Exchange Fund. To the extent that there are losses with respect to such investments, or the Exchange Fund diminishes for other reasons below the level required to make prompt payments of the Company Common Share Merger Consideration, Series B Per Share Merger Consideration and Warrant Merger Consideration as contemplated hereby, Parent shall promptly replace or restore the portion of the Exchange Fund lost through investments or other events so as to ensure that the Exchange Fund is, at all times, maintained at a level sufficient to make all such payments in full.

          (h) Lost Certificates . If any Certificate or Company Warrant shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming such Certificate or Company Warrant to be lost, stolen or destroyed and, if required by Surviving Corporation or the Paying Agent, the posting by such person of a bond in such amount as Surviving Corporation or the Paying Agent reasonably may direct, the Paying Agent will issue in exchange for such lost, stolen or destroyed Certificate or Company Warrant the Company Common Share Merger Consideration, Series B Per Share Merger Consideration or Warrant Merger Consideration, as the case may be.

      Section 3.03. Withholding Rights . Parent, MergerSub, Surviving Corporation or the Paying Agent, as applicable, shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement or the Offer Documents to any holder of Company Common Shares, Series B Preferred Shares, Company Stock Options, or Company Warrants such amounts as it is required to deduct and withhold with respect to the making of such payment under the Code, and the rules and regulations promulgated thereunder, or any provision of state, local or foreign tax law. To the extent that amounts are so withheld by MergerSub, Surviving Corporation, Parent or the Paying Agent, as applicable, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of Company Common Shares, Series B Preferred Shares, Company Stock Options or Company Warrants in

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respect of which such deduction and withholding was made by MergerSub, Surviving Corporation, Parent or the Paying Agent, as applicable.

      Section 3.04. Appraisal Rights .

          (a) Notwithstanding anything in this Agreement to the contrary, any Company Common Shares or Series B Preferred Shares that are issued and outstanding immediately prior to the Effective Time and that are held by stockholders who, in accordance with Section 262 of the DGCL (the ‘‘ Appraisal Rights Provisions ’’) (i) have not voted in favor of adopting and approving this Agreement, (ii) shall have demanded properly in writing appraisal for such shares, and (iii) have not effectively withdrawn, lost or failed to perfect their rights to appraisal (collectively, the ‘‘ Dissenting Shares ’’), will not be converted as described in Section 3.01, but at the Effective Time, by virtue of the Merger and without any action on the part of the holder thereof, shall be cancelled and shall cease to exist and shall represent the right to receive only those rights provided under the Appraisal Rights Provisions; provided, however, that all Company Common Shares or Series B Preferred Shares held by stockholders who shall have failed to perfect or who effectively shall have withdrawn or lost their rights to appraisal of such Company Common Shares or Series B Preferred Shares under the Appraisal Rights Provisions shall thereupon be deemed to have been canceled and to have been converted, as of the Effective Time, into the right to receive the Company Common Share Merger Consolidation or Series B Per Share Merger Considerations, as applicable, relating thereto, without interest, in the manner provided in Section 3.1. Persons who have perfected statutory rights with respect to Dissenting Shares (the ‘‘ Dissenting Stockholders ’’) as described above will not be paid as provided in this Agreement and will have only such rights as are provided by the Appraisal Rights Provisions with respect to such Dissenting Shares.

          (b) The Company shall give Parent and MergerSub prompt (and in any event within 10 days of receipt) notice of any demands received by the Company for the exercise of appraisal rights with respect to Company Common Shares or Series B Preferred Shares. Parent shall have the right to direct all negotiations and proceedings with respect to such demands, subject, prior to the Effective Time, to consultation with the Company. The Company shall not, except with the prior written consent of Parent or as required pursuant to court order, make any payment with respect to, or settle or offer to settle, any such demands.

