AGREEMENT AND PLAN OF MERGER

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Exhibit 2.1

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

VG HOLDING CORP.,

WHI MERGER CORPORATION,

ELECTRONIC ARTS INC.,

THE STOCKHOLDERS THAT ARE SIGNATORIES HERETO,

AND WITH RESPECT TO ARTICLES VII AND IX ONLY

ELEVATION MANAGEMENT, LLC,

AS STOCKHOLDER REPRESENTATIVE

Dated as of October 11, 2007

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INDEX OF EXHIBITS

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INDEX OF DEFINED TERMS

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THIS AGREEMENT AND PLAN OF MERGER (this “ Agreement ”) is made and entered into as of October 11, 2007 by and among Electronic Arts Inc., a Delaware corporation (“ Parent ”), WHI Merger Corporation, a Delaware corporation and a wholly-owned subsidiary of Parent (“ Sub ”), VG Holding Corp., a Delaware corporation (the “ Company ”), each of the stockholders of the Company and holders of Exchangeable Shares who have signed the signature page hereto as of the date hereof (the “ Stockholder Signatories ”) or who executes and delivers a Joinder (as defined herein) after the date hereof (the “ Joinder Parties ” and collectively with the Stockholder Signatories, the “ Stockholder Parties ”) and with respect to Article VII and Article IX only, Elevation Management, LLC as Stockholder Representative (the “ Stockholder Representative ”).

RECITALS

A. The Boards of Directors of each of Parent, Sub and the Company believe it is advisable and in the best interests of each corporation and its respective stockholders that Parent acquire the Company through the statutory merger of Sub with and into the Company (the “ Merger ”) and, in furtherance thereof, have approved this Agreement and the Merger.

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

C. Immediately following the execution and delivery of this Agreement by the parties hereto and as a material inducement to Parent and Sub to enter into this Agreement, the Company shall obtain and shall deliver to Parent a true, correct and complete copy of an Action by Written Consent (the “ Initial Stockholder Consent ”), evidencing the approval of the Merger, the adoption of this Agreement and the approval of the transactions contemplated hereby, in the form attached hereto as Exhibit A (the “ Stockholder Written Consent ”), signed by certain stockholders constituting the Requisite Stockholder Approval (as defined below).

D. Concurrently with the execution and delivery of this Agreement, and as a condition and inducement to Parent and Sub to enter into this Agreement, (i) the Company Employees (as defined below) identified on Exhibit B have entered into management retention arrangements with Parent or a subsidiary thereof (the “ Management Retention Agreements ”), and (ii) Parent and the Company have entered into a co-publishing agreement for the video game “Saboteur”.

E. The Company will assist Parent in causing the Company or the Company’s subsidiary, VG Canada Holding Corp. (“ Callco ”), to conduct an offer, promptly following the execution of this Agreement, to purchase the unvested exchangeable shares of the Company’s subsidiary, VG Exchange Corp. (“ Exchangeco ”), that are held by residents of Canada who are not “U.S. Persons” as defined in Regulation S promulgated by the Securities and Exchange Commission (“ SEC ”) on the terms and conditions set forth in Section 5.18 .

F. Concurrently with the execution and delivery of this Agreement, and as a condition and inducement to the Company to enter into this Agreement, Parent and the Company are entering into a Senior Secured Loan Agreement in the form attached hereto as Exhibit C (the “ Loan Agreement ”).

NOW, THEREFORE, in consideration of the mutual agreements, covenants and other premises 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:

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ARTICLE I

THE MERGER

1.1 The Merger . At the Effective Time and subject to and upon the terms and conditions of this Agreement and the applicable provisions of the General Corporation Law of the State of Delaware (“ Delaware Law ”), Sub shall be merged with and into the Company, the separate corporate existence of Sub shall cease, and the Company shall continue as the surviving corporation and as a wholly-owned subsidiary of Parent. The surviving corporation after the Merger is sometimes referred to hereinafter as the “ Surviving Corporation .”

1.2 Effective Time . Unless this Agreement is earlier terminated pursuant to Section 8.1 , the closing of the Merger (the “ Closing ”) will take place on the second Business Day following satisfaction or waiver of the conditions set forth in Article VI (other than those conditions that by their terms are to be satisfied at the Closing, but subject to the satisfaction or waiver thereof), at the offices of Wilson Sonsini Goodrich & Rosati, Professional Corporation, 650 Page Mill Road, Palo Alto, California, unless another time or place is mutually agreed upon in writing by Parent and the Company; provided , however , that notwithstanding anything else in this Agreement to the contrary, the Closing shall not occur prior to 10:00 a.m. (Pacific Standard Time) on November 23, 2007 or during the month of December and Parent and Sub shall not be required to effect the Closing prior to January 3, 2008 unless the matters described on Schedule 1.2 hereto shall have occurred. 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 Merger to be consummated by filing a Certificate of Merger in substantially the form attached hereto as Exhibit D , 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 such filing shall be referred to herein as the “ Effective Time ”).

1.3 Effect of the Merger . At the Effective Time, the effect of the 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, all of the property, rights, privileges, powers and franchises of the Company and Sub shall vest in the Surviving Corporation, and all debts, liabilities and duties of the Company and Sub shall become the debts, liabilities and duties of the Surviving Corporation.

1.4 Certificate of Incorporation and Bylaws .

(a) Unless otherwise determined by Parent prior to the Effective Time, the certificate of incorporation of the Surviving Corporation shall be amended and restated as of the Effective Time to be as set forth on Exhibit E , until thereafter amended in accordance with Delaware Law and as provided in such certificate of incorporation.”

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

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1.5 Directors and Officers .

(a) Directors of Surviving Corporation . Unless otherwise determined by Parent prior to the Effective Time, the directors of Sub immediately prior to the Effective Time shall be the directors of the Surviving Corporation immediately after the Effective Time, each to hold the office of a director of the Surviving Corporation in accordance with the provisions of Delaware Law and the Organizational Documents of the Surviving Corporation until their successors are duly elected and qualified.

(b) Officers of Surviving Corporation . Unless otherwise determined by Parent prior to the Effective Time, the officers of Sub immediately prior to the Effective Time shall be the officers of the Surviving Corporation immediately after the Effective Time, each to hold office in accordance with the provisions of the bylaws of the Surviving Corporation.

1.6 Effect of 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:

“ Action ” shall mean any action, appeal, petition, plea, charge, complaint, claim, suit, demand, litigation, arbitration, mediation, hearing, inquiry, audit, investigation or similar event, occurrence, or proceeding.

“ Affiliate ” shall mean with respect to any specified Person, a Person that, directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, such specified Person. For this definition, “control” (and its derivatives) means the possession, directly or indirectly, or as trustee or executor, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting Equity Interests, as trustee or executor, by Contract or credit arrangements or otherwise.

“ Articles of Amendment of Exchangeco ” shall mean the Articles of Amendment of Exchangeco, dated November 18, 2005.

“ BioWare Combination Agreement ” shall mean the Combination Agreement, dated as of October 30, 2005, among the Company, BioWare Corp. and the other parties thereto, as amended.

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

“ Code ” shall mean the Internal Revenue Code of 1986, as amended.

“ Commitment ” shall mean, with respect to a Person, (a) options, warrants, convertible securities, exchangeable securities, subscription rights, conversion rights, exchange rights, or other Contracts that could require such Person to issue any of its Equity Interests or to sell any Equity Interests it owns in another Person; (b) any other securities convertible into, exchangeable or exercisable for, or representing the right to subscribe for any Equity Interest of such Person or owned by such Person; (c) statutory pre-emptive rights or pre-emptive rights granted under a Person’s Organizational Documents or any Contract; and (d) stock appreciation rights, phantom stock, profit participation, or other similar rights with respect to such Person.

