AGREEMENT AND PLAN OF MERGER

EXHIBIT 2.1

THIS IS A DRAFT AGREEMENT ONLY AND DELIVERY OR DISCUSSION OF THIS DRAFT AGREEMENT SHOULD NOT BE CONSTRUED AS AN OFFER OR COMMITMENT WITH RESPECT TO THE PROPOSED TRANSACTION TO WHICH THIS DRAFT AGREEMENT PERTAINS. NOTWITHSTANDING THE DELIVERY OF THIS DRAFT AGREEMENT OR ANY PAST, PRESENT OR FUTURE APPROVALS BY THE MANAGEMENTS, BOARDS OF DIRECTORS, OR STOCKHOLDERS OF ANY PARTY TO THE PROPOSED TRANSACTION (OR ANY RELATED PERSON OR ENTITY) OR ANY OTHER PAST, PRESENT OR FUTURE WRITTEN OR ORAL INDICATIONS OF ASSENT, OR INDICATIONS OF THE RESULT OF NEGOTIATIONS OR AGREEMENTS, NO PARTY TO THE PROPOSED TRANSACTION (AND NO PERSON OR ENTITY RELATED TO ANY SUCH PARTY) WILL BE UNDER ANY LEGAL OBLIGATION WITH RESPECT TO THE PROPOSED COMMITMENT OF ANY NATURE WHATSOEVER UNLESS AND UNTIL THE DEFINITIVE AGREEMENT PROVIDING FOR THE TRANSACTION HAS BEEN EXECUTED AND DELIVERED BY ALL PARTIES THERETO.

AGREEMENT AND PLAN OF MERGER

NUANCE COMMUNICATIONS, INC.

VINEYARD ACQUISITION CORPORATION

VINEYARD ACQUISITION LLC

VOCADA, INC.

U.S. Bank National Association, as Escrow Agent

AND

STOCKHOLDER REPRESENTATIVE

Dated as of October 16, 2007

TABLE OF CONTENTS

				Page
ARTICLE I THE MERGER					2
1.1		The Integrated Merger			2
1.2		Effective Time			2
1.3		Effect of the First Step Merger and the Second Step Merger			3
1.4		Formation Documents			3
1.5		Management			4
1.6		Effect of First Step Merger on the Capital Stock of the Constituent Corporations			4
1.7		Dissenting Shares			12
1.8		Surrender of Certificates			13
1.9		No Further Ownership Rights in Company Capital Stock			15
1.10		Lost, Stolen or Destroyed Certificates			15
1.11		Reorganization Status			15
1.12		Adjustments			16
1.13		Taking of Necessary Action; Further Action			16
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY					16
2.1		Organization of the Company			16
2.2		Company Capital Structure			17
2.3		Subsidiaries			18
2.4		Authority			18
2.5		No Conflict			19
2.6		Consents			19
2.7		Company Financial Statements			19
2.8		No Undisclosed Liabilities			20
2.9		No Changes			20
2.10		Tax Matters			22
2.11		Restrictions on Business Activities			25
2.12		Title to Properties; Absence of Liens and Encumbrances; Condition of Equipment			25
2.13		Intellectual Property			27
2.14		Agreements, Contracts and Commitments			31
2.15		Interested Party Transactions			33
2.16		Governmental Authorization			33
2.17		Litigation			33
2.18		Minute Books			34
2.19		Environmental Matters			34
2.20		Brokers’ and Finders’ Fees; Third Party Expenses			34
2.21		Employee Benefit Plans and Compensation			34
2.22		Insurance			39

TABLE OF CONTENTS
(continued)

				Page
2.23		Compliance with Laws			40
2.24		Warranties; Indemnities			40
2.25		Bank Accounts, Letters of Credit and Powers of Attorney			40
2.26		Representations Complete			40
2.27		Information Statement			40
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND THE SUBS					41
3.1		Organization, Standing and Power			41
3.2		Authority			41
3.3		Consents			42
3.4		Parent Common Stock			42
3.5		SEC Documents			42
3.6		Parent Financial Statements			42
3.7		Information Supplied			42
3.8		Interim Operations of Subs			43
ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME					43
4.1		Conduct of Business of the Company			43
4.2		No Solicitation			47
4.3		Procedures for Requesting Parent Consent			48
ARTICLE V ADDITIONAL AGREEMENTS					48
5.1		Information Statement; Stockholder Approval			48
5.2		Access to Information			50
5.3		Confidentiality			50
5.4		Expenses			50
5.5		Public Disclosure			51
5.6		Consents			51
5.7		FIRPTA Compliance			51
5.8		Reasonable Efforts			51
5.9		Notification of Certain Matters			51
5.10		Additional Documents and Further Assurances			52
5.11		New Employment Arrangements			52
5.12		Restricted Stock Awards			53
5.13		Bonus Payments			53
5.14		Purchaser Representative and Sale of Shares			53
5.15		Termination of 401(k) Plan			54
5.16		Section 280G			54
5.17		Financials			55

TABLE OF CONTENTS
(continued)

				Page
ARTICLE VI CONDITIONS TO THE FIRST STEP MERGER					56
6.1		Conditions to Obligations of Each Party to Effect the First Step Merger			56
6.2		Conditions to the Obligations of Parent and Sub I			56
6.3		Conditions to Obligations of the Company			59
ARTICLE VII SURVIVAL OF REPRESENTATIONS AND WARRANTIES					60
7.1		Survival of Representations, Warranties and Covenants			60
7.2		Indemnification			61
7.3		Escrow Arrangements			61
7.4		Indemnification Claims			63
7.5		Stockholder Representative			69
7.6		Maximum Payments; Remedy			70
ARTICLE VIII					71
8.1		Earnout Arrangements			71
8.2		Earnout Targets			72
8.3		Achievement of Milestones			73
8.4		Sales Targets			75
8.5		Failure to Achieve Milestones			75
8.6		Calculation of Earnout Distributions; Stockholder Representative Objections			75
ARTICLE IX REGISTRATION					76
9.1		Filing and Effectiveness of Stockholder Registration Statement			76
9.2		Limitation on Registration Rights			77
9.3		Registration Procedures			78
9.4		Requirements of Stockholders			78
9.5		Assignment of Rights			80
ARTICLE X TERMINATION, AMENDMENT AND WAIVER					80
10.1		Termination			80
10.2		Effect of Termination			81
10.3		Amendment			81
10.4		Extension; Waiver			81
ARTICLE XI GENERAL PROVISIONS					81
11.1		Notices			81
11.2		Interpretation			83
11.3		Counterparts			83
11.4		Entire Agreement; Assignment			83
11.5		Severability			84
11.6		Other Remedies			84

TABLE OF CONTENTS
(continued)

				Page
11.7		Governing Law			84
11.8		Rules of Construction			84
11.9		WAIVER OF JURY TRIAL			84

INDEX OF EXHIBITS

Exhibit		Description
Exhibit A		Form of Voting Agreement
Exhibit B		Form of Employee Proprietary Information, Inventions and Non-Competition Agreement
Exhibit C-1		Form of Certificate of Merger
Exhibit C-2		Form of Second Step Certificate of Merger
Exhibit D		Legal Opinion of Counsel of the Company
Schedules
Schedule 6.2(e)(i)		Key Employees
Schedule 6.2(f)		Terminated Agreements
Schedule 6.2(g)		Assigned Intellectual Property

     THIS AGREEMENT AND PLAN OF MERGER (the “ Agreement ”) is made and entered into as of October 16, 2007 by and among Nuance Communications, Inc., a Delaware corporation (“ Parent ”), Vineyard Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of Parent (“ Sub I ”), Vineyard LLC, a Delaware limited liability company and a wholly owned subsidiary of Parent (“ Sub II ,” and with Sub I, the “ Subs ”), Vocada, Inc., a Delaware corporation (the “ Company ”), U.S. Bank National Association, as Escrow Agent, to act as escrow agent hereunder, and as a party to this Agreement solely with respect to Article VII herein (the “ Escrow Agent ”) and John Purtell, solely in his capacity as the representative of the Company’s stockholders, and is referred to herein from time to time as the “ Stockholder Representative .”

RECITALS

     A. The Boards of Directors of each of Parent, Sub I and the Company have determined that it is in the best interests of each company and its respective stockholders that Parent acquire the Company through the statutory merger of Sub I with and into the Company (the “ First Step Merger ”) and, in furtherance thereof, have approved the First Step Merger, this Agreement, and the transactions contemplated hereby.

     B. Following the First Step Merger, Parent shall cause the Company to merge with and into Sub II (the “ Second Step Merger ” and, taken together with the First Step Merger, the “ Integrated Merger ” or the “ Merger ”). The Integrated Merger is intended to constitute a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “ Code ”). Parent and the Company intend that the First Step Merger and the Second Step Merger will constitute integrated steps in a single “plan of reorganization” within the meaning of Treas. Reg. §§1.368-2(g) and 1.368-3, which plan of reorganization the parties adopt by executing this Agreement.

     C. Pursuant to the First Step Merger, among other things, and subject to the terms and conditions of this Agreement, all of the issued and outstanding capital stock of the Company (other than Dissenting Shares, as defined below) shall be converted into the right to receive the consideration set forth herein.

     D. A portion of the consideration payable in connection with the First Step Merger shall be placed in escrow as security for the indemnification obligations set forth in this Agreement.

     E. The Company, on the one hand, and Parent and the Subs, on the other hand, desire to make certain representations, warranties, covenants and other agreements in connection with the Integrated Merger.

     F. Concurrent with the execution and delivery of this Agreement, as a material inducement to Parent and the Subs to enter into this Agreement, all officers and directors of the Company, and certain stockholders of the Company are entering into Voting Agreements, in substantially the form attached hereto as Exhibit A (the “ Voting Agreements ”), with Parent, pursuant to which such stockholders have irrevocably agreed to vote in favor of the Integrated

Merger and the transactions contemplated thereby and to other matters set forth therein, and certain individuals are entering into Employee Proprietary Information, Inventions and Non-Competition Agreements, each in substantially the form attached hereto as Exhibit B (the “ Employee Proprietary Information, Inventions and Non-Competition Agreements ”), with Parent or the Final Surviving Entity (as defined in Section 1.1 hereof), as determined by Parent.

     NOW, THEREFORE, in consideration of the mutual agreements, covenants and other promises set forth herein, the mutual benefits to be gained by the performance thereof, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and accepted, the parties hereby agree as follows:

ARTICLE I

     1.1 The Integrated Merger . At the Effective Time (as defined in Section 1.2 hereof) and subject to and upon the terms and conditions of this Agreement and the applicable provisions of the Delaware General Corporation Law (“ Delaware Law ”), Sub I shall be merged with and into the Company, the separate corporate existence of Sub I shall cease, and the Company shall continue as the surviving corporation and as a wholly owned subsidiary of Parent. The surviving corporation after the First Step Merger is hereinafter referred to as the “ Interim Surviving Corporation .” As soon as practicable after the Effective Time, and subject to and upon the terms and conditions of this Agreement and the applicable provisions of The Delaware Limited Liability Company Act (the “ LLC Act ”) and Delaware Law, the Interim Surviving Corporation shall be merged with and into Sub II, the separate corporate existence of the Interim Surviving Corporation shall cease, and Sub II shall continue as the surviving entity and as a wholly-owned subsidiary of Parent. The surviving entity after the Second Step Merger is hereinafter referred to as the “ Final Surviving Entity .”