          (c) Each Dissenting Stockholder who becomes entitled under the Appraisal Rights Provisions to payment for Dissenting Shares shall receive payment therefor after the Effective Time from the Surviving Corporation (but only after the amount thereof shall have been agreed upon or finally determined pursuant to the Appraisal Rights Provisions), and such Company Common Shares or Series B Preferred Shares, as applicable, shall be canceled.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     Except as set forth in the Disclosure Schedule, the Company represents and warrants to Parent and MergerSub as of the date hereof that:

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      Section 4.01. Organization, Good Standing and Qualification . The Company is a corporation duly organized, validly existing and in good standing under the Laws of its jurisdiction of organization and has all requisite corporate or similar power and authority to own and operate its properties and assets and to carry on its business as presently conducted and is qualified to do business and, where applicable as a legal concept, is in good standing as a foreign corporation in each jurisdiction where the ownership or operation of its assets or properties or conduct of its business requires such qualification, except where the failure to be so organized, qualified or in good standing, or to have such power or authority when taken together with all other such failures, has not had, and is not reasonably likely to have, a Company Material Adverse Effect. The Company has made available to Parent a complete and accurate copy of the Company Charter and Company Bylaws, each as amended to the date hereof. The Company Charter and Company Bylaws so delivered are in full force and effect. The Company has made available to Parent complete and accurate copies of the minutes of all meetings of the stockholders, the Company Board and each committee of the Company Board held between January 1, 2000 and the date hereof. The Company does not own directly or indirectly any capital stock, equity interest or voting interest in any Person.

      Section 4.02. Capital Structure .

          (a) The authorized shares of the Company consist of 75,000,000 Company Common Shares and 10,000,000 shares of preferred stock (“ Preferred Stock ”), par value $.001, of the Company, of which 500,000 shares have been designated as Series A Preferred Stock and 1,000,000 shares have been designated as Series B Preferred Stock. As of the date of this Agreement 33,484,740 Company Common Shares, no shares of Series A Preferred Stock and 575,000 shares of Series B Preferred Stock were issued and outstanding. There has been no adjustment to the conversion price for the Series B Preferred Stock from that set forth in the Company Charter. The Company has no Company Common Shares or Preferred Stock reserved for issuance, except that, as of the date of this Agreement: (i) 9,000,000 Company Common Shares were reserved for issuance by the Company pursuant to Company Stock Options available for grant under the Company’s 2001 Stock Incentive Plan (Amended and Restated), as amended to date (the “ Company Stock Plan ”), and (ii) 6,140,000 Company Common Shares were reserved for issuance pursuant to Company Stock Options outstanding under the Company Stock Plan, (iii) 2,424,092 Company Common Shares were reserved for issuance pursuant to outstanding Company Warrants to purchase Company Common Shares, and (iv) an indeterminate number of Series A Preferred Shares of the Company are subject to the Rights Agreement. Section 4.02(a) of the Disclosure Schedule sets forth a complete and accurate list, as of the date specified therein, of all outstanding Company Stock Options and Company Warrants, indicating with respect to each such Company Stock Option or Company Warrant, as the case may be, the name of the holder thereof, the number of Company Common Shares subject to such Company Stock Option or Company Warrant, the exercise price, the date of grant, the expiration date and the vesting schedule, including whether (and to what extent) the vesting will be accelerated in any way by the execution of this Agreement, or the transactions contemplated hereby (including the Offer and the Merger) or by termination of employment or change in position following consummation of the Merger. The Company has made available to Parent complete and accurate copies of all Company Stock Plans and the forms of all stock option agreements evidencing Company Stock Options. The Company Common Shares are quoted on the OTCBB. Since April 15, 2007, except for the issuance of Company Common Shares