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“ Common Consideration ” shall mean the Total Consideration plus the Exercise Price Amount less the sum of the (i) Payoff Amount, (ii) Series A Preferred Preference, (iii) Series B Preferred Preference, (iv) Series C Preferred Preference, (iv) amount of Third Party Expenses set forth on the Statement of Expenses, (v) the amount of the Retention Bonus Payments whether or not paid, including any amounts of the Retention Bonus Payments which may be paid prior to the date of this Agreement and including (other than Retention Bonus Payments made to U.S. employees who would be ineligible to receive incentive stock options under applicable law) any employment, payroll or similar Taxes to be incurred by the Company, its subsidiaries or Parent in connection with the Retention Bonus Payments, (vi) 75% of the amount of New Hire Bonus Payments whether or not paid, including any amounts of the New Hire Bonus Payments which may be paid prior to the date of this Agreement and including (other than New Hire Bonus Payments made to U.S. employees who would be ineligible to receive incentive stock options under applicable law) any employment, payroll or similar Taxes to be incurred by the Company, its subsidiaries or Parent in connection with the New Hire Bonus Payments, and (vii) the aggregate amount payable (regardless of the time of payment or whether subject to any condition) in respect of the acquisition of unvested Exchangeable Shares pursuant to the Tender Offer, but excluding any interest accruing following the Effective Time which may be payable on amounts paid in the Tender Offer.

“ Common Consideration Per Share ” shall mean the quotient (rounded to the nearest one-millionth of a cent, with $0.000000005 rounding up) obtained by dividing the Common Consideration by the number of outstanding shares of Company Common Stock and the maximum number of shares of Company Common Stock issuable under all Company Options and Company Warrants and any other rights to obtain shares of Company Common Stock, including the Company Common Stock issued in exchange for the Exchangeable Shares (in each case, whether or not vested) pursuant to Section 5.18 , that are outstanding as of immediately prior to the Effective Time and excluding any Company Common Stock issuable in respect of any Exchangeable Shares acquired pursuant to the Tender Offer.

“ Company Capital Stock ” shall mean the Company Common Stock and the Company Preferred Stock and any other shares of capital stock, if any, of the Company, taken together.

“ Company Common Stock ” shall mean shares of common stock, par value $0.01, of the Company.

“ Company Controlled Intellectual Property ” shall mean all Company Intellectual Property other than Intellectual Property licensed to the Company or any of its subsidiaries from a third party.

“ Company Intellectual Property ” shall mean any Intellectual Property that is owned by, or licensed by a third party to, the Company or any of its subsidiaries, other than (i) Publisher Intellectual Property or (ii) widely commercially available software with a current replacement value of $25,000 or less.

“ Company Options ” shall mean all issued and outstanding options (including commitments to grant options, but excluding Company Warrants) to purchase or otherwise acquire Company Common Stock (whether or not vested) held by any Person.

“ Company Preferred Stock ” shall mean the Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock.

“ Company Registered Intellectual Property ” shall mean all of the following types of United States, international and foreign Intellectual Property owned by any of the Company or its subsidiaries: (i) patents and design or utility patent applications; (ii) registered trademarks and service marks, applications to register trademarks or service marks, intent-to-use applications, or other registrations or applications related to trademarks; (iii) registered Internet domain names and applications to register Internet domain names; and (iv) registered copyrights and applications for copyright registration.

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“ Company Stockholder ” shall mean any holder of Company Capital Stock immediately prior to the Effective Time (including holders of Company Common Stock after giving effect to the Exchange).

“ Company Warrants ” shall mean any issued and outstanding warrant or other security issued by the Company that is convertible into or exercisable for Company Capital Stock (other than Company Options and Exchangeable Shares).

“ Continuing Employee ” shall mean any employee of the Company or any of its subsidiaries who remains employed with Parent or any of its subsidiaries (including the Company and its subsidiaries) following the Effective Time (together, the “ Continuing Employees ”).

“ Contract ” shall mean any mortgage, indenture, lease, contract, covenant, plan, insurance policy or other agreement, instrument, legally binding arrangement, commitment, permit, concession, franchise or license, or other similar legally binding understanding, whether oral or written.

“ Controlled Group Liability ” shall mean Liabilities (i) under Title IV of ERISA, (ii) under Section 302 of ERISA, (iii) under Sections 412 and Section 4971 of the IRC or (iv) as a result of a failure to comply with the continuation coverage requirements of Section 601 et seq. of ERISA and Section 4980B of the IRC, other than such Liabilities that arise solely out of, or relate solely to, the Plans.

“ Disclosing Party ” shall mean a party to this Agreement who discloses Personal Information to another party to this Agreement.

“ Dollars ” or “ $ ” shall mean United States Dollars.

“ Drag-Along Rights ” shall mean the rights set forth in Section 3.5 of the Stockholders Agreement and Section 3.5 of the GSA.

“ Encumbrance ” shall mean any lien, pledge, charge, claim, mortgage, security interest or other similar encumbrance.

“ Enforceable ” shall mean, with respect to a Contract, that such Contract is the legal, valid, and binding obligation of the applicable Person, enforceable against such Person in accordance with its terms, except as such enforceability may be subject to the effects of bankruptcy, insolvency, reorganization, moratorium, or other similar Laws relating to or affecting the rights of creditors, and general principles of equity regardless of whether such enforceability is considered in a proceeding in equity or at law.

“ Environmental, Health and Safety Requirements ” shall mean all Orders and Laws concerning or relating to public health and safety, worker/occupational health and safety, or pollution or protection of the environment, including those relating to the presence, use, manufacturing, refining, production, generation, handling, transportation, treatment, recycling, transfer, storage, disposal, distribution, importing, labeling, testing, processing, discharge, release, threatened release, control, or other action or failure to act involving cleanup of any hazardous materials, substances or wastes, chemical substances or mixtures, pesticides, pollutants, contaminants, toxic chemicals, petroleum products or byproducts, asbestos, polychlorinated biphenyls, noise, or radiation, each as amended and as now in effect.

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“ Equity Interests ” shall mean (i) with respect to a corporation, any and all shares of capital stock and any Commitments with respect thereto, (ii) with respect to a partnership, limited liability company, trust or similar Person, any and all units, interests or other partnership/limited liability company interests, and any Commitments with respect thereto, and (iii) with respect to any other Person, any other equity ownership or participation in such Person.

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

“ Estimated Third Party Expenses ” shall mean the cash amount of Third Party Expenses paid or expected to be payable by the Company as estimated by the Company in good faith and based on reasonable assumptions as of the Closing Date and as set forth in the Statement of Expenses of the Company to be delivered to Parent pursuant to Section 5.12 of this Agreement.

“ Exchangeable Share Provisions ” shall mean the rights, privileges, restrictions and conditions relating to the Exchangeable Shares set forth in the Articles of Amendment of Exchangeco, as amended.

“ Exchangeable Shares ” shall mean the non-voting exchangeable shares of Exchangeco.

“ Exchange Ratio ” shall mean the quotient obtained by dividing (i) the Common Consideration Per Share by (ii) the Parent Stock Price.

“ Exercise Price Amount ” shall mean the aggregate cash exercise price payable upon the exercise of all Company Options and Company Warrants exercisable solely for shares of Company Common Stock that are outstanding as of immediately prior to the Effective Time.

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

“ Governmental Authority ” shall mean any government, any governmental or regulatory entity or body, department, commission, board, agency or instrumentality, and any court, tribunal or judicial body, in each case whether federal, state, county, provincial and whether local or foreign or any arbitrator in any controversy that has jurisdiction over an applicable party or any of its properties or assets.

“ HSR Act ” shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

“ Indebtedness ” shall mean (in each case, other than pursuant to the Loan Agreement), (i) indebtedness for borrowed money, whether secured or unsecured, (ii) obligations under conditional or installment sale or other title retention agreement or arrangement relating to purchased property, (iii) capitalized lease obligations, and (iv) guarantees of any of the foregoing of another person.

“ Indemnifying Parties ” shall mean the Stockholder Parties.

“ Intellectual Property ” shall mean any or all of the following and all rights in, arising out of, or associated therewith (i) all Patent Rights; (ii) all inventions (whether patentable or not), invention disclosures, improvements, trade secrets, proprietary information, confidential information, know how, technology, processes, designs, and all documentation relating to any of the foregoing; (iii) works of authorship in any media, and all copyrights, copyright registrations and applications therefor, and all other rights, including authors’ or moral rights, corresponding thereto throughout the world; (iv) all computer software, including all source code, object code, firmware, development tools, files, records and data, and all

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media on which any of the foregoing is recorded; (v) all trade names, logos, common law trademarks and service marks, Internet domain names, trademark and service mark registrations and applications therefor throughout the world, or any goodwill associated with any of the foregoing; (vi) with respect to subsections (i), (iii) and (v) above, all corresponding recordings, licenses or similar agreements; (vii) with respect to all of the foregoing, the right to bring an Action in Law for infringement or other impairment of rights, including the right to receive damages, proceeds or any other legal or equitable protections; and (viii) any similar or equivalent rights to any of the foregoing anywhere in the world.