     1.2 Effective Time . Unless this Agreement is earlier terminated pursuant to Section 10.1 hereof, the closing of the First Step Merger (the “ Closing ”) will take place as promptly as practicable after the execution and delivery hereof by the parties hereto, and following satisfaction or waiver of the conditions set forth in Article VI hereof, at the offices of Wilson Sonsini Goodrich & Rosati, Professional Corporation, 1700 K Street, N.W., 5th Floor, Washington, D.C. 20006, unless another time or place is mutually agreed upon in writing by Parent and the Company. The date upon which the Closing actually occurs shall be referred to herein as the " Closing Date .” On the Closing Date, the parties hereto shall cause the First Step Merger to be consummated by filing a Certificate of Merger in substantially the form attached hereto as Exhibit C-1 , with the Secretary of State of the State of Delaware (the “ Certificate of Merger ”), in accordance with the applicable provisions of Delaware Law (the time of the acceptance of such filing by the Secretary of State of the State of Delaware shall be referred to herein as the " Effective Time ”). As soon as practicable after the Effective Time, Parent shall cause the Second Step Merger to be consummated by filing a Certificate of Merger in substantially the form attached hereto as Exhibit C-2 with the Secretary of State of the State of Delaware (the “ Second Step Certificate of Merger ”), in accordance with the applicable provisions of Delaware Law and the LLC Act.

     1.3 Effect of the First Step Merger and the Second Step Merger . At the Effective Time, the effect of the First Step Merger shall be as provided in the applicable provisions of Delaware Law. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, except as otherwise agreed to pursuant to the terms of this Agreement, all of the property, rights, privileges, powers and franchises of the Company and Sub I shall vest in the Interim Surviving Corporation, and all debts, liabilities and duties of the Company and Sub I shall become the debts, liabilities and duties of the Interim Surviving Corporation. At the effective time of the Second Step Merger, the effect of the Second Step Merger shall be as provided in the applicable provisions of Delaware Law and the LLC Act. Without limiting the generality of the foregoing, and subject thereto, at the effective time of the Second Step Merger, except as otherwise agreed to pursuant to the terms of this Agreement, all of the property, rights, privileges, powers and franchises of the Interim Surviving Corporation shall vest in Sub II as the surviving entity in the Second Step Merger, and all debts, liabilities and duties of the Interim Surviving Corporation shall become the debts, liabilities and duties of Sub II as the surviving entity in the Second Step Merger.

     1.4 Formation Documents .

          (a) Unless otherwise determined by Parent prior to the Effective Time, the certificate of incorporation of the Interim Surviving Corporation shall be amended and restated as of the Effective Time to be identical to the certificate of incorporation of Sub I as in effect immediately prior to the Effective Time, until thereafter amended in accordance with Delaware Law and as provided in such certificate of incorporation; provided , however , that at the Effective Time, Article I of the certificate of incorporation of the Interim Surviving Corporation shall be amended and restated in its entirety to read as follows: “The name of the corporation is Vocada, Inc.”

          (b) Unless otherwise determined by Parent prior to the Effective Time, the bylaws of Sub I, as in effect immediately prior to the Effective Time, shall be the bylaws of the Interim Surviving Corporation at the Effective Time until thereafter amended in accordance with Delaware Law and as provided in the certificate of incorporation of the Interim Surviving Corporation and such bylaws.

          (c) Unless otherwise determined by Parent prior to the Effective Time, the certificate of formation of Sub II as in effect immediately prior to the effective time of the Second Step Merger shall be the certificate of formation of the Final Surviving Entity in the Second Step Merger until thereafter amended in accordance with the LLC Act and as provided in such certificate of formation; provided, however , that at the effective time of the Second Step Merger, Article I of such certificate of formation shall be amended and restated in its entirety to read as follows: “The name of this limited liability company is Vocada, LLC.”

          (d) Unless otherwise determined by Parent prior to the Effective Time, the Limited Liability Company Agreement of Sub II as in effect immediately prior to the effective time of the Second Step Merger shall be the Limited Liability Company Agreement of the Final Surviving Entity, until thereafter amended in accordance with the LLC Act and as provided in such Limited Liability Company Agreement; provided, however , that at the Effective Time, such Limited

Liability Company Agreement shall be amended and restated in its entirety to read as follows: “The name of this limited liability company is Vocada, LLC.”

     1.5 Management .

          (a) Directors/Managers of Company . Unless otherwise determined by Parent prior to the Effective Time, the directors of Sub I immediately prior to the Effective Time shall be the directors of the Interim Surviving Corporation immediately after the Effective Time and the managers of the Final Surviving Entity immediately after the effective time of the Second Step Merger, each to hold the office of a director/manager of the Interim Surviving Corporation and the Final Surviving Entity, respectively, in accordance with the provisions of Delaware Law and the certificate of incorporation and bylaws of the Interim Surviving Corporation and the LLC Act and the Certificate of Formation of the Final Surviving Entity until their successors are duly elected and qualified.

          (b) Officers of Company . Unless otherwise determined by Parent prior to the Effective Time, the officers of Sub I immediately prior to the Effective Time shall be the officers of the Interim Surviving Corporation immediately after the Effective Time and the officers of the Final Surviving Entity after the effective time of the Second Step Merger, each to hold office in accordance with the provisions of the bylaws of the Interim Surviving Corporation and the Limited Liability Company Agreement of the Final Surviving Entity.

     1.6 Effect of First Step Merger on the Capital Stock of the Constituent Corporations .

          (a) Definitions . For all purposes of this Agreement, the following terms shall have the following respective meanings:

               (i) “ Aggregate Preference Consideration ” shall mean that number of shares of Parent Common Stock equal to (1) the Series A Aggregate Liquidation Value, plus the Series B Aggregate Liquidation Value, divided by (2) the Signing Price.

               (ii) “ Business Day[s] ” shall mean each day that is not a Saturday, Sunday or holiday on which banking institutions located in New York, New York are authorized or obligated by law or executive order to close.

               (iii) “ Common Aggregate Consideration ” shall mean the Merger Consideration, less the Aggregate Preference Consideration (if such difference results in a negative number, such result shall be deemed to be $0).

               (iv) “ Common Consideration Per Share ” shall mean with respect to each share of Company Capital Stock outstanding immediately prior to the Effective Time, the Common Aggregate Consideration, divided by the Total Outstanding Shares.

               (v) “ Company Capital Stock ” shall mean shares of Company Common Stock and Company Preferred Stock.

               (vi) “ Company Common Stock ” shall mean shares of common stock, par value $0.01 per share, of the Company.

               (vii) “ Company Common Stockholder ” shall mean a holder of Company Common Stock, each of whom is listed on Section 2. 2(a) of the Disclosure Schedule.

               (viii) “ Company Options ” shall mean all issued and outstanding options to purchase or otherwise acquire Company Capital Stock.

               (ix) “ Company Preferred Stock ” shall mean shares of Series A Convertible Preferred Stock and Series B Convertible Preferred Stock.

               (x) “ Company Material Adverse Effect ” shall mean any change, event or effect that is or could reasonably become materially adverse to the business, assets (whether tangible or intangible), financial condition, results of operations or capitalization of the Company and any subsidiaries, taken as a whole; provided, however , that any change, event or effect relating to the industry in which the Company operates as a whole or economic condition generally, and which does not affect the Company disproportionately shall not, by itself, be deemed to constitute a Company Material Adverse Effect.

               (xi) “ Company Preferred Stockholder ” shall mean a holder of Preferred Stock, each of whom is listed on Section 2. 2(a) of the Disclosure Schedule.

               (xii) “ Continuing Employee Bonus Payment ” shall mean an aggregate of $600,000 payable to Continuing Employees of the Company as set forth on a schedule prepared by the Company after consultation with Parent.

               (xiii) “ Earnout Consideration ” shall mean an aggregate amount equal to twenty-one million dollars ($21,000,000) which, at the sole option of Parent, shall be paid in the form of (1) cash, (2) shares of Parent Common Stock with a per share value established by the quotient of twenty-one million dollars ($21,000,000), divided by the average of the reported closing price of the Parent Common Stock for the five (5) Business Days prior to the date of payment, rounded down to the nearest whole share, or (3) any combination of the foregoing clauses (1) and (2).

               (xiv) “ Employee Bonus Payments ” shall mean an aggregate of $150,000 payable to employees of the Company pursuant to existing Employee Agreements (as defined below) as set forth on Schedule 1. 6(a)(xiv) prepared by the Company and delivered to Parent.

               (xv) “ Environmental Laws ” means all Laws relating to pollution or protection of the environment or exposure of any individual to Hazardous Materials, including laws and regulations relating to emissions, discharges, releases or threatened releases of Hazardous Materials, or otherwise relating to the manufacture, processing, registration, distribution, labeling, recycling, use, treatment, storage, disposal, transport or handling of Hazardous Materials and including any Hazardous Materials related electronic waste, product content or product take-back requirements.

               (xvi) “ Equity Interests ” of a person or entity shall mean capital stock, capital stock equivalents (including stock options, restricted stock units, stock appreciation rights and phantom stock), partnership interests, membership interests, participations, shares and other equity interests of any class or kind (however designated) of such person or entity.

               (xvii) “ Escrow Amount ” shall mean a number of shares of Parent Common Stock equal to $1,200,000 divided by the Signing Price, and rounded down to the nearest whole share.

               (xviii) “ Estimated Company Expenses ” shall mean the total amount of Third Party Expenses (as defined in Section 5.4 hereof) reflected on the Statement of Expenses (as defined in Section 5.4 ).

               (xix) “ Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended.

               (xx) “ Excluded Liabilities ” shall mean (1) all outstanding indebtedness of the Company, (2) the employer portion of any payroll or employment taxes payable or reasonably estimated to become payable on compensation in connection with the transactions contemplated hereby (including the Executive Payments and the Continuing Employee Bonus Payment, but excluding the Employee Bonus Payments), whether payable by Parent, the Interim Surviving Corporation, Final Surviving Entity or the Company, and (3) all outstanding non-operating liabilities of the Company, each as of the Effective Time.

               (xxi) “ Executive Payments ” shall mean $3,650,000.

               (xxii) “ GAAP ” shall mean United States generally accepted accounting principles consistently applied.

               (xxiii) “ Guarantee ” of or by any person or entity, as of any date, shall mean, without duplication, (a) any direct or indirect obligation, contingent or otherwise, of such person or entity guaranteeing or having the economic effect of guaranteeing any Indebtedness of any other person or entity (the “ primary obligor ”) in any manner, including any obligation of such person or entity to (i) purchase or pay (or advance funds for the purchase or payment of) such Indebtedness (whether arising by virtue of partnership arrangements, agreements to keep well, to take-or-pay or to stop losses, or otherwise) or to purchase or lease property, securities or services for the purpose of assuring the payment of such Indebtedness or (ii) maintain any working capital, equity capital or other financial condition (including cash, working capital, net assets, operating results or liquidity) of the primary obligor so as to enable the primary obligor to pay such Indebtedness or (b) any Lien on any assets of such person or entity securing any Indebtedness of any other person or entity, whether or not such Indebtedness is assumed by such person or entity, in the case of each clause above as of such date; provided, however, that the term “Guarantee” shall not include endorsements for collection or deposit, in either case, in the ordinary course of business consistent with past practices.

               (xxiv) “ Hazardous Materials ” means chemicals, pollutants, contaminants, wastes, toxic substances, radioactive and biological materials, asbestos-containing materials (ACM), hazardous substances, petroleum and petroleum products or any fraction thereof.