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pursuant to Company Stock Options and Company Warrants outstanding as of that date and the issuance of options to purchase Company Common Shares issued under the Company Stock Plans through the date hereof, the Company has not (i) issued any Company Common Shares, Preferred Stock, Company Stock Options, other stock awards or other capital stock or equity securities of the Company or (ii) changed the authorized share capital of the Company. Except as otherwise set forth above in this Section 4.02, the Disclosure Schedule and in the Rights Agreement, there are no preemptive or other outstanding rights, options, warrants, conversion rights, phantom stock units or stock appreciation rights or similar rights, redemption rights, repurchase rights, agreements, arrangements, calls, commitments or rights of any kind that obligate the Company to issue or sell any shares of capital stock or other securities of the Company or any securities or obligations convertible or exchangeable into or exercisable for, or giving any Person a right to subscribe for or acquire, any securities of the Company, and no securities or obligations evidencing such rights are authorized, issued or outstanding. The Company does not have outstanding any bonds, debentures, notes or other obligations (i) the terms of which provide the holders the right to vote with the stockholders of the Company on any matter or (ii) that are convertible into or exercisable for securities having the right to vote with the stockholders of the Company on any matter (any such bonds, debentures, notes or obligations, “ Voting Debt ”).

          (b) The Company does not own, directly or indirectly, any voting interest in any Person that requires filing by Parent under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended (the “ HSR Act ”).

          (c) Except as set forth on Section 4.02(c) of the Disclosure Schedule, there are no registration rights, and, as of the date of this Agreement, except for the Rights Agreement, there is no rights agreement, “poison pill” anti-takeover plan or other similar plan, device or arrangement to which the Company is a party or by which it or they are bound with respect to any equity security of any class of the Company. Neither the Company nor any of its Affiliates is a party to or is bound by any agreements or understandings with respect to the voting (including voting trusts and proxies) or sale or transfer (including agreements imposing transfer restrictions) of any shares of capital stock or other equity interests of the Company. There are no obligations, contingent or otherwise, of the Company to repurchase, redeem or otherwise acquire any Company Common Shares or the capital stock of the Company.

          (d) Except as set forth in the Rights Agreement or in the Disclosure Schedule, the Company is under no obligation, contingent or otherwise, by reason of any agreement to register the offer and sale or resale of any of its securities under the Securities Act.

          (e) The Company Board (or, if appropriate, any committee thereof administering the Company Stock Plan) has adopted resolutions or taken such other actions as may be required to cause each outstanding Company Stock Option (whether or not then exercisable) and each outstanding Warrant (whether or not then exercisable) to automatically become fully vested and exercisable on the Majority Purchase Date.

      Section 4.03. Authority; Validity and Effect of Agreements . The Company has all necessary corporate power and authority to execute and deliver this Agreement and all documents and agreements contemplated by this Agreement, to perform its obligations under this

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Agreement and, subject to Company Stockholder Approval, to consummate the transactions contemplated by this Agreement. The execution, delivery and performance by the Company of this Agreement and the consummation of the transactions contemplated by this Agreement have been duly and validly authorized by all necessary corporate action on behalf of the Company Board. No other corporate proceedings on the part of the Company Board are necessary to authorize this Agreement or to consummate the transactions contemplated by this Agreement other than the receipt or Company Stockholder Approval and the filing and recordation of appropriate merger documents as required by the DGCL. This Agreement has been duly and validly executed and delivered by the Company and, assuming the due authorization, execution and delivery by each of Parent and MergerSub, constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar Laws of general applicability relating to or affecting creditors’ rights or by general equity principles.

      Section 4.04. No Conflict; Required Filings and Consents .