“ In-the-Money Company Option ” shall mean a Company Option outstanding as of immediately prior to the Effective Time with an exercise price per share that is less than the Common Consideration Per Share.

“ In-the-Money Company Warrant ” shall mean a Company Warrant outstanding as of immediately prior to the Effective Time with an exercise price per share that is less than the Common Consideration Per Share.

“ Knowledge ” or “ Known ” shall mean, with respect to the Company, the actual knowledge of the Persons listed on Schedule 1.6(a)(i) in accordance with and consistent with the good faith conduct of each such Person’s role and duties with respect to the Company and its subsidiaries.

“ Law ” shall mean any and all applicable federal, state, local, municipal, foreign or other law, statute, constitution, principle of common law, resolution, ordinance, code, edict, decree, rule, regulation, ruling or other requirement issued, enacted, adopted, promulgated, implemented or otherwise put into effect by or under the authority of any Governmental Authority.

“ Liabilities ” shall mean all claims, contentions, demands, debts, liabilities, agreements, costs, expenses, attorneys’ fees, damages, losses, suits, liens, actions or causes of action that they have had in the past or currently have, whether in law or equity, whether known or unknown, accrued or fixed, absolute or contingent, determined or determinable, matured or unmatured, and whether due or to become due, asserted or unasserted, or known or unknown, including, accounts payable, royalties payable, and other reserves, accrued bonuses, accrued vacation, and employee expense obligations.

“ Management Agreement ” shall mean the Amended and Restated Management Agreement, dated as of October 30, 2005, by and between the Company and Elevation Management, LLC.

“ Material Adverse Effect ” shall mean any changes, effects, events, circumstances or conditions that, individually or in the aggregate, would reasonably be expected to have a materially adverse effect on the business, assets, financial condition, or results of operations of the Company and its subsidiaries, taken as a whole, except as set forth in Schedule 1.6(a)(ii) .

“ Orders ” shall mean any order, ruling, decision, verdict, decree, writ, subpoena, mandate, precept, command, directive, consent, approval, award, judgment, injunction, or other similar determination or finding by, before, or under the supervision of any Governmental Authority, arbitrator or mediator.

“ Ordinary Course of Business ” shall mean, with respect to a Person, the ordinary course of business consistent with past practice of such Person and its subsidiaries.

“ Organizational Documents ” shall mean, with respect to a Person, the articles of incorporation, certificate of incorporation (including certificates of designation), charter, bylaws, articles of formation, articles of association, regulations, operating agreement, certificate of limited partnership,

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partnership agreement, limited liability company agreement and all other similar documents, instruments or certificates executed, adopted, or filed in connection with the creation, formation, or organization of such Person, including any amendments thereto.

“ Pandemic Contribution Agreement ” shall mean the Contribution Agreement, dated as of October 28, 2005, among the Company, Pandemic Group, LLC and the other parties thereto.

“ Parent Common Stock ” shall mean shares of common stock, par value $0.01 per share, of Parent.

“ Parent Stock Price ” shall mean the average closing sale price for a share of Parent Common Stock as quoted on the Nasdaq Global Select Market during normal trading hours for the ten (10) consecutive trading day period ending on the Closing Date.

“ Patent Rights ” shall mean all United States, international and foreign patents and applications therefor and all reissues, divisions, renewals, extensions, provisionals, continuations and continuations-in-part thereof.

“ Payoff Amount ” shall mean the aggregate amount payable at the Closing under the Payoff Letters.

“ Payoff Letters ” shall mean letters reasonably satisfactory to Parent from all Persons from whom the Company and/or its subsidiaries has outstanding Indebtedness (excluding capitalized lease obligations) as of the Effective Time setting forth the aggregate amount owed by the Company and/or its subsidiaries for such borrowed money (including outstanding principal, interest, penalties and any other amounts owed), together with a per diem amount if such aggregate amount is paid in full after the date set forth in such Payoff Letter and providing that such Indebtedness shall be paid in full and all Encumbrances in connection therewith shall be released upon the payment of such amounts.

“ Permit ” shall mean any permit, license, certificate, approval, consent, notice, waiver, franchise, registration, filing, accreditation, or other similar authorization required by any Law, Governmental Authority.

“ Permitted Encumbrance ” shall mean any of the following: (i) liens for Taxes not yet due and payable and other Taxes, assessments, governmental charges, or claims that are being contested in good faith and for which adequate reserves have been established in the Company’s financial statements; (ii) statutory liens of landlords and warehousemen’s, carriers’, mechanics’, suppliers’, materialmen’s, repairmen’s, or other like liens (including contractual landlords’ liens) arising in the Ordinary Course of Business; (iii) liens incurred or deposits made in the Ordinary Course of Business in connection with workers’ compensation, unemployment insurance and other similar types of social security; (iv) restrictions on transfer of securities imposed by applicable state and federal securities Laws; and (v) those items set forth in Section 1.6(a)(iii) of the Disclosure Letter.

“ Per Option Spread Amount ” shall mean, for each outstanding Company Option as of immediately prior to the Effective Time, the product obtained by multiplying (i) the number of shares of Company Common Stock for which each Company Option is exercisable as of immediately prior to the Effective Time (whether vested or unvested) and (ii) the difference between the Common Consideration Per Share and the exercise price per share of each In-the-Money Company Option.

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“ Person ” shall mean an individual or entity, including a partnership, a limited liability company, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, or a Governmental Authority (or any department, agency, or political subdivision thereof).

“ Personal Information ” shall mean information about an identifiable individual (other than that person’s business title or business contact information when such information was used or disclosed for business communications) to the extent subject to applicable Canadian Law.

“ Per Warrant Spread Amount ” shall mean, for each outstanding Company Warrant as of immediately prior to the Effective Time, the product obtained by multiplying (i) the number of shares of Company Common Stock for which each Company Warrant is exercisable as of immediately prior to the Effective Time (whether vested or unvested) and (ii) the difference between the Common Consideration Per Share and the exercise price per share of each In-the-Money Company Warrant.

“ Publisher ” shall mean a Person that is in the business of publishing video games or other interactive entertainment software that has entered into an agreement with the Company or any of its subsidiaries for the Company or its subsidiaries to develop video games or other interactive entertainment software on behalf of such Publisher.

“ Publisher Intellectual Property ” shall mean any Intellectual Property that is licensed to the Company or any of its subsidiaries, from a Publisher that owns or has a valid right to license such Intellectual Property, solely for the purpose of permitting the Company or its subsidiaries (as the case may be) to develop video games or other interactive entertainment software incorporating such Intellectual Property on behalf of such Publisher, and which Publisher is to subsequently publish, distribute and/or sell.

“ Receivables ” shall mean all receivables of the Company and its subsidiaries, including all Contracts in transit, manufacturers warranty receivables, notes receivable, accounts receivable, trade account receivables, and insurance proceeds receivable.

“ Recipient ” shall mean a party to this Agreement who receives Personal Information.

“ Reference Date ” shall mean August 31, 2007.

“ Related Agreements ” shall mean the Certificate of Merger, the Management Retention Agreements, the Loan Agreement, the Combination Agreement Amendment, the Escrow Agreement Amendment and all other agreements and certificates entered into by the Company, its subsidiaries and the Company Stockholders in connection with the Closing and the transactions contemplated herein.

“ Series A Preferred Preference ” shall mean the Series A Preferred Preference Per Share multiplied by the number of outstanding shares of Series A Preferred Stock as of immediately prior to the Effective Time.

“ Series A Preferred Preference Per Share ” shall mean $1.00.

“ Series B Preferred Preference ” shall mean the Series B Preferred Preference Per Share multiplied by the number of outstanding shares of Series B Preferred Stock as of immediately prior to the Effective Time.

“ Series B Preferred Preference Per Share ” shall mean $1.00.

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“ Series C Preferred Preference ” shall mean the Series C Preferred Preference Per Share multiplied by the number of outstanding shares of Series C Preferred Stock as of immediately prior to the Effective Time plus any additional dividends that would have otherwise accrued on such share of Series C Preferred Stock between the Effective Time and January 16, 2008 (assuming all such dividends were paid when due).