               (xxv) “ Indebtedness ” of any person or entity as of any date shall mean, without duplication, (a) Indebtedness for Borrowed Money, (b) all obligations of such person or entity upon which interest is customarily paid (other than trade payables incurred in the ordinary course of business consistent with past practices), (c) all off-balance-sheet financings of such person or entity, including synthetic leases and project financings, (d) all Guarantees by such person or entity of any obligation of the type described in clauses (a) through (c) above of any other person or entity, (e) all capital lease obligations of such person or entity, (f) all interest rate protection, foreign currency exchange or other interest or exchange rate hedging agreements and (g) all obligations of such person or entity as an account party in respect of letters of credit and bankers’ acceptances, in the case of each clause above, as of such date. The Indebtedness of any person or entity includes the Indebtedness of any other person or entity (including any partnership in which such person or entity is a general partner) to the extent that such person or entity is liable therefor under applicable law as a result of Equity Interests held by such person or entity in such other person or entity (except to the extent that the terms of such Indebtedness provide that such person or entity is not liable therefor).

               (xxvi)  “Indebtedness for Borrowed Money” of any person or entity as of any date shall mean, without duplication, (a) all obligations of such person or entity for borrowed money or with respect to deposits or advances of any kind (other than deposits or advances in respect of deferred revenue), (b) all obligations of such person or entity evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such person or entity for purchase money financing, including obligations under conditional sale or other title retention agreements issued or assumed in respect of deferred purchase price, relating to assets purchased by such person or entity (other than trade payables incurred in the ordinary course of business consistent with past practices) and (d) all Guarantees by such person or entity of any obligation of the type described in clauses (a) through (c) above of any other person or entity. The Indebtedness for Borrowed Money of any person or entity includes the Indebtedness for Borrowed Money of any other person or entity (including any partnership in which such person or entity is a general partner) to the extent that such person or entity is liable therefor under applicable Law as a result of Equity Interests held by such person or entity in such other person or entity (except to the extent that the terms of such Indebtedness for Borrowed Money provide that such person or entity is not liable therefor).

               (xxvii) “ Initial Consideration ” shall mean a number of shares of Parent Common Stock equal to (1) twenty-four million dollars ($24,000,000), less the amount of Estimated Company Expenses in excess of $350,000, less the Third Party Expense Credit, less the Excluded Liabilities, less the Option Aggregate Consideration, less the Continuing Employee Bonus Payment, less the Executive Payments, less the Tail Policy Expense divided by (2) the Signing Price and rounded down to the nearest whole share.

               (xxviii) “ Knowledge ” or “ Known ” shall mean, with respect to the Company, the knowledge of Peter White, Thomas White and Scott Segell (collectively, the “ Key Employees ”);

provided, however , that such Key Employees shall have made due and diligent inquiry of those employees and consultants of the Company whom such Key Employees reasonably believe would have actual knowledge of the matters represented.

               (xxix) “ Lien ” shall mean any lien, pledge, charge, claim, mortgage, security interest or other encumbrance of any sort.

               (xxx) “ Merger Consideration ” shall mean the Initial Consideration and the Earnout Consideration.

               (xxxi) “ Option Aggregate Consideration ” shall mean $100,000.

               (xxxii) “ Option Consideration Per Share ” shall mean for each share of Company Common Stock underlying a Company Option (1) the Option Aggregate Consideration, divided by (2) the number of shares of Company Common Stock underlying all Company Options outstanding immediately prior to the Effective Time.

               (xxxiii) “ Option Net Consideration Per Share ” shall mean for each share of Company Common Stock underlying a Company Option (1) the Option Consideration Per Share, minus (2) the amount required to exercise one share of Company Common Stock pursuant to the terms of such Company Option.

               (xxxiv) “ Parent Common Stock ” shall mean the common stock, par value $0.001 per share, of Parent.

               (xxxv) “ Parent Material Adverse Effect ” shall mean any change, event or effect that is materially adverse to the business, prospects, assets (whether tangible or intangible), financial condition, operations or capitalization of Parent and any subsidiaries, taken as a whole; provided, however , that (i) any change, event or effect relating to the industry in which Parent operates as a whole or economic condition generally, and which does not affect Parent disproportionately shall not, by itself, be deemed to constitute a Parent Material Adverse Effect, and (ii) any decrease in either the trading volume or trading price of Parent Common Stock, in and of itself, shall not be deemed to constitute a Parent Material Adverse Effect.

               (xxxvi) “ Period 1 Earnout Consideration ” shall mean an aggregate amount equal to seven million dollars ($7,000,000), which, at the sole option of Parent, shall be paid in the form of (1) cash, (2) shares of Parent Common Stock with a per share value established by the quotient of seven million dollars ($7,000,000), divided by the average of the reported closing price of the Parent Common Stock for the five (5) Business Days prior to the date of payment, rounded down to the nearest whole share, or (3) any combination of the foregoing clauses (1) and (2).

               (xxxvii) “ Period 2 Earnout Consideration ” shall mean an aggregate amount equal to seven million dollars ($7,000,000), which, at the sole option of Parent, shall be paid in the form of (1) cash, (2) shares of Parent Common Stock with a per share value established by the quotient of seven million dollars ($7,000,000), divided by the average of the reported closing price

of the Parent Common Stock for the five (5) Business Days prior to the date of payment, rounded down to the nearest whole share, or (3) any combination of the foregoing clauses (1) and (2).

               (xxxviii) “ Period 3 Earnout Consideration ” shall mean an aggregate amount equal to seven million dollars ($7,000,000), which, at the sole option of Parent, shall be paid in the form of (1) cash, (2) shares of Parent Common Stock with a per share value established by the quotient of seven million dollars ($7,000,000), divided by the average of the reported closing price of the Parent Common Stock for the five (5) Business Days prior to the date of payment, rounded down to the nearest whole share, or (3) any combination of the foregoing clauses (1) and (2).

               (xxxix) “ Plans ” shall mean the Company’s 2004 Equity-Based Compensation Plan.

               (xl) “ Pro Rata Portion ” shall mean, with respect to each Stockholder, an amount of Parent Common Stock equal to the quotient obtained by dividing the number of shares of Company Common Stock held by such Stockholder (including shares issuable upon conversion of any shares of Company Preferred Stock held by such Stockholder), divided by the Total Outstanding Shares.

               (xli) “ Related Agreements ” shall mean the Certificates of Merger, the Voting Agreements, and the Employee Proprietary Information, Inventions and Non-Competition Agreements.

               (xlii) “ SEC ” shall mean the United States Securities and Exchange Commission.

               (xliii) “ Securities Act ” shall mean the Securities Exchange Act of 1933, as amended.

               (xliv) “ Series A Aggregate Liquidation Value ” shall mean the Series A Liquidation Value Per Share, multiplied by the number of shares of Series A Convertible Preferred Stock outstanding immediately prior to the Effective Time.

               (xlv) “ Series A Consideration Per Share ” shall mean with respect to each share of Series A Convertible Preferred Stock the (A) Common Consideration Per Share, if any, and (2) that number of shares of Parent Common Stock equal to the Series A Liquidation Value Per Share divided by the Signing Price.

               (xlvi) “ Series A Liquidation Value Per Share ” shall mean $1.70 per share of Series A Convertible Preferred Stock, as provided in the Designation of Preferences of Series A Convertible Preferred Stock of the Company, in effect immediately prior to the Effective Time.

               (xlvii) “ Series A Convertible Preferred Stock ” shall mean shares of Series A Convertible Preferred Stock, par value $0.01 per share, of the Company.

               (xlviii) “ Series B Aggregate Liquidation Value ” shall mean the Series B Liquidation Value Per Share, multiplied by the number of shares of Series B Convertible Preferred Stock outstanding immediately prior to the Effective Time.

               (xlix) “ Series B Consideration Per Share ” shall mean with respect to each share of Series B Convertible Preferred Stock the (A) Common Consideration Per Share, if any, and (2) that number of shares of Parent Common Stock equal to the Series B Liquidation Value Per Share divided by the Signing Price.

               (l) “ Series B Liquidation Value Per Share ” shall mean $6.06 per share of Series B Convertible Preferred Stock, as provided in the Amended and Restated Designation of Preferences of Series B Convertible Preferred Stock of the Company in effect immediately prior to the Effective Time.

               (li) “ Series B Convertible Preferred Stock ” shall mean shares of Series B Convertible Preferred Stock, par value $0.01 per share, of the Company.

               (lii) “ Signing Price ” shall mean $21.35 (reflecting the average of the reported closing price of the Parent Common Stock for the five (5) Business Days prior to the date of this Agreement).

               (liii) “ Stockholder ” shall mean any holder of any Company Capital Stock immediately prior to the Effective Time.

               (liv) “ Third Party Expense Credit ” shall mean $350,000.

               (lv) “ Total Outstanding Shares ” shall mean the aggregate number of shares of (1) Company Common Stock issued and outstanding immediately prior to the Effective Time (including shares of Restricted Stock (as defined in Section 1.6(c) ), plus (2) Company Common Stock issuable upon conversion of all of the shares of Company Preferred Stock issued and outstanding immediately prior to the Effective Time.

          (b) Effect on Capital Stock . By virtue of the First Step Merger and without any action on the part of Sub I, the Company or the holders of shares of Company Capital Stock, each share of Company Capital Stock issued and outstanding immediately prior to the Effective Time (including shares of Restricted Stock (as defined in Section 1.6(c) hereof) (other than Dissenting Shares (as defined in Section 1.7(a) hereof) and subject to the escrow provisions contained herein), upon the terms and subject to the conditions set forth in this Section 1.6 and throughout this Agreement, will be cancelled and extinguished and be converted automatically into the right to receive, upon surrender of the certificate representing such shares of Company Capital Stock in the manner provided in Section 1.8 hereof, (1) the Series A Consideration Per Share with respect to the Series A Convertible Preferred Stock, (2) the Series B Consideration Per Share with respect to the Series B Convertible Preferred Stock, and (3) the Common Consideration Per Share with respect to the Company Common Stock.

               (i) Each distribution of shares of Parent Common Stock made to a Stockholder holding Company Capital Stock pursuant to this Section  1(b)(i) shall be reduced by such Stockholder’s Pro Rata Portion of the Escrow Amount in accordance with Section 7.3 hereof.

               (ii) Notwithstanding anything in this Section 1. 6(b) to the contrary, in no event shall Parent be obligated to distribute in the aggregate any number of shares of Parent Common Stock in excess of the Merger Consideration.

          (c) Restrictions on Shares of Company Capital Stock . With respect to any shares of Company Capital Stock which immediately prior to the Effective Time were unvested or were subject to a repurchase option, substantial risk of forfeiture or other similar condition under any applicable restricted stock purchase agreement or other similar agreement with the Company (“ Restricted Stock ”), the Merger Consideration issued in exchange therefor shall remain unvested or subject to such repurchase option, substantial risk of forfeiture or other similar condition.

          (d) Earnout . Notwithstanding Section 1.6(b) hereof, the Merger Consideration shall, initially, be reduced for all purposes of this Agreement (including the calculation of the Series A Consideration Per Share, Series B Consideration Per Share, and Common Consideration Per Share, but excluding the calculation of the Option Consideration Per Share) by an amount equal to the Earnout Consideration, and such Earnout Consideration will not be paid initially, but instead constitute consideration to be earned pursuant to Article VIII hereof. Upon such time as any portion of the Earnout Consideration is earned in accordance with Article VIII hereof, such earned amount shall become payable in accordance with Article VIII hereof, and the portion of the recalculated Series A Consideration Per Share, Series B Consideration Per Share, and Common Consideration Per Share not theretofore paid shall be paid in accordance with Section 1.6(b) hereof.