          (a) Except as set forth in Section 4.04(a) of the Disclosure Schedule, subject to the receipt of the Company Stockholder Approval, the execution and delivery by the Company of this Agreement and all documents and agreements contemplated by this Agreement, including the Offer and the Merger, do not, and the performance of its obligations hereunder and thereunder will not cause (i) a breach or violation of, or a default under, the Company Charter, (ii) assuming that all consents, approvals, authorizations and other actions described in subsection (c) of this Section 4.04 have been obtained and all filings and obligations described in subsection (c) of this Section 4.04 have been made, a conflict with or a violation of, any Law applicable to the Company or by which any property or asset of the Company, is bound, (iii) a breach or violation of, a termination (or right of termination) or a default under, or the acceleration of any obligations or the creation of a Lien on the assets of the Company (with or without notice, lapse of time or both) pursuant to, any agreement, lease, license, permit, contract, note, mortgage, indenture, arrangement or other obligation (“ Contracts ”) binding upon the Company, or any Laws or governmental permit or license to which the Company is subject, or (C) any change in the rights or obligations of any party under any of the Contracts, except in the case of clause (B) or (C) above, for any breach, violation, termination, default, acceleration or creation that, individually or in the aggregate, is not reasonably likely to have a Company Material Adverse Effect or prevent, materially delay or materially impair the ability of the Company to consummate the transactions contemplated by this Agreement, and (iv) assuming that all consents, approvals, authorizations and other actions described in subsection (c) of this Section 4.04 have been obtained and all filings and obligations described in subsection (c) of this Section 4.04 have been made, a conflict with or a violation of, any Law applicable to the Company or by which any property or asset of the Company, is bound. Section 4.04(a) of the Disclosure Schedule sets forth a complete and accurate list of all consents or waivers required to be obtained under the agreements referred to in this Section 4.04(a) or Section 4.05.

          (b) Section 4.04(b) of the Disclosure Schedule sets forth a complete and accurate list of all material claims held by the Company, as creditors or claimants, with respect to debtors or debtors-in-possession subject to proceedings under Chapter 11 of Title 11 of the Code, together with a complete and accurate list of all orders entered by the applicable United States

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Bankruptcy Court with respect to each such proceeding. None of such orders, individually or in the aggregate, is reasonably likely to have a Company Material Adverse Effect or prevent, materially delay or materially impair the ability of the Company to consummate the transactions contemplated by this Agreement.

          (c) The execution and delivery by the Company of this Agreement does not, and the performance of its obligations hereunder will not, require any consent, approval, authorization or permit of, or filing with or notification to, any Governmental Authority, except (i) for (A) any of the foregoing required by applicable requirements, if any, of the Securities Act, the Exchange Act, state securities or “blue sky” laws (“ Blue Sky Laws ”), (B) the filing with the SEC of (a) the Schedule 14D-9, (b) a proxy statement or, if shares have been purchased pursuant to the Offer, an information statement (as defined in Rule 14c-1 under the Exchange Act) as amended or supplemented from time to time (the “ Proxy Statement ”), and other written communications that may be deemed “soliciting materials” under Rule 14a-12 and (c) other documents otherwise required in connection with the transactions contemplated hereby, (C) any filings required under the rules and regulations of the Over The Counter Bulletin Board (the “ OTCBB ”), (D) other filings as may be required by governing tax authorities, (E) the filings of the Certificate of Merger with the Secretary of State of the State of Delaware under the DGCL, and (F) any filings that may be required under the HSR Act, and (ii) where the failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications would not, individually or in the aggregate prevent or materially delay consummation of the Offer, the Merger and the other transactions contemplated by this Agreement.

          (d) As of the date hereof, the Company Board, at a meeting duly called and held at which all of the directors of the Company Board were present in person or by telephone in compliance with the applicable provisions of the DGCL, duly adopted resolutions (i) declaring that this Agreement and the transactions contemplated hereby, including the Offer and the Merger, are advisable and in the best interest of the Company and its stockholders, (ii) adopting and approving this Agreement and the transactions contemplated hereby, including the Offer and the Merger, in accordance the requirements of the DGCL, and (iii) subject to the terms and conditions set forth herein, recommending acceptance of the Offer and approval and adoption of this Agreement and the Merger by its stockholders, (iv) taking all corporate action required to be taken by the Company Board to authorize and approve the consummation of the Offer and the Merger and the transactions contemplated hereby and (v) taking all corporate action required to render the Rights Plan and the Company Rights inapplicable to the Offer, the Merger, this Agreement and the transactions contemplated hereby; and none of the aforesaid actions by the Company Board has been amended, rescinded or modified as of the date hereof.