“ Series C Preferred Preference Per Share ” shall mean $1,000 plus the accrued and unpaid dividends on the outstanding shares of Series C Preferred Stock as of immediately prior to the Effective Time.

“ Series A Preferred Stock ” shall mean the Series A Preferred stock, par value $0.01 per share, of the Company.

“ Series B Preferred Stock ” shall mean the Series B Preferred Stock, $0.01 par value per share, of the Company.

“ Series C Preferred Stock ” shall mean the Series C Redeemable Preferred Stock, $0.01 par value per share, of the Company.

“ Subsidiary ” shall mean, with respect to any party, any corporation or other organization or Person, whether incorporated or unincorporated, of which (i) such party or any other subsidiary of such party is a general partner (excluding such partnerships where such party or any subsidiary of such party does not have a majority of the voting interest in such partnership) or (i) at least a majority of the securities or other interests having by their terms ordinary voting power to elect a majority of the board of directors or others performing similar functions with respect to such corporation or other organization is directly or indirectly owned or controlled by such party or by any one or more of its subsidiaries.

“ Tax ” shall mean any federal, state, local, or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Code Section 59A), customs, ad valorem, duties, capital stock, franchise, profits, withholding, social security, unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not, and including any liability in respect of Taxes as a transferee or under any Tax sharing agreement, Tax indemnity agreement, or other contract, arrangement, agreement, understanding or commitment (whether oral or written) and any liability in respect of Taxes which is payable by operation of law, Treasury Regulation Section 1.1502-6 (or any predecessor or successor thereof or any analogous or similar provision under state, local or foreign law) or otherwise.

“ Tax Return ” shall mean any report, return, statement, information return or other information required to be supplied to a Governmental Authority in connection with Taxes (including any attachment or schedule thereto or amendment thereof), including any claim for refund, declaration of any estimated Tax and combined or consolidated return for any group of entities.

“ Threatened ” shall mean a demand or statement has been made (orally or in writing) or a notice has been given (orally or in writing), that would lead a prudent person to reasonably conclude that a cause of Action or other matter is likely to be asserted, commenced, taken, or otherwise initiated.

“ Total Consideration ” shall mean an amount of cash equal to $747,000,000.

(b) Effect on Capital Stock . At the Effective Time, by virtue of the Merger and subject to Section 1.7 regarding Dissenting Shares without any action on the part of Sub, the Company or the holders

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of shares of Company Capital Stock, each share of Company Capital Stock issued and outstanding immediately prior to the Effective Time, upon the terms and subject to the conditions set forth in this Section 1.6 and throughout this Agreement, will be canceled and extinguished and will 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 , an amount of cash without interest equal to:

(i) In the case of Series C Preferred Stock (other than any Dissenting Shares), the Series C Preferred Preference Per Share;

(ii) In the case of Series B Preferred Stock (other than any Dissenting Shares), the Series B Preferred Preference Per Share;

(iii) In the case of Series A Preferred Stock (other than any Dissenting Shares), the Series A Preferred Preference Per Share; and

(iv) In the case of Company Common Stock (other than any Dissenting Shares), the Common Consideration Per Share.

The effect of the Merger on the Company Capital Stock provided hereunder shall constitute an amendment to the Company’s Organizational Documents to the extent that the consideration for such Company Capital Stock provided for under this Section 1.6(b) conflicts with any such Organizational Documents.

(c) Repurchase Rights . Notwithstanding anything in this Section 1.6 to the contrary, if any shares of Company Common Stock outstanding immediately prior to the Effective Time are unvested or are subject to a repurchase option, risk of forfeiture, escrow or other condition under any applicable restricted stock purchase agreement or other agreement with the Company or any subsidiary thereof, then the portion of the Common Consideration payable by Parent for such shares of Company Common Stock pursuant to Section 1.6(b)(iv) will also be unvested and subject to the same risk of forfeiture, escrow or other condition and will be paid to the holders thereof over time as such shares of Company Common Stock would have vested, in each case as set forth in such agreements, or such other time frame as is agreed to between Parent and the holders of such shares of Company Common Stock. For the avoidance of doubt, it is understood that the Common Consideration payable (a) with respect to the Company Common Stock held in the Escrow Account (as defined in the Pandemic Contribution Agreement) at the Effective Time, when delivered pursuant to Section 1.8 , shall be deposited in such Escrow Account pursuant to Section 2.6(d) of the Pandemic Contribution Agreement and (b) with respect to any Company Common Stock held in the Escrow Account (as defined in the BioWare Combination Agreement) at the Effective Time (after giving effect to the Exchange and Tender Offer), when delivered pursuant to Section 1.8 , shall be deposited in such Escrow Account pursuant to Section 2.6(d) of the BioWare Combination Agreement. The Common Consideration and any interest or earnings on the Common Consideration deposited in either of such escrow accounts shall accrue and be paid in the manner set forth in the respective escrow agreements entered into pursuant to the Pandemic Contribution Agreement and the BioWare Combination Agreement (true and complete copies of such escrow agreements have been made available to Parent prior to the date hereof).

(d) Treatment of Company Options; Company Warrants; and Exchangeable Shares .

(i) Effect on Company Options . At the Effective Time, each then outstanding Company Option, regardless of the exercise prices thereof or whether vested or unvested, will be assumed by Parent. Each such Company Option so assumed by Parent under this Agreement will continue to have, and be subject to, the same terms and conditions set forth in the agreement and plan governing such Company Option immediately prior to the Effective Time (including any vesting provisions), except that (A) each such

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Company Option will be exercisable (or will become exercisable in accordance with its terms) for that number of whole shares of Parent Common Stock equal to the product of the number of shares of Company Common Stock that were issuable upon exercise of such Company Option immediately prior to the Effective Time multiplied by the Exchange Ratio, rounded down to the nearest whole share of Parent Common Stock and (B) the per share exercise price for the shares of Parent Common Stock issuable upon exercise of such assumed Company Option will be equal to the quotient obtained by dividing the exercise price per share of such Company Option immediately prior to the Effective Time by the Exchange Ratio, rounded up to the nearest whole cent.

(ii) Company Warrants . No outstanding Company Warrants shall be assumed by Parent and each such Company Warrant outstanding as of immediately prior to the Effective Time will at and after the Effective Time represent only the right to receive the Per Warrant Spread Amount upon delivery of such Company Warrants for cancellation.

(iii) Exchangeable Shares . On the Closing Date but immediately prior to the Effective Time, each Exchangeable Share (other than Exchangeable Shares held by the Company or its subsidiaries) shall be purchased by the Company or by Callco, at Parent’s option, for one share of Company Common Stock as contemplated by Section 7.2 of the Exchangeable Share Provisions and Section 5.18 .

(e) Capital Stock of Sub . Each share of common stock of Sub issued and outstanding immediately prior to the Effective Time shall be converted into and exchanged for one (1) validly issued, fully paid and nonassessable share of common stock of the Surviving Corporation. Each stock certificate of Sub evidencing ownership of any such shares shall continue to evidence ownership of such shares of capital stock of the Surviving Corporation.

(f) Adjustments . In the event of any stock split, reverse stock split, stock dividend (including any dividend or distribution of securities convertible into Company Capital Stock), reorganization, reclassification, combination, recapitalization or other like change with respect to Company Capital Stock or Parent Common Stock occurring after the date of this Agreement and prior to the Effective Time, all references in this Agreement to specified numbers of shares of any class or series (or trading prices therefor) affected thereby, shall be equitably adjusted to the extent necessary to provide the parties the same economic effect as contemplated by this Agreement prior to such stock split, reverse stock split, stock dividend, reorganization, reclassification, combination, recapitalization or other like change.

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 effectively withdrawn or lost such holder’s appraisal rights for such shares under Delaware Law (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 , but the holder thereof shall only be entitled to such rights as are provided by Section 262 of Delaware Law.

(b) Notwithstanding the provisions of Section 1.7(a) , 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 set forth in Section 1.6 , without interest thereon, upon surrender of the certificate representing such shares.