          (e) Withholding for Amounts Due in Respect of Previously Issued Company Capital Stock . Notwithstanding any other provision in this Agreement, Parent, the Company, the Subs, the Exchange Agent (as defined in Section 1.8(a) hereof) shall have the right to reduce the number of shares of Parent Common Stock issuable as Merger Consideration in respect of any shares of Company Capital Stock that were issued prior to the Effective Time and in respect of which issuance any of Parent, the Company or the Subs has any unsatisfied legal obligation to withhold Taxes or other amounts. Such reduction in the number of shares of Parent Common Stock shall be calculated by dividing the total amount of any such withholding obligation by the Signing Price.

          (f) Termination of Company Options.

               (i) No Company Option shall be assumed by Parent, and each outstanding Company Option shall be canceled or terminated at the Effective Time (without regard to the exercise price thereof).

               (ii) Immediately prior to the Effective Time, and conditioned on the consummation of the Merger, each Company Option shall be cancelled and each Company Optionholder shall automatically (without any further action required of such holder) be entitled to a

cash payment equal to the Option Net Consideration Per Share for each share of Company Common Stock underlying the Company Option(s) held by such Company Optionholder. At the same time the Company distributes the Soliciting Materials pursuant to Section 5.1(a) hereof, the Company shall provide to each holder of any Company Option an informational notice and consent describing the treatment of Company Options pursuant to this Section 1.6 . Parent shall make the cash payment required pursuant to the foregoing provisions of this Section 1.6(f)(ii) to each holder of Company Options as promptly as reasonably practicable after the Closing. The payment of the Option Merger Consideration to a Company Optionholder shall be reduced by any income or employment tax withholding required under the Code or any provision of state, local or foreign tax law. To the extent that amounts are so withheld, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Company Optionholder.

               (iii) Prior to the Effective Time, and subject to the reasonable review and approval of Parent, the Company shall have taken all actions necessary to effect the transactions anticipated by this Section 1. 6(f) under the Plan, all Company Option agreements, and any other plan or arrangement of the Company (whether written or oral, formal or informal), including delivering all required notices (the “ Optionholder Notices ”) and obtaining any required consents necessary to effectuate the provisions of this Section 1. 6(f) and Article VII hereof.

          (g) Withholding Taxes . Notwithstanding any other provision in this Agreement, Parent, the Company, the Subs, the Exchange Agent (as defined in Section 1.8(a) hereof) and the Escrow Agent shall have the right to deduct and withhold Taxes (as defined in Section 2.10 hereof) from any payments to be made hereunder (including with respect to the Earnout Consideration) if such withholding is required by law and to request any necessary Tax forms, including Form W-9 or the appropriate series of Form W-8, as applicable, or any similar information, from the Stockholders and any other recipients of payments hereunder. To the extent that amounts are so withheld, such withheld amounts shall be treated for all purposes of this Agreement as having been delivered and paid to the Stockholder or other recipient of payments in respect of which such deduction and withholding was made.

          (h)  Capital Stock of Subs. Each share of common stock of Sub I issued and outstanding immediately prior to the Effective Time shall be converted into and exchanged for one validly issued, fully paid and nonassessable share of common stock of the Interim Surviving Corporation. Each stock certificate of Sub I evidencing ownership of any such shares shall continue to evidence ownership of such shares of capital stock of the Interim Surviving Corporation. Each share of common stock of the Interim Surviving Corporation issued and outstanding immediately after the Effective Time shall be converted into and exchanged for the applicable corresponding interest of the Final Surviving Entity. Each stock certificate of the Interim Surviving Corporation evidencing ownership of any such shares shall continue to evidence the applicable corresponding interest in the Final Surviving Entity.

     1.7 Dissenting Shares .

          (a) Notwithstanding any other provisions of this Agreement to the contrary, any shares of Company Capital Stock held by a holder who has not voted for the Merger, or who has not

effectively withdrawn or lost such holder’s appraisal rights under Delaware Law (collectively, the “ Dissenting Shares ”) shall not be converted into or represent a right to receive the applicable consideration for Company Capital Stock set forth in Section 1.6 hereof, but the holder thereof shall only be entitled to such rights as are provided by Delaware Law.

          (b) Notwithstanding the provisions of Section 1.7(a) hereof, if any holder of Dissenting Shares shall effectively withdraw or lose (through failure to perfect or otherwise) such holder’s appraisal rights under Delaware Law, then, as of the later of the Effective Time and the occurrence of such event, such holder’s shares shall automatically be converted into and represent only the right to receive the consideration for Company Capital Stock, as applicable, set forth in Section 1.6 hereof, without interest thereon, upon surrender of the certificate representing such shares.

          (c) The Company shall give Parent (i) prompt notice of any written demand for appraisal received by the Company pursuant to the applicable provisions of Delaware Law, and (ii) the opportunity to participate in all negotiations and proceedings with respect to such demands. The Company shall not, except with the prior written consent of Parent, make any payment with respect to any such demands or offer to settle or settle any such demands. Notwithstanding the foregoing, to the extent that Parent or the Company (i) makes any payment or payments in respect of any Dissenting Shares in excess of the consideration that otherwise would have been payable in respect of such shares in accordance with this Agreement, or (ii) incurs any other costs or expenses, (including specifically, but without limitation, attorneys’ fees, costs and expenses in connection with any action or proceeding or in connection with any investigation) in respect of any Dissenting Shares (excluding payments for such shares) (together “ Dissenting Share Payments ”), Parent shall be entitled to recover under the terms of Section 7.2 hereof the amount of such Dissenting Share Payments without regard to the Threshold Amount (as defined in Section 7.4(a) hereof).

     1.8 Surrender of Certificates .

          (a) Exchange Agent . Parent, or an institution selected by Parent prior to the Effective Time and reasonably acceptable to the Stockholder Representative, shall serve as the exchange agent (Parent in such capacity, or such institution, the “ Exchange Agent ”) for the Merger.

          (b) Parent to Provide Parent Common Stock . Subject to the provisions of Section 7.3 relating to escrow arrangements, at the Effective Time, Parent shall make available to the Exchange Agent for exchange in accordance with this Article I the shares of Parent Common Stock issuable at the Effective Time pursuant to Section 1.6 hereof in exchange for outstanding shares of Company Capital Stock; provided, however, that, with respect to the Stockholders, Parent shall deposit into the Escrow Fund (as defined in Section 7.3(a) hereof) a number of shares of Parent Common Stock which equal the Escrow Amount out of the aggregate number of shares of Parent Common Stock otherwise deliverable to the Stockholders with respect to the Initial Consideration pursuant to Section 1.6 hereof. The Pro Rata Portion of the Parent Common Stock comprising the Escrow Amount shall be deemed to be contributed to the Escrow Fund with respect to each Stockholder.

          (c) Exchange Procedures . On or as promptly as practicable, and in any event within no later than three (3) Business Days after the Closing Date, Parent shall mail a letter of transmittal (in customary form and containing such provisions and instructions as Parent may reasonably specify and the Company may reasonably approve prior to the Effective Time) to each Stockholder at the address set forth opposite each such Stockholder’s name on Section 2.2(a) of the Disclosure Schedule. After receipt of such letter of transmittal, the Stockholders may surrender the certificates representing their shares of Company Capital Stock (the “ Company Stock Certificates ”) to the Exchange Agent for cancellation together with a duly completed and validly executed letter of transmittal. Upon surrender of a Company Stock Certificate for cancellation to the Exchange Agent, together with such letter of transmittal, duly completed and validly executed in accordance with the instructions thereto, subject to the terms of Section 1.8(e) hereof, the holder of such Company Stock Certificate shall be entitled to receive from the Exchange Agent in exchange therefor, the Merger Consideration to which such holder is entitled pursuant to Section 1.6 hereof with respect to the shares represented by such Company Stock Certificate (less the Escrow Amount to be deposited into the Escrow Fund with respect to such Stockholder relating to the shares represented by such Company Stock Certificate), and the Company Stock Certificate so surrendered shall be cancelled. Until so surrendered, each Company Stock Certificate outstanding after the Effective Time will be deemed, for all corporate purposes thereafter, to evidence only the right to receive the Merger Consideration into which such shares of Company Capital Stock shall have been so converted. No portion of the Merger Consideration will be issued to the holder of any unsurrendered Company Stock Certificate with respect to shares of Company Capital Stock formerly represented thereby until the holder of record of such Company Stock Certificate shall surrender such Company Stock Certificate pursuant hereto.

          (d) Distributions With Respect to Unexchanged Shares . No dividends or other distributions declared or made after the Effective Time with respect to Parent Common Stock with a record date after the Effective Time will be paid to the holder of any unsurrendered Company Stock Certificate with respect to the shares of Parent Common Stock represented thereby until the holder of record of such Company Stock Certificate shall surrender such Company Stock Certificate. Subject to applicable law, following surrender of any such Company Stock Certificate, there shall be delivered to the record holder of the certificates representing whole shares of Parent Common Stock issued in exchange therefor, at the time of such surrender, the amount of dividends or other distributions with a record date after the Effective Time theretofore paid with respect to such whole shares of Parent Common Stock. No interest shall be payable on any cash deliverable upon the exchange of any Company Capital Stock.

          (e) Transfers of Ownership . If any certificate for shares of Parent Common Stock is to be issued in a name other than that in which the Company Stock Certificate surrendered in exchange therefor is registered, or if any cash amounts are to be disbursed pursuant to Section 1.6 hereof to any person other than the person or entity whose name is reflected on the Company Stock Certificate surrendered in exchange therefor, it will be a condition of the issuance or delivery thereof that the certificate so surrendered will be properly endorsed and otherwise in proper form for transfer and that the person requesting such exchange will have paid to Parent or any agent designated by it any transfer or other taxes required by reason of the issuance of a certificate for shares of Parent

Common Stock in any name other than that of the registered holder of the certificate surrendered, or established to the satisfaction of Parent or any agent designated by it that such tax has been paid or is not payable.

          (f) Exchange Agent to Return Merger Consideration . At any time following the last day of the sixth (6 ^th ) month following the Effective Time, Parent shall be entitled to require the Exchange Agent to deliver to Parent or its designated successor or assign all portions of the Merger Consideration that have been deposited with the Exchange Agent pursuant to Section 1.8(b) hereof not disbursed to the holders of Company Stock Certificates pursuant to Section 1.8(c) hereof, and thereafter the holders of Company Stock Certificates shall be entitled to look only to Parent (subject to the terms of Section 1.8(g) hereof) only as general creditors thereof with respect to any and all amounts that may be payable to such holders of Company Stock Certificates pursuant to Section 1.6 hereof upon the due surrender of such Company Stock Certificates in the manner set forth in Section 1.8(c) hereof.

          (g) No Liability . Notwithstanding anything to the contrary in this Section 1.8 , neither the Exchange Agent, the Final Surviving Entity, nor any party hereto shall be liable to a holder of shares of Company Capital Stock for any amount properly paid to a public official pursuant to any applicable abandoned property, escheat or similar law.

     1.9 No Further Ownership Rights in Company Capital Stock . The Merger Consideration paid in respect of the surrender for exchange of shares of Company Capital Stock in accordance with the terms hereof shall be deemed to be full satisfaction of all rights pertaining to such shares of Company Capital Stock, and there shall be no further registration of transfers on the records of the Final Surviving Entity of shares of Company Capital Stock which were outstanding immediately prior to the Effective Time. If, after the Effective Time, Company Stock Certificates are presented to the Final Surviving Entity for any reason, they shall be canceled and exchanged as provided in this Article I .