          (e) The Company Board has duly and validly approved and taken all corporate action required to be taken by the Company Board to grant the Top-Up Option and to issue the Top-Up Shares upon the exercise thereof. None of the grant of the Top-Up Option by the Company, the exercise thereof by MergerSub or the issuance of the Top-Up Shares to MergerSub in respect of such exercise, in each case, in accordance with Section 2.05, will conflict with, or result in a violation of breach of, any provision of applicable Laws or any judgment, injunction, order or decree of any Governmental Authority, or require any action, consent, approval, authorization or permit of, action by, or filing with or notification to, any Governmental Authority or the Company’s stockholders.

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      Section 4.05. Contracts .

          (a) For purposes of this Agreement, “ Company Material Contract ” shall mean:

     (i) any “material contract” (as such term is defined in Item 601(b)(10) of Regulation S-K of the SEC) with respect to the Company that has not been terminated or expired by its terms;

     (ii) any employment, service or consulting Contract or arrangement pursuant to which the Company has any material continuing obligations with any current or former executive officer or other employee of the Company or member of the Company Board or pursuant to which the Company or its successors may be obligated to make any severance payments, other than those Contracts (x) that are terminable by the Company on no more than thirty (30) days’ notice without liability or financial obligation to the Company or (y) with former executive officers or other employees or members of the Company Board entered into prior to January 1, 2000 that are immaterial as of the date hereof;

     (iii) (A) any Contract containing any covenant granting any exclusivity rights or limiting in any respect the right of the Company or any of its Affiliates to engage in any line of business, compete with any Person in any line of business or to compete with any party or the manner or locations in which any of them may engage, (B) any Contract granting “most favored nation” status to any customer of the Company, or (C) any Contract otherwise prohibiting or limiting the right of the Company or any of its Affiliates to make, sell or distribute any Company Products or services or use, transfer, license, distribute or enforce any material Intellectual Property rights of the Company;

     (iv) any Contract relating to the disposition or acquisition by the Company after the date of this Agreement of a material amount of assets or pursuant to which the Company has any material ownership interest in any other Person or other business enterprise (including, without limitation, joint venture, partnership or other similar agreements);

     (v) any Contract where the Company provides access to source code to any third party for all or any portion of any Company Product or Owned Intellectual Property in any circumstance, including pursuant to the terms of a source code escrow agreement or similar Contract;

     (vi) any Contract to license or otherwise authorize any third party to manufacture, reproduce, develop or modify any portion of the Company’s products, services or technology or any Contract to sell or distribute any of the Company’s products, services or technology;

     (vii) any mortgages, indentures, guarantees, loans or credit agreements, security agreements or other Contracts relating to the borrowing of money by or

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     extension of credit to, the Company other than accounts receivables and payables in the ordinary course of business;

     (viii) any settlement agreement entered into by the Company within three (3) years prior to the date of this Agreement;

     (ix) any Contract not described in clause (iii) above under which the Company has licensed or otherwise made available any Owned Intellectual Property or Third Party License to a third party, other than to consultants, temporary employees and testers subject to confidentiality obligations to the Company or customers, distributors and other resellers in the ordinary course of business;

     (x) any Contract under which the Company has received a Third Party License but excluding any off-the-shelf software applications programs having an purchase price of less than $500 per unit ((“ Off-the-Shelf Software”) );

     (xi) any Contract between the Company and any customer that was entered into or in effect on or after March 31, 2004 (each such customer, a “ Customer ,” and each Contract referenced in this Section 4.5(a)(xi), a “ Customer Contract ”);

     (xii) any Contract (other than any Company Standard Form Contract) which has aggregate future sums due from the Company in excess of $20,000; or

     (xiii) any other Contract (A) with any Affiliate of the Company other than an employment, service or consulting Contract, (B) with a Governmental Authority (other than ordinary course Contracts with governmental authorities as a customer), (C) with investment bankers, financial advisors, attorneys, accountants or other advisors retained by the Company, (D) providing for indemnification by the Company of any Person, except for any Company Standard Form Contract, (E) containing a standstill or similar agreement pursuant to which the Company have agreed not to acquire assets or securities of another Person, or (F) relating to currency hedging or similar transactions.