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(c) Prior to the Effective Time, 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. Neither Parent nor the Surviving Corporation, except with the prior written consent of the Stockholder Representative, shall 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, the Surviving Corporation or the Company (i) makes any payment or payments in respect of any Dissenting Shares or (ii) incurs any out-of-pocket Losses in respect of any Dissenting Shares (excluding payments for such shares) ((i) and (ii) together, “ Dissenting Share Payments ”), Parent shall be entitled to recover under the terms of Article VII the amount by which such Dissenting Share Payments exceed the amount that the holder of such Dissenting Shares would have otherwise received pursuant to Section 1.6 had such holder complied with the exchange procedures set forth in Section 1.8 .

1.8 Surrender of Certificates .

(a) Exchange Agent . Prior to the Closing, Parent shall select a nationally recognized bank or trust company reasonably acceptable to the Company to serve as the exchange agent (the “ Exchange Agent ”) for the Merger.

(b) Parent to Provide Cash . Promptly following the Effective Time, Parent shall make available to the Exchange Agent for exchange in accordance with this Article I that portion of the Total Consideration payable pursuant to Section 1.6 in exchange for outstanding shares of Company Capital Stock.

(c) Exchange Procedures . No later than ten (10) days prior to the Closing Date, Parent or the Exchange Agent shall mail or cause to be mailed the letter of transmittal in substantially the form attached hereto as Exhibit F (the “ Letter of Transmittal ”) to the Company Stockholders at the address set forth opposite each such Company Stockholder’s name delivered by the Company prior thereto. After receipt of such Letter of Transmittal and any other documents that Parent or the Exchange Agent may reasonably require in order to effect the exchange (the “ Exchange Documents ”), the Company Stockholders will surrender the certificates representing their shares of Company Capital Stock (the “ Company Stock Certificates ”) to the Exchange Agent for cancellation together with duly completed and validly executed Exchange Documents. Upon surrender of a Company Stock Certificate for cancellation to the Exchange Agent, together with such Exchange Documents, duly completed and validly executed in accordance with the instructions thereto, and subject to the terms of Section   1.8(d) , (i) the holder of such Company Stock Certificate shall be entitled to receive from the Exchange Agent in exchange therefor, the cash constituting that portion of the Total Consideration to which such holder is entitled pursuant to Section 1.6 (rounded to the nearest cent, with $0.005 rounding up), and (ii) the Company Stock Certificate so surrendered shall be canceled as of the Effective Time. Any such holder surrendering its Company Stock Certificate and duly completed Letter of Transmittal in accordance with the terms hereof prior to the Closing Date shall be entitled to receive (or have delivery commenced, if by check) its applicable portion of the Total Consideration promptly following the Effective Time, in each case either, at the election of such holder, by wire transfer of immediately available funds to an account designated in writing by such holder or by check delivered to the address of such holder. 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 consideration provided for in this Article I . No portion of the Total Consideration will be paid 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 and the Exchange Documents pursuant hereto.

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(d) Transfers of Ownership . If the cash payment or check evidencing the cash to be paid pursuant to Section 1.6 is to be made to a Person other than the Person whose name is reflected on the Company Stock Certificate surrendered in exchange therefor, it will be a condition of the payment 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 payment of any portion of the Total Consideration 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.

(e) Exchange Agent to Return Merger Consideration . At any time following the last day of the twelfth 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 Total Consideration that has been deposited with the Exchange Agent pursuant to Section 1.8(b) , not disbursed to the holders of Company Stock Certificates pursuant to Section 1.8(c) , and thereafter the holders of Company Stock Certificates shall be entitled to look only to Parent (subject to the terms of Section 1.8(f) ) only as general creditors thereof with respect to any and all cash amounts that may be payable to such holders of Company Stock Certificates pursuant to Sections 1.6 upon the due surrender of such Company Stock Certificates and duly executed Exchange Documents in the manner set forth in Section 1.8(c) . No interest shall be payable for the cash amounts delivered to Parent pursuant to the provisions of this Section 1.8(e) and which are subsequently delivered to the holders of Company Stock Certificates.

(f) No Liability . Notwithstanding anything to the contrary in this Section   1.8 , neither the Exchange Agent, the Surviving Corporation, nor any party hereto shall be liable to a holder of shares of Company Capital Stock for any amount 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 portion of the Total Consideration paid or payable 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 Surviving Corporation of shares of Company Capital Stock that were outstanding immediately prior to the Effective Time. If, after the Effective Time, Company Stock Certificates are presented to the Surviving Corporation 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 consideration, if any, as may be required pursuant to Section 1.6 ; provided , however , that Parent or Exchange Agent may, in their discretion and as a condition precedent to the issuance thereof, require the Company Stockholder who is the owner of such lost, stolen or destroyed certificates to either (i) deliver a bond in such amount as it may reasonably direct or (ii) provide an indemnification agreement in a form and substance acceptable to Parent and Exchange Agent, 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 Withholding Taxes . The Company and, on its behalf, Parent, Callco, the Surviving Corporation and the Exchange Agent, shall be entitled to deduct and withhold from any consideration payable or otherwise deliverable pursuant to the transactions contemplated by this Agreement such amounts as may be required to be deducted or withheld therefrom under any provision of federal, local or foreign tax law or under any applicable legal requirement. To the extent such amounts are so deducted or withheld, such amounts shall be treated for all purposes under this Agreement as having been paid to the Person to whom such amounts would otherwise have been paid.

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

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE STOCKHOLDER

SIGNATORIES

Subject to the exceptions and disclosure set forth in writing in the disclosure letter (referencing the appropriate section and subsection numbers, it being understood and hereby agreed that any information disclosed in any section or subsection of the Disclosure Letter shall qualify the representations and warranties set forth in the corresponding section and subsection and also the representations and warranties set forth in any other section or subsection of the Disclosure Letter (whether or not a specific cross-reference is included therein) if and to the extent it is reasonably apparent on its face that such disclosure applies to such other sections or subsections) delivered by the Company to Parent on the date of this Agreement (the “ Disclosure Letter ”), the Company and each of the Stockholder Signatories represent and warrant, severally and not jointly, to Parent as follows (and in the case of the representations and warranties contained in Section 2.24 , each Stockholder Signatory represents and warrants, severally and not jointly, to Parent and the other Stockholder Signatories):

2.1 Organization . Each of the Company and its subsidiaries is (a) duly organized, validly existing and in good standing (with respect to jurisdictions that recognize the concept of good standing) under the Laws of its jurisdiction of organization and has the requisite power to own its properties and to carry on its business as it is now being conducted, (b) not in violation of its Organizational Documents and (c) duly qualified or otherwise authorized to do business in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification necessary (a list of the jurisdictions in which the Company and its subsidiaries are so qualified is set forth in Section 2.1 of the Disclosure Letter), except in the case of this clause (c) where the failure to be so qualified or authorized has not had and could not reasonably be expected to have individually or in the aggregate, a Material Adverse Effect. True, correct and complete copies of the Organizational Documents, each as amended to date, of the Company and each of its subsidiaries have been made available to Parent prior to the date of this Agreement, and each of such Organizational Documents is in full force and effect. There is no pending or, to the Knowledge of the Company, Threatened Action for the dissolution, liquidation or insolvency of the Company or any of its subsidiaries.

2.2 Capitalization .

(a) The authorized Company Capital Stock consists of (i) 440,000,000 shares of Company Common Stock, and (ii) 10,000,000 shares of Company Preferred Stock, of which one (1) share has been designated Series A Preferred Stock, one (1) share has been designated Series B Preferred Stock and 50,000 shares have been designated Series C Preferred Stock. As of the date of this Agreement: (A) 252,201,879 shares of Company Common Stock are issued and outstanding, (B) one (1) share of Series A