     1.10 Lost, Stolen or Destroyed Certificates . In the event any Company Stock Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall issue in exchange for such lost, stolen or destroyed certificates, upon the making of an affidavit of that fact by the holder thereof, such amount, if any, as may be required pursuant to Section 1.6 hereof; provided , however , that Parent may, in its discretion and as a condition precedent to the issuance thereof, require the Stockholder who is the owner of such lost, stolen or destroyed certificates to either (i) deliver a bond in such reasonable and customary amount as it may reasonably direct or (ii) provide an indemnification agreement in a reasonable and customary form and substance acceptable to Parent, against any claim that may be made against Parent or the Exchange Agent with respect to the certificates alleged to have been lost, stolen or destroyed.

     1.11 Reorganization Status . The Integrated Merger is intended to constitute a “reorganization” within the meaning of Section 368(a) of the Code. Parent and the Company intend that the First Step Merger and the Second Step Merger will constitute integrated steps in a single “plan of reorganization” within the meaning of Treas. Reg. §1.368-2(g) and 1.368-3, which plan of reorganization the parties adopt by executing this Agreement. None of the parties hereto will take

any action, except as specifically contemplated by this Agreement, that would be reasonably expected to cause the Integrated Merger to fail to qualify as a “reorganization” within the meaning of Section 368(a) of the Code.

     1.12 Adjustments . If, during the period between the date hereof and the Effective Time:

          (a) any change in the outstanding capital stock of Parent shall occur by reason of any reclassification, recapitalization, stock split or combination, reverse stock split, exchange or readjustment of shares, or stock dividend thereon with a record date prior to the Effective Time or amendment of any material term of any outstanding security issued by Parent, then in each case, the Merger Consideration and any other amounts payable pursuant to this Agreement shall be appropriately and equitably adjusted;

          (b) except as addressed in Section 1.12(a) , Parent declares, sets aside or pays any dividends on, or makes any other distributions (whether in cash, stock, equity securities or property) in respect of any capital stock of Parent, then the Merger Consideration and any other amounts payable pursuant to this Agreement shall be appropriately and equitably adjusted.

     1.13 Taking of Necessary Action; Further Action . If at any time after the Effective Time, any further action is necessary or desirable to carry out the purposes of this Agreement and to vest the Final Surviving Entity with full right, title and possession to all assets, property, rights, privileges, powers and franchises of the Company, Parent, the Subs, and the officers and directors of the Company, Parent and the Subs are fully authorized in the name of their respective corporations or otherwise to take, and will take, all such lawful and necessary action.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     The Company hereby represents and warrants to Parent and the Subs, subject to such exceptions as are specifically disclosed in the disclosure schedule (referencing the appropriate section and paragraph numbers) supplied by the Company to Parent (the “ Disclosure Schedule ”) and dated as of the date hereof, on the date hereof and as of the Effective Time, as though made at the Effective Time, as follows:

     2.1 Organization of the Company . The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. The Company has the corporate power to own its properties and to carry on its business as currently conducted. The Company is duly qualified or licensed to do business and in good standing as a foreign corporation in each jurisdiction in which it conducts business, except for those jurisdictions where failure to be so qualified or licensed and in good standing would not have or be reasonably likely to result in a Company Material Adverse Effect. The Company has delivered a true and correct copy of its certificate of incorporation and bylaws, each as amended to date and in full force and effect on the date hereof (collectively, the “ Charter Documents ”), to Parent. Section 2.1 of the Disclosure Schedule lists the directors and officers of the Company as of the date hereof. The operations now

being conducted by the Company are not now and have never been conducted by the Company under any name other than Vocada, Inc. and Vocada.com, Inc. Section 2.1 of the Disclosure Schedule also lists (i) each jurisdiction in which the Company is qualified or licensed to do business as a foreign corporation, and (ii) every state or foreign jurisdiction in which the Company has employees or facilities or otherwise is required to be qualified or licensed to do business as a foreign corporation.

     2.2 Company Capital Structure .

          (a) The authorized capital stock of the Company consists of 10,000,000 shares of Company Common Stock, of which 1,473,497 shares are issued and outstanding as of the date hereof, 2,000,000 shares of Company Preferred Stock, of which 1,132,352 shares have been designated Series A Convertible Preferred Stock, of which 1,132,352 shares are issued and outstanding as of the date hereof and 437,284 shares have been designated Series B Convertible Preferred Stock, of which 437,284 shares are issued and outstanding as of the date hereof. As of the date hereof, the Company Capital Stock is owned of record by the persons and in the numbers of shares set forth in Section 2.2(a) of the Disclosure Schedule. All outstanding shares of Company Capital Stock have been issued in accordance with the respective terms thereof, duly authorized, validly issued, fully paid and non-assessable and not subject to preemptive rights created by Delaware Law, the Charter Documents or any agreement to which the Company is a party, and have been issued in compliance in all material respects with all applicable federal and state securities laws. The Company has not, and will not have, suffered or incurred any material liability (contingent or otherwise) or material claim, loss, damage, deficiency, cost or expense relating to or arising out of the issuance or repurchase of any Company Capital Stock or options or warrants to purchase Company Capital Stock, or out of any Material Contract (as defined in Section 2.14 hereof) relating thereto (including any amendment of the terms of any such contract). There are no declared or accrued but unpaid dividends with respect to any shares of Company Capital Stock. The Company has no capital stock other than the Company Capital Stock authorized, issued or outstanding. As of the date hereof, the conversion price of each series of Company Preferred Stock is as set forth in the Company’s certificate of incorporation, as amended to date and in full force and effect on the date hereof.

          (b) Section 2.2(b) of the Disclosure Schedule sets forth as of the date hereof, a list of each holder of Restricted Stock and (i) the name of the holder of such Restricted Stock, (ii) the number of shares of Restricted Stock held by such holder, (iii) the repurchase price of such Restricted Stock, (iv) the date on which such Restricted Stock was purchased or granted, and (v) the applicable vesting schedule pursuant to which the Company’s right of repurchase or forfeiture lapses.

          (c) Except for the Plan, the Company does not have in effect any stock option plan or any other plan or agreement providing for equity compensation to any person. The Company has reserved 300,000 shares of Company Common Stock for issuance to employees and directors of, and consultants to, the Company upon the issuance of stock or the exercise of options granted under the Plan or any other plan, agreement or arrangement (whether written or oral, formal or informal),

of which 11,812 shares are issuable, as of the date hereof, upon the exercise of outstanding, unexercised options. Except as set forth in Section 2.2(c) of the Disclosure Schedule, there are no options, warrants, calls, rights, convertible securities, commitments or agreements of any character, written or oral, to which the Company is a party or by which the Company is bound obligating the Company to issue, deliver, sell, repurchase or redeem, or cause to be issued, delivered, sold, repurchased or redeemed, any shares of the Company Capital Stock or obligating the Company to grant, extend, accelerate the vesting of, change the price of, otherwise amend or enter into any such option, warrant, call, right, commitment or agreement. There are no outstanding or authorized stock appreciation, phantom stock, profit participation, or other similar rights with respect to the Company. Except as contemplated hereby, or set forth in Section 2.2(c) of the Disclosure Schedule, there are no voting trusts, proxies, or other agreements or understandings to which the Company is a party or by which the Company is bound with respect to the voting securities of the Company. Except as set forth in Section 2.2(c) of the Disclosure Schedule, there are no agreements to which the Company is a party relating to the registration, sale or transfer (including agreements relating to rights of first refusal, co-sale rights or “drag-along” rights) of any Company Capital Stock. To the Knowledge of the Company, as a result of the First Step Merger, Parent will be the sole record and beneficial holder of all issued and outstanding Company Capital Stock and all rights to acquire or receive any shares of Company Capital Stock, whether or not such shares of Company Capital Stock are outstanding.

          (d) The Company does not have more than 35 Stockholders, in the aggregate, that are not “accredited investors” (as such term is defined under Rule 501 under the Securities Act).

     2.3 Subsidiaries . The Company does not have and has never had any subsidiaries and does not otherwise own and has never otherwise owned any shares of capital stock or any interest in, or control, directly or indirectly, any other corporation, limited liability company, partnership, association, joint venture or other business entity.

     2.4 Authority . The Company has all requisite power and authority to enter into this Agreement and any Related Agreements to which it is a party and, subject to the Sufficient Stockholder Vote, to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and any Related Agreements to which the Company is a party and, subject to the Sufficient Stockholder Vote, the consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of the Company and no further action is required on the part of the Company to authorize the Agreement and any Related Agreements to which it is a party and the transactions contemplated hereby and thereby, subject only to the approval of this Agreement by the Stockholders. The vote required under Delaware Law and the Charter Documents to approve and adopt this Agreement and the Integrated Merger by the Stockholders is set forth in Section 2.4 of the Disclosure Schedule (the “ Sufficient Stockholder Vote ”). This Agreement and the Integrated Merger have been unanimously approved by the Board of Directors of the Company. This Agreement and each of the Related Agreements to which the Company is a party has been duly executed and delivered by the Company and assuming the due authorization, execution and delivery by the other parties hereto and thereto, constitute the valid and binding obligations of the Company enforceable against it in

accordance with their respective terms, except as such enforceability may be subject to the laws of general application relating to bankruptcy, insolvency, and the relief of debtors and rules of law governing specific performance, injunctive relief, or other equitable remedies.

     2.5 No Conflict . The execution and delivery by the Company of this Agreement and any Related Agreement to which the Company is a party, and, subject to the Sufficient Stockholder Vote, the consummation of the transactions contemplated hereby and thereby, will not conflict with or result in any violation of or default under (with or without notice or lapse of time, or both) or give rise to a right of termination, cancellation, modification or acceleration of any obligation or loss of any benefit under (any such event, a “ Conflict ”) (i) any provision of the Charter Documents, (ii) any Material Contract, or (iii) except as provided in Section 2.6 hereof, any judgment, order, decree, statute, law, ordinance, rule or regulation applicable to the Company or any of its properties (whether tangible or intangible) or assets, except in the case of clause (iii) for such violations as have not had and are not reasonably likely to have a Company Material Adverse Effect.

     2.6 Consents . No consent, notice, waiver, approval, order or authorization of, or registration, declaration or filing with any court, administrative agency or commission or other federal, state, county, local or other foreign governmental authority, instrumentality, agency or commission (each, a “ Governmental Entity ”), is required by, or with respect to, the Company in connection with the execution and delivery by the Company of this Agreement and any Related Agreement to which the Company is a party or the consummation of the transactions contemplated hereby and thereby, except for (i) the filing of the Certificates of Merger with the Secretary of State of Delaware, (ii) the adoption of this Agreement and approval of the transactions contemplated by this Agreement by the Stockholders, and (iii) consents, notices, waivers, approvals, orders, authorizations, registrations, declarations and filings required under applicable federal and state securities laws and the rules and regulations of the NASDAQ Global Select Market (or other market or other exchange on which Parent Common Stock may be listed at the Effective Time).