          (b) Section 4.05(b) of the Disclosure Schedule sets forth a list of all Company Material Contracts to which the Company or any of its Affiliates is a party or bound by as of the date hereof. A complete and accurate copy of each Company Material Contract has been made available to Parent (including all amendments, modifications, extensions, renewals, guarantees or other Contracts with respect to such Company Material Contracts, but excluding all names, terms and conditions that have been redacted in compliance with applicable Laws or contractual provisions or agreements governing the sharing of information; provided, however, with respect Company Standard Form Contract, the Company has provided only a copy of the Company Standard Form Contract and copies of any Contracts related to the same subject matter that deviate in any material respect from the Company Standard Form Contract.

          (c) All Company Material Contracts are valid and binding and in full force and effect, except to the extent they have previously expired in accordance with their terms or for

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such failures to be valid and binding or in full force and effect that, individually or in the aggregate, are not reasonably likely to have a Company Material Adverse Effect. The Company has not violated, and to the knowledge of the Company, no other party to any of the Company Material Contracts has violated, any provision of, or committed or failed to perform any act which, with or without notice, lapse of time or both, would constitute a default under the provisions of any Company Material Contract, except in each case for those violations and defaults which, individually or in the aggregate, are not reasonably likely to have a Company Material Adverse Effect.

          (d) Attached at Section 4.05(e) of the Disclosure Schedule is a copy of each of the standard form Contracts currently in use by the Company (including, without limitation, any end user, partnership, maintenance, professional services, sales, distribution, licensing and reseller standard form Contracts) in connection with their respective businesses (each, a “ Company Standard Form Contract ”).

          (e) Section 4.05(e) of the Disclosure Schedule sets forth a complete and accurate list of all active vendors, resellers and distributors or similar Persons through which any Company Product is marketed, sold or otherwise distributed and sets forth a description of any Contracts with vendors, resellers and distributors or similar Persons that are not a Company Standard Form Contract.

      Section 4.06. SEC Filings; Financial Statements; Information Provided .

          (a) Except as set forth in Section 4.06(a) of the Disclosure Schedule, the Company has filed or furnished all registration statements, forms, reports and other documents required to be filed or furnished by the Company with the SEC since January 1, 2005. All such registration statements, forms, reports and other documents (including those that the Company may file or furnish after the date hereof until the Closing) are referred to herein as the “ Company SEC Reports .” The Company SEC Reports (i) were or will be filed on a timely basis (which includes a filing within the time period permitted by Rule 12b-25 following a timely filing of a Form 12b-25), (ii) except as set forth in Section 4.06(a) of the Disclosure Schedule, at the time filed, complied, or will comply when filed, as to form in all material respects with the applicable requirements of the Securities Act and the Exchange Act, as the case may be, and the rules and regulations of the SEC thereunder applicable to such Company SEC Reports, and (iii) except as corrected through subsequent amendment, did not or will not at the time they were or are filed contain any untrue statement of a material fact or omit to state a material fact required to be stated in such Company SEC Reports or necessary in order to make the statements in such Company SEC Reports, in the light of the circumstances under which they were made, not misleading. There are no off-balance sheet structures or transactions with respect to the Company that would be required to be reported or set forth in the Company SEC Reports.

          (b) Except as set forth in Section 4.06(b) of the Disclosure Schedule, each of the financial statements (including, in each case, any related notes and schedules) contained or to be contained in or incorporated by reference in the Company SEC Reports at the time filed (or to be filed) (i) complied (or will comply) as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto and (ii) were (or will be) prepared in accordance with United States generally accepted

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accounting principles (“ GAAP ”) applied on a consistent basis throughout the periods involved (except as may be indicated in the notes to such financial statements or, in the case of unaudited interim financial statements, as permitted by the SEC with respect to Form 10-QSB or Form 8-K under the Exchange Act). Except as set forth in Section 4.06(b) of the Disclosure Schedule, each of the balance sh