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Preferred Stock is issued and outstanding, (C) one (1) share of Series B Preferred Stock is issued and outstanding, (D) 50,000 shares of Series C Preferred Stock are issued and outstanding, (E) 72,502,803 Exchangeable Shares that are exchangeable for an aggregate of 72,502,803 shares of Company Common Stock are issued and outstanding, and (F) there are no shares of Company Capital Stock held by the Company as treasury shares. All of the issued and outstanding Equity Interests of the Company and its subsidiaries have been duly authorized, validly issued, are fully paid and nonassessable, and have not been issued in violation of any Contract or preemptive or similar rights or other applicable Law. There are no preemptive rights, rights of first refusal or similar rights applicable to the shares of Company Capital Stock or Exchangeable Shares. Section 2.2(a) of the Disclosure Letter sets forth as of the date of this Agreement, (i) the names and addresses on the Company’s corporate records of the holders of record of outstanding Company Options, each Company Option held by such holder, the number of shares issuable upon the exercise of each such Company Option, the exercise price per share of each such Company Option, the vesting schedule for each such Company Option, whether and to the extent that such Company Option is an “incentive stock option” under Section 422 of the Code, the number of vested shares underlying such Company Option, the grant date for such Company Option and the expiration date for such Company Option and (ii) the names and addresses on the Company’s corporate records of the holders of record of outstanding Company Warrants, each Company Warrant held by such holder, the number of shares issuable upon the exercise of each such Company Warrant, the exercise price per share of each such Company Warrant, the vesting schedule, if any, for each such Company Warrant, the number of vested shares underlying such Company Warrant, the grant date for such Company Warrant and the expiration date for such Company Warrant. Other than as set forth in Section 2.2(a) of the Disclosure Letter, there are no outstanding warrants, options, rights, “phantom” stock rights, agreements, convertible or exchangeable securities or other commitments or obligations (contingent or otherwise) (other than this Agreement) pursuant to which the Company or any of its subsidiaries is or may become obligated to issue, sell, purchase, return or redeem any Equity Interests. Other than as set forth in Section 2.2(a) of the Disclosure Letter, there are no outstanding bonds, debentures, notes or other indebtedness having the right to vote on any matters on which holders of Equity Interests of the Company or any of its subsidiaries may vote. Section 2.2(a) of the Disclosure Letter sets forth, as of the date of this Agreement, the Company’s and its subsidiaries’ Indebtedness, including the outstanding principal amount owed and accrued and unpaid interest and penalties thereon, the Persons to which such Indebtedness is owed and the agreements and instruments under which such Indebtedness has been incurred. Immediately after the Effective Time, if the amounts set forth in the Payoff Letters are paid in full, the Company and its subsidiaries shall have no Indebtedness or Encumbrances related thereto.

(b) The Company owns (directly or indirectly) of record and beneficially all Equity Interests of each of the subsidiaries of the Company, and Section 2.2(b) of the Disclosure Letter sets forth with respect to each such subsidiary: (i) its name and jurisdiction of organization and (ii) the number of issued and outstanding Equity Interests of such subsidiary.

(c) The Spreadsheet (as defined in Section 5.13 ) will be true, complete and accurate as of immediately prior to the Effective Time. Section 2.2(c) of the Disclosure Letter sets forth as of the date hereof the name and address on the Company’s corporate records of each holder of record of Company Capital Stock, the number of shares owned of record by such holder, whether such shares are subject to vesting provisions (and if so, a description of the vesting provisions) and the accrued and unpaid dividends on such shares of Company Capital Stock. Section 2.2(c) of the Disclosure Letter also sets forth as of the date hereof the name and address on the Company’s corporate records of each holder of record (and to the Knowledge of the Company, beneficially) of the Exchangeable Shares, the number of shares owned as of the date hereof by such holder, whether such shares are subject to vesting provisions (and if so, a description of the vesting provisions) and the accrued and unpaid dividends on such shares. The Company has never declared or paid any dividends or made any other distributions in respect of its Capital Stock. Immediately following the Closing, Parent will own 100% of the outstanding Equity Interests of the Company and directly or indirectly 100% of the Equity Interests of the Company’s subsidiaries.

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(d) None of the Company or its subsidiaries directly or indirectly owns any Equity Interests in, or any interest convertible or exchangeable or exercisable for any Equity Interest in, any other Person. There are no obligations, contingent or otherwise, of the Company or any of its subsidiaries to provide funds to or make any investment in or to any other Person (whether in the form of a loan, capital contribution or otherwise).

2.3 Financial Statements; Distributions and Payments .

(a) Section 2.3(a) of the Disclosure Letter sets forth the following (collectively, the “ Financial Statements ”): (i) the audited consolidated statements of operations and cash flows of the Company for the period from inception through March 31, 2006 and for the 12 months ended March 31, 2007; (ii) the audited consolidated balance sheets of the Company as of March 31, 2007 and 2006; the unaudited consolidated statements of income and cash flows of the Company for the five months ended August 31, 2007; and (iv) the unaudited consolidated balance sheet of the Company as of August 31, 2007 (the “ Balance Sheet ”). The Financial Statements have been prepared in good faith in accordance with GAAP based upon the books and records of the Company and its subsidiaries throughout the relevant periods and fairly present in all material respects the financial position of the Company and its subsidiaries as of the dates thereof and their results of operations and cash flows for the periods then ended (except in the case of the unaudited Financial Statements, subject to normal, immaterial year-end adjustments).

(b) Section 2.3(b) of the Disclosure Letter sets forth all dividends and other distributions on or after November 23, 2005 made by the Company or any of its subsidiaries to the Company Stockholders or holders of Exchangeable Shares in respect of the shares of Company Capital Stock or Exchangeable Shares held by such Company Stockholders.

(c) The Company and each of its subsidiaries has established and maintains, adheres to and enforces a system of internal accounting controls which are effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP (including the Financial Statements), including policies and procedures that (i) require the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company and its subsidiaries, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company and its subsidiaries are being made only in accordance with appropriate authorizations of management and the board of directors of the Company, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the assets of the Company and its subsidiaries. Neither the Company nor any of its subsidiaries (including any employee thereof) nor to the Company’s Knowledge, the Company’s independent registered public accounting firm, has identified or been made aware of (i) any significant deficiency or material weakness in the system of internal accounting controls utilized by the Company and its subsidiaries, (ii) any fraud, whether or not material, that involves the Company’s management or other employees who have a role in the preparation of financial statements or the internal accounting controls utilized by the Company and its subsidiaries or (iii) any claim or allegation regarding any of the foregoing.

2.4 Absence of Changes . Since the date of this Agreement, there have been no events, circumstances or conditions, or series of events, circumstances or conditions, which have had or would reasonably be expected to have, in each case, individually or in the aggregate, a Material Adverse Effect. Between the Reference Date and the date of this Agreement:

(a) the Company and its subsidiaries have operated in the Ordinary Course of Business;

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(b) there have been no events, circumstances or conditions, or series of events, circumstances or conditions, which have had or would reasonably be expected to have, in each case, individually or in the aggregate, a Material Adverse Effect;

(c) there has not been any material damage, destruction, impairment or loss (whether or not covered by insurance) to any material assets of the Company or any of its subsidiaries; and

(d) none of the Company or any of its subsidiaries has taken any of the following actions:

(i) (A) granted any increase in the compensation or fringe benefits (including severance or similar benefits) of any present or former director, officer or employee of the Company or its subsidiaries (except for increases in salary or wages in the Ordinary Course of Business), (B) paid any severance or termination pay (other than accrued paid time off and business expense reimbursements) to any present or former director, officer or employee of the Company or its subsidiaries or (C) issued any Equity Interests;

(ii) incurred or assumed any Liabilities for borrowed money or guaranteed any such Liabilities;

(iii) canceled any indebtedness or waived any claims or rights having a value, in the aggregate, in excess of $100,000;

(iv) made any change in any method of accounting or accounting practice or policy;

(v) made or incurred any capital expenditure, other than in the Ordinary Course of Business;

(vi) sold, leased or otherwise disposed of any of its material assets, other than (a) replacement of equipment and other tangible assets in the Ordinary Course of Business or (b) the disposition of unused and obsolete equipment in immaterial amounts;

(vii) made any loan, advance, or capital contribution to or investment in any Person (other than routine travel and business expense advances made to directors or employees in the Ordinary Course of Business);

(viii) created or incurred any Encumbrance (other than Permitted Encumbrances) on any of the assets or properties (whether tangible or intangible) of the Company or any of its subsidiaries other than purchase money security interests in connection with the acquisition of immaterial amounts of equipment in the Ordinary Course of Business and non-exclusive license agreements to Company Intellectual Property entered into in the Ordinary Course of Business;

(ix) discharged or otherwise obtained the release of any Encumbrance or paid or otherwise discharged any Liability, other than current Liabilities incurred in the Ordinary Course of Business and non-exclusive license agreements to Company Intellectual Property entered into in the Ordinary Course of Business;

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(x) merged with, entered into a consolidation with or acquired an interest in any Person or acquired by merging or consolidating with, or by purchasing a substantial portion of the assets of, or by any other manner, any business or any corporation, partnership, association, limited liability company, trust or other business organization or division thereof;

(xi) amended its Organizational Documents;

(xii) agreed to issue any Equity Interests;

(xiii) made any payments (other than compensation in the Ordinary Course of Business) to or entered into any agreements or transactions with any Company Stockholder or any of its subsidiaries or any of their Affiliates;

(xiv) terminated any Material Contract; or

(xv) agreed, whether in writing or otherwise, to do any of the foregoing, except as expressly contemplated by this Agreement.