     2.7 Company Financial Statements . Section 2.7 of the Disclosure Schedule sets forth the Company’s (i) audited balance sheets as of December 31, 2006 and December 31, 2005, respectively, and the related consolidated statements of income, cash flow and stockholders’ equity for each of the twelve (12) month periods then ended (the “ Year-End Financials ”), and (ii) unaudited balance sheet as of June 30, 2007 (the “ Balance Sheet Date ”) and June 30, 2006, and the related unaudited statement of income, cash flow and stockholders’ equity for the six (6) month periods then ended reviewed by the Company’s independent accountants in accordance with Statement of Auditing Standards No. 100 (“ SAS-100 ”) (the “ Interim Financials ”). The Year-End Financials have been prepared in accordance with Regulation S-X promulgated under the Exchange Act and meet the requirements for inclusion in a registration statement to be filed with the SEC. The Year-End Financials and the Interim Financials (collectively referred to as the “ Financials ”) are true and correct in all material respects and have been prepared in accordance with GAAP applied on a consistent basis throughout the periods indicated and consistent with each other (except that the Interim Financials do not contain footnotes and other presentation items that may be required by GAAP). The Financials present fairly in all material respects the Company’s financial condition, operating results and cash flows as of the dates and during the periods indicated therein, subject in

the case of the Interim Financials to normal year-end adjustments, which are not material in amount or significance in any individual case or in the aggregate. The Company’s unaudited balance sheet as of the Balance Sheet Date is referred to hereinafter as the “ Current Balance Sheet .”

     2.8 No Undisclosed Liabilities . The Company has no liability, indebtedness, obligation, expense, claim, deficiency, guaranty or endorsement of any type, whether accrued, absolute, contingent, matured, unmatured or other (whether or not required to be reflected in financial statements in accordance with GAAP) (“ Liabilities ”), which is material to the Company individually or in the aggregate, other than (i) those reflected in the Current Balance Sheet or disclosed in the notes thereto, or (ii) those incurred in the ordinary course of business consistent with past practices since the Balance Sheet Date.

     2.9 No Changes . Since the Balance Sheet Date, except as set forth in Section 2.9 of the Disclosure Schedule, there has not been, occurred or arisen any:

          (a) transaction by the Company except in the ordinary course of business as conducted on that date and consistent with past practices;

          (b) amendments or changes to the certificate of incorporation or bylaws of the Company;

          (c) capital expenditure or commitment by the Company exceeding $25,000 individually or $50,000 in the aggregate;

          (d) payment, discharge or satisfaction, in any amount in excess of $25,000 in any one case, or $50,000 in the aggregate, of any claim, liability or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise of the Company), other than payments, discharges or satisfactions in the ordinary course of business of liabilities: (i) reflected or reserved against in the Current Balance Sheet or (ii) incurred after the Balance Sheet Date in the ordinary course of business or in connection with the transactions contemplated by this Agreement;

          (e) destruction of, damage to, or loss of any material assets (whether tangible or intangible), material business or material customer of the Company (whether or not covered by insurance);

          (f) employment dispute, including claims or matters raised by any individuals or any workers’ representative organization, bargaining unit or union regarding labor trouble or claim of wrongful discharge or other unlawful employment or labor practice or action with respect to the Company;

          (g) change in accounting methods or practices (including any change in depreciation or amortization policies or rates) by the Company other than as required by GAAP;

          (h) adoption of or change in any material Tax (as defined in Section 2.10(a) hereof) election, adoption of or change in any Tax accounting method, entry into any closing

agreement, settlement or compromise of any Tax claim or assessment, or extension or waiver of the limitation period applicable to any Tax claim or assessment;

          (i) revaluation by the Company of any of its material assets (whether tangible or intangible), including without limitation, writing down the value of material inventory or writing off material notes or accounts receivable;

          (j) declaration, setting aside or payment of a dividend or other distribution (whether in cash, stock or property) in respect of any Company Capital Stock, or any split, combination or reclassification in respect of any shares of Company Capital Stock, or any issuance or authorization of any issuance of any other securities in respect of, in lieu of or in substitution for shares of Company Capital Stock, or any direct or indirect repurchase, redemption, or other acquisition by the Company of any shares of Company Capital Stock (or options, warrants or other rights convertible into, exercisable or exchangeable therefor);

          (k) increase in the salary or other compensation payable or to become payable by the Company to any of its respective officers, directors, employees or advisors, or the declaration, payment or commitment or obligation of any kind for the payment (whether in cash or equity) by the Company of a severance payment, termination payment, bonus or other additional salary or compensation to any such person;

          (l) Material Contract or any termination, extension, amendment or modification of the terms of any Material Contract;

          (m) sale, lease, license or other disposition of any of the assets (whether tangible or intangible) or properties of the Company outside of the ordinary course of business, including, but not limited to, the sale of any accounts receivable of the Company, or any creation of any security interest in such assets or properties;

          (n) loan by the Company to any person or entity, or purchase by the Company of any debt securities of any person or entity, except for advances to employees for travel and business expenses in the ordinary course of business consistent with past practices;

          (o) incurring by the Company of any Indebtedness, amendment of the terms of any outstanding loan agreement, guaranteeing by the Company of any indebtedness, issuance or sale of any debt securities of the Company or guaranteeing of any debt securities of others;

          (p) waiver or release of any right or claim of the Company, including any write-off or other compromise of any account receivable of the Company;

          (q) commencement or settlement of any lawsuit by the Company, the commencement, settlement, notice or, to the Knowledge of the Company, threat of any lawsuit or proceeding or other investigation against the Company, or, to the Company’s Knowledge, any reasonable basis for any of the foregoing;

          (r) notice of any claim or potential claim of ownership, interest or right by any person other than the Company of the Company Intellectual Property (as defined in Section 2.13 hereof) or of infringement by the Company of any other person’s Intellectual Property (as defined in Section 2.13 hereof);

          (s) issuance or sale, or contract or agreement to issue or sell, by the Company of any shares of Company Capital Stock or securities convertible into, or exercisable or exchangeable for, shares of Company Capital Stock, or any securities, warrants, options or rights to purchase any of the foregoing;

          (t) (i) except standard end user licenses entered into in the ordinary course of business, sale or license of any Company Intellectual Property or execution, modification or amendment of any agreement with respect to the Company Intellectual Property with any person or entity or with respect to the Intellectual Property of any person or entity, or (ii) except in the ordinary course of business, purchase or license of any Intellectual Property or execution, modification or amendment of any agreement with respect to the Intellectual Property of any person or entity, (iii) agreement or modification or amendment of an existing agreement with respect to the development of any Intellectual Property with a third party, or (iv) change in pricing or royalties set or charged by the Company to its customers or licensees or in pricing or royalties set or charged by persons who have licensed Intellectual Property to the Company;

          (u) agreement or modification to any agreement pursuant to which any other party was granted marketing, distribution, development, manufacturing or similar rights of any type or scope with respect to any products or technology of the Company;

          (v) event or condition of any character that has had or is reasonably likely to have a Company Material Adverse Effect;

          (w) lease, license, sublease or other occupancy of any Leased Real Property by the Company; or

          (x) agreement by the Company, or any officer or employees on behalf of the Company, to do any of the things described in the preceding clauses (a) through (w) of this Section 2.9 (other than negotiations with Parent and its representatives regarding the transactions contemplated by this Agreement and the Related Agreements).

     2.10 Tax Matters .

          (a) Definition of Taxes . For the purposes of this Agreement, the term “ Tax ” or, collectively, " Taxes ” shall mean (i) any and all U.S. federal, state, local and non-U.S. taxes, assessments and other governmental charges, duties, impositions and liabilities, including taxes based upon or measured by gross receipts, income, profits, sales, use and occupation, and value added, ad valorem, transfer, franchise, withholding, payroll, recapture, employment, excise and property taxes as well as public imposts, fees and social security charges (including health, unemployment and pension insurance), together with all interest, penalties and additions imposed

with respect to such amounts, (ii) any liability for the payment of any amounts of the type described in clause (i) of this Section 2.10(a) as a result of being a member of an affiliated, consolidated, combined or unitary group for any period prior to the Effective Time (including any arrangement for group or consortium relief or similar arrangement), and (iii) any liability for the payment of any amounts of the type described in clauses (i) or (ii) of this Section 2.10(a) as a result of any express or implied obligation to indemnify any other person or as a result of any obligation under any agreement or arrangement with any other person with respect to such amounts and including any liability for taxes of a predecessor or transferor.

          (b) Tax Returns and Audits .

               (i) The Company has (1) prepared and filed all required U.S. federal, state, local and non-U.S. returns, estimates, amendments, information statements and reports, including any attachments, appendices and addenda thereto (“ Returns ”) relating to any and all Taxes of the Company and such Returns are true and correct in all material respects and have been completed in all material respects in accordance with applicable law, and (2) paid all Taxes it is required to pay (whether or not shown to be due on any Return).

               (ii) The Company has paid or withheld with respect to its Employees (as defined in Section 2. 21(a) hereof) and other third parties, all U.S. federal, state and non-U.S. income taxes and social security charges and similar fees, Federal Insurance Contribution Act amounts, Federal Unemployment Tax Act amounts and other Taxes required to be withheld, and has timely paid over any such withheld Taxes to the appropriate authorities.

               (iii) The Company has not been delinquent in the payment of any Tax, nor is there any Tax deficiency outstanding, assessed or, to the Knowledge of the Company, proposed against the Company, nor has the Company executed any waiver of any statute of limitations on or extending the period for the assessment or collection of any Tax.

               (iv) To the Knowledge of the Company, no audit or other examination of any Return of the Company is presently in progress, nor has the Company been notified of any request for such an audit or other examination. No adjustment relating to any Return filed by the Company has been proposed by any Tax authority to the Company or any representative thereof. No claim has ever been made by an authority in a jurisdiction where the Company does not file Tax Returns that it is or may be subject to taxation by that jurisdiction.

               (v) As of the date of the Current Balance Sheet, the Company had no liabilities for unpaid Taxes which have not been accrued or reserved on the Current Balance Sheet, whether asserted or unasserted, contingent or otherwise, and the Company has not incurred any liability for Taxes since the date of the Current Balance Sheet other than in the ordinary course of business. The Company has identified all uncertain tax positions contained in all Returns filed by the Company and has established adequate reserves and made any appropriate disclosures in the Financial Statements in accordance with the requirements of Financial Interpretation Notice 48 of FASB 109.

               (vi) The Company has made available to Parent or its legal counsel, copies of all Tax Returns for the Company filed for all periods since 2004.

               (vii) There are (and immediately following the Effective Time there will be) no Liens on the assets of the Company relating to or attributable to Taxes, other than Liens for Taxes not yet due and payable.

               (viii) The Company has (1) never been a member of an affiliated group (within the meaning of Code §1504(a)) filing a consolidated federal income Tax Return (other than a group the common parent of which was Company), (2) never been a party to any Tax sharing, indemnification, allocation or similar agreement, (3) no liability for the Taxes of any person (other than the Company) under Treasury Regulation § 1.1502-6 (or any similar provision of state, local or foreign law (including any arrangement for group or consortium relief or similar arrangement)), as a transferee or successor, by contract or agreement, or otherwise, and (4) never been a party to any joint venture, partnership or other arrangement that could be treated as a partnership for Tax purposes.

               (ix) The Company has not been, at any time, a “United States Real Property Holding Corporation” within the meaning of Section 897(c)(2) of the Code.

               (x) The Company has not constituted either a “distributing corporation” or a “controlled corporation” in a distribution of stock intended to qualify for tax-free treatment under Section 355 of the Code.

               (xi) The Company has not engaged in a reportable transaction under Treas. Reg. § 1.6011-4(b), including a transaction that is the same as or substantially similar to one of the types of transactions that the Internal Revenue Service has determined to be a tax avoidance transaction and identified by notice, regulation, or other form of published guidance as a listed transaction, as set forth in Treas. Reg. § 1.6011-4(b)(2).

               (xii)  Section 2. 10(b)(xii) of the Disclosure Schedule sets forth the following information with respect to the Company: (1) the basis of the Company in its assets; (2) the amount of any net operating loss, net capital loss, unused investment, foreign, or other Tax credit and the amount of any limitation upon any of the foregoing; and (3) the amount of any deferred gain or loss allocable to the Company arising out of any deferred intercompany transaction as defined in Treas. Reg. § 1.1502-13 or any similar provision of applicable law.

               (xiii) The Company will not be required to include any income or gain or exclude any deduction or loss from Taxable income as a result of (1) any change in method of accounting under Section 481 of the Code, (2) closing agreement under Section 7121 of the Code, (3) deferred intercompany gain or excess loss account under Treasury Regulations under Section 1502 of the Code (or in the case of each of (1), (2) and (3), under any similar provision of applicable law), (4) installment sale or open transaction disposition or (5) prepaid amount.

               (xiv) The Company uses the accrual method of accounting for tax purposes.

               (xv) The Company is not subject to Tax in any jurisdiction other than its country of incorporation or formation by virtue of having a permanent establishment or other place of business or by virtue of having a source of income in that country.

               (xvi) The Company is in full compliance with all terms and conditions of any Tax exemption, Tax holiday or other Tax reduction agreement or order applicable to it ( “Tax Incentive ”) and the consummation of the transactions contemplated by this Agreement will not have any adverse effect on the continued validity and effectiveness of any such Tax Incentive.

          (c) Executive Compensation Tax . Except as set forth on Section 2.10(c) of the Disclosure Schedule, there is no contract, agreement, plan or arrangement to which the Company is a party, including, without limitation, the provisions of this Agreement, covering any Employee of the Company, which, individually or collectively, could give rise to the payment of any amount that would not be deductible pursuant to Sections 280G or 404 of the Code or that would give rise to a penalty under Section 409A of the Code.

          (d) Section 409A . Except as set forth on Section 2.10(d) of the Disclosure Schedule, the Company is not party to any contract or arrangement that is a “nonqualified deferred compensation plan” subject to Section 409A of the Code. Each such nonqualified deferred compensation plan has been operated since January 1, 2005 in good faith compliance with Section 409A of the Code and IRS Notice 2005-1. No nonqualified deferred compensation plan has been “materially modified” (within the meaning of IRS Notice 2005-1) at any time after October 3, 2004. No stock option, Company Option or other right to acquire Company Common Stock or other equity of the Company (i) has an exercise price that has been or may be less than the fair market value of the underlying equity as of the date such stock option, Company Option, or other right was granted, (ii) has any feature for the deferral of compensation other than the deferral of recognition of income until the later of exercise or disposition of such stock option, Company Option, or rights, or (iii) has been granted after December 31, 2004, with respect to any class of stock of the Company that is not “service recipient stock” (within the meaning of applicable regulations under Section 409A).

     2.11 Restrictions on Business Activities . Except as set forth in Section 2.11 of the Disclosure Schedule, there is no agreement (non-competition or otherwise), commitment, judgment, injunction, order or decree to which the Company is a party or otherwise binding upon the Company that has or may reasonably be expected to have the effect of prohibiting or impairing any business practice of the Company, any acquisition of property (tangible or intangible) by the Company, the conduct of business by the Company, or otherwise limiting the freedom of the Company to engage in any line of business or to compete with any person. Without limiting the generality of the foregoing, except as set forth in Section 2.11 of the Disclosure Schedule, the Company has not entered into any agreement under which the Company is restricted from selling, licensing, manufacturing or otherwise distributing any of its technology or products or from providing services to customers or potential customers or any class of customers, in any geographic area, during any period of time, or in any segment of the market.

     2.12 Title to Properties; Absence of Liens and Encumbrances; Condition of Equipment.

          (a) The Company does not own any real property, nor has the Company ever owned any real property. Section 2.12(a) of the Disclosure Schedule sets forth a list of all real property currently leased, subleased or licensed by or from the Company or otherwise used or occupied by the Company for the operation of its business (the “ Leased Real Property ”), the name of the lessor, licensor, sublessor, master lessor and/or lessee, the date and term of the lease, license, sublease or other occupancy right and each amendment thereto (the “ Lease Agreements ”) and, with respect to any current lease, license, sublease or other occupancy right the aggregate annual rental payable thereunder. All such Lease Agreements are valid and effective in accordance with their respective terms, and there is not, under any of such leases, any existing default, no rentals are past due, or event of default (or event which with notice or lapse of time, or both, would constitute a default) by the Company or, to its Knowledge, any other party thereto. The Company has not received any notice of a default, alleged failure to perform, or any offset or counterclaim with respect to any such Lease Agreement, which has not been fully remedied and withdrawn. The Closing will not affect the enforceability against any person of any such Lease Agreement or the rights of the Company to the continued use and possession of the Leased Real Property for the conduct of business as presently conducted.

          (b) To the Company’s Knowledge, the Leased Real Property is in good operating condition and repair, free from structural, physical and mechanical defects and is structurally sufficient and otherwise suitable for the conduct of the business as presently conducted. Neither the operation of the Company on the Leased Real Property, nor such Leased Real Property, including the improvements thereon, violate in any material respect any applicable building code, zoning requirement or statute relating to such property or operations thereon, and any such non-violation is not dependent on so-called non-conforming use exceptions.

          (c) There are no laws, statutes, rules, regulations or orders now in existence or, to the Company’s Knowledge, under active consideration by any Governmental Entity which would require the Company, as a tenant of any Leased Real Property, to make any expenditure in excess of $25,000 to modify or improve such Leased Real Property to bring it into compliance therewith. The Company shall not be required to expend more than $25,000 in the aggregate under all Lease Agreements to restore the Leased Real Property at the end of the term of the applicable Lease Agreement to the condition required under the Lease Agreement (assuming the conditions existing in such Leased Real Property as of the date hereof and as of the Closing).

          (d) The Company has good and valid title to, or, in the case of leased properties and assets, valid leasehold interests in, all of its tangible properties and assets, real, personal and mixed, used or held for use in its business, free and clear of any Liens, except (i) as reflected in the Current Balance Sheet, (ii) Liens for Taxes not yet due and payable, and (iii) such imperfections of title and encumbrances, if any, which do not detract from the value or interfere with the present use of the property subject thereto or affected thereby.

          (e) Section 2.12(e) of the Disclosure Schedule lists all material items of equipment (the " Equipment ”) owned or leased by the Company, and such Equipment is (i) adequate for the conduct of the business of the Company as currently conducted and as currently

contemplated to be conducted, and (ii) in good operating condition, regularly and properly maintained, subject to normal wear and tear.

     2.13 Intellectual Property .

          (a) Definitions . For all purposes of this Agreement, the following terms shall have the following respective meanings:

               (i) “ Intellectual Property ” shall mean any or all of the following (1) works of authorship including, without limitation, computer programs, source code, and executable code, whether embodied in software, firmware or otherwise, architecture, documentation, designs, files, records, databases, and data, (2) inventions (whether or not patentable), discoveries, improvements, and technology, (3) proprietary and confidential information, trade secrets and know how, (4) databases, data compilations and collections and technical data, (5) domain names, web addresses and sites, (6) tools, methods and processes, and (7) any and all instantiations or embodiments of the foregoing in any form and embodied in any media.

               (ii) “ Intellectual Property Rights ” shall mean worldwide common law and statutory rights associated with (1) patents and patent applications of any kind, (2) copyrights, copyright registrations and copyright applications, “moral” rights and mask work rights, (3) the protection of trade and industrial secrets and confidential information, (4) logos, trademarks, trade names and service marks, (5) analogous rights to those set forth above, and (6) divisions, continuations, renewals, reissuances and extensions of the foregoing (as applicable).

               (iii) “ Company Intellectual Property ” shall mean any and all Intellectual Property and Intellectual Property Rights that are owned by or exclusively licensed to the Company.

               (iv) “ Registered Intellectual Property ” shall mean Intellectual Property and Intellectual Property Rights that have been registered, applied for, filed, certified or otherwise perfected, issued, or recorded with or by any state, government or other public or quasi-public legal authority.

          (b) Section 2.13(a)(iv)(b) of the Disclosure Schedule (i) lists all material Company Intellectual Property, (ii) lists all Registered Intellectual Property owned by, or filed in the name of, the Company (the “ Company Registered Intellectual Property ”) and (iii) lists any proceedings or actions before any court, tribunal (including the United States Patent and Trademark Office (the “ PTO ”) or equivalent authority anywhere in the world) related to any of the Company Registered Intellectual Property or Company Intellectual Property.

          (c) To the Knowledge of the Company, each item of Company Registered Intellectual Property is valid and subsisting, and all necessary registration, maintenance and renewal fees in connection with such Company Registered Intellectual Property have been paid and all necessary documents and certificates in connection with such Company Registered Intellectual Property have been filed with the relevant patent, copyright, trademark or other authorities in the United States or foreign jurisdictions, as the case may be, for the purposes of maintaining such

Registered Intellectual Property and there are no actions with respect thereto that must be taken by the Company within one hundred twenty (120) days following the date of this Agreement. In each case in which the Company has acquired ownership of any Intellectual Property or Intellectual Property Rights from any person, the Company has obtained a valid and enforceable assignment sufficient to irrevocably transfer to the Company all rights in such Intellectual Property and the associated Intellectual Property Rights and, with respect to any such Intellectual Property Rights that are Registered Intellectual Property, the Company has recorded the relevant assignment with the relevant governmental authorities, including the PTO, the U.S. Copyright Office, or their respective equivalents in any relevant foreign jurisdiction, as the case may be.

          (d) All Company Intellectual Property will be fully transferable and licensable by the Final Surviving Entity and/or Parent without restriction and without payment of any kind to any third party.

          (e) Each item of Company Intellectual Property (other than Intellectual Property licensed to the Company), and, to the Knowledge of the Company, all Intellectual Property licensed to the Company, is free and clear of any Liens other than those set forth on Section 2.13(e) of the Disclosure Schedule.

          (f) Except as set forth in Section 2.13(f) of the Disclosure Schedule, the Company has not (i) granted any exclusive license of or exclusive right to use, or authorized the retention of any exclusive rights to use or joint ownership of, any Intellectual Property or Intellectual Property Rights that is Company Intellectual Property, to any other person, or (ii) to the Knowledge of the Company, permitted the Company’s rights in any Company Intellectual Property to enter into the public domain.

          (g) The Company Intellectual Property, together with (i) the other Intellectual Property licensed to the Company pursuant to the licenses listed in Section 2.14(p) of the Disclosure Schedule, (ii) any Shrink-Wrap Code non-exclusively licensed to the Company and (iii) any Intellectual Property in the public domain constitute all of the Intellectual Property and Intellectual Property Rights used in, necessary to, or that otherwise would be infringed by the conduct of the business of the Company as it currently is conducted or currently planned to be conducted, including, without limitation, the design, development, marketing, manufacture, use, import and sale of any product, technology or service (including products, technology or services currently under development). Except as set forth on Section 2.13(g) of the Disclosure Schedule, the Final Surviving Entity will own or possess sufficient rights to all Intellectual Property and Intellectual Property Rights immediately following the Closing Date that are necessary to the operation of the business of the Company as it currently is conducted or currently planned to be conducted and without infringing on the Intellectual Property Rights of any person.