2.5 No Undisclosed Liabilities . The Company and its subsidiaries have no Liabilities of a nature required to be disclosed on a consolidated balance sheet or in the related notes thereto prepared in accordance with GAAP in a manner consistently applied with the Balance Sheet other than (a) Liabilities quantified on the face of the Financial Statements (or in any notes thereto) and not heretofore paid or discharged and (b) Liabilities that have arisen after the Reference Date in the Ordinary Course of Business. Neither the Company nor any of its subsidiaries is a party to, or has any commitment to become a party to, any Contract associated with off balance sheet financing, including any arrangement for the sale of Receivables.

2.6 Legal Compliance . The Company and its subsidiaries have complied in all material respects with all applicable Laws, and no Action is pending or, to the Knowledge of the Company, Threatened against them alleging any failure to so comply. The Company and its subsidiaries hold all material Permits that are required to operate their businesses as currently conducted, and such Permits are in full force and effect and no proceeding is pending or, to the Knowledge of the Company, Threatened, to revoke or limit any thereof. Neither the Company nor any subsidiary has received any notice of or been charged with a material violation of any Laws and to the Knowledge of the Company, no fact exists that could reasonably be likely to result in such violation.

2.7 Tax Matters .

(a) All material Tax Returns required to be filed by, or on behalf of, the Company or any of its subsidiaries have been timely filed, and all such Tax Returns were true, correct and complete in all material respects. All Taxes for which the Company or any of its subsidiaries are liable that are due and payable after giving effect to all extensions have been fully and timely paid. Neither the Company nor any of its subsidiaries as of the date of this Agreement is the beneficiary of any extension of time within which to file any Tax Return. Neither the Company nor any of its subsidiaries has any material liabilities for unpaid Taxes as of the Reference Date which have not been accrued or reserved on the Balance Sheet, whether asserted or unasserted, contingent or otherwise, and neither the Company nor any of its subsidiaries has incurred any liability for material Taxes since the Reference Date other than in the Ordinary Course of Business.

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(b) Each of the Company and its subsidiaries has duly and timely withheld and paid over to the appropriate Governmental Authority all material Taxes and other amounts required to be so withheld and paid over for all periods under all applicable laws in connection with amounts paid or owing to any employee, independent contractor, contingent worker, subcontractor, lender, stockholder or other third party.

(c) No audits, investigations or other proceedings are pending or being conducted with respect to material Taxes of the Company or its subsidiaries.

(d) (i) Neither the Company nor any of its subsidiaries has received any written notice of any assessment or intent to make any assessment by any Governmental Authority regarding material Taxes for which the Company or any of its subsidiaries may be liable; (ii) no claim has been made in writing by a Governmental Authority in a jurisdiction where the Company or any of its subsidiaries does not file Tax Returns that the Company or any of its subsidiaries is or may be subject to taxation by that jurisdiction or is obliged to act as withholding agent under the laws of that jurisdiction; and (iii) no waiver or extension of any statute of limitations has been given or requested with respect to the Company or any of its subsidiaries in connection with any Tax Returns.

(e) There are no Encumbrances (other than Taxes not yet due and payable) on any of the assets of the Company or any of its subsidiaries that arose in connection with any failure to pay any material Tax.

(f) Neither the Company nor any of its subsidiaries is a party to or bound by any agreement providing for the allocation, sharing or indemnification of Taxes.

(g) Neither the Company nor any of its subsidiaries has executed or entered into a closing agreement pursuant to Section 7121 of the Code or any predecessor provision thereof or any similar provision of state, local or foreign law or any other agreement relating to Taxes.

(h) The Company has made available to Parent or its legal counsel or accountants copies of all material Tax Returns for the Company and its subsidiaries filed for all periods for which the statute of limitations remains open.

(i) Neither the Company nor any of its subsidiaries has been, at any time, a “United States Real Property Holding Corporation” within the meaning of Section 897(c)(2) of the Code.

(j) Neither the Company nor any of its subsidiaries has 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 within the last two (2) years.

(k) Neither the Company nor any of its subsidiaries has engaged in a “reportable transaction,” as set forth in Treas. Reg. Section 1.6011-4(b), including any 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. Section 1.6011-4(b)(2).

(l) Neither the Company nor any of its subsidiaries is the beneficiary of any Tax exemption, Tax holiday or other Tax incentive agreement or order (“ Tax Incentive ”).

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(m) Neither the Company nor any of its subsidiaries is or has been subject to material 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 a source of income in that country.

(n) Neither the Company nor its subsidiaries have or will have any material liability for unpaid Taxes for any taxable period or portion thereof ending on or prior to the Closing Date pursuant to applicable transfer pricing laws and regulations to the extent such Taxes are in excess of the Taxes for which the Company would be liable pursuant to the Company’s current and ongoing transfer pricing practices.

2.8 Title . Neither the Company nor any of its subsidiaries own any real property. Section 2.8 of the Disclosure Letter sets forth all leases, subleases or other agreements (including all amendments, terminations and modifications thereof and any guaranties thereof) under which the Company and any of its subsidiaries use or occupy or have the right to use or occupy, now or in the future, any real property (the “ Leases ”) and there are no other Leases for real property to which the Company or any of its subsidiaries is bound. Each of the Company and its subsidiaries has good title to, or in the case of leased property and assets has valid leasehold interests in, all material property and assets (whether real or personal, other than Intellectual Property) owned or leased by it and, in the case of owned property and assets, free and clear of all Encumbrances (other than, solely with respect to assets other than Equity Interests of any subsidiary, Permitted Encumbrances). To the Knowledge of the Company, the real property subject to the Leases is in compliance in all material respects with all applicable Laws, and no Action is pending or, to the Knowledge of the Company, Threatened against any such properties. To the Knowledge of the Company, the real property subject to the Leases is in operating condition, without need for material repairs to or replacements of any capital items. Such real property is maintained in a manner consistent with standards generally followed with respect to similar properties, and is otherwise suitable for the conduct of the business as presently conducted. There are no other parties occupying, or with a right to occupy, the properties subject to the Leases other than the Company or any of its subsidiaries. Neither the Company nor any of its subsidiaries owe any brokerage commissions or finders fees with respect to any such real property or would owe any such fees if any existing Leases were renewed pursuant to any renewal options contained in such Leases.

2.9 Intellectual Property .

(a) Registered Intellectual Property; Proceedings . Section 2.9(a) of the Disclosure Letter sets forth as of the date of this Agreement all (i) Company Registered Intellectual Property and specifies, where applicable, the jurisdictions in which each such item of Company Registered Intellectual Property has been issued or registered and (ii) the following proceedings or actions, during the twelve (12) month period immediately preceding the date of this Agreement, before any Governmental Authority (including the United States Patent and Trademark Office or equivalent authority anywhere else in the world) related to any of the Company Registered Intellectual Property: (x) interference, reissue, reexamination or similar proceedings pertaining to the scope, validity and/or ownership of any of the patents of the Company and its subsidiaries, (y) trademark opposition proceedings, or (z) proceedings relating to Internet domain names.

(b) No Order . No Company Controlled Intellectual Property is subject to any outstanding order, injunction, stipulation or compulsory or confirmatory licensing terms entered or imposed by any Governmental Authority or other administrative or arbitration tribunal restricting in any manner the use, transfer, or licensing thereof by the Company or any of its subsidiaries, or which may reasonably be expected to affect the validity, use or enforceability of such Company Controlled Intellectual Property.

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(c) Registration . All necessary registration, maintenance and renewal fees currently due in connection with Company Registered Intellectual Property have been made and all necessary documents, recordations and certificates in connection with such Company Registered Intellectual Property have been filed, or will be made in a timely fashion, with the relevant Governmental Authority in the United States or those foreign jurisdictions in which applications for Company Registered Intellectual Property have been filed, as the case may be, for the purposes of prosecuting, maintaining or perfecting such Company Registered Intellectual Property.

(d) Absence of Encumbrances . The Company and its subsidiaries own and have good and exclusive title to each item of Company Controlled Intellectual Property, free and clear of any Encumbrances (other than Permitted Encumbrances), except as would not reasonably be expected to materially interfere with the use of such Company Controlled Intellectual Property by the Company and its subsidiaries as currently used in the operation of the business of the Company and its subsidiaries.

(e) In-Bound Licenses . (i) In the case of third-party software that is incorporated into any products of the Company or any of its subsidiaries, other than “shrink wrap” and similar widely available commercial licenses for Intellectual Property at a cost of less than $25,000 and (ii) in the case of third-party software for end use ( i.e. not for resale or distribution), other than software that is generally available to the public at a cost of less than $50,000, Section 2.9(e) of the Disclosure Letter sets forth a list as of the date of this Agreement of all Contracts to which the Company or any of its subsidiaries is a party pursuant to which Intellectual Property has been licensed by a third party to the Company or any of its subsidiaries (including all third party Intellectual Property that is used or incorporated into any products of the Company or any of its subsidiaries).

(f) Out-Bound Licenses . Section 2.9(f) of the Disclosure Letter sets forth a list as of the date of this Agreement of all Contracts to which the Company or any of its subsidiaries is a party pursuant to which Company Intellectual Property has been licensed to any third party (including any Contracts where Company Intellectual Property is tied, bundled or co-branded with any third-party Intellectual Property) other than any standard end-user license agreements the Company or its subsidiaries uses in licensing the products of the Company or any of its subsidiaries to end-users of a video game product, which standard agreement forms have been made available to Parent and its counsel. Neither the Company nor any of its subsidiaries has granted any exclusive rights to any third party to publish or otherwise exploit any Company Intellectual Property, or any rights of first negotiation, rights of last refusal, or similar rights with respect to the publishing or the exploitation of any Company Intellectual Property.

(g) No Conflict . To the Knowledge of the Company, all Contracts relating to Company Intellectual Property (including Contracts whereby any Intellectual Property of a third party is licensed to the Company or any of its subsidiaries) (the “ IP Contracts ”) are in full force and effect, except to the extent they have previously expired in accordance with their terms. The consummation of the Transactions will not in any material respect automatically (with or without the giving of notice or lapse of time or both) violate or result in the breach, modification, cancellation, termination, suspension of, or right to modify, cancel, terminate or suspend, or acceleration of any payments with respect to, such IP Contracts. Each of the Company and its subsidiaries in all material respects is in compliance with, and has not breached any term of any IP Contracts and, to the Knowledge of the Company, all other parties to IP Contracts in all material respects are in compliance with, and have not breached any material term thereof. Following the Closing Date, the Company and its subsidiaries will be permitted to exercise all of their respective rights under the IP Contracts to the same extent the Company and its subsidiaries would have been able to had the transactions contemplated by this Agreement not occurred and without the payment of any additional amounts or consideration of more than $50,000 per IP Contract other than ongoing fees, royalties or payments that the Company, any of its subsidiaries or Parent would otherwise be required to pay.

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(h) No Infringement . The conduct of the business of the Company and its subsidiaries, as such business currently is conducted, does not in any material respect infringe, misappropriate or violate the Intellectual Property (other than Patent Rights) of any third party. To the Knowledge of the Company, the conduct of the business of the Company and its subsidiaries, as such business currently is conducted, does not in any material respect infringe, misappropriate or violate the Patent Rights of any third party.

(i) No Notice of Infringement . Neither the Company nor any of its subsidiaries has received written notice from any third party, or has otherwise become aware, that the conduct of the business of the Company and its subsidiaries infringes, misappropriates or violates the Intellectual Property of any third party (including cease and desist letters or any requests by a third party that the Company or any of its subsidiaries license such third party’s technology so as to not infringe such third party’s Intellectual Property, or other notices of any third party patents or patent rights).

(j) No Third Party Infringement . To the Knowledge of the Company, no Person is infringing, misappropriating or violating any Company Controlled Intellectual Property in any material respect.

(k) Information Privacy and Security . The Company and its subsidiaries have not used and do not currently use any of the consumer or customer information that they have received or currently receive through websites or otherwise or stores in their computer systems in an unlawful manner or in a manner violating the Company’s privacy policy. The Company has not collected any customer information through its website or otherwise in an unlawful manner or in violation of its privacy policy. The Company has commercially reasonable security measures in place to protect the consumer or customer information it receives through its website or otherwise and which it stores in its computer systems from illegal use by third parties or use by third parties in a manner violative of the rights of privacy of its customers. Each of the Company and its subsidiaries takes commercially reasonable actions to protect the confidentiality, integrity and security of its software, databases, systems, networks and Internet sites and all information stored or contained therein or transmitted thereby from any unauthorized use, access, interruption or modification by third parties and complies with all relevant laws and regulations with regards to the transmission and storage of such information. To the Knowledge of the Company, none of the Company’s products contain any malicious worms, viruses, Trojan horses, malware or anything similar to the foregoing.

(l) Open Source Software . None of the Company Controlled Intellectual Property that is distributed by the Company or any of its subsidiaries, incorporates or has embedded in it any source, object or other software code subject to an “open source”, “copyleft” or other similar types of license terms (including, without limitation, any GNU General Public License, Library General Public License, Lesser General Public License, Mozilla License, Berkeley Software Distribution License, Open Source Initiative License, MIT, Apache or public domain licenses, and the like).

(m) Escrow of Company Controlled Intellectual Property . No Company Controlled Intellectual Property is subject to any agreement with any third party pursuant to which the Company or any of its subsidiaries has, or would be required to, in any circumstances, deposit into escrow such Company Controlled Intellectual Property for the benefit of such third party.

(n) Protection of Intellectual Property Assets . Each of the Company and its subsidiaries has and enforces policies requiring each employee and contractor involved in proprietary aspects of the business or Company Intellectual Property, including any trade secrets or other proprietary or confidential information, to execute nondisclosure or proprietary information and confidential information agreements, and the Company and each of its subsidiaries has obtained such valid written agreements from each such employee and contractor in each case pursuant to the form of such agreement made available to Parent or

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pursuant to a substantially similar form of agreement and, in any event, without any exceptions set forth therein that would affect the ownership of a Company Product. All persons who have contributed to the creation, invention, modification or improvement of any Company Controlled Intellectual Property have signed written agreements ensuring that all such Company Controlled Intellectual Property is owned exclusively by the Company and its subsidiaries, in each case pursuant to the form of such agreement made available to Parent or pursuant to a substantially similar form of agreement and, in any event, without any exceptions set forth therein that would affect the ownership of a Company Product. Each of the Company and its subsidiaries has taken reasonable steps, consistent with video game development industry standards, to protect and preserve the confidentiality of any trade secrets, including not disclosing such trade secrets except pursuant to a confidentiality agreement.

(o) Source Code . Neither the Company, any of its subsidiaries, nor any other Person acting on its 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 source code except for disclosures to employees, contractors or consultants under agreements that prohibit use or disclosure except in the performance of services to the Company or any of its subsidiaries.

(p) Company Products . All products or services that as of the date of this Agreement are licensed, sold, distributed or, in the case of services, performed, by or on behalf of the Company or any of its subsidiaries and all products or services currently under development by the Company or any of its subsidiaries, or which the Company or any of its subsidiaries is contractually obligated to develop (all of the foregoing, the “ Company Products ”), in each case, as of the date of this Agreement, are set forth on Section 2.9(p) of the Disclosure Letter.

(q) Development Tools . To the Knowledge of the Company, Section 2.9(q) of the Disclosure Letter contains a complete list of all material software development tools and game engines used by the Company and its subsidiaries, as of the date of this Agreement, except for any such tools or game engines that are generally available and are used in their generally available form (such as standard compilers) (collectively, the “ Development Tools ”). Section 2.9(q) of the Disclosure Letter also sets forth, for each Development Tool: (a) any Contracts with third parties providing such third parties with rights to receive royalties or other payments with respect to such Development Tool; (b) a list of any restrictions on the Company’s and its subsidiaries’ unrestricted right to use and distribute such Development Tools (other than such restrictions set forth in