          (h) No third party that has licensed Intellectual Property or Intellectual Property Rights to the Company has ownership rights or license rights to improvements or derivative works made by the Company in such Intellectual Property that has been licensed to the Company, except as set forth in Section 2.13(h) of the Disclosure Schedule.

          (i) Section 2.13(i) of the Disclosure Schedule lists all Material Contracts between the Company and any other person wherein or whereby the Company has agreed to, or assumed, any obligation or duty to warrant, indemnify, reimburse, hold harmless, guaranty or otherwise assume or incur any obligation or Liability or provide a right of rescission with respect to the infringement or misappropriation by the Company, or such other person of the Intellectual Property Rights of any person other than the Company, but excluding (i) Shrink-Wrap Code, and (ii) non-disclosure agreements entered into in the ordinary course of business.

          (j) The operation of the business of the Company as it has been conducted, is currently conducted and is currently contemplated to be conducted by the Company, including the design, development, use, import, branding, advertising, promotion, marketing, distribution, manufacture and sale of any product, technology or service (including products, technology or services that have been or are currently under development) of the Company has not infringed or misappropriated, does not infringe or misappropriate, and will not infringe or misappropriate when conducted by Parent and/or the Final Surviving Entity following the Closing in the manner currently conducted, or currently planned to be conducted, any Intellectual Property Rights of any person, violate any right to privacy or publicity of any person, or constitute unfair competition or trade practices under the Laws of any jurisdiction. The Company has not received notice from any person claiming that such operation or any act, any product, technology or service (including products, technology or services currently under development) or Intellectual Property of the Company infringes or misappropriates any Intellectual Property Rights of any person or constitutes unfair competition or trade practices under the Laws of any jurisdiction (nor does the Company have Knowledge of any basis therefor).

          (k) Neither this Agreement nor the consummation of the transactions contemplated by this Agreement, including the assignment to Parent and/or the Final Surviving Entity by operation of law or otherwise of any contracts to which the Company is a party, will result in: (i) Parent or any of its subsidiaries granting to any third party any right to or with respect to any Intellectual Property Rights owned by, or licensed to Parent or any of its subsidiaries, (ii) Parent or any of its subsidiaries, being bound by or subject to, any exclusivity obligations, non-compete or other restriction on the operation or scope of their respective businesses, or (iii) Parent or the Final Surviving Entity being obligated to pay any royalties or other material amounts to any third party in excess of those payable by any of them, respectively, in the absence of this Agreement or the transactions contemplated hereby. Notwithstanding the foregoing, the representations in this Section 2.13(k) will not be breached as a result of the operation of provisions contained in agreements to which Parent is a party but the Company is not a party.

          (l) To the Knowledge of the Company, no person has infringed or misappropriated or is infringing or misappropriating any Company Intellectual Property.

          (m) Except as forth on Section 2.13(m) of the Disclosure Schedule, to the extent that any Intellectual Property has been developed or created independently or jointly by any person other than the Company for which the Company has, directly or indirectly, provided consideration for such development or creation, the Company has a written contract with such person with respect

thereto, and the Company thereby has obtained ownership of, and is the exclusive owner of, all such Intellectual Property therein and associated Intellectual Property Rights by operation of law or by valid assignment.

          (n) No Company Intellectual Property, Company Intellectual Property Rights, product, technology, or service of the Company is subject to any proceeding or outstanding decree, order, judgment or settlement agreement or stipulation that restricts in any manner the use, transfer or licensing thereof by the Company or may affect the validity, use or enforceability of such Company Intellectual Property.

          (o) No (i) material published or distributed by the Company, or (ii) conduct or statement of the Company constitutes obscene material, a defamatory statement or material, false advertising.

          (p) No government funding, facilities or resources of a university, college, other educational institution or research center or funding from third parties was used in the development of the Company Intellectual Property and no Governmental Entity, university, college, other educational institution or research center has any claim or right in or to the Company Intellectual Property. Except as set forth on Section 2.13(p) of the Disclosure Schedule, to the Company’s Knowledge, no current or former Employee or contractor of the Company who was involved in, or who contributed to, the creation or development of any Company Intellectual Property, has performed services for the government, a university, college or other educational institution, or a research center, during a period of time during which such Employee or contractor was also performing services for the Company.

          (q) The Company has not collected any personally identifiable information from any third parties except as described in Section 2.13(q) of the Disclosure Schedule. The Company has complied with all applicable Laws and its internal privacy policies relating to the privacy of users of its products, services, and Web sites, and also the collection, use, storage, and transfer of any personally identifiable information collected by or on behalf of the Company.

          (r) The Company has taken commercially reasonable steps to protect the Company’s rights in confidential information and trade secrets of the Company or provided by any other person to the Company, including without limitation any personally identifiable information. Without limiting the foregoing, neither the Company nor any person acting on the Company’s behalf has disclosed, delivered or licensed to any person, agreed to disclose, deliver or license to any person, or permitted the disclosure or delivery to any escrow agent or other person of any Company Source Code (as defined below). No event has occurred, and no circumstance or condition exists, that (with or without notice or lapse of time or both) will, or would reasonably be expected to, result in the disclosure or delivery by or on behalf of the Company of any Company Source Code. Company Source Code means any software source code or related proprietary or confidential information or algorithms of any Company Intellectual Property.

          (s) Section 2.13(s) of the Disclosure Schedule lists all software or other material that is distributed as “freeware,” “free software,” “open source software” or under a similar licensing

or distribution model (including the GNU General Public License) that, to the Knowledge of the Company, the Company uses or licenses, and identifies that which is incorporated into, combined with, or distributed in conjunction with any Company products (“ Incorporated Open Source Software ”) and identifies the type of license or distribution model governing its use. The Company’s use and/or distribution of each component of Incorporated Open Source Software complies with all material provisions of the applicable license agreement, and in no case does such use or distribution give rise under such license agreement to any rights in any third parties under any Company Intellectual Property or obligations for the Company with respect to any Company Intellectual Property, including without limitation any obligation to disclose or distribute any such Intellectual Property in source code form, to license any such Intellectual Property for the purpose of making derivative works, or to distribute any such Intellectual Property without charge.

     2.14 Agreements, Contracts and Commitments . Except as set forth in Section 2.14 of the Disclosure Schedule (specifying the appropriate subparagraph), the Company is not a party to, nor is it bound by any of the following (each, a “ Material Contract ”):

          (a) any employment or consulting contract or commitment with an Employee or consultant or salesperson, or consulting or sales contract, or commitment with a firm or other organization;

          (b) any contract or plan, including, without limitation, any stock option plan, stock appreciation rights plan or stock purchase plan, any of the benefits of which will be increased, or the vesting of benefits of which will be accelerated, by the occurrence of any of the transactions contemplated by this Agreement (either alone or upon the occurrence of any additional subsequent events) or the value of any of the benefits of which will be calculated on the basis of any of the transactions contemplated by this Agreement;

          (c) any fidelity or surety bond or completion bond;

          (d) any lease of personal property having a value in excess of $25,000 individually or $50,000 in the aggregate and any Lease Agreement;

          (e) any agreement of indemnification or guaranty under which the Company has actual or potential liability that exceeds $25,000 individually or $50,000 in the aggregate, other than pursuant to contracts entered into in the ordinary course of business and identified pursuant to another subparagraph of this Section 2.14 ;

          (f) any contract or commitment relating to capital expenditures and involving future payments in excess of $25,000 individually or $50,000 in the aggregate;

          (g) any contract or commitment relating to the disposition or acquisition of assets or any interest in any business enterprise outside the ordinary course of the Company’s business;

          (h) any mortgages, indentures, guarantees, loans or credit agreements, security agreements or other agreements or instruments relating to the borrowing of money or extension of credit involving in excess of $25,000 individually or $50,000 in the aggregate;

          (i) any purchase order or contract for the purchase of materials involving future payments in excess of $25,000 individually or $50,000 in the aggregate;

          (j) any contract containing covenants or other obligations granting or containing any current or future commitments regarding exclusive rights, non-competition, “most favored nations,” restriction on the operation or scope of its businesses or operations, or similar terms;

          (k) any dealer, distribution or marketing contract requiring or reasonably anticipated to result in future payments by any party thereto in excess of $25,000 annually or $50,000 in the aggregate;

          (l) any development, joint venture, partnership or similar contract;

          (m) any sales representative, original equipment manufacturer, manufacturing, value added, remarketer, reseller, or independent software vendor, or other contract for use or distribution of the products, technology or services of the Company;

          (n) any customer contract involving, or reasonably expected to involve revenues to the Company in excess of $25,000 annually or $50,000 in the aggregate;

          (o) any agreement that is royalty bearing;

          (p) any contract with respect to any Intellectual Property or Intellectual Property Rights, including without limitation, any in-bound licenses, out-bound licenses and cross licenses, but excluding (i) non-exclusive in-licenses and purchase agreements for commercial off-the-shelf Intellectual Property that are generally available on nondiscriminatory pricing terms, in the case of software for a cost of not more than $5,000 for a perpetual license for a single user or work station or $50,000 in the aggregate for all users and work stations (“ Shrink-Wrap Code ”) and (ii) non-disclosure agreements entered into in the ordinary course of business; or

          (q) any other contract or commitment that involves the payment or receipt by the Company of $25,000 individually or $50,000 in the aggregate and is not cancelable without penalty within thirty (30) days.

          (r) The Company is in compliance in all material respects with and has not breached, violated or defaulted under, or received notice that it has breached, violated or defaulted under, any of the terms or conditions of any Material Contract, nor does the Company have Knowledge of any event that would constitute such a breach, violation or default with the lapse of time, giving of notice or both. Each Material Contract is in full force and effect, and the Company is not subject to any default thereunder, nor, to the Knowledge of the Company, is any party obligated to the Company pursuant to any such Material Contract subject to, or reasonably likely to become

subject to any default thereunder. Section 2.14(r) of the Disclosure Schedule sets forth all necessary consents, waivers and approvals of parties to any Material Contracts as are required thereunder in connection with the Merger, or for any such Material Contract to remain in full force and effect without limitation, modification or alteration after the Effective Time so as to preserve all rights of, and benefits to, the Company under such Material Contracts from and after the Effective Time. Section 2.14(r) of the Disclosure Schedule identifies each Material Contract which by its terms will terminate or may be terminated by either party thereto, solely by the passage of time or at the election of either party. Following the Effective Time, the Interim Surviving Corporation will be permitted to exercise all of its rights under the Material Contracts without the payment of any additional amounts or consideration other than ongoing fees, royalties or payments which the Company would otherwise be required to pay pursuant to the terms of such Material Contracts had the transactions contemplated by this Agreement not occurred.

     2.15 Interested Party Transactions . No officer or director of the Company (nor, to the Knowledge of the Company, any ancestor, sibling, descendant or spouse of any of such persons, or any trust, partnership or corporation in which any of such persons has or has had an interest), has or has had, directly or indirectly, (i) an interest in any entity which furnished or sold or licensed, or furnishes or sells or licenses, services, products, technology or Intellectual Property that the Company furnishes or sells, or proposes to furnish or sell, or (ii) any interest in any entity that purchases from or sells or furnishes to the Company, any goods or services, or (iii) a beneficial interest in any Material Contract to which the Company is a party; provided , however , that ownership of no more than one percent (1%) of the outstanding voting stock of a publicly traded corporation shall not be deemed to be an “interest in any entity” for purposes of this Section 2.15 . No Stockholder has any loans outsta